The Great American Bubble Machine - Rolling Stone
DOR
Two Ron Toe 9,900 Posts
Did anyone read this in Rolling Stone? Any thoughts???http://www.rollingstone.com/politics/story/28816321/the_great_american_bubble_machine
Comments
I find the comment at the end of carbon credits scary. Almost like you can feel it setting up to happen...
Choice quotes:
"Rubin was the prototypical Goldman banker. He was probably born in a $4,000 suit, he had a face that seemed permanently frozen just short of an apology for being so much smarter than you, and he exuded a Spock-like, emotion-neutral exterior."[/b]
General criticism: Contains more hyperbole and ridiculous adjective phrases than a typical Rolling Stone album review.
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"...but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a !groundbreaking! new commodities bubble, disguised as an "environmental plan," called cap-and-trade."[/b]
From Wikipedia:
"The efficacy of what later was to be called the "cap and trade" approach to air pollution abatement was first demonstrated in a series of micro-economic computer simulation studies between 1967 and 1970 for the National Air Pollution Control Administration (predecessor to the United States Environmental Protection Agency's Office of Air and Radiation) by Ellison Burton and William Sanjour."
40 years old = groundbreaking!
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"The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank..."[/b]
Really? With 5 minutes of research you can find tables at http://thomsonreuters.com/products_services/financial/league_tables/ showing (mostly) up to the quarter statistics regarding investment banks. Check the PDFs and you will see Goldman Sachs outside the top 5 in almost every category. Other factoids from Wikipedia:
"The investment banking segment accounts for around 17 percent of Goldman Sachs' revenues."
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What's that, you want more nonsense you say? Have no fear:
"They did this by setting up what was, in reality, a two-tiered investment system ??? one for the insiders who knew the real numbers, and another for the lay investor who was invited to chase soaring prices the banks themselves knew were irrational."[/b]
Regarding the Internet bubble, Taibbi takes the SHOCKING curtain off the fact that institutional investors pay less for IPOs than your average dude with an E-Trade account. MIND BLOWING.
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More general literary criticism:
"Then, at the dawn of the new millennium, they suddenly threw all that shit out the window and started writing mortgages on the backs of napkins to cocktail waitresses and ex-cons carrying five bucks and a Snickers bar."[/b]
If I was a Middle School English teacher this paragraph alone would merit an F. The first 3 pages of the article are stylistically identical to this passage and contain no evidence of research whatsoever except for this...
"Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed."[/b]
Gross generalizations PROVE Goldman's involvement in rising levels of commodity speculation/CONSPIRACIES. Seriously?
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Regarding the amount of former Goldman employees in high positions....no f*cking duh. They are one of the most respected and oldest firms on the face of the f*cking Earth known for their conservative approach to the game. Quotes such as "Goldman Sachs, for a long time during the 1980s, was the only major investment bank with a strict policy against helping to initiate a hostile takeover, which increased Goldman's reputation immensely among sitting management teams at the time" (from Wikipedia) illustrate this fact quite clearly. Not to mention the sheer volume of employees (ALMOST 28,0000).
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I'm no financial crisis apologist but how this pile of stinking filth gets published period is beyond me. And I only chose a small portion of its retardosity for criticism. The dude who wrote it would have more credibility if he carved a swastika into his forehead and titled the piece "I HATE JEWS" and started focusing his time on Rothschild/Illuminati/9-11 conspiracies.
When he's talking about how many goldman people are in Obama's cabinet... he twists words in a crazy weird way.
I'm interested on your thoughts on GS. And I'm not sure I understand your comments on jews & nazi's. Were you trying to match a Rolling Stones article sensationalism? You definitely beat it.
I am interested in things like how GS has benefited from pretty much everything the fed has done with it's credit lending and their ability to make back 100 cents on the dollar (Like when the Fed ordered AIG to pay Goldman 100 cents on the dollar). Their ability to move around as not to come under any governmental controls (Are they a private firm, investment bank, commercial bank and how this was all done so quickly?). What part they possibly play in manipulating markets, etc.
And while it might not be an article worth your 5 minutes to read. It does bring up some questions that should be discussed. There is a lot in the air that doesn't seem to smell right. And I'm not just saying that because there is a garbage strike going on in my city.
But your right. This probably is all a conspiracy and I hope the tax payer isn't going to get screwed, like many of the people who invest in this stuff. Are you not looking forward to seeing how cap n trade and carbon trading goes down???
