Tag Archives: Corruption

Does Goldman Sachs Rule the World?

I found these great excerpts along with commentary at washingtonsblog.com.

“The New York Times points out that Goldman alums include:

* Former treasury secretary Hank Paulson
* Paulson’s bailout chief Neel Kashkari
* Interim Treasury investment officer Reuben Jeffrey
* Key Treasury players Dan Jester, Steve Shafran, Edward C. Forst, and Robert K. Steel
* Key New York Federal Reserve players Stephen Friedman (head of the New York Fed board of governors) , William C. Dudley (head of the New York Fed’s unit that buys and sells government securities), and E. Gerald Corrigan (charged with convening a group to analyze risk on Wall Street)

(And there are many more Goldman alums who have been – or are soon to be – appointed. For example, Obama has named Gary Gensler to head the Commodity Futures Trading Commission.) . . .

Here is just one random item this week announcing a couple of standard personnel moves:

Former Barney Frank staffer now top Goldman Sachs lobbyist

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.

But that doesn’t mean that Goldman has engaged in any self-dealing, does it?

Well, as Time magazine notes:

Among the biggest beneficiaries of the AIG pass-through, at $12.9 billion, was Goldman Sachs, the investment-banking house that has been the single largest supplier of financial talent to the government. Critics have been quick to note — and not favorably — the almost uncanny influence of former Goldman executives. Initial phases of the rescue were orchestrated by ex–Goldman chairman Hank Paulson, who was recruited as Treasury Secretary in part by former White House chief of staff and Goldman senior exec Josh Bolten. Goldman’s current boss, Lloyd Blankfein, was invited to participate in meetings with the Fed. AIG’s Liddy is a former Goldman director and an ex-CEO of Allstate. Another alum, Mark Patterson, once a Goldman lobbyist, serves as chief of staff at the Treasury, while Neel Kashkari, who runs TARP, was a Goldman vice president.

“

Biden Son and Brother Near Epicenter of Two Ponzi Schemes

“It’s now public, Francesco Rusciano of Ponta Negra has formally had his assets frozen by a Federal Judge at the request of the SEC.

‘Rusciano went to great lengths to deceive investors, and the SEC is committed to ensuring that money managers who provide inaccurate information to investors and fail to uphold their fiduciary duties are held responsible for their misconduct,’ said Rose Romero, Director of the SEC’s Fort Worth Regional Office.

Back in March, as a blind item, I reported that this was likely to come down:

Very Suspicious Trading…

…coming out of a New York based hedge fund. They report no monthly losses in two years of currency trading. Such perfecto trading has not been seen since Hillary Clinton did it in cattle futures.

They appear to have offices, or at least a mailing address, on Fifth Avenue in a building once owned by the Shah of Iran’s Pahlavi Foundation. Notorious tenants have included: Marc Rich and Ivan Boesky, though there is zero indication that they have any involvement in what appears to be a Ponzi Scheme.

This one is about to break wide open.

What I didn’t know at the time was that the vice-president’s son and brother are playing cameo roles in this saga. . . .” (Read more from economicpolicyjournal.com)

Argentina’s Economic Collapse

part 1 of 12:

The images of this mass uprising are downright inspiring. I fear our own government would be much better at splintering any such uprising. Much like our military studies ethnic, political, and social divides in countries we invade, similar knowledge would be used to fragment any domestic opposition to the U.S.S.A. Think of how tea party activists were labeled racist by several newsy shows.

part 2 of 12:

Pay attention to the part about mass debt being a source of impoverishment and corruption, and also of wealth for the financiers. The talk of “endless debt” ought to sound chillingly familiar to us in Amerika.

part 3 of 12:

I will point out, the crime is not inherent to the free market. It occurs when government colludes with business. The parts about nationalizing a tyrrant’s debt, and the case of the Royal Bank of Canada vs. Cost Rica are fascinating.

part 4 of 12:

Carl Saul Menem and his cult of followers is just like Obama. This is why it’s important to believe in principles first (non-intervention, sound money, the Constitution), in people second (Obama), and in phrases never ( “change” / “yes we can” ).

Goldman Sachs Smells Rotten (again)

“Nouriel Roubini wrote in March that Goldman Sachs was insolvent:

So for the Treasury to hide behind the “systemic risk” excuse to fork out another $30 billion to AIG is a polite way to say that without such a bailout (and another half-dozen government bailout programs such as TAF, TSLF, PDCF, TARP, TALF and a program that allowed $170 billion of additional debt borrowing by banks and other broker-dealers, with a full government guarantee), Goldman Sachs and every other broker-dealer and major U.S. bank would already be fully insolvent today.

Yet Goldman reported a $1.7 billion dollar profit for last quarter.

How did Goldman do it?

