Goldman Sachs Again; Worse, Worser, Worst, and Proud of Themselves!

I try to get out and they pull me right back in again.
Its really the fault of my Google Reader, which used to start with the tech blogs, but for some reason turned itself around and is feeding me the dreaded news instead of restaurant reviews round my town, or chicken keeping, or the new liver in Steve Jobs (medical meets tech!) I'm trying to get off of this thing, really I am, but here I am again at Goldman Sachs via Taibbi from the end of last week. This is just more that you gotta know, because the truth about Goldman Sachs is gonna come out...or maybe not in any way that people will actually take it in....but you still need to know. So, Taibblog pointed me to an article in the NY Times Business section this past week, and then Matt explained it to me like this:

Apparently Goldman is repaying it's 10 bil in bailout money (does that include, by the way, the money funneled to it by AIG?) and the Chief Executive, Lloyd Blankfein, felt that he should say a few words to "leading Congressional lawmakers."

Honestly, Some people just don't know when to just shut up and accept their biggest bonus in the history of time! Here is the beef of what Blankfein said:

Goldman had “an explicit contract with our shareholders to be responsible stewards of their capital.”

“While we regret that we participated in the market euphoria and failed to raise a responsible voice, we are proud of the way our firm managed the risk it assumed on behalf of our clients before and during the financial crisis,” ....

To which Taibbi replies:

Really, Lloyd? You “participated” in the market euphoria? You didn’t, I don’t know, cause the market euphoria? By almost any measurement, Goldman was a central, leading player in the subprime housing bubble story.

-snip- in which its clear that Goldman dealt in and encouraged every bit as much of the same shit as AIG and the rest...

Let’s be clear about what that meant. These crap/sham mortgages, a lot of them adjustable-rate deals with teaser rates that featured sudden rate hikes two or three years after closing, they would never have been possible had not someone devised a method for selling them off to secondary buyers. No local bank is going to keep millions of dollars worth of Alt-A mortgages on its books, because no sensible company lends out money to very risky customers and actually keeps those loans on its balance sheet.

So this system depended almost entirely on banks like Goldman finding ways to securitize these instruments, ie chop the mortgages up into little bits, repackage them as mortgage-backed securities like CDOs and CMOs, and sell them to unsuspecting customers on the secondary market, most of them large institutional buyers like pensions and insurance companies and workers’ unions, many of them foreigners. Most of those customers were snookered into buying this stuff because they had no idea what it was: in the case of pensions and unions particularly, a lot of these customers only bought this crap because the peculiar alchemy banks like Goldman used in devising their mortgage-backed securities made radioactive mortgages look like AAA-rated investments.

So, they created, pumped up and sold the same bundled bad debts as the others did, and on the name of Goldman, but there is a difference that Taibbi points out about the part where Blankfein is proud of how the firm handled it's customer's investments:

...what is particularly obnoxious about this phrase is that Goldman is bragging about the fact that it actually made money while it was pumping the economy full of explosive leverage. While companies like Lehman and Bear were dumb enough to actually eat their own rat meat, Goldman knew what it was doing and was careful to bet against the same stuff it was selling, which makes its behavior many times worse than that of other banks, not better.

He then goes on to let slip that he goes into this more in the upcoming issue of Rolling Stone. I don't have to say here that I will be waiting for that one in my mailbox and that I know what I'm gonna be reading 2 or 3 times in the upcoming weeks! Thanks Matt!

Brilliant at Breakfast

Goldman Sachs Best Quarter Ever Means its now time for The Biggest Bonuses Ever!!

For those of you that were losing sleep worrying about the top earners at Goldman Sachs, you can relax your little minds. According to the Guardian, Goldman will be handing out record bonuses; the largest bonuses in its 140 year history! And you know why?

Well apparently Goldman has done really, really well in it's first half, and that's due to...are you ready?..."lack of competition!" Oh, there is a surge of trading foreign bonds, and whatever else they've decided to package and trade back and forth to each other in a continuation of the most deceptive ponzi scheme ever. And then, of course, the bonus structure was changed at the end of last year which made it look like they saved money; but, what they really did was to stop allowing their "talent" to take the money and run at bonus time. In other words, the stock and cash bonuses that used to be liquidly available at bonus time, now take time to ...er..."vest." So, if I'm reading http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=ao5_D4S6Zgdw correctly, the 2008 awards don't really become fully available until the end of 2009, thus creating a bullshit scenario where everything is rosy, and so we can do it again, but this time bigger!! You get that? This is when you need Taibbi to 'splain things ( especially because I haven't mentioned his fantabulous Rolling Stone article that barely scratches the surface of this mess, in a long time. And you know what? It holds up well to a couple of months of more ponzi, if you want a window into the foundational non-rules of this game.)

