Goldman CEO Henry Paulson was the architect of the bailout

For more on Wall Street's march on Washington, read Taibbi's "The Big Takeover."

If the ABCs of the financial meltdown leave your head spinning -- if "default swaps" and "collateralized debt obligations" and "high-rated tranches" are all just so much gobbledygook -- don't worry. You're not alone.

The alphabet soup of exotic investments that represent the immediate cause of the banking mess is so complex that many of those "innovative" financiers responsible for bringing the global economy to the brink of collapse are now making a fortune in consulting fees explaining just what the hell it is that they created

This story is being updated...Securities fraud charges against Goldman Sachs are just the beginning....Meanwhile, that hedge fund, Paulson & Co. Inc, made $1 billion. The investors lost about an equal amount. Goldman, meanwhile, racked up the fees.

George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup — which in turn got a $300 billion taxpayer bailout from Paulson.

DOMESTIC TERRORISM 101.............Hedge-fund and Ponzi scams continue as frauds du jour......

, as was the case with Collateralized Debt Obligations (CDOs), when an act of Congress prohibits the SEC from having a look.

Fannie Mae and Freddie Mac have a similar tale not to tell. Congress was closely involved in their charade as well, with conflicts of interest that are certainly worthy of extensive investigations

past three decades steadily eroding the regulatory system that restrained the financial sector from acting on its own worst tendencies.


The 231-page report, "Sold Out: How Wall Street and Washington Betrayed America," shows that the financial sector invested more than $5 billion on purchasing political influence in Washington over the past decade, with as many as 3,000 lobbyists winning deregulation and other policy decisions that led directly to the current financial collapse.

"The report details, step-by-step, how Washington systematically sold out to Wall Street," said Harvey Rosenfield, president of the California-based non-profit organization Consumer Education Foundation.

"Depression-era programs that would have prevented the financial meltdown that began last year were dismantled, and the warnings of those who foresaw disaster were drowned in an ocean of political money," he said. "Americans were betrayed, and we are paying a high price -- trillions of dollars -- for that betrayal."
From 1998-2008, Wall Street investment firms, commercial banks, hedge funds, real estate companies and insurance conglomerates made political contributions totalling $2.725 billion and spent another $4.4 billion on lobbyists -- a financial juggernaut aimed at undercutting federal regulation.

"Congress and the Executive Branch responded to the legal bribes from the financial sector, rolling back common-sense standards, barring honest regulators from issuing rules to address emerging problems and trashing enforcement efforts," said Robert Weissman of Essential Information and the lead author of the report
How Wall Street's Scam Artists Turned Home Mortgages Into Economic WMDs
The titans of high finance are trying desperately to shift blame for the crisis onto others, but this dead cat lies squarely on their doorstep.

Sept 18, 2008 ... Only one member of Congress, Barney Frank, Chris Dodd, received more kickbacks from Raines's Fannie Mae cronies than did Barack Obama–over $120000 in bribes. ... Senator Christopher Dodd, and the chairman of the Senate Budget Committee ... and wrecked Wall Street through greed and avarice on a scale ...

Dec 23, 2009 ... Sleazy bribes and pork payoffs didn't start with their government health care takeover bill. ... the majority's Wall Street regulatory “reform” bill with $4 billion in payoffs ... Chris Dodd, whose re-election bid is in hot water

Apr 5, 2010 ... Barney Frank Permanently Bans Staff From Communicating With Aide-Turned- ... SWAPS + FEES + PAYOFFS + BRIBES + FELONIES + SCAMS + L1ES + EXPL0ITATION ..... It is the CR1M1NAL ELEMENT that run the Wall Street Banks! ...

Barney Frank's Shocking Admission On Fannie And Freddie | FDL News ...Jan 5, 2010 ... I know that it's fashionable around FDL to put Barney Frank in the pocket of the banksters but we ... It amounts to paying off Wall Street's gambling debts, not the people's mortgages. .... And the worst part of it is that we think it sounds crazy to pay off the loans, ... Bribes before legislation. ...
news.firedoglake.com/.../barney-franks-shocking-admission-on-fannie-and-freddie/

Geithner, now treasury secretary, was previously the president of the Federal Reserve Bank of New York (FRBNY), where he negotiated the deal to pay Goldman Sachs and the other top banks in full to cover their bad bets on securitized mortgages. Barofsky’s report concluded that Geithner’s scheme represented a “backdoor bailout” for the financial hustlers at the center of the market fiasco. Noting that Geithner denies that was his intention, the report states, “Irrespective of their stated intent, however, there is no question that the effect of FRBNY’s decisions—indeed, the very design of the federal assistance to AIG—was that tens of billions of dollars of Government money was funneled inexorably and directly to AIG’s counterparties.”