Well, as Floyd Norris – chief financial correspondent for the New York Times – explains, Goldman simply didn’t report results for December 2008, a month in which it took huge write-downs.

Its easy to look profitable when you can cook the books . . .” (Read more from washingtonsblog.com)

Business–Government Collusion

By Eric-Charles Banfield • February 1995

“Back when first cutting my teeth on the concepts of free-market economics, I was impressed by the argument that business firms have to satisfy their customers to survive. Firms have strong, natural disincentives against performing poorly or acting immorally because they would risk losing customers and going out of business. For some time thereafter, I defended ‘business’ on those grounds. Business is not an evil, I argued; indeed, businesses are almost ‘slaves’ to the shifting and elusive passions of the sovereign consumer.

But over the years, I found myself forced to refine my views regarding business firms. Three lessons stand out. First, being ‘pro-business’ is not the same as being ‘free-market.’ Second, regulation, which presumably works ‘against’ business, goes hand-in-hand with special privileges and artificial protections ‘for’ business. Third, the phenomenon of active and routine collusion between business and government made the business world seem less than the pure and benevolent social agent I once perceived. In short, I began to recognize that the concept of ‘the corporate welfare state’ goes a long way to describe some of the problems we observe in the complex nexus between the market sector and the government sector. All too often, businesses lobby government for special privileges they would not have in a true, free market.” (Read more from thefreemanonline.org)

The worst thing that might come from this crises is a loss of faith in free markets because of business-government collusion.

Treasury won’t disclose bank bailout details to congressional monitor

“But ‘without a clearer explanation’ about parts of the program, ‘it is not possible to exercise meaningful oversight over Treasury’s actions,’ said Elizabeth Warren, a Harvard Law School professor who leads a special congressional oversight panel monitoring the TARP program. Her comments came in a Senate Finance Committee hearing on the bailout program.” (Read more from mcclatchydc.com)

Of course government can’t regulate Wall Street. Instead of giving them our money, just let them fail! The best (only) way to regulate Wall Street, is to expose banks to the consequences of their irresponsibility. The irresponsible/incompetent ones go bankrupt. Instead we’ve taken money from the competent and given it to the incompetent.

Obama’s Economic Advisor

“Mr. Summers, the former Treasury secretary and Harvard president who is now the chief economic adviser to President Obama, earned nearly $5.2 million in just the last of his two years at one of the world’s largest funds, according to financial records released Friday by the White House.

Impressive as that might sound, it is all the more considering that Mr. Summers worked there just one day a week.” (Read more from nytimes.com)

The crooks are in charge.

Did Goldman Goose Oil?

“When oil prices spiked last summer to $147 a barrel, the biggest corporate casualty was oil pipeline giant Semgroup Holdings, a $14 billion (sales) private firm in Tulsa, Okla. It had racked up $2.4 billion in trading losses betting that oil prices would go down, including $290 million in accounts personally managed by then chief executive Thomas Kivisto. . . .

But now some of the people involved in cleaning up the financial mess are suggesting that Semgroup’s collapse was more than just bad judgment and worse timing. There is evidence of a malevolent hand at work: oil price manipulation by traders orchestrating a short squeeze to push up the price of West Texas Intermediate crude to the point that it would generate fatal losses in Semgroup’s accounts. . . .

What’s the evidence of this? Much is circumstantial. Proving oil-trading manipulation is difficult. But numerous people familiar with the events insist that Citibank, Merrill Lynch and especially Goldman Sachs had knowledge about Semgroup’s trading positions from their vetting of an ill-fated $1.5 billion private placement deal last spring. “Nothing’s been proven, but if somebody has your book and knows every trade, it would not be difficult to bet against that book and put the company into a tremendous liquidity squeeze,” says John Tucker, who is representing Kivisto.

What’s known for sure is that Goldman Sachs, through J. Aron & Co., its commodities trading arm, was in prime position to use such data–and profited handsomely from Semgroup’s fall. J. Aron was Semgroup’s biggest counterparty, trading both physical oil flowing through pipelines and paper oil, in the form of options and futures.” (Read more from forbes.com)

Obama Administration Seeks to Help Wall Street Circumvent the Executive Pay Restrictions

Well, that didn’t take long at all.

Yesterday: “Pledging to take ‘the air out of golden parachutes,’ President Obama announced Wednesday that executives of companies receiving federal bailout money will have their pay capped at $500,000 under a revised financial compensation plan.”

Today: “The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.”

(Read more from propagandadetox.blogspot.com)

What do you say to that, Obamaniacs?

