July 15, 2009

Matt Taibbi in Rolling Stone called Goldman Sachs a "giant vampire squid wrapped around the face of humanity" sucking money into a "blood funnel". I thought the remark was an unjustified insult to vampire squid.

On our dime the Wall Street mega-bank took in $3.44 billion in profit from April through June. The 29,000 people who work at Goldman Sachs are "on course this year for average pay, bonus and benefit packages of an eye-watering $770,000." (The Telegraph -UK) That’s double what it paid during the tech boom at the beginning of the decade. As Eliot Spitzer put it, Goldman Sachs made a "bloody fortune".

And it is on our dime. Not just the measly $10 billion in TARP loan money that Goldman paid back to the U.S. so grandly. Goldman is benefitting from the $12.8 trillion ($12,800,000,000,000 ) Bush and Obama pumped into Wall Street. Goldman makes money on the difference between what it costs to get money and what it charges when it loans it out. Thanks to Bush’s Secretary of the Treasury Hank Paulsen(a former Goldman Sachs bigwig) Wall Streets gets money for next to nothing, (0%).and loans it out for lots more. Top businesses pay 3%. Homeowners pay more. After dipping briefly in the 4% range, house mortgages are up past 5%.

The big kahuna was when Goldman Sachs was sent a nice sized check by A.I.G. A.I.G. you recall collapsed last year and was rescued by $180 billion donated by you and your descendants down to the next millenium. Goldman Sachs was an A.I.G. "counterparty". No, not sweets and drinks on a lunch counter. It means that A.I.G. sold Goldman credit default swaps, insurance contracts on financial paper. With its government help A.I.G. paid Goldman 100 cents on a dollar, amounting to $12.9 billion.

There was no reason A.I.G. had to be pay out all that money. It was bankrupt in reality. The U.S. could have demanded different arrangements. Were worker pay and benefits maintained 100 cents on the dollar when Chrysler and GM went bankrupt? Not on your life.

But for A.I.G. and Goldman it was different. IT WAS AN EMERGENCY. IT WAS TOTAL CATASTROPHE LOOKING US RIGHT IN THE EYE. IT WAS THE END OF THE BANKING SYSTEM. IT WAS A CRISIS OF BIBLICAL PROPORTIONS, GOG AND MAGOG RAVAGING THE CITIES …

It was bullshit. Recall last fall when we were told that the "toxic assets" were going to destroy the world if Congress didn’t give $789 billion in one weekend to Wall St. for the TARP program to buy up the poison? Congress caved. Only Paulsen didn’t use a penny of that TARP to buy the "toxic assets". So those near worthless pieces of paper supposedly were still dooming us all. Yet nothing was done. The banks didn’t want to sell the paper, that is they didn’t want to sell at market value. They wanted top dollar for the trash. So Tim Geithner, Obama’s man at Treasury came up a PiP of a Plan (acutally the PPIP plan) where the U.S. would team with with private investors and ghostbust some $1 trillion dollars of the deadly paper. Except here in July the PIPP has opened up with just $30 billion U.S. investment and $10 billion from some big money men. And that’s it. Chickenfeed. The fearsome boogey man is a leuprachaun.

They’re stealing us blind.

Now if Goldman and its brother thieves were at least usuing the money to build up U.S. industry and trade perhaps they could be forgiven. But they’re not. They’re back to their old tricks."Our model really never changed," Goldman Sachs Chief Financial Officer David Viniar told Bloomberg.com. "We’ve said very consistently that our business model remained the same." It’s VAR (value at risk) measure rose to the highest on record according to Bloomberg. Their VAR last quarter was $245 million, the amount that their traders could lose in a single day.

And all the while U.S. industry is in the toilet. Car plants and dealers and shutting down right and left. Detroit and Gary Indiana rust away and the state of California has to hand out I.O.U’s.