Goldman Sachs – Public Enemy #1 – must read

Goldman Sachs – Public Enemy #1

In Open Thread, stocks finance on Monday, April 13, 2009 at 11:33 pm

Author’s warning: What follows is a sprawling, bloody, semi-coherent mess (at best).  I wrote it when I learned that Goldman Sachs was trying to stifle someone’s right to freedom of expression and because I believe that our recent history is being morphed into an alternate reality, where many important details are being lost or erased.  I don’t trust McGraw-Hill (parent company of Standard and Poor’s) to write the history books.  So, I decided to sharpen the hatchet and take some whacks……

The megalomaniacs of Manhattan are at it again…….

First, it was Glass-Steagall, then leverage limits, then the uptick rule (I’ll pin that on them later)….now the first amendment is proving irritating to Goldman Sachs.  Yup, they’ve decided that an obscure blog called goldmansachs666.com needs to be silenced.  Blogger Mike Morgan is the author  and has been warned he may face legal action if he does not “cease and desist”…..

Here’s the story by James Quinn (which incidentally, was reported by a British publication, because US propagandists journalists have already accepted the repeal of the first amendment) :

According to Chadbourne & Parke’s letter, dated April 8, the bank is rattled because the site “violates several of Goldman Sachs’ intellectual property rights” and also “implies a relationship” with the bank itself.

I guess running a “pump and dump” like Goldman did with oil last summer could be considered intellectual property, but mostly it proves  once again that the “smartest guys on the street” are pretty fucking dumb.  You see, if there’s one thing bloggers hate more than being ignored (and trust me, I know about being ignored), it’s being censored by scumbags like Goldman.  And when you get away with the greatest heist in history,  it’s probably a bad idea to shine the spotlight on those with a mountain of evidence against you.    In fact, if I were Goldman Sachs, I wouldn’t want my name and “conviction” uttered in the same breath (but that’s just me).  What kind of things would Goldman want suppressed?  Maybe things like:

more……

How Goldman made $4B in Q3 2007 shorting subrime mortgages.  Let’s think about this again.  By Q3 2007  the subprime mortgage market was seized, so how did Goldman get prices to short and cover at?  Who did they borrow those securities from?  and who bought them on the open market.  I believe these trades were either every bit as fictitious as Madoff’s trades, or they were criminal.  Goldman sold over $100B in CMO’s to others (including subprime), yet profiting from the short sale was never viewed as a conflict of interest by the same regulators who were too inept to catch Madoff even after being told what he was up to in exquisite detail.  Weird, huh?

And speaking of Madoff, Goldman knew about Madoff. If you read Harry Markopolos 2005 report to the SEC on Madoff, it’s clear (if you believe otherwise, you’re the conspiracy theorist).  There wasn’t a buck to be made by doing the right thing, so Paulson and friends looked the other way and acted shocked when the shit hit the fan.  Remember that when these crooks start talking about self-regulation.

from Wikipedia.org:

On December 4, 1928, it launched the Goldman Sachs Trading Corp. a closed-end fund with characteristics similar to that of a Ponzi scheme.

Now that’s an old skeleton to drag out, I’ll admit,  but there’s a  Mark Twain quote about history rhyming…..

Tyler Durden of  Zero hedge has been banging the drum lately about some weird goings on at Goldman.

“This is getting surreal. Goldman principal program trading is now well over 5x compared to its customer and agency trades and a 150 million share pick up compared to last week. For yet another week, Goldman’s principal trading represents more than half of all NYSE member firm principal transactions.”

S’up with that?  dunno.  They could be front-running Treasuries “decision(?)” to convert more taxpayers preferred shares into common stock.  Just imagine how much money you could make if you knew when that was coming.

from David Lawder on Rueters

“Conversion of preferred shares to common equity could increase a bank’s capital cushion without using new taxpayer cash, amid dwindling resources from the $700 billion U.S. financial bailout fund.

This was a key part of the latest rescue package for Citigroup (C.N) in February, in which the government agreed to convert up to $25 billion in preferred shares to common stock. The move increased tangible common equity, which bank regulators see as the strongest form of capital — effectively the cushion left after all creditors and preferred shareholders have been paid off.

However, such moves would increase repayment and dilution risks for taxpayers, subordinating them to the same status as other common shareholders.

Conversion of preferred shares to common equity could increase a bank’s capital cushion without using new taxpayer cash, amid dwindling resources from the $700 billion U.S. financial bailout fund.”

Does it strike anyone else as odd that the government’s top “advisor” is trading like it knows something we don’t?

I guess these are the kinds of things Goldmansachs666.com wants to tell you about.

Or maybe, it’s more mundane things, like:

How Goldie has already received $10B in TARP funds (which they said they didn’t need,  wanted to pay back, and then said they needed to raise capital to pay it back).  Here’s a fun game – try finding a still-valid link that says Goldman didn’t want or need TARP money (it’s like finding links connecting now SEC Chair Mary Schapiro to Bernie Madoff ~ good luck!).

