She tried to warn them and got run out of town.

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Obama is right to clobber Wall Street

Published: January 15 2010 20:35 | Last updated: January 15 2010 20:35

The American public dreams of putting bankers on trial. The hearings of the Financial Crisis Inquiry Commission, which started this week, are a spectacle that comes close to that fantasy. With camera flashes firing, the bankers’ journeys to take the stand have had the drama of the “perp walk”. The quasi-defendants were quizzed, among other things, on the White House’s new plan, revealed this week, for a $90bn tax on banks.

The proposal is political. That much is clear from the timing. The administration announced it ahead of bank bonus season. With US unemployment continuing to rise, the spectacle of Wall Street plutocrats reporting multimillion dollar earnings from bailed-out companies will trigger geysers of rage. This policy should soothe and exploit that popular anger.
EDITOR’S CHOICE
Little European support for bank levy - Jan-15
US bank levy will be tax-deductible - Jan-15
Money Supply: One cheer for banking levies - Jan-15
Lex: Obama’s levy - Jan-14
Bankers’ fury - Jan-14
FT Alphaville: From Obama to Europe, with love - Jan-15

But this is not mindless populism. Crisis interventions made US bank creditors and shareholders hundreds of billions of dollars richer. But, for its part, the commonweal is expected to lose $47bn on its initial $125bn equity injection into the banks alone. The American state has a right to correct that imbalance.

The details of the proposal will necessarily be a cause of argument. The White House has settled on using the levy to pay for losses on the troubled asset relief programme. But the reasoning for targeting this amount of money is muddled. Some Tarp losses are nothing to do with the banks, notably expected losses from the car industry bail-outs. And some financial sector costs are excluded, particularly the price of insurance policies that were put in place, and acknowledged in banks’ funding costs, but never called upon. A further complication to the levy is that customers will probably end up paying it.

There is much for reasonable people to disagree on here – and even more for politicians to dispute. But the levy is justified, and it will force the banks to cover the cost they have imposed on society. This tax will draw in cash from banks backed by foreign governments. But other states should follow suit, as Tim Geithner, the US Treasury secretary, has said.

Debate about the levy, however, must not distract from the question of how to construct a financial system where banks can fail safely. In future, it must be easier for bank debt to be turned into common equity in a crisis, and the fate of insolvent banks’ counter-parties must be made clearer to prevent the panic that followed the Lehman bankruptcy. Capital requirements must also be raised.

For cases when regulators fear a bank may be too big to fail, the authorities should work out a model for ex ante insurance premiums, payable to the state. Such a structure, combined with extra-high capital requirements for these overgrown institutions, should create strong incentives for these companies to slim down. It should, in addition, make sure that they cannot profit from the public guarantees that their bloatedness brings them. States must not continue acting as omniline insurers, guaranteeing everything for free.

Copyright The Financial Times Limited 2010.

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Hoffa shows Geithner how to run things

Memo to Treasury Secretary im Geithner: If you want to survive another year in Washington, start channeling your inner Jimmy Hoffa. Yes, Hoffa James P. Hoffa, that is -- the current Teamsters boss and the one man who has stared down Goldman Sachs and the big-money crowd on Wall Street and come out a winner. While our Treasury Secretary has been busy covering the friendly tracks he laid as NY Fed Chief, in recent weeks Hoffa has showed Lloyd Blankfein and Co. who's boss -- and did so without even breaking a sweat. The Hoffa v. Wall Street battle began back in December and received little notice, but taxpayers should pay attention to the kind of deal that can be cut when a tough cookie like Hoffa is driving the negotiations. The dispute centered around YRC, parent company of the Yellow and Roadway fleets, the nation's biggest trucker and employer of 30,000 of Hoffa's union brothers. Loaded with debt, and saddled with a CEO who spent more time on CNBC in recent years than Jim Cramer, YRC was headed for a year-end rendezvous with bankruptcy unless it could convince most of its bondholders to swap their debt for stock. That's a tricky proposition under any circumstances, but YRC had another obstacle to face. Hundreds of millions of dollars worth of credit-default insurance on YRC debt would pay off if the company went bust, giving bondholders an incentive to see the company go Chapter 11. Hoffa understood this and decided to play hardball -- he accused Goldman, Deutsche Bank and a handful of hedge funds of trafficking in YRC's credit default insurance and raised the prospect of his 18-wheelers parked all the way from Park Avenue to Broad Street in protest. He also turned up the political heat with union-connected lawmakers in Washington. In the end, the bullying worked like magic and by Jan. 1, fully 88 percent of bondholders agree to participate in the exchange. Bankruptcy was averted, and Goldman Sachs was eventually praised for helping YRC get "over the goal line" by buying up YRC debt in the marketplace in order to exchange the paper for stock. A triumphant Hoffa called it his "first foray into high finance." Unfortunately, Hoffa looks to have a brighter future in that area than the man who currently commands the US Treasury Department. Compare the YRC drama with the slowly evolving tale of Geithner's role in the 2008 back-door bailout of Goldman Sachs and its subsequent cover-up. You'll see why taxpayers sense something is very wrong about this story, and rightly so. As we're now learning by the day, Goldman nearly bankrupted AIG in the fall of 2008 -- much as YRC's credit default holders almost bankrupt that company last month. The key difference is that in AIG's case, the taxpayer was left holding the bag, while Goldman and AIG live to trade another day. But it gets worse. Not only did AIG pay off those contracts to Goldman and a dozen other banks to the tune of 100 cents on the dollar -- or a remarkable $62 billion -- Geithner's NY Fed insisted AIG cross out any reference to the full price of the payout. As e-mails released by Congress last week show, the idea was to keep the public in the dark. The final cost to taxpayers from the AIG rescue -- $182 billion, or about half of the entire US defense budget. Imagine the bargain Hoffa would have driven home for US taxpayers had he been representing our interests the way he did that of his union brethren. Fifty cents on the dollar? You better believe that would have been at least his starting point. And why not? Those who profited from the government bailout of AIG, led principally by Goldman Sachs, obviously think that the alphabet soup of derivatives were spun in such a fine web that no mere mortal could never grasp what was really going on. But the public is not so naive. Jimmy Hoffa, Jr. understood this and rode to the rescue of his constituents. It's too bad Geithner didn't do the same for his constituents, the US taxpayers.
terrykeenan@email.com

Some comments from Huffington post...Think people are pissed?

