Skip to comments.Resist The Urge To Punish Success ( RE: Goldman Sachs)
Posted on 07/20/2009 12:21:49 PM PDT by Ernest_at_the_Beach
Money can't buy love? For proof, look no further than Goldman Sachs. Last week, the firm reported a spectacular quarterly profit -- close to $3.5 billion for the bank and about $385,000 in compensation for each employee for the first half of the year -- and right on cue, the braying began for the heads of the Goldmanites. Earlier this month, Rolling Stone's Matt Taibbi, in a comprehensive exercise in conspiracy mongering, primed the pump of outrage with his article "The Great American Bubble Machine." Now a chorus of supporters has chimed in, shocked that in a recession the evil Goldman could turn such profit.
The rhetoric of outrage has come full circle: Before, the villains were the banks that were stupid and greedy enough to fail; now the villains are those -- a small club, basically just Goldman and J.P. Morgan Chase -- that have been smart and greedy enough to succeed.
What began as an effort to keep the financial industry from repeating its mistakes has turned into, as at other points in history, an attack on the idea of trading profit. It is no longer enough that the banks should be reformed; the opportunity to make this kind of profit should be eliminated.
This now-fashionable line of attack is badly misguided. Goldman and J.P. Morgan are reaping great rewards as the last firms standing in a game in which everyone else has been cowed or crushed. Yes, they're able to do that partly because the government has kept the financial system afloat. (Would anyone really prefer that it had not?) But the essence of the outcry is that we must punish Goldman for having been right. This is a mistake.
(Excerpt) Read more at washingtonpost.com ...
Once again, the former chair of GS arranged the AIG bailout. That netted $13 billion in taxpayer funds to GS. The federal government assurances to cover the CDS obligations by AIG did not exist at the time GS purchased such. This was not Congress making the FDIC whole to meet obligations to depositors at the time the deposits were made. GS used CDSs to increase their leverage without making sure AIG could cover them. In other words, GS made a ton of money without doing their homework to properly cover the risk, but then had their sugar daddy in Treasury cover their butts when that went south. As the saying, privatizing profits and publicizing losses. That is not capitalism, that is fascism.
For you to even TRY to rationalize such as anything but theft from the taxpayer at the point of goverment power confirms my opinion of you as a craven apologist for all the carnage these pinheads wrought upon the economy and the taxpayers.
This from a guy who rationalizes billions in goverment bailouts to GS via AIG - government guarantees that did not exist at the time GS purchased the credit default swaps. Methinks I understand capitalism just fine - under capitalism, GS would have eaten the $13 billion in losses because they failed to properly account for risk - that IS what capitalism is about, risk versus reward. What you are shilling for is fascism, where the well-connected run to the taxpayer when their schemese go south. Fascism, which is what you have a tingle down your leg for, apparently.
You may have the last word, for what little it is worth.
I asked a simple question. You answered that GS should make the profit of a no profit. Do you work for the government?
No, AIG did not pay them the money. The American taxpayer gave AIG the money to meet those obligations. And former GS chair Paulsen arranged the deal - AIG just became a passthru from the taxpayer to AIG - the AIG securities were not guaranteed by the taxpayer at the time they were issued. That ain't capitalism, it is crony fascism. True to form, you omit what brackets the AIG bailout - the interests of GS and the power of GS to force the taxpayer to cover the risks they failed to properly anticipate and research. Fascist freak.
No I did not, you lying weasel. I said this:
What they can earn without massive government intervention, and without setting up the bowling pins for another financial meltdown.
AIG's profit now is largely a result of the bailout money they have gotten.
Now, answer my questions. Or shut the flock up. Dishonest and disingenuous posters are the worst.
Let me know if you ever suspect you have deep thought.
Such unnecessary venom in response to a simple question. $3.5 billion is too much profit. What is just right?
Since they accepted so much money, do your feelings tell you that GS should lose money? Would that make you feel better?
The treasury was smart to prevent a messy default by AIG, since it would have cost the treasury far more than recapitalizing the company. Your one entry accounting fallacy pretends the treasury would have spent nothing if it had let AIG fail as messily as Lehman, but that is a pipe dream. Being against bailouts for 72 hours cost the authorities $2 trillion by the following Friday. Runs are much more expensive than anything "saved" by forcing debts to not be paid instead of seeing to it that they are paid.
Underlying your entire ideology is the notion that debtors have the right if not the duty to stiff they creditors, that creditors exist to be robbed blind, and that the height of policy is for the authorities to connive at robbing them as much as possible. Simultaneously you expect the treasury to milk financiers of hundreds of billions a year to pay for anything but support of finance.
This is stuff and nonsense, start to finish. The treasury is not a god above the fray but one modest player in the thick of it, and if it lets creditors get smashed, it gets stuck with every bill there is. You can't allocate debts beyond capitals economy wide, and you can't confiscate all financial capital either, since it performs an absolutely necessary social function that enforces its returns by natural economic law. All you can do is decide which hat you are wearing when you pay for the services of capital. And the longer you delay it and the more grudging it is, the more everyone pays.