The Palestinian Archipelago

“Maybe posting the full map would help to take it for what it is, i.e. an illustration of the West Bank’s ongoing fragmentation based on the (originally temporary) A/B/C zoning which came out of the Oslo process, still valid until now. To make things clear, areas ‘under water’ strictly reflect C zones, plus the East Jerusalem area, i.e. areas that have officially remained under full Israeli control and occupation following the Agreements. These include all Israeli settlements and outposts as well as Palestinian populated areas.”

Shouldn’t we be talking about Palestine’s right to exist?

Yet Another Obama Apointee Doesn’t Pay Taxes

Obama’s court: “Taxes are for commoners.”

Add Sebelius to list of Obama Cabinet picks with tax troubles

“President Obama’s second choice to lead Health and Human Services said she’s paid nearly $8,000 for ‘unintentional’ tax errors. . . . The list of nominees with tax trouble includes Treasury Secretary Tim Geithner and former Sen. Tom Daschle, who was Obama’s first choice for HHS and withdrew after disclosing that he paid $140,000 in back taxes and interest. Neither Sebelius nor the White House issued a comment.” (Read more from miamiherald.com)

Hidden History: Post Office sues Cub Scouts to maintain monopoly

“The Postal Service has faced repeated challenges from more competent private companies and has responded with one legal counterattack after another.

In 1971, a federal district court prohibited a private firm from carrying Christmas cards in Oklahoma on the basis that the plaintiffs, a postal employees union, suffered ‘significant loss of work time, overtime, employment benefits. . and morale.’ The court concluded that private delivery of Christmas cards would be a ‘widespread public nuisance.’ The result was that the public suffered slower service and higher costs to support postal workers’ ‘morale.’

In 1976 in New York, a pack of Cub Scouts tried to raise money by delivering Christmas cards: Postal Service lawyers ordered them to stop, and threatened the ten-year-olds with a $76,500 fine. A New York Times editorial regretted that the Postal Service’s carriers were not as fast as its lawyers.

In 1978, the P.H. Brennan Hand Delivery Service offered same-day delivery of mail in Rochester, New York, for 10� a piece; the Postal Service could not guarantee overnight delivery even for 15�. The Brennan Service operated during snowstorms (when the Postal Service did not even try to deliver), never lost a letter, and never had a complaint. When U.S.P.S. attorneys closed in on the Brennans, Rochester lawyers provided them with a free legal defense. But the Postal Service persuaded a judge to issue a ‘cease and desist’ order on account of the ‘threat to postal revenues.’

For 200 years, the Postal Service has been playing a game of catch-up with its illegal competition. Throughout its history, U.S.P.S. has upgraded service or cut rates only after some private company came along and did a better job. Were it not for its competition, the Postal Service might still be charging by the page and requiring citizens to come to the post office to send and pick up mail.” (Read more from cato.org)

***

Government is not our protector from monopolies, they are the creators and enforcers of monopolies. Businessmen, whom we so readily blame for all our problems, survive by providing goods and services we want at affordable prices.

***

“The U.S. Post Office [1839-1851] returned almost no revenue to the general fund. It usually reported losses. Large profits were being earned, but they were distributed internally. Giving out the postage revenues to groups with political power became the Post Office’s second function. Measured monetarily, it was the Post Office’s primary function. Thomas Jefferson, suspicious of the Post Office, had written:

I view [the Post Office] as a source of boundless patronage to the executive, jobbing to members of Congress and their friends and a bottomless abyss of public money. You will begin by only appropriating the surplus of the post-office revenues; but other revenues will soon be called in to their aid and it will be a source of eternal scramble among the members, who can get the most money wasted in their states; and they will always get most who are meanest [Jefferson 1892-99: IX, 324-25].

”

“In the first half of the 19th century, the federal government’s legal monopoly over the mail was a monopoly over all intercity communication. Informal and illegal channels of communication had always existed, but their inconvenience and limited scope allowed the Post Office to earn huge monopoly profits. The government’s policy of running the Post Office on a ‘nonprofit’ basis simply channeled the rents (profits) to powerful political groups who were in a position to draw directly from the Post Office coffers. Those profits gathered from the U.S. Post Office were of the same magnitude as the profits earned more openly by the British postal service.

The transportation revolution lowered the cost of intercity transportation and communication in the 1830s and 1840s. Private companies met the change by offering low-cost transportation and communication. The Post Office, facing no formal competition, at first kept its prices fixed. As costs dropped, monopoly profits increased. The profits became large enough to draw competitors despite the legal risk. That competition, and pressure from consumer groups, caused the Post Office to lower its rates in 1845 and 1851 by 79 percent.

The effect of private competition went beyond the drop in postage rates. An equally important effect was the introduction of new techniques into the U.S. market. The most important innovations were prepayment with stamps and intracity pickup and delivery. The Post Office showed no sign of adopting such innovations until they were successfully used by private companies.” (Read more from cato.org)