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Infinite cap on Freddie and Fannie.
And Geitner needs to be held accountable for it and his dealings with AIG.
New York Fed paid AIG billions and was told to keep it secret. He needs to prove who's side he's really on.
Show us or step down.

The Fed: A conspiracy of silence. A conspiracy to defraud taxpayers and keep us forever in the dark. Git yer pitchforks. It's time the banksters learn the meaning of a few words, such as fear, retribution and expropriation. They need to be brought low, which, after all, is their natural station. Rough justice is better than none.
I guess the powers that be think it is none of our business where OUR money went. Then these people wonder why they are despised by almost everyone.

MALIGNANTLY Corrupt to the CORE. The massess are helplessly languishing, due to excessive abuse of the top 2 percent. The nation is withering. The collapse of a Super Power ! All rooted from GREED. GREED.GREED. MORE YACHTS, BIGGER YACHTS. MORE MANSIONS. BIGGER MANSIONS. bIGGER JETS, LARGER FLEETS. i' am BIG and I CRUSH you.

We're all serfs now and Barak Obama and his bipartisanship fetish is helping make it all possible.
audit audit audit !

They are all closing ranks now. Anyone outside of Wall Street believing that Obama is still going to protect their interests is delusional. If he were, Geithner would have been gone LONG ago. Never hired in the first place. He wants Bernanke reaffirmed. He's in collusion with them.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it, and to institute new government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness

We are at that point, I believe.

Surprise, Surprise!! NO NEED TO KNOW, JUST PAY! Or what is to KNOW, no small print contract clauses - just a SWEAT DEAL for the ones that CAN!

What could possibly be gained by getting this information from the Fed. People might find out that Goldman got money from the government. Come on. It's a waste of time congress should focus on something worthwhile.

Blind robbery of the American taxpayer is something important. It sucks that you don't think so, but everyone is entitled to an opinion.

I remember Obama promising transparency during the campaign. I also remember the day last fall that Obama invited all the banksters and their lobbyists down to the White House for a walkthrough and sitdown over some kind of presidential lunch and I remember The bank presidents and managers going in and coming out. And the press who were there--CNBC was the only cable channel that even bothered to cover this momentous event--was set up at a small table along the walkway leading to and from the White House entrance the banksters and their lobbyists were using. And the questions were so softball and the answers so banal that it reminded me of that scene in the Bush campaign film made by Alex Pelosi in which Bush tells her about his shirt,his pants, his belt and his cowboy boots. Then Obama later talked about the meetings and discussion in meaningless platitudes and spoke of a "frank and open discussion"!

True transparency that!!!!

I decided then, that I couldn't always get all of my money back, if I put it in a bank, but, I could always get my money back, if I had some stash.......,[please take note of my slightly 'conservative' conclusion on how to deal with this. See? I'm not always a liberal, i been saving $ on my own]....., : )

Who would like to see Bernanke, Summers and Geithner put in stocks with a bushel of rotten tomatoes?

Antichrist Lloyd Blankfein Up Close and Personal

Lloyd Blankfein is the CEO of Goldman Sachs.

He replaced Henry Paulson, who went on to assist the Bush administration in it’s demolishing of the economy.

Blankfein earned a total compensation in 2008 of $53,965,418.
Base salary – $600,000
Cash Bonus – $26,985,474
Stock – $15,542,756
Options – $10,453,031

He declared in an interview that he was doing “God’s work”.

He suggested that Goldman would have been fine without financial assistance from the feds.

Goldman recieved $10 billion in direct aid from the US government.

The Financial Times chose Lloyd C. Blankfein as its person of the year.

He suggested that Goldman’s employees make more than everyone else because they’re better than everyone else. This resulted in massive bonuses.

Goldman Sachs gave out $4.82 billion in bonuses in 2008, despite earnings of only $2.32 billion that year.

Goldman’s revenue in 2008 was 22.2 billion and net earnings were 2.3 billion.

Blankfein is the poster boy for Wall Street’s incredible craving for massive profits.

After helping impact the global financial crisis to the tune of several trillion dollars he said that Goldman regretted any damage they may have committed and apologized.

The public was outraged, but unfortunately most were represented in Congress by a bunch of spineless, worthless cowards.

Today Goldman is a money machine, massive profits, massive bonuses, massive arrogance and a distinct lack of any perceivable code of ethics.

And in gratitude to the public that kept it afloat, kept the limos and private jets running, kept the pay scale far above what any single person is worth, kept it’s customers in a suicidal state and flipped the bird at regulatory agencies everywhere, it’s response is a heart felt “fuck you very much”.

Suckers

Timmy's gotta go! And he can take Ben with him!

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The latest revelations about the New York Fed's actions in the AIG bailout make one thing clear: Treasury Secretary Tim Geithner must go.
Geithner must go not just because of the emails showing that his New York Fed ordered AIG to keep details of the bailout secret, but because of many other decisions and policies he has championed in the past two years.
These decisions and policies have consistently put the interests of Wall Street ahead of the interests of the taxpayer, and they have undermined the public's confidence in the government at a time when the country needs it the most.
Tim Geithner's defense of his actions continues to be, in effect, "We had to do it or the world would have ended." This isn't good enough. It is also, at the very least, debatable.
It is true that Tim Geithner made many of his decisions in the midst of a crisis, and I do not doubt that his intentions were good and that he was doing the best he could. But this does not rinse his hands of responsibility for his decisions or their ongoing ramifications.
For five reasons, Geithner must go:

• Geithner was directly responsible for the most appalling corporate bailout in U.S. history, in which tens of billions of taxpayer dollars were secretly funneled to some of the richest corporations in the world. The terms of this bailout, and the associated cloak of secrecy under which it was conducted (the details of which continue to leak out) have hurt the public's confidence in the government.
• Geithner's ongoing decision to save banks at any cost was predicated on the theory that this would keep the banks lending. This policy has failed: The banks have not continued to lend. What the banks HAVE done is coin billions of dollars of profits risk-free at taxpayer expense, fueling even more public outrage.
• Geithner's policy of "too big to fail" has created a banking system whose bets are guaranteed by the US taxpayer, and it has distorted lending and market forces across the entire economy. This policy, which has now been all but written into the Constitution, is grossly unfair. Big banks can do whatever they want with no concern about the consequences; small banks have to hunker down or they'll get taken over and shut down.
• Geithner's role in the AIG bailout, which the current administration bears no responsibility for, continues to destroy confidence in his current boss, President Barack Obama. If AIG stays in the headlines, and Geithner does not accept responsibility for what happened. Obama's agenda and influence will continue to suffer.
• Geithner's consistent decision to put Wall Street first has helped fuel a populist rage that will make it very difficult for the government to do anything more to help the financial system. If the recovery continues, such help might never become necessary. If it falters, however, Geithner's policies will have severely curtailed the government's ability to do anything about it.

