Goldman Sachs: The Pigs Win Again

“We’re all going to die, all of us, what a circus! That alone should make us love each other but it doesn’t. We are terrorized and flattened by trivialities, we are eaten up by nothing. ”

– Charles Bukowski



The dazzling propaganda onslaught conducted by the financial sector has been shock and fucking awe as the amazing resuscitation of the FIRE industry roars into the next quarter. A dirty as a pig in shit corporatist media waged total war against reason, morality, facts, history and the law itself in allowing the treasonous looters from Wall Street bounce back off of the ropes and reassert their control over the government and the country at large. Now under the cover of the saturation coverage of the Michael Jackson freak show (I doubt that I will see this shit end in my lifetime) the still annoying little trickles of doom, like the impending implosion of Arnoldland are stomped on by gatekeepers who just play another card from the Whacko Jacko deck of jokers. Face it people, we are fucked! With the celebrity infatuated lemmings in this rotting from the insides empire it is only a matter of time until they start seeing the great one’s ghoulish visage appearing on tortillas and grilled cheese sandwiches. If there were such a thing as a truly American Jesus it would be Michael Jackson. Neverland will become the bastardized equivalent of Lourdes, Jerusalem and Graceland uniquely spliced together to resemble our sick, twisted and mutated national DNA.

I must admit a perverse sort of cynical fascination over the strange death of Jacko and the mammoth industry that it is springing up around the aftermath. If there were ever a truly American tragedy then the story of the moonwalking freak is it. To me the rise of Jackson paralleled the rise of the Bizzaro version of America that was subbed out with reality with the rise of Ronald Reagan and the war against history, the canonization of the greedheads and the stupefying of the population. It was an orchestrated pushback that truly began with Nixon and Agnew against the ugliness of the 60’s, the putridity of the lies of Vietnam and the loss of faith in a system gone terribly wrong since the fascist shadow government gunned down Jack Kennedy like an animal in the streets.

The corporate state, the national security apparatus and assorted other malefactors as laid out in the infamous Powell Memorandum that laid out the game plan for the filthy incubators of lies that are the think tanks had to fight back and fight back hard against the serious inventory of the American soul that was threatening their empires built by plunder, death and madness. So they schemed and ultimately rolled out Ronald Reagan, the golden- tonsiled right-wing crackpot who rose through the ranks as a shill for all that was rotten and a predilection for gangsters, fascists and the toxic offal that slimed out from the wreckage of the uber right-wing crazy Barry Goldwater movement.

In the 1980’s, the exact time of America’s demarcation from the reality based world Ronald Wilson Reagan was our king and Michael Jackson our national minstrel, our hero and role model and our ambassador of American consumer driven capitalism. When I think of the Reagan years Jacko is doing the soundtrack as we all moonwalked to the edge of the abyss and danced naked before finally jumping in during the George W. Bush years. Adolf Hitler, it has been said, never cared much about the subjects of his Reich, he had his eye on their children and in another serendipitous parallel between Nazi Germany and post 9/11 America the generation that came to age during the Reagan era have become the brain dead, snake mean and maxed out majority of the population in 2009. The combination of the engineered dumbing down and rearranging of the educational system and the emergence of cable and satellite television made for perfect methods of colonizing the brains of generation shit. Their willful ignorance, selfishness, historical isolation and hard-wired to shop till they drop impulses are largely responsible for the devastation that is gripping the country outside the beautiful and silly little worlds on those plastic and glass electronic gods in living rooms. They will be the ones who will be running the police state when it becomes necessary to keep the rabble down, willing executioners they shall be.

But I digress…

Reagan and Jacko’s ascendance cast into marble our national implosion, the melding of idiocy as a virtue and celebrity were a toxic vat of Kool Aid indeed. The homilies of Der Gipper allowed for the dismantling of the social safety net behind the smiling face of the beloved old uncle and the cover provided by the entertainment industrial complex drowned out the sound of slaughter in the chutes while the sheep placidly grazed in the pasture under the ubiquitous stars and stripes forever. But the rot began to dominate, Reagan was exposed as a drooling old fool propped up by the black operations devils who were using his administration as a breeding ground and launching pad for their dirty little wars. They sold poison gas to Saddam, sent weapons to the ayatollahs in Iran through their Israeli middlemen and turned Latin America red with the blood of the victims of the victims of their client torture states. This is a story for another time though and it will be told in more detail soon enough. Meanwhile back on the lemming farm, Jacko and the American psyche itself was locked in a fornicating freefall. There were allegations of pedophilia, madness, skin bleaching, greed, money troubles, self mutilation and madness.

