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Goldman Collects Twice On Bailout Money

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http://www.marketoracle.co.uk/Article12157.html

Goldman Sachs: A Vampire On The Jugular Of America

…organized greed always defeats disorganized democracy - Matt Taibbi

In Rolling Stone Magazine, Matt Taibbi wrote what would never be read in The New York Times, The Financial Times, Fortune, Barrons and certainly not in the Washington

…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. - Matt Taibbi, Goldman Sachs: The Great American Bubble Machine, Rolling Stone Magazine, July 2, 2009, issue 1082-83

Those at the center of power are often reticent to criticize others feeding at the same trough. It is left to those on the fringe, in this instance Rolling Stone Magazine, a reviewer of popular music, to state the ugly truth about what is happening at the center—that bank-holding company, née investment bank Goldman Sachs, engineered America’s serial bubbles in stocks, housing and commodities; and, has now profited immensely from both the bubbles and America’s subsequent collapse.

That bankers at Goldman Sachs will receive record bonuses the same year millions of Americans will lose their homes and their jobs is not by coincidence. Matt Taibbi’s article explains why and how this is so. In the game of last man standing called Western democratic capitalism the winner is clearly Goldman Sachs.

DEMOCRACY’S BIRTH WAS AN IMPROBABLE EVENT IT’S DEATH LESS SO

Taibbi’s statement, “organized greed always defeats disorganized democracyâ€, gives the understanding how America, once the greatest economic power in the world, lost its extraordinary productivity, wealth, and power in only a few decades.

The lofty intent of those who founded the US has today been effectively subverted. Democracy no longer serves the role intended by America’s founding fathers. Today, democracy serves instead the special interests that control America through a highly compromised, manipulated and mis-named “democratic processâ€.

Control of the democratic process is not difficult. It is done with money, money given to politicians who raise campaign funds by selling out those they are elected to serve. This is not only true for most Republicans and Democrats. It is true for most nations.

In this process, voters are temporarily satisfied when “their†candidate wins. In truth, “their†candidate was never theirs in the first place, already having been brokered and bought by powerful interest groups who have much to gain by their candidate’s ability to get elected.

DIVIDE AND CONQUER THE TWO-PARTY DANCE OF DISASTER

Instead of helping to solve society’s problems, the democratic process has been diverted by powerful and well-organized special interest groups. This diversion is accomplished by exploiting the conservative and liberal tendencies of the electorate, a diversion that enables special interests to maintain control no matter what party wins.

By exacerbating the natural tensions existing within society, special interests use politicians and the media to control the political dialogue, emphasizing issues that divide and inflame the electorate thereby diverting attention away from the destabilizing, dangerous and self-serving aims of special interests.

After every election, either conservatives or liberals will feel that victory has been achieved, their ideological opponents temporarily vanquished, their political ends accomplished; but nothing could be further from the truth as both conservatives and liberals have been duped in the process, a process best described as political pornography—as the aftermath is always somehow unfulfilling, no matter how exciting the initial attraction and foreplay.

In the end, very little gets solved, problems persist and proliferate, and the electorate becomes increasingly disillusioned—that is, until a new candidate is found by the special interests to again raise the hopes of both conservatives and liberals that this time it will be different.

SPECIAL INTEREST GROUPS AND THE RISE AND FALL OF NATIONS

The ability of special interest groups to dominate democracies is surprising only because democracies are relatively new; notwithstanding the Greek city-states and the earliest reports of democracy in ancient India—and my parody of an earlier imagined attempt, http://www.drschoon.com/articles/DemocracyInTheMadhouse.pdf .

Special interest groups far predate the modern democratic state. According to American economist, Mancur Olsen (1932-1988), author of The Rise And Decline Of Nations: Economic Growth, Stagflation, And Social Rigidities, 1982, Yale University Press, special interest groups arise in all nations and it is their presence and power that ultimately destroys the nations they dominate.