Those who know him say that Tim Geithner is a very good guy. He made the decisions above in the midst of a panic, and I have no doubt that he was trying to do the right thing.
But contrary to the revisionist history now being promulgated, these actions were not the only way out. They were grossly unfair to taxpayers, and they have undermined public confidence in the government -- and our current President -- at a time when the country needs it most.

Image by MyEyeSees via Flickr

You guys will not understand what is really going on here until you understand that the tarp loans to GS were just a red herring, a distraction. The real game is AIG, and all the money we pumped in that direction. Which then went to GS, and other firms. The PR people at GS tell us GS had the risk of AIG fallure hedged, but they should be made to prove that those counterparties would have paid 100 cents on the dollar. That is very doubtful, So the 12 or 13 billion GS got from AIG came directly from the taxpayers.
Second, GS has become a government sponsored entity, knowing they can walk into the financial casino, place their bets, and if they lose, the tax payer will cover them. How can the fail to make money?
Third, GS played a major role in creating the commodities supply panic of 2008, convincing everyone that they should pay $150 for oil today, so they don't have to pay $200 tomorrow.
But I doubt if anything will happen, because GS and the other Wall Street big financials are so tight with the financial press, there will never be good investigative journalism on this. Ask a financial reporter if he has any personal friends who work on Wall Street, and they will all say yes. Ask most New York and Washington based reporters in general if they have friends who work on Wall Street. Chuck Todd of NBC admitted as much several months ago, saying that "all of us have social friends on Wall Street, maybe if we all knew some autoworkers, we would look at each set of bailouts differently."
Then throw in the fact that Barney Frank is good friends with Henry Paulson....
Remember, Galleon is just the tip of the iceberg.
Justin, please find out where the AIG money went, and make them prove their other hedge counterparties could pay up. Because we also bailed them out.

randymiller

9

You know, these guys would be living in a different universe if so many members of the financial press weren't wearing clown shoes.
I quote Justin's coworker, after describing how Andrew Hall has his unit rent a tanker and take delivery of 1 million barrels of oil because he thought the price was temporarily low.
"When the price of oil recovered Hall made as much as $40 million on that one trade alone. "
Excuse me, but he would have had to make over $42 per barrel to both cover his costs and make $40 per barrell. I find that very improbable.
Does this idiot reporter know this to be the case? If so, he doesn't provide any evidence. Instead, he gushes on:
"Hall has also reportedly been buying gold this year. Another good move...."
But not a particularly innovative one, particularly when you are playing risk-free with other people's money backed by the government.
I don't have any problem with the idea that individuals can be worth a lot of money. I can name three whose companies I have dealt with and where the company's success clearly bears their imprint:
1. Bill Gates
2. John Chambers
3. Steve Jobs
Maybe Andrew Hall is one of these folks. Or maybe he's just a guy who engages in highly leveraged, high risk transactions with other people's money. Who knows?
What I can tell you definitely is that nobody will be able to make that determination more accurately because they read this idiot article in time.
http://www.time.com/time/business/article/0,8599,1930732,00.html
Small wonder that America's discussion of this issue approaches the overtly moronic.

tc125231

October 19, 2009

at 3:13 pm

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Read more: http://curiouscapitalist.blogs.time.com/2009/10/16/lloyd-blankfein-whats-good-for-goldman-sachs-is-good-for-america/#ixzz0bUw7MJPG

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Why is no-one calling this Enron instead of goldman sachs?

The Massive Ponzi Scheme at Goldman Sachs

Doug Heller

In what might as well be called a perfect ending to the year - and maybe a reasonable summation of the decade - McClatchy is reporting on newly revealed documents from Goldman Sachs that point to a massive ponzi scheme by the Wall Street titan. (Credit to Truthdig for putting it on our radar.) 
By now it's clear that Goldman played the Fed and Treasury like a fiddle to reap billions of dollars through the AIG bailout, but these new documents illustrate how Wall Street's bonus-machine also ripped off its own investors.  As Greg Gordon at McClatchy reports:

In some of these transactions, investors not only bought shaky securities backed by residential mortgages, but also took on the role of insurers by agreeing to pay Goldman and others massive sums if risky home loans nose-dived in value — as Goldman was effectively betting they would...

and

The documents obtained by McClatchy also reveal that:
--Goldman's Caymans deals were riddled with potential conflicts of interest, which Goldman disclosed deep in prospectuses that typically ran 200 pages or more. Goldman created the companies that oversaw the deals, selected many of the securities to be peddled, including mortgages it had securitized, and in several instances placed huge bets against similar loans.
--Despite Goldman's assertion that its top executives didn't decide to exit the risky mortgage securities market until December 2006, the documents indicate that Goldman secretly bet on a sharp housing downturn much earlier than that.
--Goldman pegged at least 11 of its Caymans deals in 2006 and 2007 on swaps tied in some cases to the performance of a bundle of securities that it neither owned nor sold, but used as markers to coax investors into covering its bets on a housing downturn...
[Financial Services consultant Gary] Kopff said, Goldman appears to have created "mini-AIGs in the Caymans," arranging for investors to post the money that would cover the bets up front.
Kopff charged that Goldman inserted the credit-default swaps into CDO deals "like a Trojan Horse — secret bets that the same types of bonds that they were selling to their clients would in fact fail."