The 1990’s were the era when the mindfields were plowed, Jacko’s troubles fueled the cable ‘news’ industry and like fresh shit draws flies there was shit aplenty. There was O.J. Simpson and the launching pad to the careers of propagandists still on the payroll of networks, there were Buttafuocos and severed penises, children drowned in a car driven into a lake and blamed on black men, sick murders of child beauty queens, blowjobs and semen stained dresses and through it all we shopped, bought bigger televisions on ever expanding credit lines. Once the national gray matter had been sufficiently prepped the seeds were planted and then nurtured by the devils behind Bush, the imagery of the 9/11 ‘terrorist’ attacks heralded the harvest and we are now reaping what we have sown. The looting and the gutting of the American infrastructure, the offshoring of industry and the wars of today could never have been accomplished with an educated, vigilant and aware populace, that much was understood by the oligarchy when they rolled out Saint Ronald, Michael Jackson was only the natural progression of a mutated culture that led us to this point as we now prepare for our altered destiny.

The primary purpose of this essay was really on the triumph of the pigs, the failure of the Obamessiah to deliver us from evil and the coming plunder of institutions shored up with taxpayer money and wedded to a government that has turned against the people, that little detour only serves as a lead in, a reason for how we got to this point. What I would really like to do is to offer up some encouragement to read a long piece by Matt Taibbi in the current issue of Rolling Stone Magazine: The Great American Bubble Machine. The link is to a scan since Rolling Stone is not making it available online, nor for that matter is it getting any coverage for the explosive revelations it contains about the Great Satan, Goldman Sachs and the role of this capitalist monstrosity in engineering, profiting and prolonging the eating of the flesh of a once prosperous nation like the diseased, purely evil incarnate zombies that they are. Taibbi’s piece is Pulitzer Prize material, and I will excerpt select bits of it to offer up here:

The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who’s Who of Goldman Sachs graduates.

And –

The bank’s unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere – high gas prices, rising consumer-credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you’re losing, it’s going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it’s going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth – pure profit for rich individuals.

They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They’ve been pulling this same stunt over and over since the 1920s – and now they’re preparing to do it again, creating what may be the biggest and most audacious bubble yet.

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. There were a lot of losers in each of those bubbles, and in the bailout that followed. But Goldman wasn’t one of them.

IF AMERICA IS NOW CIRCLING THE DRAIN, GOLDMAN SACHS HAS FOUND A WAY TO BE THAT DRAIN.

(After that rip-roaring intro Taibbi then goes on to explain the complicity of the Great Satan (G.S.) in the following bubbles:)

1: The Great Depression



Beginning a pattern that would repeat itself over and over again, Goldman got into the investment-trust game late, then jumped in with both feet and went hog-wild. The first effort was the Goldman Sachs Trading Corporation; the bank issued a million shares at $100 apiece, bought all those shares with its own money and then sold 90 percent of them to the hungry public at $104. The trading corporation then relentlessly bought shares in itself, bidding the price up further and further. Eventually it dumped part of its holdings and sponsored a new trust, the Shenandoah Corporation, issuing millions more in shares in that fund – which in turn sponsored yet another trust called the Blue Ridge Corporation. In this way, each investment trust served as a front for an endless investment pyramid: Goldman hiding behind Goldman hiding behind Goldman. Of the 7,250,000 initial shares of Blue Ridge, 6,250,000 were actually owned by Shenandoah – which, of course, was in large part owned by Goldman Trading.

