Dylan Ratigan: Goldman Sachs Magic Trick
By Heather Sunday Oct 18, 2009 7:00am
From MSNBC's Morning Meeting Oct. 16, 2009. Dylan Ratigan explains how Goldman Sachs managed to make $3 billion in three months investing our tax dollars sent to keep them afloat with no strings attached.
For more you can read his entry at the Huffington Post Goldman Sachs' Black Magic, Here's How They Did It.
Goldman at the apex of the crisis is delivered this money -- which they then use to borrow against at $20 or $30 for every $1. Which at 30x equals $2.1 trillion in available capital.
As one of the only banks in the world with money at the time, Goldman Sachs was able to buy billions in distressed assets around the world at record low prices -- only to watch $23.7 trillion in US taxpayer money be deployed during the past year to re-inflate the asset's values that Goldman had purchased with our tax money.
The question is not why did we bail out the banks.
The question is why did we give the banks billions of our money so they could then buy assets by the trillions with our money and they keep the profits?
The answer is Henry Paulson, former Goldman Sachs CEO who ran the US Treasury, and Tim Geithner, current Treasury Secretary who at the time ran the New York Federal Reserve, willingly delivered Goldman Sachs the $70 Billion -- with no strings attached.
So what can we do?
- We must demand the return of those investment gains made with America's money - it was stolen from us and we can get it back. Demand Claw Backs - and not from the future but from the past - That is where our money is.
- We must have an exchange for all credit derivatives -- the current version is riddled with loopholes that let banks avoid transparency by mobbing offshore and prohibiting government regulators from being able to force the use of the exchange by the banks.
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screwed
The question should be very much why did we bail out the banks.
See Janet Tavakoli interviewed by C-SPAN's Brian Lamb from 4/20/09 here
This was an enormous PONZI scheme the Banks were running and we have been pillaged.
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Paulson in his three page ransom note handed to Congress in Sept '08 didn't require that the Banks would say what they were going to do with the money. Congress obliged.
Elizabeth Warren after the just concluded Buttonwood Conference here
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Most revealing is who Paulson the Great Plunder was talking to most at that time, before the election.
Nomi Prins here
The Pope of Hope (R-Government Sachs) was the new front man designate in the most recent Coup d'Etat.
The Oligarchs hold a Coup every so often, as election cycles dictate.
Not why did we bail out the banks, but why did we bail out ONLY the banks.
We were in a situation where troubled homeowners were causing the problem for the banks. So why did we pursue a path that helped the only the banks and left the homeowners to fail?
Any sane solution would have addressed the problem of the homeowners and the banks would have been saved as a result.
The govt took the least effective, narrowest targeted approach to rescue ONLY the people who were actually responsible for the crisis in the first place.
in your question. It should be, 'why did "THEY" pursue a path that helped only the banks...?'
The whole crisis was manufactured during the previous 12 years or so: eliminating oversight (Glass-Stegall, SEC), allowing the housing bubble to grow exponentially, creating new financial instruments (swaps, CDOs), and all the while diverting the attention of the Taxpayers with 9/11 and the invasion of Iraq.
The answer to my reworked question above: they did it because they could....and because they are greedy bastards who control every aspect of our economy and government. We are so screwed.
I think its clear the sense I used 'we' in, no need to nitpick unless you're looking for excuses to take exception.
For the thirteen trillion or twenty three trillion, depending on which account you listen to, Barofsky or Warren, every distressed mortgage could have been purchased outright.
The Banks had, and still have fraudulent collateralized debt obligations by the trillions on their books, and even more fraudulent synthetic CDOs.
Plus the big banks are the only ones now left writing credit default swaps because purchasers see them as guaranteed by the Government, as in we the peons. We the peons are going to need a bailout ourselves, but I suspect we will be left holding the bag.
The system is not repaired, it is made worse. Instead of a dozen large banks there are four.
They will crash again, sooner rather than later and they will be back for more money.
Back to my original point, they should not have been bailed out, they should have been nationalized and broken up.
The say they are capitalists, they should have been treated like capitalists who have been going bust for centuries.
Now it is Crony Capitalism, commit massive fraud, blow your bank up, no problem, keep your job, don't go to jail and here is $150 billion to write yourself some enormous bailout bonuses.
Even Greenspan, crony numero uno, in what must be an attempt to salvage his legacy now says the too big to fail banks should be broken up. James Kwak here after the Bloomberg report here
Too big to fail is too big to jail.
We should be rounding the crooks up and marching them off to the hoosegow.
Instead, we bail them out, by the trillions.