Goldman has recieved at least $13B from the AIG bailout. Barry Ritholtz of the Big Picture points out that some estimates are over $25Bhttp://www.ritholtz.com/blog/2009/03/backdoor-bailouts-for-goldman-sachs/ Ritholtz is one of the very few high-profile writers with the courage to question Goldman’s sacred cow status (and he does it with style).

Of course, the real elephant in the room is asking the question, “How did this whole financial crisis thing happen?”  And that’s when the guys at Goldman start looking less like firefighters and more like arsonists.

The Repeal of the Glass-Steagall Act –

was pushed for by Golmanite-turned-Treasury Secretary Robert Rubin in 1995.

“Rubin said Glass-Steagall imposed unnecessary costs and made providing financial services less efficient and more costly. He said the act can “conceivably impede safety and soundness by limiting revenue diversification.” Rubin also said many legitimate concerns were addressed adequately outside the act, including the numerous steps taken to safeguard against risky and abusive bank transactions and to protect the deposit insurance fund.”

So Rubin was trying to do the world a favor?   Glass-Stegall was officially repealed by the Gramm-Leach-Bliley Act (wikipedia) in 1999, the same year Rubin joined Citigroup (one of the companies “freed” by his ideology).  So, how’d that work out for everybody?

  • Rubin was compensated to the tune of $126 million while….
  • Citigroup shareholders got clipped over $200B as the stock went from $57.50 in August 2000 to less than $6 at the point of his resignation, despite….
  • $52B and counting taxpayer dollars being funnelled to Citigroup.

…And he didn’t even have the decency to say, “D’oh!”

40 to 1 Leverage

“The best advice I could ever give you is if you’re going to start a money fire, make sure as little as possible is your money.”

~Mark McHugh

In 2000, Goldman CEO Hank Paulson begged the Senate Banking Committee to be allowed to take on more leverage.

From the statement:

In addition, we and other global firms have, for many years, urged the SEC to reform its net capital rule to allow for more efficient use of capital. This is the single most important factor in driving significant parts of our business offshore, so that our firms can remain competitive with our foreign competitors risk-based capital standards must become the norm. The SEC has made it clear that risk-based capital rules can be implemented only when the Commission is confident that firms employing value-at-risk models have robust credit and risk management policies in place.

The insane wish was granted by the SEC in 2004, with William Donaldson (who served with Paulson in the Nixon administration) as SEC Chair.  Of the 5 companies granted the exemption, 3 collapsed (Bear Stearns, Lehman Brothers and Merrill Lynch).  Only Goldman and Morgan Stanley survive.  Former SEC official Lee Pickard said this (and a lot more) to the New York Sun.

“The SEC modification in 2004 is the primary reason for all of the losses that have occurred…..”

Hankenstein’s concept of risk management was sticking taxpayer’s with the bill, which only required him to transfer to the US Treasury division of Goldman.  One of the perks was being able to cash out his $700M stake in Goldman tax free.  A small price to pay for the kind of financial insight Paulson brought to the table.  You know, things like:

“I continue to believe the U.S. economy is healthy.  We have had a significant housing correction in the U.S. You can’t have a correction like that without causing some dislocations. It’s too early to tell whether it’s bottomed. I believe it has…….shouldn’t be a surprise to anyone that there’s some fallout in the subprime mortgage market … but it’s largely contained.”

~Henry Paulson  March 2007

That’s right,  the king of the “smart guys” called the housing bottom in Q1 2007.  But my favorite is still…….

“If you’ve got a squirt gun in your pocket, you may have to take it out. If you’ve got a bazooka, and people know you’ve got it … you’re not likely to [have to] take it out.”

I’m sure Alexander Hamilton would have said something like that if there were squirt guns and bazookas in his time  (we’re freaking doomed).

Author’s note:  The Paulson story is beyond the scope of this article, so it will be covered later in another post.  But I’m leaving this  mess here anyway (because it’s MY blog), so think of this as a trailer……

The Story of Hankenstein

Coming Soon to a blog near you…..*

burnett-paulson-bride-of-hankenstein

Paulson in an appearance on “Street Signs with Erin Burnett”

*Unless a real Journalist beats me to it.  Because I’d like to redesign the blog, and a whole bunch of other things…..

Fun facts about Paulson:

Paulson illegally rationed US Silver Eagles and suspended sales of Gold Eagles coins while masquerading as a government official.  Criminal offenses completely ignored by the mainstream media (they’re hoping to get bailed out….)  Here’s the US codes governing the Treasury Secretary’s obligations to the public.  Apparently, us bloggers are the only ones who actually read the law.