The end result (ask yourself if this sounds familiar) was a daisy chain of borrowed money, one exquisitely vulnerable to a decline in performance anywhere along the line; The basic idea isn’t hard to follow. You take a dollar and borrow nine against it; then you take that $10 fund and borrow $90; then you take your $100 fund and, so long as the public is still lending, borrow and invest $900. If the last fund in the line starts to lose value, you no longer have the money to pay back your investors, and everyone gets massacred.

2: Tech Stocks



The basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren’t much more than pot-fueled ideas scrawled on napkins by up-too-late bong-smokers were taken public via IPOs, hyped in the media and sold to the public for megamillions. It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out 50-story windows and opening the phones for bids. In this game you were a winner only if you took your money out before the melon hit the pavement.

And

How did Goldman achieve such extraordinary results? One answer is that they used a practice called “laddering,” which is just a fancy way of saying they manipulated the share price of new offerings. Here’s how it works: Say you’re Goldman Sachs, and Bullshit.com comes to you and asks you to take their company public. You agree on the usual terms: You’ll price the stock, determine how many shares should be released and take the Bullshit.com CEO on a “road show” to schmooze investors, all in exchange for a substantial fee (typically six to seven percent of the amount raised). You then promise your best clients the right to buy big chunks of the IPO at the low offering price – let’s say Bullshit.com’s starting share price is $15 – in exchange for a promise that they will buy more shares later on the open market. That seemingly simple demand gives you inside knowledge of the IPO’s future, knowledge that wasn’t disclosed to the day-trader schmucks who only had the prospectus to go by: You know that certain of your clients who bought X amount of shares at $15 are also going to buy Y more shares at $20 or $25, virtually guaranteeing that the price is going to go to $25 and beyond. In this way, Goldman could artificially jack up the new company’s price, which of course was to the bank’s benefit – a six percent fee of a $500 million IPO is serious money.

3: The Housing Craze



GOLDMAN SCAMMED HOUSING INVESTORS BY BETTING AGAINST ITS OWN CRAPPY MORTGAGES.

Goldman’s role in the sweeping disaster that was the housing bubble is not hard to trace. Here again, the basic trick was a decline in underwriting standards, although in this case the standards weren’t in IPOs but in mortgages. By now almost everyone knows that for decades mortgage dealers insisted that home buyers be able to produce a down payment of 10 percent or more, show a steady income and good credit rating, and possess a real first and last name. Then, at the dawn of the new millennium, they suddenly threw all that poo poo 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.

None of that would have been possible without investment bankers like Goldman, who created vehicles to package those lovely mortgages and sell them en masse to unsuspecting insurance companies and pension funds. This created a mass market for toxic debt that would never have existed before; in the old days, no bank would have wanted to keep some addict ex-con’s mortgage on its books, knowing how likely it was to fail. You can’t write these mortgages, in other words, unless you can sell them to someone who doesn’t know what they are.

Goldman used two methods to hide the mess they were selling. First, they bundled hundreds of different mortgages into instruments called Collateralized Debt Obligations. Then they sold investors on the idea that, because a bunch of those mortgages would turn out to be OK, there was no reason to worry so much about the lovely ones: The CDO, as a whole, was sound. Thus, junk-rated mortgages were turned into AAA-rated investments. Second, to hedge its own bets, Goldman got companies like AIG to provide insurance – known as credit-default swaps – on the CDOs. The swaps were essentially a racetrack bet between AIG and Goldman: Goldman is betting the ex-cons will default, AIG is betting they won’t.

(note: Taibbi did another piece that is on Alternet where he offered up the simplest explanation of what has gone on with the derivatives and worthless but now pumped back up mortgage backed securities – not in the Rolling Stone piece but priceless nonetheless)

This isn’t really commerce, but much more like organized crime: it was a gigantic fraud perpetrated on the economy that wouldn’t have been possible without accomplices in the ratings agencies and regulators willing to turn a blind eye. Imagine a meat company that bred ten billion rats, fattened them on trash and sewage, ground their bodies into chuck, and then sold it all as grade-A ground beef to McDonald’s and Burger King, right under the noses of the USDA: this is exactly the same thing, only with debt instead of food. We’re eating it, they’re counting the money.