You described the state of FACISM in the USofBLOODYISRAEL perfectly. Save the rich can the peons.
Peaceful protest against the Banksters in Chicago October 25-27
Yves Smith here
Can we claw back Geithner?
In response to #2 on the hit list above I suggest you contact Barney Frank and demand that we must have an exchange for all credit derivatives. I realize this is probably too small of a response but it would not hurt.
Phone Barney Frank's office.
Here is his website.
Phone numbers (call them all --- often!):
(202) 225-5931
(617) 332-3920
(508) 999-6462
On his site it says:
"If you would like to ask Barney to support or oppose a bill, the best way to reach him is to send an email. Or you may also call the Washington office at (202) 225-5931. We discourage constituents from sending postal mail because House security procedures can delay delivery for up to several weeks.
"To express your opinion about legislation concerning mortgages, banking, executive compensation and other financial issues, you may address an email to the House Financial Services Committee."
To contact the "Financial Services Committee." Phone: (202) 225–4247 or email them using this form.
If you would like to send an email to Barney you can fill out this form. If you do not live in his district you can use 02740 as a zip code to get to his email form. the thing about email is that it is not as good as the phone. I have no idea how much it matters but calling and writing cannot hurt. I will give out this info during the week to remind everybody to contact these people. I hope that the C+L staff understands.
I will use this comment tomorrow as well so that people can call and actually talk to somebody.
barney franks is compromised.
"Legislation by Representative Barney Frank to tighten derivatives regulation contains an exemption that may let most financial firms escape new collateral and disclosure rules, the head of the Commodity Futures Trading Commission said."
then there was this:
Goldman Sachs' new top lobbyist was recently the top staffer to Rep. Barney Frank, D-Mass., on the House Financial Services Committee chaired by Frank. Michael Paese, a registered lobbyist for the Securities Industries and Financial Markets Association since he left Frank's committee in September, will join Goldman as director of government affairs, a role held last year by former Tom Daschle intimate, Mark Patterson, now the chief of staff at the Treasury Department. This is not Paese's first swing through the Wall Street-Congress revolving door: he previously worked at JP Morgan and Mercantile Bankshares, and in between served as senior minority counsel at the Financial Services Committee.
The government should take its legal hammer and chisel and DISMANTLE that DEN of THIEVES once and for all.
You're implying our current government is NOT a den of thieves.
LOL
This mess was no accident.
about it here.
Great article.
relax enjoy the ride
goldman sachs: investment bank
*scratch that*
goldman sachs: bank holding company
*Scratch that*
goldman sachs: financial holding company
A financial entity engaged in a broad range of banking-related activities, created by the Gramm-Leach-Bliley Act of 1999. These activities include: insurance underwriting, securities dealing and underwriting, financial and investment advisory services, merchant banking, issuing or selling securitized interests in bank-eligible assets, and generally engaging in any non-banking activity authorized by the Bank Holding Company Act. The Federal Reserve Board is responsible for supervising the financial condition and activities of financial holding companies. Similarly, any non-bank commercial company that is predominantly engaged in financial activities, earning 85% or more of its gross revenues from financial services, may choose to become a financial holding company. --Fed
in other words, goldman sachs is poised, once again, to be at the center of the storm that wrecks the economy. of course GS will make billions before then, and we'll be forced to bail them out... ya know american finance capitalism.
this is exactly the type of shit that led to the critically needed glass-steagall in the first place, back in '33. what is it that is said about history repeating itself?
I remember watching Paulson testifying to congress about his bailout plan and when they asked him why the plan called for no oversight, he responded that he thought it would have been arrogant to ask for oversight.
That was when I knew the whole thing was an elaborate "Ocean's 11" type scam.
We got took HARD.
At this point we should be grateful we at least have the illusion of personal freedom.
A very telling response that sums up the collusion of Government and Industry. Is it arrogant for any and all branches of the Government to provide regulation and oversight of Commerce and Finance that potentially damages the "common good and welfare" of it's citizens? I thought that was expected of them and one reason among many that we HAVE a government.
The entire argument for regulation and oversight could be summed up by John Maynard Keynes:
"Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone."
Self regulation by private industry to provide for safeguards to protect the population is ludicrous. Business (particularly banks and the majority of corporations) has but one, single minded purpose, which is to generate profits (the larger the better) by any means possible (preferably legal and ethical but that's often a judgment call by upper management).