It's an elaborate game of taking securities overseas and creating shells that look like legitimate, if complex, investment vehicles that Goldman knew couldn't sustain themselves and was privately betting to fail.  Except for that last part - the hedging against the products it was selling to investors - Goldman's scheme brings back memories of Enron's "partnerships."  But Goldman's twist, essentially betting on their investors to lose money, is what makes these revelations a scary capstone to the 2000s. 
A decade that began with the collosal failure of Enron's indescribably complex, greed-driven and self-destructive schemes that cost taxapyers and investors billions ended with revelations of Goldman's indescribably complex, greed-driven and hugely profitable schemes that cost taxpayers and investors billions. 
So is that it?  Is Wall Street's big lesson of the The decade of the Oughts that you ought a bet against the people you're telling to trust you?  You can't win just by suckering people to follow you down your perverted path; you also have to avoid being suckered by your own scam.

A little poetry...

What happens in an executive bathroom?

Shit happens. The only thing different for the executive is they will never be called to clean up their own shit. Results may vary for those down wind or down on the org chart. Irrelevant rant you say…see you tomorrow at the job you hate...cleaning up the shit of others because servitude is your fate.

Take back the streets, the communities, the hearts and minds of struggling and prosperous families…and not the White House and you take back America. A call for revolution is not a call for anarchy or physical violence, but a call for an end to the silence of the sheep at cliff’s edge. As for violence, by all means do slay apathy; do slay blind belief in the Gods of Wall Street and the mystical deities of Washington and other locations. Certainly, on Wall Street and in Washington there are people of sound heart and mind, pure motivation and clear intention of principle and real desire to transform service or professionalism into societal progress. Salute them for their efforts and acknowledge their uphill battle. It is easier to move a mountain than it is to change a corrupted heart and a co-opted mind. This is why change is hard. It has nothing to do with representative government or the lack of a parliamentary system, or the fact that people go to church and possess a centrist or moderate view. It remains a foundational issue.

 

 
It has nothing to do with a president of flesh and bone and brown skin tone. It has everything to do with definition of life as codified and practiced in policy and procedure and the strange habits of living creatures who line up for their own slaughter at the hands of those who could care less, share less, and who bear false witness concerning the attributes of trickle down and pull yourself up off of the ground after I knocked you down with the hidden hand and the wry sly smile. Look closely and you will see the tears of the clown who entertains and distracts. Stand up my people and take the country back. This is what Durbin meant when he said,

The banks “frankly own the place”
http://www.huffingtonpost.com/2009/04/29/dick-durbin-banks-frankly_n_193010.html

A veiled called to arms, but oh look at the time, hear the sounding of the alarm to march in time to the beat of fear. Don’t call in sick – get yer behind in here so that you can be underpaid and waylaid by my myopic march to greed. I will work you until you drop and when you are out of energy, I will ask you to leave, or I might ask before that. What is this we hear of manufacturing jobs gone for ever, never to come back, all while fools dip their crusty feet in the pools of million dollar retreats from reality?

 

  I'm a fan of this user Oh the banality of it all, the spectrum of defining color that emits from the fall of the hypocritical who blow once in an eternity opportunities to rise above the limitations of their fixation on self-interest. These dinosaurs of fabricated legend and lore are not the solution therefore they should not be the priority. Excuse me if I refuse to believe that the intelligent, the compassionate, the loving, the kind, the color blind patriot of this place called home is in the minority. There is no time like the present for a personal revolution. You do not even need to leave your home to have it, just decide that day by day you will become increasingly independent of that which does not love you. Such a mindset will separate friend from foe and servant from garden implement…more interested in amassig money they can never spend -- to the detriment of the nation.

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Goldman's secret moral pathology
15 symptoms of a Wall Street disease destroying democracy and capitalism

1. Gross denial of any moral damage caused by their rampant greed

Seeking Alpha: "Goldman is America's most hated corporation." We cheer as Rolling Stone's Matt Taibbi calls Goldman "a giant vampire squid wrapped around the face of humanity." Banks triggered a global crisis. Main Street suffers. Greedy bank CEOs raid the Treasury then stuff $30 billion in their bonus pockets, up 60% from last year. They are our 21st century General Motors, convinced "What's good for Goldman is good for America." We saw how that arrogance ended. Wall Street has similar suicidal symptoms.

2. Narcissistic egomaniacs with secret 'God complexes'

London Times' John Arlidge interviewed Goldman CEO Blankfein: "He paid himself $68 million in 2007, now worth more than $500 million, yet insists he's a blue-collar guy. He says banking has a 'social purpose,' just a banker 'doing God's work.'" When I was at Morgan Stanley in the 1970s the firm ran an ad: "If God Wanted To Do a Financing, He Would Call Morgan Stanley."

Today, all of Wall Street is dual diagnosed: They're morally blind money addicts who believe they're "God's chosen." AA would say: They haven't "bottomed," won't recover from their disease till a disaster hits, with another market meltdown and the "Great Depression 2." Then maybe they'll "quit playing God."

3. Paranoid obsessives about secrecy, guilt and non-disclosure

Bloomberg: "New York Fed's Secret Deal: Taxpayers paid $13 billion more than necessary when government officials, acting in secret, made deals with banks on AIG, buying $62 billion of credit-default swaps from AIG." The government would eventually cover about $180 billion in AIG swaps backing toxic CDOs when Paulson and Ben Bernanke double-teamed to bailout Goldman, saving them from bankruptcy.

4. Power-hungry need to control government using Trojan Horses

Wall Street Journal: "For a year Goldman said it wouldn't have suffered damage if AIG collapsed. But a new report kills that claim. TARP inspector general found that then New York Fed Chair Tim Geithner gave away the farm. If AIG had collapsed, Goldman would have had to cover the losses itself. They couldn't collect on the protection of AIG swaps." Yes, Goldman was bankrupt. But friends in high places always save them.

5. Borderline personalities who regularly ignore conflicts of interest

New York Times: "Before becoming Treasury secretary in 2006, Hank Paulson agreed to hold himself to a higher ethical standard than his predecessors. He specifically said he'd avoid his old buddies at Goldman where he was CEO. Later Congress saw many conflicts of interest, not just meetings but favorable treatment for his buddies at Goldman."

6. Pathological liars incapable of honesty even with own investors

McClatchy News: "Goldman secretly bet on the U.S. housing crash after peddling more than $40 billion of securities backed by 200,000 risky home mortgages. But they never told their investors they were also secretly betting that a drop in housing prices could wipe out the value of those securities." Paulson knew, stayed silent. "Only later did their investors discover Goldman's triple-A investments were junk. Did Goldman's failure to disclose its bets on an imminent housing crash violate securities laws?" Boston University Prof. Laurence Kotlikoff says: "This is fraud, should be prosecuted." But it won't be in the new "mutant capitalism."