Goldman Sachs is the  Afghanistan of the financial universe, where warped individuals go to hone their skills.  I guess what separates Goldman’s monsters from Al-Qaeda is that Goldman’s terrorists have successfully infiltrated the US Government and mainstream media.  Now maybe you think that it irresponsible to call these guys terrorists.  So, here’s a story that mainstream media forgot to tell last fall:

Paulson Was Behind Bailout Martial Law Threat

From Alex Jone’s Prisonplanet.com

Speaking on Tulsa Oklahoma’s 1170 KFAQ, when asked who was behind threats of martial law and civil unrest if the bailout bill failed, Senator James Inhofe named Treasury Secretary Henry Paulson as the source.

“Somebody in D.C. was feeding you guys quite a story prior to the bailout, a story that if we didn’t do this we were going to see something on the scale of the depression, there were people talking about martial law being instituted, civil unrest….who was feeding you guys this stuff?,” asked host Pat Campbell.

That’s Henry Paulson,” responded Inhofe, “We had a conference call early on, it was on a Friday I think – a week and half before the vote on Oct. 1. So it would have been the middle … what was it – the 19th of September, we had a conference call. In this conference call – and I guess there’s no reason for me not to repeat what he said, but he said – he painted this picture you just described. He said, ‘This is serious. This is the most serious thing that we faced.’”

Inhofe said that Paulson told members of Congress the crisis would be “far worse than the great depression” if Congress didn’t authorize the bill to buy out toxic debt, a proposal “which he abandoned the day after he got the money,” added Inhofe.

Us “conspiracy theorists” call that making terroristic threats and extortion, Goldman guys call it another day at the office.  Brad Sherman also made reference to the threats here.  Funny thing though, the stock market plunge, that we were warned about if we didn’t give Hank his bazooka, happened anyway.

This post officially resumes now……..

The Uptick Rule

The Uptick rule (and it’s 2007 repeal) are perhaps the most misunderstood and misrepresented aspect of the meltdown.   Without it, the NYSE is nothing more than a crooked casino that no one should patronize…ever.  In fact, without it the NYSE wouldn’t have made it to World War II.  The men who put it in place knew what they were doing.  It’s removal allowed short sellers to flat-out steal the life savings of millions of Americans.  Anyone who tries to tell you different is either a fool or a liar (and yes those are meant to be fighting words).  I’ll elaborate on this another time….but what does this have to do with Goldman?

Nothing, or so it would seem.  Goldman Sachs is one the biggest market-makers at the NYSE (I can’t find a list…help), yet they never bothered to chime in on a rule change that would dramatically effect their business.  Not a word….mum.  Their fingerprints aren’t on it.

There is one interesting detail, however….

April 9, 2007 – less than three months before the uptick rule was repealed , Huliq news ran this headline: Duncan L. Niederauer Joins NYSE Group As President.  Wanna guess where Niederauer made his bones????? Yup, 22 years at Goldman!!! (made it to Managing Director)  He was to be in charge of  “U.S. cash equities operations, including Institutional and Member Firm Client Group sales and client services for both the New York Stock Exchange and NYSE Arca, and will serve on the NYSE Group Management Committee.”

Regulations obliterated….clueless dunce puppet regulators….media controlled….checkmate.

Shortly thereafter, the money fire got so big everybody noticed, and there was Goldman Sachs, johnny-on-the-spot with a plan to put it out.  The next thing we know, wer’e handing a blank check to the guy who started the fire.

Those are the things that Goldmansachs666.com wants you to know and Goldman Sachs doesn’t.  They’ve done a masterful job of manipulating the mainstream media (but let’s be honest, that’s not tough) but the blogosphere has been causing them some embarassment.  What surprises me is I think they believed that saying, “Hey you, shut-up” would work.  I would like to submit again that the “smartest guys on the street” are morons when it comes to trying to control people they aren’t bribing.  By trying to silence Mike Morgan, they’ve catapulted him to rock-star status (file that under unintended consequences).  It’s almost as funny as their “conviction” buy and sell list (but that’s a story for another day).

Financial Terrorists Capitalist Failures trained at Goldman (with links to muckety maps, Wikipedia, and more!) I decided that it was unfair to call this group terrorists, but it equally unfair to call them capitalists (especially successful ones).  What follows is a list of people long on connections, short on achievements:

Robert Rubin – Treasury Secratary under Clinton, wanted Glass Steagall repealed, left to help wreck Citigroup (CEO for like five minutes in 2007).

Neel Kashkari – Goldman wunderkind(?) & bailout czar; got his ass kicked by Congessman Dan Manzullo HERE.

Eddie Lampert - Goldman Alum who worked directly with Robert Rubin; stole Kmart for a song, bought Sears, and is now wrecking that whole train, proving once again that Goldman people don’t actually understand running a business.  Chosen as “America’s Worst CEO” for 2007 by Herb Greenberg of Marketwatch.  Short tip: He’s also on the board at Autozone.

