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
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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...
Jason you are a mescheguna, now Bernie Madoff, he’s a mensch!
But that is the number one goal of liberal Demowits...
Yeah, sure, Jason. That's why GS bought $13 billion in credit default swaps from AIG and never got around to making sure AIG could cover them until the last minute.
Any more of your divorced-from-current-reality bullbiscuits you wish to dump into this thread?
Actually, Jason, you are probably correct in one regard in reference to GS risk management - they apprently were smart enough to have a revolving door between their company and the federal goverment so that if things did go south regarding being overleveraged, they had access to Uncle Sugar’s wallet.
Meanwhile the treasury made $1.4 billion lending GS $10 billion for less than a year, for a 23% annual rate of return in a market going smash. The treasury was also smart. You weren't. This apparently bothers you.
AIG covered them ONLY WITH A $185 BILLION GOVERNMENT BAILOUT.
You are truly sick and deranged if you can post that with a straight face.
After dumping $13 billion into GS via the AIG bailout. Which means they sunk $13 billion into a black hole to get $1.4 billion back. That might sound like success for a government employee, but to taxpayers it is a big wet bite in the arse.
You are measuring other means actions against a world that does not exist in which you own everything and are the tyrant of all policy and capital. We are all capable of doing the math and seeing what actions would work well in that fantasyland. But the rest of us are also capable of seeing that it is a fantasy of your own devising and not the reality in which we live, work, and act economically. Criticising other men as supposedly dumb for living in the real world, not between your ears, is flat stupid.
Goldman lives in the real world, and got paid just fine in the real world. This apparently bothers you. But calling them stupid for any of it, is merely pretending.
You continue to operate under the delusion that you can create money for yourself by directing that third parties not pay their debts. You can't. Remotely.
If AIG failed like Lehman failed, the treasury would not have been a dime richer. It would have been several trillions poorer. So would a lot of other people, probably including you, but that is neither here nor there.
One entry accounting is the essence of financial idiocy...
You are truly twisted and sick. GS only got paid because AIG got massive federal bailouts. GS did not perform any audits of AIG to ensure AIG could cover its CDS exposure. That is a failure of risk management.
I work with PII and SPII information. My company gets audited every year by our clients to ensure we are safeguarding the data properly. One would think that AIG would have done something similar with a company with $13 billion in CDS underwriting.
The fact that you cannot tell between honest business and bad business leading to a bailout speaks volumes about your pure depravity.
No, I am simply pointing out that GS failed to ensure that AIG was capable of making good on their CDS commitments. Instead, it took a federal bailout to cover AIG. That is a cold, hard fact that you are unwilling to face in your worship of the jackasses who brought us the financial meltdown in the first place.
Excuse me? I am not allowed to be critical of the very folks who helped engineer the financial meltdown and then went to the government for massive bailouts to stay afloat? You truly are sick.
And now you are going in circles. You first say that AIG made good on the CDS obligations, yet now say that if the fedgov had NOT intervened, AIG would NOT have been able to meet those obligations and the likes of GS could have failed. You just made my point about the failure of GS risk management for me, in your efforts to spin this.
Companies such as GS, in their zeal to increase their leverage, were on the hook to AIG for billions of dollars in CDS coverage - obligations that by any objective standard, AIG could not meet, hence the need for a federal bailout. GS only got the AIG CDS money because of a government bailout. That meant they were not properly assessing risk - it meant that whether or not they stayed in business or went out of business like Lehman was entirely up to the willingness of the goverment to perform a bailout of AIG.
And yet you have the unmitigated gall to hector me for pointing out what is obvious to ANYONE who has to deal with risk management on any level. Go stuff your pom-poms where they will do more good.
GS is a trillion dollar bank, that routinely makes that kind of money on the spread between its funding costs to carry a position that size, and what its assets earn for it.
In the CDS market, AIG was not required to post extra collateral against open CDS positions as long as it kept its AAA rating, but it paid its actual losses as they occurred. When it lost that rating it needed extra capital to cover its CDS exposure. AIG is a $2 trillion bank, with $500 billion in "float" (money in its possession on which it owes nothing, accruing to it for insurance contracts, between the time it collects premiums and pays out claims). It had a solvency danger certainly, but not a liquidity one in the conventional sense, given this massive access to uncallable capital it doesn't even pay interest on. Regulatory restrictions on use of capital of its insurance operations to support its trading operations were the cause of its immediate liquidity difficulties last fall. In normal times, that capital can be accessed for the firm as a whole by selling a profitable insurance division if necessary. Needless to say, last year that was not possible.
It is not obvious AIG will lose money for the treasury gross. It may, maybe as much as $100 billion. Or it may not. But it certainly would have cost many times those figures to let it fail. Lehman made that clear as day.
