We have come yet again to Friday night. I had a couple of different things in my inbox that I didn’t have time to read all of yet, so I am unsure if what was there was suitable guest commentary material or not. But I saw a familiar name in there who had done guest commentary before. Life of Illusion had offered some more information to me. Knowing this was a name I could trust, I opened his email and found that the information, while not “technically” a guest commentary, was very pertinent to the discussions we have been having all week. LOI offered several different portions of articles that discussed the series of events involving Goldman Sachs. I have followed this saga for some time as, in my opinion, it offers a fairly important glimpse into how high the corruption in our federal government goes.
Life of Illusion has offered a couple of guest commentaries before. I always find that LOI’s input during the discussions and the guest commentary stuff that LOI offers is interesting and well thought out. What I admire most about the guest commentary offerings is research and delving into areas that are not necessarily an area of expertise, but instead an area of interest that LOI was interested in learning more about. This speaks highly! One of the absolute best ways to learn more about something that you know little about is to research a presentation for others. When you are offering a perspective of your own to a group of folks you respect, you want to make sure you don’t make a fool of yourself so you research a little harder and end up understanding things far better than you had intended.
This happens to me all the time as I research stuff. When I have to write nearly every night, I often decide to write about topics that I am certainly not an expert in. I am well read. I feel like I am pretty intelligent, but the vast amount of stuff that I am ignorant about vastly outnumbers what I know well enough to speak intelligently about. I submit that anyone who doesn’t realize this about themselves is living in a fantasy! So I end up learning far more than I probably even need to in order to offer the best information I can. This is why I encourage all of you so often to write guest commentaries. I cannot tell you how good it feels when you see your thoughts and words published. So get to work all of you! And that includes our liberal friends as well. There is no limitation on the content of guest commentary. I welcome viewpoints from the left, right, center, and even outer space! Everyone’s view or perspective is welcome at Stand Up For America. I actually wish I had MORE stuff from the left offered so we could discuss it more and debate the concepts of what is presented.
But let’s get to it for tonight. Life of Illusion offers some perspective from three different sources. Matt Taibbi is a very liberal columnist who has his own popular blog and who also writes for Rolling Stone Magazine. He is also the author of the article that Ray Hawkins suggested the other day on health care. I have yet to find a copy of said magazine, but my search will continue. Glenn Beck is, well, Glenn Beck. Fox News commentator, radio talk host, and entertainer. As I have said, he is sometimes bizarre and always fun to watch, and also fairly honest and oddly accurate with what he presents as fact.
Some Interesting Things About Goldman Sachs
Life Of Illusion
Kathy had a post on July 2, about Goldman Sachs. For some reason, I was the only one to respond. I do not claim to have much knowledge about the economy and such. But I felt it was worth following up on, and trying to put an article together. I had thought the fincial market bubble burst was caused by Freddie/Fannie/Barney Franks/Chris Dodd. It never is that simple, is it? For the record, I don’t claim to have written an article here, just cut and pasted what seemed to fit USW’s needs on length. I suggest all read the origional’s.
According to MATT TAIBBI, of Rolling Stone:
If you want to understand how we got into this financial crisis, you have to first understand where all the money went — and in order to understand that, you need to understand what Goldman has already gotten away with. It is a history exactly five bubbles long — including last year’s strange and seemingly inexplicable spike in the price of oil.
In 1936, however, Congress recognized that there should never be more speculators in the market than real producers and consumers. If that happened, prices would be affected by something other than supply and demand, and price manipulations would ensue. A new law empowered the Commodity Futures Trading Commission — the very same body that would later try and fail to regulate credit swaps — to place limits on speculative trades in commodities. As a result of the CFTC’s oversight, peace and harmony reigned in the commodities markets for more than 50 years.
All that changed in 1991 when, unbeknownst to almost everyone in the world, a Goldman owned commodities trading subsidiary called J. Aron wrote to the CFTC and made an unusual argument, requesting an exemption. The CFTC, amazingly issued the bank a free pass, called the “Bona Fide Hedging” exemption, allowing Goldman’s subsidiary to call itself a physical hedger and escape virtually all limits placed on speculators. In the years that followed, the commission would quietly issue 14 similar exemptions to other companies.
Now Goldman and other banks were free to drive more investors into the commodities markets, enabling speculators to place increasingly big bets. That 1991 letter from Goldman more or less directly led to the oil bubble in 2008,
What is even more amazing is that the letter to Goldman, along with most of the other trading exemptions, was handed out more or less in secret.In fact, the letters only came to light by accident. Last year, a staffer for the House Energy and Commerce Committee just happened to be at a briefing when officials from the CFTC made an offhand reference to the exemptions.
“I had been invited to a briefing the commission was holding on energy,” the staffer recounts. “And suddenly in the middle of it, they start saying, ‘Yeah, we’ve been issuing these letters for years now.’ I raised my hand and said, ‘Really? You issued a letter? Can I see it?’ And they were like, ‘Duh, duh.’ So we went back and forth, and finally they said, ‘We have to clear it with Goldman Sachs.’ I’m like, ‘What do you mean, you have to clear it with Goldman Sachs?'”