When last we saw Goldman Sachs and their Chiefs, it was Christmas time 2008, and they were giving up their bonuses as some attempt to distinguish themselves from their brethren (what I envision as tentacles,) in just about every area of the financial world. The big question back then was would the rest of the big financial firms follow suit, and also could top "talent" be retained without huge bonuses?


The Wall Street Journal explained it thusly:

The decision at Goldman doesn't mean everyone at the firm will go home empty-handed. The firm still has to reward its roughly 30,000 employees. Distinctions are being made between the highest-ranking executives and lower-level traders and investment bankers, according to people familiar with the matter. Many of these employees performed well in 2008 despite the market turmoil, these people say, but could get plucked away by rival firms if compensation practices are significantly altered.

and

The move on the part of Goldman's top executives is expected to set the tone for the rest of Wall Street, where bonuses are typically many times bigger than base salaries. At many financial firms, about half of all revenue is allocated to compensation, and multimillion-dollar bonuses are routinely paid out to ensure the best talent stays put. Top traders and bankers on Wall Street typically make a base salary of about $250,000, with the rest coming as a bonus. Employees tend to get their bonus numbers in the first two weeks of December -- with the cash coming early in the New Year.

And isn't it a kick that the huge fight over the roll back in Bush's tax cuts for this top tier of earners was about what turns out to be just their base salaries?! I don't know why that strikes me as disgusting, but back then, those who earned over a quarter mil were willing to go to the mat to save a few thousand dollars of that at the expense of their fellow Americans whose houses were/are being foreclosed upon, and people who's lives were basically in the toilet, largely because of the ponzi schemes that these very characters cooked up! And, yes, the salaries that these folks make are contracted with the bonuses in mind, so I suppose you cant just tear away a percentage of what they expected to earn. Its just that all of this talk of contracts and retention of employees makes me think of the fact that every time any American puts a deposit into their 401.k or even their bank account, (remember the super money market with the .02% interest,) they have a contract with those "talents" who move this paper around the globe with the promise of a tiny percentage getting shaken down to the savers. Isn't the deal that they get to use our money, even overnight, to make a huge profit putting it somewhere, and so we get a penny in our own tin cup, or cat-food can, as the case may be?

So, while Goldman is patting itself on the back for this rock and roll first half, and making sure that no real laws were broken and that everyone gets their cut of the profits, I wonder if someone might look at the contract that the entire industry might have had with us. That really should go even beyond the little loans that we floated to keep these fuckers alive. Maybe somebody could look at how it's possible for the top chiefs and the "retained talents" to walk away with the biggest fucking bonuses in 140 years while everyone I know has lost their retirement savings! Oh, its because that other guy did it, right? Like AIG? Was it bad old AIG? How come they passed most of their bailout money directly to Goldman? How did that work?

Hey, that's capitalism and the free market for ya! I may not know much about the ins and outs of this shit, but I know when I've been railroaded. These top financial institutions took our trust and in a global way raped the system. They threw back some crumbs last Christmas to try to look all sorry like, and now they are back at it.

If these firms are all in bed with each other and banks are insurance co's are brokerages, then no one should be paying huge bonuses until the entire thing is regulated fairly. President Obama just can't make new laws that fast, and the quarter mil club has too strong a lobby...and, honestly, I don't know if Obama really wants to completely overhaul this anyway, because that would amount to the S-word....and we all know that if we go down that path we may end up with single payer health care and the whole package! What would that be like?

So, all you independent and free Americans out there, be happy that the government isn't allowed to put its hand in your pocket and its rules in your bedrooms, (some of the time,) its cameras on your street corners and its taps on your phone lines, (some of the time,) because these guys removed your pocket stitching while you were busy being all free out there on the range with Bush, and the money already poured out the other end.

Brilliant at Breakfast

Taibbi Again: Hank Paulson is a Prick Who Took Down the Economy...