Members of AA say you know when an alcoholic is lying: Their lips are moving. Same with Wall Street: Think liar's poker. It's in their DNA. They're compulsive liars trapped in a culture of secrecy. They lie, the lies cascade, memory slips, more lies are necessary, they cannot stop lying. Goldman sure can't ... look, their lips are moving again.

7. Sole fiduciary duty to insiders, not investors, never the public

New York Examiner: "Goldman was at the heart of the subprime market, selling subprime junk as no-risk AAA bonds, then gambling, hedging, shorting their investors. Goldman traded like Enron. That set up the meltdown. The Fed and Goldman's ex-CEO at Treasury saved Goldman. Taxpayers got stuck with the bill. Bailout overseer Elizabeth Warren called this reckless gambling. Trend forecaster Gerald Celente calls it mafia-style looting.

8. Moral issues are PR glitches, violations of 'don't get caught' rule

USA Today says "Goldman Sachs should be celebrating. Yet, the mood at the investment bank seems to be one of crisis about the public backlash over employees' bonuses." So Goldman's on a PR blitz in a bid to undo the damage. They canceled their Christmas party. Also launched a $500 million program for small businesses. Get it? They can't see their moral failings, only a PR problem, so they hire PR agents and crisis managers first.

9. Charitable donations are tax and PR opportunities, not moral issues

New York Times: Examined Goldman charitable foundation's tax filing: Thick as a phone book with more than 200 pages of trades. "Never seen anything like it," said Verne Sedlacek, president of Commonfund, a $25 billion fund for universities and nonprofits. The money to Goldman's foundation is dwarfed by insiders' bonuses. The foundation got $400 million, gave away $22 million. Bonuses were 20 times more. Even the New York Post said "Goldman's Born Again Image is Laughable." They're sleaze-ball cheapskates.

10. When exposed in a massive fraud, feign humility, fake an apology

CBS MoneyWatch: "Blankfein now says he's 'sorry for the role Goldman played in the housing crisis: We participated in things that were clearly wrong.'" Wrong? Sounds more like he's admitting to something "clearly criminal." Reread: Isn't he admitting guilt to a fraud; cheating millions of homeowners, shareholders, taxpayers? Then laughs at us with phony "restitution," a fund of $100 million annually for five years to small-business owners. Financial Times says "$100 million is the profits from one good trading day. In 3Q '09 they had 36 days better than that." Unfortunately, these crooks will get away with it.

11. When bankruptcy threatens, bribe friends in 'Happy Conspiracy'

Barron's: While Geithner was "showcasing what a great investment Washington made in Goldman, the 23% return on the $5 billion of the taxpayers money, Warren Buffett's deal made him a fabulous 120% return. Goldman's stock ran up to $180 from $115, a gain of $2.8 billion. Add 8% discount on warrants, another $3.2 billion to him."

12. Engage co-conspirators to cover up, distract, do your dirty work

Reuters: "Former Merrill Lynch CEO John Thain was fired after a scandal over the billions in Merrill bonuses. He says big insider bonuses don't cause excessive risk-taking nor the financial crisis." He blames "poor risk management, excessive leverage and too much liquidity for too long. But even if they tie bonuses to long-term performance, that won't prevent the next collapse." Why? They'll find new ways to break the moral code.

13. As money-hungry vultures they will prey on vulnerable Americans

McClatchy News: "An obscure Goldman subsidiary spent years buying hundreds of thousands of subprime mortgages, many from the more unsavory lenders. They repackaged them as high-yield bonds. The bottom fell out. Now, after years of refusing to disclose they owned the mortgages, the secret is out and Goldman has become one of America's biggest, greediest foreclosers." Yes, the vampire squid wants pounds of flesh.

14. Treat everyone not in the 'Happy Conspiracy' with tough love

HuffPost's Leo Leopold warns: "Each day reveals how we've traded away our sense of decency and the common good in exchange for pure greed. Unemployment means hunger. The Agriculture Department reports 49 million Americans don't have enough food, up 13 million over the last year, highest number ever." Wall Street treats anyone not in the "Happy Conspiracy" as morally defective capitalists in need of "tough love."

15. Addicts consumed by money: 'Jesus would throw them out ...'

New York Times' Maureen Dowd: "Goldman's trickle-down catechism isn't working. We have two economies. In the past decade Wall Street's shared little with society. Their culture is totally money-obsessed. There's always room for a bigger house, bigger boat. If not, you're falling behind. It's an addiction. And Washington's done little to quell it. Geithner coddles wanton bankers. Obama's absent. 'Saturday Night Live' was tougher. And as far as doing God's work: The bankers who took taxpayer money, pocketing obscene bonuses: They're the same greedy types Jesus threw out of the temple."

Warning: Washington, Main Street, none of us has "clean hands." We're all in bed with the "Happy Conspiracy," touched by greed, turning a blind eye to Wall Street's rapidly metastasizing moral and spiritual pathology: So ask yourself, do you believe America's widespread "lack of a moral compass" will eventually trigger another, bigger market and economic meltdown, pushing America into the next "Great Depression II?"

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This month the biggest Wall Street companies reported their quarterly earnings. JP Morgan Chase and Goldman Sachs reported bumper earnings, Citgroup and Bank of America, not so good. But if you leave out write downs on debt, everyone had a great quarter in their capital markets businesses. Billions have been budgeted for year end bonuses.

As could be expected, the issue of Wall Street compensation raised its head again. And this time there is the weight of the federal government behind it. Banks that have taken TARP money will see their executive compensation capped. And the Federal Reserve has suggested that all large banks that fall under its jurisdiction will be reviewed on on going basis to ensure that executive bonuses do not produce risk taking behavior that could put the banking system at risk.

There are several memes that get mixed up in any discussion about Wall Street compensation in the media. Add a lot of emotion from a distraught public and it becomes for a tangled mess where the media feeds the furore but there’s no real understanding of the underlying issues. Let’s see if we can parse the issues out.

These are the issues as they are played out in the media
- Issue #1 – The taxpayer bailed out Wall Street. How can they pay themselves these kinds of bonuses.
- Issue #2 – The rest of the country is going through agonizing pain – high unemployment, pay freezes and cuts – how can these people pay themselves what they do?
- Issue #3 – Their companies have been (and some still are) hemorrhaging cash. How can they pay their investment bankers so much?