Not surprisingly, the Treasury Department that Geithner now heads defended his actions in not forcing “haircuts” on the full dollar-for-dollar payoff by AIG to the banks while he was at the New York Fed: “The government could not unilaterally impose haircuts on creditors, and it would not have been appropriate for the government to pressure counterparties to accept haircuts by threatening to retaliate in some way through its regulatory power.”


Who in America is going to stand up and accept appropriate culpability for his/her contribution to our current economic crisis? Who in America is also willing to expose the incestuous nature of the Wall Street-Washington relationship which provided the cover for the activities which have debilitated our nation?

Let’s review what we have learned so far:

1. Blame has been directed at bank executives…but they got paid handsomely, and have not accepted full responsibility.

2. Blame has been directed at ratings agencies….but they also got paid handsomely to provide ratings, while not really knowing what they were doing. (more…)

Tags: Ben Bernanke, blame for crisis, Chris Dodd, culpability for crisis, Fannie Mae execs, FCIC, finger pointing, FINRA, Franklin Raines, Freddie Mac execs, Larry Summers, Leland Brendsel, mortgage originators, Phil Gramm, public service, public service and private wealth accumulation, ratings agencies, reasons for our economic crisis, regulators, Rham Emanuel, Robert Rubin, SEC, Tim Geithner, Wall Street executives, Wall Street-Washington incest, Washington, what is to blame for our economic crisis, who is to blame for our economic crisis


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.



By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup — which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the asshole chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibilliondollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in goldenparachute payments as his bank was selfdestructing. There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailedout insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman — not to mention …

But then, any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

The Ponzi scheme was based on the collateralized debt obligations (CDOs) in which the bankers traded and which AIG had insured with the credit default swaps (CDSs) that they sold but failed to back with adequate funding. Now Geithner’s Treasury concedes that AIG “should never have been allowed to escape tough, consolidated supervision.” But none of AIG’s scams were regulated, nor were any of the others at the center of the larger financial debacle, because of laws pushed through Congress by Geithner’s boss, Lawrence Summers, when they both were in the Clinton administration. Specifically, they prevented regulation of those opaque CDOs and CDSs that would come to derail the world’s economy.

As the inspector general’s report stated: “In 2000, the [Clinton administration-backed] Commodity Futures Modernization Act (CFMA) … barred the regulation of credit default swaps and other derivatives.” Why did the financial geniuses of the Clinton administration seek to prevent that obviously needed regulation? Because the Clintonistas believed the Wall Street guys knew what they were doing and that what was good for them was good for us lesser folk. As Summers, who is the top economic adviser in the Obama White House, put it in congressional testimony back then: “The parties to these kinds of contracts are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies.”

Sounds nonsensical today: The inspector general’s report notes that AIG, because of the deregulatory law that Summers and Geithner pushed through, was “able to sell swaps on $72 billion worth of CDOs to counterparties without holding reserves that a regulated insurance company would be required to maintain.” But why, then, is Summers once again running the show with Geithner when both have made careers of exhibiting total contempt for the public interest? Because there is no accountability for the high rollers of finance, no matter who happens to be president.



The bank's unprecedented reach and power have enabled it to turn all of America into a giant pumpanddump 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 consumercredit rates, halfeaten 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.


Goldman wasn't always a too-big-to-fail Wall Street behemoth, the ruthless face of kill-or-be-killed capitalism on steroids — just almost always. The bank was actually founded in 1869 by a German immigrant named Marcus Goldman, who built it up with his soninlaw Samuel Sachs. They were pioneers in the use of commercial paper, which is just a fancy way of saying they made money lending out shortterm IOUs to smalltime vendors in downtown Manhattan.

You can probably guess the basic plotline of Goldman's first 100 years in business: plucky, immigrantled investment bank beats the odds, pulls itself up by its bootstraps, makes shitloads of money. In that ancient history there's really only one episode that bears scrutiny now, in light of more recent events: Goldman's disastrous foray into the speculative mania of precrash Wall Street in the late 1920s.

This great Hindenburg of financial history has a few features that might sound familiar. Back then, the main financial tool used to bilk investors was called an "investment trust." Similar to modern mutual funds, the trusts took the cash of investors large and small and (theoretically, at least) invested it in a smorgasbord of Wall Street securities, though the securities and amounts were often kept hidden from the public. So a regular guy could invest $10 or $100 in a trust and feel like he was a big player. Much as in the 1990s, when new vehicles like day trading and etrading attracted reams of new suckers from the sticks who wanted to feel like big shots, investment trusts roped a new generation of regularguy investors into the speculation game.

Beginning a pattern that would repeat itself over and over again, Goldman got into the investmenttrust game late, then jumped in with both feet and went hogwild. 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.