GS wasn't hedging large cash market positions in low quality mortgage securities at AIG, as most of the big European banks were. Those were the lion's share of the AIG CDS market winners, and their winnings matched losses on low quality mortgage debt, which they had only risked taking positions in because they believed they were hedged by CDS's from AIG. Goldman was merely betting that those mortgages were trash, and it was right. Its trades there were almost pure profit if AIG paid. If it had defaulted instead, they would have received something from a dismembered AIG, a year or two down the line. They would not have lost anything on it any way it is sliced. It is not like they lent $13 billion to AIG. Quite the contrary.
You continue to pretend that AIG paying out on its debts is some grievious wrong. It is nothing of the kind, it is ordinary commercial morality being upheld. You continue to regard it as somehow uncapitalist or horrible that the treasury helped it to meet its obligations. It is nothing of the kind, it was simply the right move to support the whole market last fall and stop the credit collapse Lehman set off. Allowing that collapse to continue would not have saved the treasury anything, or US taxpayers anything, or you anything. It would have costed all of the above, more.
You don't need to like any of that for it to be true. Your approval of any of it is not required by any of the adults involved in any of it. Your reckless slanders of them are just that, slander, made up, entirely between your ears. None of them did anything wrong in any particle of it. AIG was dumb in some of the promises it made, and its shareholders have paid for it; numerous banks were dumb to underwrite so many poor quality mortgages to American deadbeats on mainstreet, and everyone has paid some for that. But neither Goldman nor the treasury have harmed you in the slightest in any of it, and your railing against them anyway is the purest ideological spite and class warfare drivel.
Your righteous indignation is not righteous at all and utterly unjustified. They are simply much better men than you are in every respect - better capitalists, better citizens, better at financial and economic policy, morally better in that they are not accusing others unjustly - and I side with them against your ignorant ranting. Is that clear enough?
Uh, yeah, sure. They did such a great job that they completely missed the fact that if the economy went south, AIG would need $185 billion in government money to meet its obligations. And if the government refused to go through with the bailout, GS could go the way of Lehman. Yeah, that is world-class risk management. /sarcasm
You are the most obtuse weasel I have ever seen posting on FR, and that is saying something. Companies that screwed up the financial system so badly to where the Fedgov has put out $4.7 trillion are paragons of virtue and capitalism, and I'm some ungrateful slob for pointing that out.
Go sell this shinola to someone stupid enough to buy it. In case you haven't noticed, very few on FR will.
Uh, yes, they played their own role in overleveraging the financial markets.
That is the first point.
The second point is that your fantasy policy is stupid and that is why it was not followed by the responsible men actually in charge of the matter. Not because it helped Goldman or AIG or your Aunt Mabel, but because it helped the US treasury. They tried the puritanical no bailouts line with Lehman, and attempting to "save" the treasury about $60 billion that way, for all of 72 hours, cost the authorities $2 trillion in necessary interventions by the following Friday's close. Starving a panic is stoopid, it doesn't work. Some of them had to be beaten over the head by events to admit this, but admit it they did; you still haven't. If they had continued on the no bailout policy, it would not have saved them another $185 billion or whatever on AIG. It would just have cost them another $2 trillion, or $5 trillion, in another month or so.
In the long run, the treasury is only solvent if the financial markets in which they live are sound. There was never any prospect of the treasury not being on the hook, or just backing away and pretending that others could take all losses. All the losses would have multipled 10 to 100 fold and ended up in a big steaming pile at the treasury, after first taking down more intervening institutions and wrecking more future economic growth.
Your approval isn't required for any of those propositions either. Any more than a stone needs your permission to fall under the force of gravity.
The treasury did the right thing, it did not harm you in the slightest, it benefited you. It benefited other men too, and this apparently bothers you. Tough freaking toenails. None of the rest of us are under any obligation to give a damn about your raving lunacies and your false fantasy alternate realities. And I for one don't.
Your policy recommendations are that stupid. The comparison is quite exact.
That's my point, weasel. GS did such a good job auditing AIG's ability to make good on its CDS commitments that they missed the fact that when the economy slowed, AIG would need $185 BILLION in goverment assistance to meet commitments. And that GS would rely on a decision by government officials as to whether they would get that $13 billion from AIG. That is an abject failure to properly assess risk by any objective standard - taking a path to where your fate as a corporation is left in the hands of others.
And the fact that the entire financial sector required massive intervention by goverments around the world shows just how wrong the lot of all these geniuses were in getting so overleveraged.
So these guys you are defending have triggered a financial crisis that so far has cost this country $4.7 billion, led to unemployment approaching 10 percent, yet you act like no one was impacted by all this? And guys like me are wrong for pointing all that out? You're truly an obtuse idiot and an utter fool.