I don’t think any of these issues merit any attention from lawmakers. #1 could be argued many ways but at the end of the day, if the bank has taken TARP money and hasn’t yet returned it, the federal government as shareholder with special rights, can do as it pleases. Politics dictates that compensation should be curbed and so it will be. #2 amounts to appealing to a cold corporation’s heart – a futile endeavor. #3 is the company’s call. They have a board and shareholders. If they think that they need to pay top dollar to retain talent, then that’s what they need to do.

In my mind there are two fundamental issues that need consideration. One, is related to risk increasing compensation practices. The second is a larger issue of high, untrammeled growth in the capital markets in the last two decades.

On the first issue, everyone agrees that Wall Street’s bonus bonanzas encourage traders and management to pile on the risk, collect their super size bonuses and when things turn south, leave the shareholders to pick up the pieces. And when things go really really bad, like what happened to the markets last year, let the federal government foot the bill.

What is not clear to me is why the shareholders just stand there and let this happen. The expectation that the bank is too big to fail and that the fed will bail you out, doesn’t explain it. If you were a shareholder in Citigroup and held the stock prior to the crash, even though you were bailed out, you probably lost your shirt on Citi.

I am not sure what the answer to this is. It could be that in the normal course of things, shareholders don’t really exert any influence on the board of the company. Election of board members and votes on CEO compensation, need to see a lot more vigor in the shareholder meetings, especially in the US.

Or it could be that shareholders think they’re smart and will be able to get out before the stuff hits the fan – a variant of what the trader or management thinks – except that the employee just loses her job, the shareholder his savings.

It could be that there isn’t enough disclosure. That Wall Street companies, on the pretext of not revealing proprietary information on trades and investments, is actually throwing a cloak on dodgy, heads-I-win-tails-you-lose schemes.

There could be other things going on that only behavioral economics can explain. Thinking that if everyone has been doing risky trades for so long then maybe its not that risky, is both irrational and perfectly natural.

Whatever, the reason behind it, this nexus between risk and compensation needs to be tackled head on. It is going to be a very tough problem. But not addressing it is not the answer.

The other question is also a big one. In the last two decades, the capital markets have grown much faster than the rest of the economy. The chart here shows that the profits in the US Financial sector went from about 15% of total corporate profits in 1998 to over 40% in 2007. When an industry grows at that pace, the competitive intensity is low and margins are high. The use of technology raises productivity further increasing margins. In the capital markets the only significant cost is the cost of people. When there is no or low downward pressure on prices, compensation has no place to go but up.

But is the ‘natural’ size of the industry as a share of GDP what it is today or what it was two decades ago? Can an industry that essentially allocates capital, and doesn’t really make anything, have such a large share of the GDP? Is there something in the laws of the land that make it so? For instance the credit rating industry, many say, is a creation of legislation and would not have existed at least in this twisted model of today, had it not been for an easy regulatory environment. Are there other such areas that would wilt in the face of an openly competitive field or lower entry barriers?

I don’t know the answers to these questions. But I do know that if the world has a problem with Wall Street traders, bankers and CEOs making tens of millions a year, not just in today’s recession, but beyond as well, we will need to look at taming the industry, not capping salaries. If that’s even possible at all.

Image by fsgm via Flickr

Companies that liberated themselves from the shackles of the TARP are feasting on low-interest rates and other government efforts to prop up markets—and they're partying like its 2007. Goldman Sachs is setting aside nearly $20 billion in compensation for employees this year—most of it for bonuses. Morgan Stanley set aside $5 billion for bonuses in the third quarter alone. Elizabeth Warren, who chairs the congressional panel overseeing the TARP, is aghast. "I don't understand that they don't think the world has changed in fundamental ways," she says. Asked earlier this year about the prospect of megabonuses at bailed-out Wall Street firms, President Obama said: "I'd like to think that people would feel a little remorse and feel embarrassed and would not get million-dollar or multimillion-dollar bonuses."

Shame? Self-awareness? Remorse? Come on: These are bankers we're talking about.
President Obama graduated from Harvard Law School, where Warren is on the faculty. But they'd have a better understanding of Wall Street had they spent time in Harvard's anthropology department. That's because bankers must be evaluated the way Margaret Mead approached the cultures she studied—as an insular tribe with its own mores, a society with long-accepted conventions that might strike outsiders as bizarre.
Just as Tiger Woods was placed on this earth to whack the dickens out of dimpled balls, Wall Streeters were placed on this planet to dispense and receive bonuses. Sure, firms trumpet their values. Goldman has 14 business principles, many of which could apply to a preschool. ("We stress creativity and imagination.") But betting on the direction of currencies and enriching the already rich is not a particularly edifying pursuit. Bankers toil like maniacs not because they like working in creative teams but because they like getting paid. Throughout December, tense dramas play out in office suites in Greenwich, Conn., and Manhattan as bonuses are negotiated. Traders and bankers plead their cases, threaten to leave, profess undying loyalty, and complain of betrayal. Imagine a telenovela by David Mamet—an all-male cast cursing passionately.
At most companies, bonuses are paid out of profits. No end-of-year profits, no bonuses. But on the island nation of Wall Street, they're paid out of revenues. Since the 1980s, notes Brad Hintz, an analyst at Sanford C. Bernstein, it's been the standard for half of revenues to be devoted to compensation. So long as these outfits were private partnerships, that practice didn't really matter to the rest of us. But since the 1990s, when investment banks went public, compensation has evolved into a zero-sum game between employees and shareholders. Guess who lost?
In normal industries, discretionary compensation would decline when companies suffer losses and their stocks crater. But most Wall Street firms still paid out bonuses in 2008, as shareholders and taxpayers suffered. Just as chickens can run around with their heads cut off, financial firms can pay bonuses even when they've essentially failed (AIG) or clocked massive losses (Merrill Lynch).
This year, compensation will again eat up something close to a majority of Wall Street's revenues. And while Goldman and Morgan Stanley have paid back their bailout funds, other large bonus dispensers still owe huge sums of money to the public. Every dollar they pay out in compensation is one fewer they can pay back the taxpayer. Wall Street's structure may have changed a great deal in the past year, but its culture has proved remarkably resistant to change. The recession didn't alter this custom. And neither will the public opprobrium, the disapproval of President Obama, or the threat of Federal Reserve oversight. Come December and January, we will continue to be shocked by the level of bonuses—and Wall Street will continue to be shocked that we're shocked.