In a chapter from The Great Crash, 1929 titled "In Goldman Sachs We Trust," the famed economist John Kenneth Galbraith held up the Blue Ridge and Shenandoah trusts as classic examples of the insanity of leveragebased investment. The trusts, he wrote, were a major cause of the market's historic crash; in today's dollars, the losses the bank suffered totaled $475 billion. "It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity," Galbraith observed, sounding like Keith Olbermann in an ascot. "If there must be madness, something may be said for having it on a heroic scale."

Fast-forward about 65 years. Goldman not only survived the crash that wiped out so many of the investors it duped, it went on to become the chief underwriter to the country's wealthiest and most powerful corporations. Thanks to Sidney Weinberg, who rose from the rank of janitor's assistant to head the firm, Goldman became the pioneer of the initial public offering, one of the principal and most lucrative means by which companies raise money. During the 1970s and 1980s, Goldman may not have been the planet-eating Death Star of political influence it is today, but it was a topdrawer firm that had a reputation for attracting the very smartest talent on the Street.

It also, oddly enough, had a reputation for relatively solid ethics and a patient approach to investment that shunned the fast buck; its executives were trained to adopt the firm's mantra, "longterm greedy." One former Goldman banker who left the firm in the early Nineties recalls seeing his superiors give up a very profitable deal on the grounds that it was a longterm loser. "We gave back money to 'grownup' corporate clients who had made bad deals with us," he says. "Everything we did was legal and fair — but 'longterm greedy' said we didn't want to make such a profit at the clients' collective expense that we spoiled the marketplace."

But then, something happened. It's hard to say what it was exactly; it might have been the fact that Goldman's cochairman in the early Nineties, Robert Rubin, followed Bill Clinton to the White House, where he directed the National Economic Council and eventually became Treasury secretary. While the American media fell in love with the story line of a pair of babyboomer, Sixtieschild, Fleetwood Mac yuppies nesting in the White House, it also nursed an undisguised crush on Rubin, who was hyped as without a doubt the smartest person ever to walk the face of the Earth, with Newton, Einstein, Mozart and Kant running far behind.

Rubin was the prototypical Goldman banker. He was probably born in a $4,000 suit, he had a face that seemed permanently frozen just short of an apology for being so much smarter than you, and he exuded a Spock-like, emotion-neutral exterior; the only human feeling you could imagine him experiencing was a nightmare about being forced to fly coach. It became almost a national clichè that whatever Rubin thought was best for the economy — a phenomenon that reached its apex in 1999, when Rubin appeared on the cover of Time with his Treasury deputy, Larry Summers, and Fed chief Alan Greenspan under the headline The Committee To Save The World. And "what Rubin thought," mostly, was that the American economy, and in particular the financial markets, were over-regulated and needed to be set free. During his tenure at Treasury, the Clinton White House made a series of moves that would have drastic consequences for the global economy — beginning with Rubin's complete and total failure to regulate his old firm during its first mad dash for obscene short-term profits.

The basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren't much more than potfueled ideas scrawled on napkins by uptoolate bongsmokers were taken public via IPOs, hyped in the media and sold to the public for mega-millions. 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.

It sounds obvious now, but what the average investor didn't know at the time was that the banks had changed the rules of the game, making the deals look better than they actually were. They did this by setting up what was, in reality, a two-tiered investment system — one for the insiders who knew the real numbers, and another for the lay investor who was invited to chase soaring prices the banks themselves knew were irrational. While Goldman's later pattern would be to capitalize on changes in the regulatory environment, its key innovation in the Internet years was to abandon its own industry's standards of quality control.

"Since the Depression, there were strict underwriting guidelines that Wall Street adhered to when taking a company public," says one prominent hedge-fund manager. "The company had to be in business for a minimum of five years, and it had to show profitability for three consecutive years. But Wall Street took these guidelines and threw them in the trash." Goldman completed the snow job by pumping up the sham stocks: "Their analysts were out there saying Bullshit.com is worth $100 a share."

The problem was, nobody told investors that the rules had changed. "Everyone on the inside knew," the manager says. "Bob Rubin sure as hell knew what the underwriting standards were. They'd been intact since the 1930s."

Jay Ritter, a professor of finance at the University of Florida who specializes in IPOs, says banks like Goldman knew full well that many of the public offerings they were touting would never make a dime. "In the early Eighties, the major underwriters insisted on three years of profitability. Then it was one year, then it was a quarter. By the time of the Internet bubble, they were not even requiring profitability in the foreseeable future."

Goldman has denied that it changed its underwriting standards during the Internet years, but its own statistics belie the claim. Just as it did with the investment trust in the 1920s, Goldman started slow and finished crazy in the Internet years. After it took a littleknown company with weak financials called Yahoo! public in 1996, once the tech boom had already begun, Goldman quickly became the IPO king of the Internet era. Of the 24 companies it took public in 1997, a third were losing money at the time of the IPO. In 1999, at the height of the boom, it took 47 companies public, including stillborns like Webvan and eToys, investment offerings that were in many ways the modern equivalents of Blue Ridge and Shenandoah. The following year, it underwrote 18 companies in the first four months, 14 of which were money losers at the time. As a leading underwriter of Internet stocks during the boom, Goldman provided profits far more volatile than those of its competitors: In 1999, the average Goldman IPO leapt 281 percent above its offering price, compared to the Wall Street average of 181 percent.