4: $4 a Gallon



So 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.

As is so often the case, there had been a Depression-era law in place designed specifically to prevent this sort of thing. The commodities market was designed in large part to help farmers: A grower concerned about future price drops could enter into a contract to sell his corn at a certain price for delivery later on, which made him worry less about building up stores of his crop. When no one was buying corn, the farmer could sell to a middleman known as a “traditional speculator,” who would store the grain and sell it later, when demand returned. That way, someone was always there to buy from the farmer, even when the market temporarily had no need for his crops.

5: Rigging the Bailout

Once the bailouts were in place, Goldman went right back to business as usual, dreaming up impossibly convoluted schemes to pick the American carcass clean of its loose capital. One of its first moves in the post-bailout era was to quietly push forward the calendar it uses to report its earnings, essentially wiping December 2008 – with its $1.3 billion in pretax losses – off the books. At the same time, the bank announced a highly suspicious $1.8 billion profit for the first quarter of 2009 – which apparently included a large chunk of money funneled to it by taxpayers via the AIG bailout. “They cooked those first-quarter results six ways from Sunday,” says one hedge-fund manager. “They hid the losses in the orphan month and called the bailout money profit.”

Two more numbers stand out from that stunning first-quarter turnaround. The bank paid out an astonishing $4.7 billion in bonuses and compensation in the first three months of this year, an 18 percent increase over the first quarter of 2008. It also raised $5 billion by issuing new shares almost immediately after releasing its first-quarter results. Taken together, the numbers show that Goldman essentially borrowed a $5 billion salary payout for its executives in the middle of the global economic crisis it helped cause, using half-baked accounting to reel in investors, just months after receiving billions in a taxpayer bailout.

6: Global Warming



AS ENVISIONED BY GOLDMAN, THE FIGHT TO STOP GLOBAL WARMING WILL BECOME A “CARBON MARKET” WORTH $1 TRILLION A YEAR.

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.

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 estimates that about $646 billions 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 an 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.” A 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 the Chicago Climate Exchange, where the 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 Al 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 Harris. 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.

It may be Bubble #6 that has caused this story to be ignored, while I believe that there is too much scientific evidence to lend any credence to the global warming deniers I have been highly suspicious of the rush by rapacious corporations to cash in on ‘Going Green’. Now that Taibbi has pointed out just how the Great Satan (G.S.) will be able to profit beyond the wildest dreams of even King Midas by speculating in the carbon trading markets it’s apparent that we have once again been had. No wonder that Barack Obama is pushing for the cap and trade legislation (now likely to fly through the den of iniquity that is the Senate as well with that fucking little weasel Al Franken onboard), did anybody mention that his campaign was largely funded by Goldman Sachs and the other looters in the Wall Street ivory towers?

So this is where we find ourselves now. In a slow roiling, percolating and increasingly restive economic wasteland where the largest state – California is about to go el busto and as the maxim goes, as goes California so goes America. Those poor stupid dupes (and I know many of them) gave the oligarchy the knife that would lead to their own disembowelment when the Karl Rove backed overthrow of Governor Gray Davis was successfully executed with that outlandish, oversexed, neo-Nazi buffoon then handed the reigns to execute the Chicago School plan and implement the Shock Doctrine. While I have never been completely onboard with the wild eyed ‘conspiracy theorists’ (god I hate that term) that this economic collapse has all been planned and engineered I am getting there with each passing day. The incessant Pollyanna media spin on every tidbit of miserable economic news to turn chicken shit into chicken salad is so Orwellian, so mendacious and so entwined with the conventional wisdom that even I am beginning to question whether this is indeed reality or if in fact I am already dead and suspended in some sort of purgatory. The up is down, war is peace, piss on my head and tell me that it’s raining spin machine that in a uniquely American way glorifies the newthink that ‘hey we suck but since we didn’t suck as bad as we originally predicted that we were going to suck that everything really doesn’t suck afterall’ (especially in relation to the spin on the grim unemployment figures) has me wondering if Aldous Huxley pegged it dead on when he mused that:

Maybe this world is another planet’s Hell