Image by Getty Images via Daylife

Perhaps we need a new vocabulary, one that helps us describe a society that promotes the accumulation of vast riches, bails out the rich when they take too many chances, and avoids responsibility for the common good. Even Milton Friedman would have trouble calling that capitalism.

How about the Billionaire Bailout Society?

Here are its salient features:

1. We promote accumulation of vast fortunes without limits.
2. We shun progressive income taxes that could narrow the gap.
3. We keep most of finance deregulated even after it has collapsed so spectacularly.
4. We let the minimum wage atrophy.
5. We discourage unionization.
6. We let middle class jobs disappear.
7. We allow a revolving door between public office and high paying private sector jobs.
8. We let our public infrastructure deteriorate.
9. We belittle government and public service.
10. We promote private gain as the best way to promote the common good.
11. We force our children to pile up debt in order to get an education.
12. We live with a porous safety net.
13. We encourage health care to be a profit maximizing enterprise.
14. We allow institutions to become too big to fail.
15. We bail out the largest financial institutions when they do fail, even if that means transferring trillions to Wall Street.
16. We allow Wall Street to use its bailout money to lobby against the public interest.
17. We let Wall Street keep its bailout-created "profits" and bonuses.
18. We have no clue if the financial sector provides any real value to our economy.
19. We permit financial hucksters to buy up solid companies, load them up with debt, take the cash, and then drive them into the ground.
20. We bad-mouth as protectionist all efforts to keep jobs in this country.
21. We don't have any serious plan for returning to a full-employment economy.
22. We live in awe of billionaires.

Of course, it takes a billionaire to help us understand how the billionaire bailout society really works. Here's what George Soros said recently about Wall Street's latest profit binge:

"Those earnings are not the achievement of risk-takers. These are gifts, hidden gifts, from the government, so I don't think that those monies should be used to pay bonuses. There's a resentment which I think is justified." (Reuters)

Yes, there's resentment, but most of the action has come from the tea-baggers who are the foot soldiers for our new social order. Although the vast majority of Americans are upset about the financial casino, the bailouts and the loss of jobs, we need a progressive infrastructure to mobilize it. Perhaps the recent demonstrations at the American Bankers Association meetings in Chicago signal the start of labor and community mobilizations. It's long overdue.

It would be easy to give up. Apathy is Wall Street's best friend. But we've been here before. It took the populists several generations before they were able to bust the trusts when Teddy Roosevelt rode to office. It took decades of labor agitation and the organization of the Progressive movement before its ideas became the core of the New Deal. It took even longer for African-Americans to build a successful civil rights movement to end Jim Crow. We shouldn't expect it to be easy to build an alternative to the billionaire bailout society.

We drank the cool aid of deregulated markets and private gain as supreme values. We got drunk on its bubbles until they burst. Now we're bailing out the super-wealthy while 29 million of us need work.

Turning that around is going to take hard work and planning for the long haul. It's going to take years of education and organizational development. Twitter is a great tool, but it can't substitute for organizational structures. Most of all, it's going to take a new vision that focuses on the common good, on what ties us together, on something more precious than private gain.

What does that mean? Imagine what we could do if we had the courage to institute steep progressive taxes. Today, the top 400 wealthiest Americans have a combined net worth of about $1.5 trillion. Had progressive taxes reduced their wealth to "only" $100 million each, we would be able to endow every public college and university, two-year, four-year and graduate school, so that all of our children could go to school free, in perpetuity.

Wouldn't that be worth it?

Image by Getty Images via Daylife

ATTN: Employees of Goldman Sachs

We did it. Bottom of the ninth, down by three, bases loaded, and we cranked another grand slam to the moon. They may have shot Lennon, but nothing can kill the Beatles.

I admit things looked bleak for a minute there. We had to convert to a bank holding company and were forced to accept a taxpayer bailout. It felt un-American. Terribly unbanksmanly. But we accepted the money, knowing that we could magically weave it into a much larger mountain of money.

We had a few hard months there, didn’t we? They regulated our corporate jet so that we could no longer use it to fly from hole to hole on the green. Dave had to drain his money pool to half capacity. I stopped injecting gold into my blood. They don’t call it a recession for nothing. One day, we’ll look back on the year we received only five-figure bonuses and laugh.

Wanting to celebrate our renewed success is natural, but it’s important that we don’t go crazy here. Remember, ten per cent of the non-bank country is unemployed, and even those who are working have “real” jobs, where payment is proportional to the creation of a “product” or a “service.” Those poor bastards. So I ask that, in celebrating our raping of the stock market, we show restraint in the following ways:

    * Please limit high-fives and chest bumps to a dozen a day.
    * Don’t wear your crowns, except around the office.
    * Stop paying for things in Monopoly money—I understand it is the same as real money to us, but there have been some complaints.
    * For now, let’s take down the giant scoreboard that reads “Main Street: zero. Wall Street: a billion gazillion bajillion.”

Furthermore, to avoid drawing criticism from the press, this year the bonuses, expected to be comically large, will be distributed in blood diamonds, which can be easily concealed in a briefcase so it looks like we’re working.

I’d like to thank everyone who made this possible—for a second time. Respect to President Obama for keeping us in the green. Thanks to the big guy upstairs (me). And let’s not forget all the ordinary Americans, who, for some unfathomable reason, have refused to put us behind bars. We are literally taking money out of their wallets. Seriously, with these returns we are making Madoff look like a little kid with his hand caught in the cookie jar. Amateur!

Yours in money,

Lloyd Blankfein, C.E.O., Goldman Sachs

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Wall Street is about to learn an overdue lesson in humility.

A year removed from the global economic crisis they created, executives of the financial companies responsible have yet to disassociate themselves of the notion they deserve the obscene sums they pay themselves.

Do they make anything of value?
Do they contribute anything tangible to society?

Do they heal the sick or comfort the afflicted?

The answers, of course, are no, no and no. They simply move money from one place to another and take a cut. Yet even after being bailed out by U.S. taxpayers who will shoulder the bill for years to come, the delusional titans of Citigroup, Bank of America, AIG and their brethren believed they were still deserving of stipends that would make a king blush.