Are all 28,0000 employees jews or something?
http://rawstory.com/08/news/2009/07/04/taibbi-nyse-ends-transparency-to-protect-goldman-sachs/
Which had a link to this interesting post.
http://zerohedge.blogspot.com/2009/05/observations-on-nyse-program-trading.html
Sorry for any confusion in my first post, I was pretty hammered when I wrote it. My Jewish-R comments were meant to reflect that I believe the author of the article was hinting at some common anti-Semitic rhetoric and that his poor writing and research were more representative of a conspiracy theory than a journalistic piece. The way he singled out a Jewish-R firm in the context of a banking crisis seems reminiscent of the tactics of Hitler in post-Versailles Germany, and, given the implications of such propaganda historically, I'm surprised more people don't get the connection.
Nevertheless, I am not familiar with how Goldman has singularly benefited from the financial boom/bust. From what I have read, most banks/financial institutions have profited in the aftermath. To single out one particular firm seems unfair and irresponsible, when, with the exception of a few scapegoats (Lehman Bros./GM) almost all have been given a golden parachute.
Regarding a couple of the questions you posed DOR, Goldman Sachs is now a "bank holding company." This change was made as a result of the financial crisis. In the short term, it gave them greater liquidity and access to TARP, among other benefits. American Express and GM Acceptance Corp. made the same transition. This gives them the appearance of benefiting handsomely by shifting around assets, etc. that you described. HOWEVER, in the long run, they open themselves up to greater regulation and will be limited in terms of risk exposure.
Also, I think you may be misunderstood about cap-and-trade. Emissions trading was put into place in the US as a result of the Clean Air Act of 1990, designed to limit sulfur dioxide in the air and thus acid rain. It has been quite effective and arguably one of the EPA's most successful initiatives. Similar programs also exist at the state level. Internationally, the Kyoto Protocol provides for a carbon trading system and the EU has already established such a system. Though I am unfamiliar with how particular groups will seek to profit from the administration's proposed system here.
EDIT:
P.S. I did actually read the article, btw.
P.P.S.
I just thought of this, regarding your questions pertaining to manipulating markets and the author's reference to commodity speculation, I suggest reading up on the Hunt brothers and their great silver escapades. These events actually precipitated the first federal bailout and are pretty much a microcosm of what happened in 2008 on a smaller scale. The architect of that bailout (which I believe was handled quite well), Paul Volcker, is the chief of Obama's Economic Recovery Board. I am unsure if he has any connections to Goldman, but he did used to work for Chase and is a member of the Bilderberg Group and the Trilateral Comission. That alone should give Matt Taibbi enough conspiracy fodder for another 5-page article.
P.P.P.S.
If you want my opinion on who is to blame/who should get hit in the face by Raekwon with a spiked baseball bat it's those who created the fictional financial "instruments" which mega-inflated the crisis. George Soros wrote an interesting article on this lately. I'm more interested in the government eliminating these pipe-dreams than assigning blame or worrying about who profits.
http://trueslant.com/matttaibbi/2009/07/07/on-the-everyone-was-doing-it-excuse/
And as far as cap and trade goes. It's explained in the article.
As posted from here which has edited it.
http://www.fatwallet.com/forums/finance/934908/
"Following was edited. Credit goes to Matt Taibbi/Rolling Stone.
Having seamlessly navigated the political minefield of the bailout era, Goldman is once again back to its old business, scouting out loopholes in a new government-created market with the aid of a new set of alumni occupying key government jobs.
Gone are Hank Paulson and Neel Kashkari; in their place arc Treasury chief of staff Mark Patterson and CFTC chief Gary Gensler, both former Goldmanites. (Gensler was the firm's co-head of finance.) And instead of credit derivatives or oil futures or mortgage-backed CDOs, the new game in town, the next bubble, is in carbon credits - a booming trillion dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a ground breaking new commodities bubble, disguised as an "environmental plan," called cap-and-trade.
The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.
Here's how it works: If the bill passes, there will be limits for coal plants, utilities, natural-gas distributors and numerous other industries on the amount of carbon emissions (a.k.a. greenhouse gases) they can produce per year. If the companies go over their allotment, they will be able to buy "allocations" or credits from other companies that have managed to produce fewer emissions. President Obama conservatively estimated that about $646 billion worth of carbon credits will be auctioned in the first seven years; one of his top economic aides speculates that the real number might be twice or even three times that amount.