Ah the dulcet tones of truth...There is something about digging to the bottom of this shit hole, unraveling the lies, and getting to the horrible truth, that gets me all tingly like Tweety. If he didn't remind me so much of a certain kid in high school who had way too much gangly, explosive energy, I might be in love with this guy, (Taibbi, not Paulson!) But here we are again; Alternet, June 9th:

"Hank Paulson is a national hero. I said it last October and I'm sticking by it. And now, there's actual evidence to back me up. The TARP bailout worked. The Wall Street crisis is over." -- by Evan Newmark from "Mean Street: It's Time to Enshrine Hank Paulson as National Hero" -- Wall Street Journal.

So here's the letter I wrote to the Wall Street Journal after reading Evan Newmark's paean to Hank Paulson last week:

Dear WSJ,

Just out of curiosity -- did Evan Newmark ever work for Goldman, Sachs? And if the answer to the question is yes, don't you think that might have been a good fact to disclose before he fellated Hank Paulson in his "Mean Street" column?

Sincerely,
Matt Taibbi

Can you imagine what a craven, bumlicking ass-goblin you'd have to be to get a job working for the Wall Street Journal, not mention up front that you used to be a Goldman, Sachs managing director, and then write a lengthy article calling your former boss a "national hero" -- in the middle of a sweeping financial crisis, one in which half the world is in a panic and the unemployment rate just hit a 25-year high? Behavior like this, you usually don't see it outside prison trusties who spend their evenings shining the guards' boots. I can't even think of a political press secretary who would sink that low. Hank Paulson, a hero? Are you fucking kidding us?

I wonder if the WSJ is gonna print that little missive?
Im not saying that Taibbi is just the the kind of angry crank that I like, because you know that there is a certain type of angry crank that gets me all weak in the knees; I'm saying that he knows whereof he speaks, and as much as I disagree with him on certain issues, (Elliot Spitzer, for one, and I almost cried when he said that on Maher a few weeks ago...as if anyone could understand the ins and outs of complex economics and crime!...we cant all be YOU, Matt!) But seriously, I cant say enough about his depth of knowledge about this thing and how, again, his Rolling Stone article, The Big Takeover, is a must-read, if you read nothing else about what went into the financial crisis that we're right now suffering through.

Its just too bad that Ive got to run, because I've got more to say on this. But, Taibbi sums it all up pretty nicely in his succinct way:

Even if it weren't about five years too early to make any kind of judgment at all about whether or not TARP helped, the notion that Henry Paulson is a hero is complete and utter madness because TARP would never have been necessary if someone, anyone who wasn't a greed-addled incompetent like Paulson had actually been regulating the economy in the last years of the Bush administration. If anyone besides Paulson had been running Goldman Sachs earlier in this decade -- if a person with a serious brain injury had been in his place, for instance, or a horse, or a head of lettuce -- we'd all be better off today, because there wouldn't be so many toxic Goldman-underwritten mortgage-backed CDOs on the market.

Fuck, yeah! Now, can we start investigating these assholes and maybe even put some of them in jail?

c/p Brilliant at Breakfast

Ex-SEC Chairman to Advise Goldman Sachs; Whats Wrong With This Picture?

In another slide from what Matt Taibbi calls "protocapitalist buddhism: the endless life-cycle," Goldman Sachs announced this week that ex-SEC chairman, Arthur Levitt was being hired as advisor on public policy issues, whatever that is; according to a press release by Goldman Sachs, it has something to do with “strategic advice to the firm on a range of matters.” OK. He is also a senior adviser to the Carlyle Group; enough said.

If there is no conflict of interest in this cluster-fuck that we call the financial services industry, then I don't know what planet I'm on anymore. It' getting very hard to keep track of the reshuffling going on in the ashes of the crash, but this should be illegal. These guys just keep turning up like some sorta bad pennies.

I couldn't say it better than Matt, but, honestly, it is completely, utterly,unbelievable that Goldman Sachs is hiring the very guy who oversaw the Financial Services Modernization Act and the Commodity Futures Modernization Act. Since he is responsible for teaching me the gory details of this via his must-read, Rolling Stone article, which I had to go-over, like, 3 times before I found myself mindlessly spewing the information to my son in the car, I'll have to refer you over to him for the ramifications of our leadership and our society not looking hard at where these guys are landing...of course, it could be that this suits the leadership just fine. As the man said then, "we're officially, royally fucked," ....Still.


c/p Brilliant at Breakfast