No more.

On Wednesday, a frustrated Obama administration indicated it will cap pay to the chief executives of companies the Treasury rescued last year.

According to the New York Times, details of the plan will be divulged over the next few days, but the seven companies that received the most TARP money will have to learn to live much more modestly. The 25 best-paid executives, the Times said, will be paid up to 90 percent less than last year. In fact, no top executive will receive more than $200,000 in total compensation.

It's about time.

But, as the infomercials say, there's more.

Any executive who wants more than $25,000 in special benefits -- think country clubs, private planes and limousines -- first will have to get government permission.

Obviously, Wall Street failed to understand Americans had had enough.

While the bankers who hatched the financial shenanigans in lower Manhattan continued to pocket paychecks in the tens of millions, ordinary Americans bailing them out were being handed pink slips as a consequence of the economic train wreck.

Yes, the bailout was necessary. Without it, the economy would have buckled. Unfortunately, it came with too little oversight. Even as they took billions in TARP money, executives whined that their substantial payment packages were necessary to keep them in their plush offices. Bewildered Americans asked why, but the Bush administration acquiesced.

Now, a year later, those who thought they were too big to fail are going to have to answer to those who were too small to save.

We the people have to do two things:

-- disengage from corporate America, no more Walmart, no Chinese goods, no big banks, no Wall Street 401k investments. Buy things from your neighbors, trade, barter, reuse, re-purpose anything that can be made to work again. Find the community banks and credit unions and start moving your business there. Buy local food, no imports.

-- vote out all incumbents in all offices from the local to state to national level. They have ceased to work for the taxpayer, they are owned and operated by business interests. Getting elected has become an industry that has perverted the process of running for office.

If we do not rise up and walk away, we will be diminished serfs in a modern version of feudalism.

Our children will not be proud of us.
Our freedom is at stake here, a freedom that the wealthy elites have not wanted bestowed on us for hundreds of years. If there is a chance to squash this grand experiment called the United States of America and the freedom that the middle class and lower class have enjoyed during its brief existence, I fear that they will make that move.

Read more at: http://www.huffingtonpost.com/robert-l-borosage/where-will-the-jobs-come_b_328022.html

Who are these people?
I am not referring to the pathetic parents of "Balloon Boy," whose fake drama I have been unable to escape while on the treadmill this week, thanks to my gym's insistence on tuning its flat-screen TVs to Wolf Blitzer's nonstop self-parody.
The Colorado incident was significant only in the tawdriness of those who perpetrated the made-for-TV scam and their allies in the mindless media who covered this sham "reality" so relentlessly. But even so it was enough to push aside most consideration of the true hoax reported last week with far less fervor: the obscene rewards that Wall Street bankers bestowed upon themselves for ripping off our economy.
The people I want to know more about are the superrich who expect to be rewarded for their failures, like the folks at Goldman Sachs who will receive $16.71 billion in bonuses--an average of $530,000 per employee--this year after their company did as much as any to bring the world economy to the brink of disaster.
"The Guys from Goldman Sachs" is what The New York Times once called them in recognition of their chokehold on the federal government. Their power is marked by the two treasury secretaries who led the fight to legally enable and then reward Wall Street for its obscene excesses. Why wasn't there a CNN stakeout at the homes of former Goldman-execs-turned-treasury-chiefs Robert Rubin and Henry Paulson aimed at finding out how they feel about the almost $7 billion profit that Goldman Sachs made in the last two quarters in the wake of the government's bailout of the firm?
They were both deeply involved last fall, along with Rubin protégé and current Treasury Secretary Timothy Geithner, then head of the New York Fed, in saving Goldman as archrival Lehman Brothers was forced to go belly up. As opposed to Lehman, Goldman was allowed to change its status and become a commercial bank qualifying for Federal Reserve and TARP funding. Goldman received $10 billion in immediate bailout funds, and we are supposed to be grateful that the company has paid it back in return for an end to any pretense of government control over its executive compensation. The additional cool $12.9 billion that Goldman received from the government as a pass-through from the bailout of AIG to cover Goldman's toxic paper is money the investment bank has no intention of ever paying back.
The rationale for saving Goldman and the other too-big-to-fail usurers was that the rescue would increase lending to businesses and consumers and thus revive the economy. But Goldman made money last quarter by shunning such loans and instead putting the government-guaranteed low-interest money it now can borrow toward acquisitions and bond and stock trading. As The New York Times reported: "Titans like Goldman Sachs and JPMorgan Chase are making fortunes in hot areas like trading stocks and bonds, rather than the ho-hum business of lending people money."
Under the headline "Bailout Helps Fuel a New Era of Wall Street Wealth," Times reporter Graham Bowley detailed many of the enabling favors that the government, under two presidents, extended to Goldman, like clearing the way for the company to issue bonds guaranteed by the FDIC. "It may come as a surprise that one of the most powerful forces driving the resurgence on Wall Street," the Times reported, "is not the banks but Washington. Many of the steps that policy makers took last year to stabilize the financial system--reducing interest rates to near zero, bolstering big banks with taxpayer money, guaranteeing billions of dollars of financial institution debts--helped set the stage for this new era of Wall Street wealth."
It should not come as a surprise to Timothy Geithner, who, as The Wall Street Journal reported last week, talks to the honchos of Goldman more often than to members of Congress ostensibly in charge of banking legislation. Nor will it shock the lobbyists for Wall Street--augmented, as The Nation reported last week, by the pro-Goldman efforts of former Democratic congressman and faux populist Dick Gephardt--that the rich will emerge richer from this deep recession in which so many Americans have lost everything. The die is cast: People working in finance grabbed two-thirds of the growth in GDP, with the rest of us scrambling for the other third.
Nor will the situation change anytime soon. The House Financial Services Committee is in charge of writing new rules to protect consumers, but as the respected Sunlight Foundation reports, 27 of the 71 members of that committee receive at least one-fourth of their campaign funds from the financial industry, with the rest of the committee members not far behind.
Now if we could get one of the banking lobbyists to float a duct-taped flying saucer balloon, Wolf Blitzer might cover the real hoax.

Read more at: http://www.huffingtonpost.com/robert-scheer/zooming-in-on-the-years-b_b_328174.html