Mancur Olsen’s theory, the Logic Of Collective Action, posits the longer a nation is stable, the more likely special interest groups will rise and dominate that nation’s affairs and economy, making that nation less efficient and less productive and by so doing contribute to its ultimate downfall.

In a paper at Cornell University, Chia-chen Chou sheds light on Olsen’s Logic of Collective Action as follows:

Special interest organizations and collisions (distributional coalitions) reduce efficiency and make political life more divisive. Distributional coalitions struggle to maximize their own self-interests, that is, share of the national income rather than finding ways of increasing this income. [bold mine]:

Thus, special interest groups attempting to get a bigger slice of the pie will lead to decreased societal production…The underlying logic of collective action and its implications provide a general explanation for the economic growth and decline of states. The longer the period of stable government, the more special interest groups will form to rob the economy. [bold mine]:

Olsen’s Logic of Collective Action explains the increasing divisiveness of American politics, Wall Street’s successful robbery of America’s wealth, and the military-industrial complex’s role in America’s demise as a world power; and now that these issues have been resolved, the question remains, what’s next?

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It is not Goldman Sachs you have to question, but the US government. It was they who agreed to settle all of AIG's business. GS took the very wise decision to buy insurance against the insurer going bankrupt, but it was the US government who decided to pay everyone regardless. GS has its primary responsibility to its shareholders, in whose interests they clearly acted for. The US government has responsibility for the interests of tax payers i.e. everyone. So who messed up?

I will also defend GS with one example - if you bought car insurance and also insured against your insurer going bust, and then it did go bust just as you crashed your car; if the govt. stepped in to cover the losses of everyone who had claims against the insurer, how would you feel if they withheld your payment because you had actually bought the insurance? Probably like all those people who save for their old age and find themsleves forced to pay for the same care treatment as those who did not save and who thus get it for free.

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What happens if it kills the host?

Very simple, they leave face sucking eggs on a distant world in the remains of an alien spacecraft with a distress beacon running... one day, far in the future, a hapless mining vessel will land to investigate and the Goldman Sachs facegrabbers start all over again growing into a fiendish cabal of front running, bailout profiteering and virtually unkillable monsters.

Jim

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It is not Goldman Sachs you have to question, but the US government. It was they who agreed to settle all of AIG's business. GS took the very wise decision to buy insurance against the insurer going bankrupt, but it was the US government who decided to pay everyone regardless. GS has its primary responsibility to its shareholders, in whose interests they clearly acted for. The US government has responsibility for the interests of tax payers i.e. everyone. So who messed up?

Are you suggesting the two are seperate?

--Henry Paulson: President George W. Bush's last Treasury secretary and the architect of the $700 billion Troubled Asset Relief Program, the bailout fund used to inject capital into financial institutions, including Goldman Sachs. He served as chairman and chief executive from 1999 to 2006, was co-senior partner from 1998 to 1999 and president and chief operating officer from 1994 to 1998.

--Neel Kashkari: Until last month, Kashkari headed TARP. Until 2006, Kashkari had worked at Goldman Sachs and had headed the firm's information technology security investment banking practice in San Francisco.

--Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup — which in turn got a $300 billion taxpayer bailout from Paulson.

--John Thain, the chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibillion-dollar handout from Paulson.

--Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden-parachute payments as his bank was self-destructing.

--There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailed-out insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board.

-- The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman.

--Converting to a bank-holding company has other benefits as well: Goldman's primary supervisor is now the New York Fed, whose chairman at the time of its announcement was Stephen Friedman, a former co-chairman of Goldman Sachs.

--Friedman stepped down in May, but the man now in charge of supervising Goldman — New York Fed president William Dudley — is yet another former Goldmanite.

--Barack Obama, whose leading private campaign donor was an investment bank called Goldman Sachs.

--Gone now are Hank Paulson and Neel Kashkari; in their place are Treasury chief of staff Mark Patterson and CFTC chief Gary Gensler, both former Goldmanites.

;)

Edited by MOP

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