Goldman Is Too Big and Dirty to Survive

April/24/2010 16:08PM
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From Matt Taibbi’s “The Great American Bubble Machine” in Rolling Stone Issue 1082-83. Published last June in Rolling Stone, of all places.

“The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

Any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They’ve been pulling this same stunt over and over since the 1920s — and now they’re preparing to do it again, creating what may be the biggest and most audacious bubble yet.”

Whether Matt’s article led the SEC to Goldman or they just wandered over there, Matt’s criticisms of Goldman, the Giant Squid with it’s tentacles into all aspects of government and business, or it’s coincidence it appears the Feds are about to put some heat on Goldman.

But, Goldman’s story in the current SEC investigation is interesting. They were just the house in a big poker game. They got the players together and dealt the cards. But, the players were all professional gamblers and knew the game. It was a zero sum game, you needed a loser to have a winner. The winner was John Paulson, who bet the housing market would crash. The losers, all of those who bet the market would keep going up. No widows or orphans in this game. Goldman claims the house(Goldman) lost money staging the game. The government’s case, Goldman had an obligation to tell the bettors on the up side that the short bettor was picking bad bets to stick the buyers with to hedge his chances to win. Goldman’s position, these were big boys they should have done the research.

In my opinion Goldman is too big to succeed. It is not a group of really smart guys who outsmart the rest of Wall Street. It is a corrupt organization that has wreaked havoc on the economy of America and destroyed the financial fortunes of many a small investor for the big guys and the bonus program. It is the consummate insider trading firm with plants in all aspects of government, Democrat or Republican.

Goldman announced their head attorney in the suit by the SEC is one, Gregg Craig. He was hired by Castro to get Elian Gonzales back to Cuba. He was a top advisor to Obama serving as White House Counsel. His primary role, to get Gitmo closed. He became the fall guy when it didn’t, and hasn’t happened.

So, the SEC announces a big suit against Goldman as the administration is trying to get a bill passed to tighten up government control over Wall Street. Goldman announces big profits and big bonuses. Goldman announces they will defend the suit by the SEC using the recently fired White House Lead Counsel.

It’s all crap. Goldman will get off with a fine. The bill, or some version of it will pass, and Craig will be paid well for serving less than a year in the administration. Goldman will still have many ex-employees in all levels of government passing significant information to them that they will use to make obscene illegal profits. The new bill will do nothing to stop Goldman but will cost billions for firms to comply. Goldman will flaunt the bill and use political connections to thrive.

Cute little game, isn’t it?

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