Erin Burnett – Fast-food clerk (in non-Bizarro world) turned media star (think of Rush Limbaugh without tits).  Remains unclear whether she is extremely dim-witted or completely psychotic (I have a side-bet on the latter).  Although I’ve highlighted her blatherings here and here, it’s impossible for one man to keep pace with her ravings (that’s why the TV has an off button).

Jon Corzine - Former Goldman CEO, now New Jersey’s Governor, running deficits only surpassed by an actor whose state regularly catches fire, including a $34B state pension deficit.

Jim Cramer – How stupid do you have to be to allow yourself to be videotaped explaining how to manipulate stock prices?  The only one on the list who has actually earns his keep (by selling books).

John Thain – CEO of the NYSE Jan 2004 – Nov 2007,  Made sure that Merril got flushed in style

William Dudley – Partner and managing director at Goldman, now Chairman and CEO of the New York Fed.

Deryck Maughan –  more more Goldman (1979-83); Chairman and CEO of Citigroup International;  vice-chairman NYSE; knighted 2002;  CEO @ KKR; BOD @ GSK, Blackrock and Thomson Rueters.

Duncan L. Niederauer – Present CEO of the NYSE, 22 year vet at Goldman.

Stephen Friedman – currently President’s Foreign Intelligence Advisory Board Chariman; Chairman and CEO at GoldmanSachs (92 – 94); BOD @Fannie Mae, Wal-mart, Director of the National Economic Council (Bob Rubin had that gig too!)
2002-2005;  Amanda Peet’s Father-in-law (not damning – just cool)

Edward Liddy – current CEO of AIG; on Goldman’s board (2003 – 08); Paulson’s boy

Robert Steel- Goldman lifer (1976-2004); Under Secretary of Domestic Finance – US Treasury; became CEO of Wachovia July 9, 2008  (three months before Wachovia’s fate was determined).

Fun fact about Goldman:

Goldman Sachs contributed $980,945.00 to Barack Obama’s Presidential Campaign.

For me, this whole mess boils down to a few key points:

  1. The soundness of our entire financial system was undone in about 15 years.
  2. The system was not unsound by design (quite the contrary), it was altered to become unsound under the guise of innovation and improvement.
  3. The people who put the system at risk made (and continue to make) obscene profits.

Goldman Sachs and it’s minions have been in key positions at every  turn.  If that doesn’t beg investigation, nothing does.  Guys like Mike Morgan are the last hope for America, don’t let Goldman silence him.

~ by behindthematrix on May 5, 2009.

7 Responses to “Goldman Sachs – Public Enemy #1 – must read”

  1. I just want to remind everyone that the aforementioned William Donaldson is a member of Yale Skull & Bones, as are many of the people he was supposed to ‘regulate,’ such as the uber-rich Eddie S. Lampert and Steven Schwartzman. Just a coincidence, of course.
    I’d sure like to know how he came to be on Obama’s Economic Advisory Board.

  2. [...] Goldman Sachs – Public Enemy #1 – Behind-the-Matrix [...]

  3. I really like your attitude about bloggers who do not get noticed, or ignored as you so eloquently put it. I joined the ranks of unnoticed bloggers a long time ago.

    That is why I am linking and putting you and Goldmansachs666 on my blogroll.

    I tend to go on and on about the philosphy and ethics about these selfsame people that you write about on my blog. You, however know all the gory details. Which makes for a blogger partnership of sorts that cannot and will not be silenced. Together we can raise holy hell and elevate GoldmanSachs666 to a higher level.

    Why is that we as Americans have to get our unfiltered news, about us, from either the BBC or The Independent? I already know the big media propaganda answer to that, no need to explain. It’s all accidentally on purpose.

    I could go on and on…but you write so much better than I. Keep up the good work…..and I’ll keep linking.

  4. Sorry MArk I thought it was was clear as I put your link and excerpt before it. Had no bad intentions just to publish your great article
    see yourself in my other blog

    http://behind-the-matrix.blogspot.com/2009/05/goldman-sachs-public-enemy-1-must-read.html

  5. Thanks a lot but the credit for this special article is by Mark Mc Hugh I just posted it as it was a very good read

  6. I didn’t see the link and I’m very flattered that you liked it. I even had a moment where I said, “well, maybe Goldman will send the hit squad after BTM……”

    But thanks for making it right, because believe it or not, I sweat blood for this crap. I try to make it short, factual, interesting and funny, and that’s not easy (at least not for me).

    Thanks again and best wishes (I’ll be adding your fine blog to my blogroll),

    Mark

  7. Yeah but the hit squad is only activated when you really hit a nerve it seems :)
    It is a good job you do so you should be upset if someone would steal your work but I just wanted to publish your excellent piece.
    Keep up the good work

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