Glenn Beck on Goldman Sachs:
Complete coincidence today that Goldman Sachs has their profits go up by 65%. Goldman Sachs. Secretary Paulson runs the treasury. Secretary Paulson comes from Goldman Sachs. Secretary Paulson is saving all of these institutions, except Lehman Brothers.
Lehman Brothers is Goldman Sachs’ biggest competitor? The very next day AIG, “they can’t fail” and “needs to be saved!” So the former employee of Goldman Sachs, now secretary treasury Paulson decides to bail out AIG. Who is one of the first companies that get the money from the bailout from AIG? Goldman Sachs. So AIG pays Goldman Sachs.
Neel T. Kashkari was a former Vice President at Goldman, Sachs & Co. in San Francisco. He was chosen to design and oversee TARP. Then, two former employees from Goldman Sachs decided to allow Goldman Sachs to be a bank holding company.
Why would they want to be a bank holding company? That allows them to get even more funds from the government. They cannot only get the TARP funds but they can also get FDIC funds. The SEC doesn’t oversee bank holding companies. The Federal Reserve oversees a bank holding company, so they will be overseen by the Federal Reserve chairman of New York who is also on your board of directors! Which is against the law.
The former Goldman Sachs employee who is now the treasury secretary has signed a waiver allowing him to remain on the board. He doesn’t have to sell any of his stocks. He will just have the former Goldman Sachs employee write a waiver to the Federal Reserve so the Federal Reserve chair can stay on the board and not only keep his stock but he can buy hang on just a second 52,000 shares of additional stock.” Yeah. So now the guy who’s overseeing Goldman Sachs, the watchdog, buys 52,000 shares more which up until today only made him three million dollars.
The biggest thing that Goldman Sachs was doing was derivatives. What are derivatives? Goldman Sachs was the biggest derivatives trader and also they the biggest in oil speculation as well? Goldman Sachs has gotten out of derivatives and oil and energy. They are onto cap and trade. They are the biggest supporters of cap and trade next to GE. Now they are going to start creating the biggest derivative market of invisible gas for energy.
And from Rolling Stone (more from Taibbi):
And what caused the huge spike in oil prices? Take a wild guess. Obviously Goldman had help — there were other players in the physical-commodities market — but the root cause had almost everything to do with the behavior of a few powerful actors determined to turn the once-solid market into a speculative casino. Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures — agreeing to buy oil at a certain price on a fixed date. The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. 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.
The Housing Bubble? Barney Franks had help.
In 1994, report by the Government Accountability Office recommended that such financial instruments be tightly regulated — and in 1998, the head of the Commodity Futures Trading Commission, a woman named Brooksley Born, agreed. That May, she circulated a letter to business leaders and the Clinton administration suggesting that banks be required to provide greater disclosure in derivatives trades, and maintain reserves to cushion against losses.
Clinton’s reigning economic foursome — “Greenspan, Summers,especially Rubin and [SEC chief Arthur] Levitt, according to Michael Greenberger — called Born in for a meeting and pleaded their case. She refused to back down, however, and continued to push for more regulation of the derivatives. Then, in June 1998, Rubin went public to denounce her move, eventually recommending that Congress strip the CFTC of its regulatory authority. In 2000, on its last day in session, Congress passed the now-notorious Commodity Futures Modernization Act, which had been inserted into an 11,000-page spending bill at the last minute, with almost no debate on the floor of the Senate. Banks were now free to trade default swaps with impunity.
Fast-forward to today. It’s early June in Washington, D.C. Barack Obama, a popular young politician whose leading private campaign donor was an investment bank called Goldman Sachs — its employees paid some $981,000 to his campaign — sits in the White House. 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 are 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 groundbreaking 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.
While this is not the traditional “Guest Commentary”, I found it interesting to see such similar views, and such similar condemnation from folks such as Glenn Beck, Matt Taibbi, and Rolling Stone in general. Given the discussions yesterday and presentation of the idea of the big banks getting bigger, and my assertion that they are doing so with the intentional help of the federal government, this was a fitting piece for tonight. It seems that Goldman Sachs is also getting much federal assistance from key figures in the federal government.
I submit to everyone, especially some of the folks who seem to have a vast level of trust that the “government” is interested in doing things to help the huddled masses, that this is a prime example of the level of moral ineptitude in the federal play makers. I challenge anyone to tell me how a blatant set of illegal and certainly immoral moves such as what we see illustrated here, in any possible way, bolster your argument that moving towards a form of socialism, communism, or fascism, is a good thing. I know I have read a couple of folks here lately telling me that they would prefer government be involved with everything. That having “government” involved in making rules for business is the only way that morality can be achieved, since a man cannot be trusted but a group of men can.
Given the level of corruption, lack of morals, and amount of helping big business screw over consumers that is coming from the highest levels of the federal government, I challenge you to show me how your argument is not rendered completely moot. Because the group of men running this country into the ground, continue to show me that TRUST is the absolute last thing I should be giving them.
Thanks again to Life of Illusion for putting this information together so that we could all share it and discuss it.