It is the duty of those we elect to govern us, and those they appoint, to provide safeguards for the nation as a whole and its citizens, against fraud and unfair business practices. It is becoming more apparent every year that we no longer have a two party political system. The real power has been abdicated to moneyed interests that control both parties through the very loose election finance and lobbying activities that have become the norm. Activities that would be censured in other countries as bribery are touted as being "necessary" for American politics to function.
As for Mr. Paulson, and his successor it is NOT arrogance to provide oversight but is actually their responsibility.
It seems this guy is about the only person who understands what's going on and communicates it for the rest of us. He doesn't have Michael Moores hatred of capitalism, but he blows the whistle when he sees any kind of dishonesty. Plus when it comes to tough talk he can give Alan Grayson lessons.
I don't think MM hates capitalism outright. He just hates what is become in this country, which isn't capitalism. Its a highly rigged system that should be hated if you're not one of the riggers.
Just unbridled capitalism, unregulated capitalism, or as we have today croney capitalism. We have all got to do our part. Our government is supposed to be Of, For, and By, the people. You were not supposed to have to raise millions of dollars to run for a seat in congress. It was designed to be done by the average citizen. You were supposed to do your duty, serve your term and go back to your former life. There was not supposed to be retirement. This really sucks what they have done to us!
republicanism/conservatism is a mental illness!
GS produces nothing yet it makes billions. We can't have a financial system were our most profitable companies produce nothing and provide no real service and our best compensate executives head these companies.
It had been in the works for thirty years. Just waiting for the right set of circumstances. The bush cabal with a lot of lies and gimicks stole the 2000 election, then they allowed 911 to happen and that was just what they needed. The doors of the treasury flew open and the money was being printed and hauled out in record numbers.
They gave all their cronies rewards of high paying job with out work. Awarded no bid contracts to companies they had close ties to and must have profited from their associations greatly. The revolving door in washington had been running at such a fast rate that the pivot bearings are about warn out.
We really and truely need to empty washington and wallstreet. Those are the two major problems we face as a country today. To institutions woven together in a criminal conspiracy almost 50 years in the making. The two are tied together at the hip complicit in the financial problems we face today. We cannot expect wallstreet or the government to repair the damage they have created. We must do that ourselves. Now the way I see it the people that caused the problems can quit, leave, get out of the way and let the average American citizen step in and take over, Or we can take them out forcibly.
republicanism/conservatism is a mental illness!
To bad the dems are just as complicit in this heist. And in the protection of those who did it.
I did make the observation that republicanism/conservatism is a mental illness. But when I was talking about cleaning out washington I mean all of them both sides. The way I see it we have two parties the republicans and the democratrepublicans. They have been following each other around for so long that you can't tell one from the other. Oh sure a republican will run up behind you and stick a knife in your back if he can make a buck doing it. But todays demorepubs will distract you so the republican can slip up behind you.
when it comes to economics, Wall Street, regulations, etc. which means it's all pretty cloudy to me, I/we can still apply some common sense.
If the repealing of the 1933 Glass-Stegel Act in 1999, which was passed to prevent another great depression, enabled the recent economic meltdown then...
WHY ISN'T THE GLASS-STEGEL ACT BEING REINSTATED???
My first guess would be that our Congress is mostly made up of marionettes whose strings are pulled by Wall Street.
TARPS are also used by sideshow barkers.
Working as a Canadian seal clubber is now more reputable than banking.
("enough to pay the health insurance premium for the average American family ($13,375) 1.7 million times.")
....what can we do in regard to your 2 points? Is there a petition or any organization that can push these demands? Please let us know and I'll join.
The Panic of 1907, also known as the 1907 Bankers' Panic, was a financial crisis that occurred in the United States when the New York Stock Exchange fell close to 50% from its peak the previous year.
The Working Group on Financial Markets (also, President's Working Group on Financial Markets, the Working Group, and colloquially the Plunge Protection Team) was created by Executive Order 12631,signed on March 18, 1988 by United States President Ronald Reagan.
Cash is king...break the economy and buy stuff cheap. Pump up the economy on paper and then buy up the hard assets when fear and reality sets in.
It's unfortunate when money becomes more important then mortality. :-/
So whats new? The democrats are gonna lose a ton of seats in 2010 for supporting the bailout. Its one the few things I agreed with the republicans.
Come on people, Geithner, Summers, Rubin? These are the clods who fricken opened up the door for Citi and helped repeal the trading safeguards. The only change Obama has brought to the economy is to yield the drivers seat to greedy men who are stepping on the gas as we fall into oblivion.
* Recovery? Based on what solid financial data?
* Keynesian Economics? OK well print our way out of it and re-inflate the bubbles so the next burst is even bigger. Price vs. value, what the hell is that?
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