Intelligent men at the treasury and Fed saw all of this, though not before screwing the pooch on Lehman in exactly the manner you are advocating, and seeing it blow up in their face immediately. They were pragmatic enough to reverse course when not paying $60 billion cost them $2 trillion within a week. Lacking all practical responsibilities, you pretend that you can oppose the costs as well, but it is poppycock. (If banks fail, the FDIC fails, then the treasury fails).
None of it had anything to do with GS or the interests of GS, it had to do with the US treasury and the interests of the US treasury. Which are not "pay out nothing", because it is already contractually obligated to pay for many things, and because wrecking the economy it owns 20% of is not a way to keep it afloat. The interests of the US treasury and of GS and other financiers simply happen to coincide, and you don't like it. Tough toenails.
None of it is your money anyway. Everything spent to support finance, directly or indirectly, since the country was founded, wouldn't make a dent in the vast sum milked from productive financiers by unproductive drones in Washington, year in and year out. But you never even acknowledge this. You treat it as a birthright - capital exists for you to rob.
Well, no, it doesn't, and it can and will defend itself against the depredations of organized deadbeats. Suck it up.
Incidentally, you are free to join them in all of this at any time, making any pretence than any of it oppresses you in the slightest utterly laughable.
Wake up and smell the stench that is the financial oligarchy ruling this country.
Goldman Sachs deserves every bit of ridicule they’re receiving. The only thing Taibi missed was the role of the Federal Reserve in starting this fascist mess.
The answer to how much Goldman should be punished with is the same 13b they got from the government.
Man, you just crossed into absurdity. I have promoted limited government my entire adult life. I am protesting how the likes of AIG and Lehman and Bear and GS messed up their risk assessment so badly that they required a massive bailout from the government and the Fed to prevent the entire financial system from imploding. YET YOU HAVE THE GALL TO DERIDE ME AS BEING IN FAVOR OF WASHINGTON PARASITES? The main private-sector parasites I see nowaday sare the Masters of the Universe on Wall Street who required billions from the goverment to keep from failing - because they failed to properly evaluate their risk - or simply didn't care because doing such would have limited their revenues.
You are a disgusting, two-faced [inserted appropriate expletetive here]. You have gone completely Orwellian in your attempts to defend the indefensible here. Capitialism is NOT screwing up things so badly that the government has to backstop $24 TRILLION in securities. Capitalism is instead not needing government aid in the first place - and acting prudently or else having the character to accept that the market will punish you for your mistakes. Character - something apparently completely lacking in your pathetic brain - only someone devoid of character can twist the clear meaning of concepts the way you have on this thread.
AIG did not pay the money, US taxpayers paid the money. Why did treasury decide to save AIG but just the day before let other big players fail? Hint, AIG owed GS 13 billions and without that 13 billion GS goes under too. So it's OK for everyone but GS to fail huh? Curious that Treasury and Fed are full of GS employees isn't it. In laymans terms GS owns the Treasury and the Fed. Both are more then happy to give GS billions and billions of tax payers monies. That you are cool with all this doesn't not make you a capitalist, it makes you an accessory to grand larceny.
I think JasonC's posts have been one of the most disgusting exercises in economic Orwellianism that I have ever seen on FR. Because I take serious issue with the incestuous relationship between Goldman Sachs and the Fed and Treasury, and the fact that GS would not be posting a profit now if it didn't get that $13 billion in AIG backstop money from the Feds, I somehow am anti-capitalist and pro-goverment spending.
As about an absurd a statement as one can make. Rationalizations such as this are why so many Americans now hold Wall Street in complete contempt. It's one thing for them to have screwed the pooch so completely. It's another for jackasses like JasonC to come to FR and act like they are virtuous and limited-government critics are not.
One can argue that the bailout was needed to prevent a total economic meltdown. But don’t call it capitalism. And to rip into critics of the Masters of the Universe who completely ignored risk, and in doing such put the financial system in such dire straits as to be on the verge of meltdown, is completely craven.
Yes one could but I wouldn't. The argument was credit would freeze without the bailouts, well guess what credit froze with the bailouts, so the bailouts did not work as "intended". All the bailouts did was save a few favorite firms. Now if unfreezing credit is the goal why not bailout CIT? CIT provides credit to tens of thousands of small businesses, guess only GS is too big to fail. Someday the corruption of both parties in DC will be revealed and heads will roll (figuratively speaking of course). But it is going to take electing a populist outsider (Sarah Palin anyone?) to do it, since both D's and R's are totally in bed with the likes of GS.
Matt Taibbi on how Goldman Sachs has engineered every major market manipulation since the Great Depression
The ancient Greeks had to compel their citizens to give up a year of their life to government service. Their belief was that if anyone actually wanted to rule and control their fellow citizens, they should immediately be put to death because obviously they were up to something. Time to bring that back! Let's start with all the "former" Goldman employees currently in government "service" writing the "heads I win/tails you lose" legislation that will haunt America for generations to come.
I tell people that Austrian economics is the new Marxism and financiers the new Jews, and they don't believe it at first. But then folks like you pipe up and a blind man can see it...