The feature of this plan that has special appeal to speculators is that the "cap" on carbon will be continually lowered by the government, which means that carbon credits will become more and more scarce with each passing year. Which means that this is a brand-new commodities market where the main commodity to be traded is guaranteed to rise in price over time. The volume of this new market will be upwards of a trillion dollars annually for comparison's sake, the annual combined revenues of all electricity suppliers in the U.S. total $320 billion.
Goldman wants this bill. The plan is (1) to get in on the ground floor of paradigm shifting legislation, (2) make sure that they're the profit-making slice of that paradigm and (3) make sure the slice is a big slice. Goldman started pushing hard for cap-and-trade long ago, but things really ramped up last year when the firm spent $3.5 million to lobby climate issues. (One of their lobbyists at the time was none other than Patterson, now Treasury chief of staff.) Back in 2005, when Hank Paulson was chief of Goldman, he personally helped author the bank's environmental policy, a document that contains some surprising elements for a firm that in all other areas has been consistently opposed to any sort of government regulation.
Paulson's report argued that "voluntary action alone cannot solve the climate-change problem." Few years later, the bank's carbon chief, Ken Newcombe, insisted that cap-and-trade alone won't be enough to fix the climate problem and called for further public investments in research and development. Which is convenient, considering that Goldman made early investments in wind power (it bought a subsidiary called Horizon Wind Energy), renewable diesel (it is an investor in a firm called Changing World Technologies) and solar power (it partnered with BP Solar), exactly the kind of deals that will prosper if the government forces energy producers to use cleaner energy. As Paulson said at the time, "We're not making those investments to lose money."
The bank owns a 10 percent stake in carbon credits will be traded. Moreover, Goldman owns a minority stake in Blue Source LLC, a Utah-based firm that sells carbon credits of the type that will be in great demand if the bill passes. Nobel Prize winner AI Gore, who is intimately involved with the planning of cap-and-trade, started up a company called Generation Investment Management with three former bigwigs from Goldman Sachs Asset Management, David Blood, Mark Ferguson and Peter Hanis. Their business? Investing in carbon offsets, There's also a $500 million Green Growth Fund set up by a Goldmanite to invest in green-tech...the list goes on and on. Goldman is ahead of the headlines again, just waiting for someone to make it rain in the right spot. Will this market be bigger than the energy-futures market?
"Oh, it'll dwarf it," says a former staffer on the House energy committee.
Well, you might say, who cares? If cap-and-trade succeeds, won't we all be saved from the catastrophe of global warming? Maybe but cap-and-trade, as envisioned by Goldman, is really just a carbon tax structured so that private interests collect the revenues. Instead of simply imposing a fixed government levy on carbon pollution and forcing unclean energy producers to pay for the mess they make, cap and trade will allow a small tribe of greedy-as-hell Wall Street swine to turn yet another commodities market into a private tax-collection scheme. This is worse than the bailout: It allows the bank to seize taxpayer money before it's even collected.
"If it's going to be a tax, I would prefer that Washington set the tax and collect it," says Michael Masters, the hedge fund director who spoke out against oil-futures speculation. "But we're saying that Wall Street can set the tax, and Wall Street can collect the tax. That's the last thing in the world I want, It's just asinine."
Cap-and-trade is going to happen. Or, if it doesn't, something like it will. The moral is the same as for all the other bubbles that Goldman helped create, from 1929 to 2009. In almost every case, the very same bank that behaved recklessly for years, weighing down the system with toxic loans and predatory debt, and accomplishing nothing but massive bonuses for a few bosses, has been rewarded with mountains of virtually free money and government guarantees - while the actual victims in this mess, ordinary taxpayers, are the ones paying tor it.
It's not always easy to accept the reality of what we now routinely allow these people to get away with; there's a kind of collective denial that kicks in when a country goes through what America has gone though lately, when a people lose as much prestige and status as we have in the past few years. You can't really register the fact that you're no longer a citizen of a thriving first-world democracy, that you're no longer above getting robbed in broad daylight, because like an amputee, you can still sort of feel things that are no longer there.
But this is it. This is the world we live in now. And in this world, some of us have to play by the rules, while others get a note from the principal excusing them from homework till the end of time, plus 10 billion free dollars in a paper bag to buy lunch. It's a gangster state, running on gangster economics, and even prices can't be trusted anymore; there are hidden taxes in every buck you pay. And maybe we can't stop it, but we should at least know where it's all going."
Rey keepin' it real!!!