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 daytrader 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.

Goldman was repeatedly sued by shareholders for engaging in laddering in a variety of Internet IPOs, including Webvan and NetZero. The deceptive practices also caught the attention of Nicholas Maier, the syndicate manager of Cramer & Co., the hedge fund run at the time by the now-famous chattering television asshole Jim Cramer, himself a Goldman alum. Maier told the SEC that while working for Cramer between 1996 and 1998, he was repeatedly forced to engage in laddering practices during IPO deals with Goldman.

"Goldman, from what I witnessed, they were the worst perpetrator," Maier said. "They totally fueled the bubble. And it's specifically that kind of behavior that has caused the market crash. They built these stocks upon an illegal foundation — manipulated up — and ultimately, it really was the small person who ended up buying in." In 2005, Goldman agreed to pay $40 million for its laddering violations — a puny penalty relative to the enormous profits it made. (Goldman, which has denied wrongdoing in all of the cases it has settled, refused to respond to questions for this story.)

Another practice Goldman engaged in during the Internet boom was "spinning," better known as bribery. Here the investment bank would offer the executives of the newly public company shares at extra-low prices, in exchange for future underwriting business. Banks that engaged in spinning would then undervalue the initial offering price — ensuring that those "hot" opening-price shares it had handed out to insiders would be more likely to rise quickly, supplying bigger firstday rewards for the chosen few. So instead of Bullshit.com opening at $20, the bank would approach the Bullshit.com CEO and offer him a million shares of his own company at $18 in exchange for future business — effectively robbing all of Bullshit's new shareholders by diverting cash that should have gone to the company's bottom line into the private bank account of the company's CEO.

In one case, Goldman allegedly gave a multimillion-dollar special offering to eBay CEO Meg Whitman, who later joined Goldman's board, in exchange for future i-banking business. According to a report by the House Financial Services Committee in 2002, Goldman gave special stock offerings to executives in 21 companies that it took public, including Yahoo! cofounder Jerry Yang and two of the great slithering villains of the financial-scandal age — Tyco's Dennis Kozlowski and Enron's Ken Lay. Goldman angrily denounced the report as "an egregious distortion of the facts" — shortly before paying $110 million to settle an investigation into spinning and other manipulations launched by New York state regulators. "The spinning of hot IPO shares was not a harmless corporate perk," then-attorney general Eliot Spitzer said at the time. "Instead, it was an integral part of a fraudulent scheme to win new investment-banking business."

Such practices conspired to turn the Internet bubble into one of the greatest financial disasters in world history: Some $5 trillion of wealth was wiped out on the NASDAQ alone. But the real problem wasn't the money that was lost by shareholders, it was the money gained by investment bankers, who received hefty bonuses for tampering with the market. Instead of teaching Wall Street a lesson that bubbles always deflate, the Internet years demonstrated to bankers that in the age of freely flowing capital and publicly owned financial companies, bubbles are incredibly easy to inflate, and individual bonuses are actually bigger when the mania and the irrationality are greater.

Nowhere was this truer than at Goldman. Between 1999 and 2002, the firm paid out $28.5 billion in compensation and benefits — an average of roughly $350,000 a year per employee. Those numbers are important because the key legacy of the Internet boom is that the economy is now driven in large part by the pursuit of the enormous salaries and bonuses that such bubbles make possible. Goldman's mantra of "long-term greedy" vanished into thin air as the game became about getting your check before the melon hit the pavement.

The market was no longer a rationally managed place to grow real, profitable businesses: It was a huge ocean of Someone Else's Money where bankers hauled in vast sums through whatever means necessary and tried to convert that money into bonuses and payouts as quickly as possible. If you laddered and spun 50 Internet IPOs that went bust within a year, so what? By the time the Securities and Exchange Commission got around to fining your firm $110 million, the yacht you bought with your IPO bonuses was already six years old. Besides, you were probably out of Goldman by then, running the U.S. Treasury or maybe the state of New Jersey. (One of the truly comic moments in the history of America's recent financial collapse came when Gov. Jon Corzine of New Jersey, who ran Goldman from 1994 to 1999 and left with $320 million in IPO-fattened stock, insisted in 2002 that "I've never even heard the term 'laddering' before.")

For a bank that paid out $7 billion a year in salaries, $110 million fines issued half a decade late were something far less than a deterrent — they were a joke. Once the Internet bubble burst, Goldman had no incentive to reassess its new, profit-driven strategy; it just searched around for another bubble to inflate. As it turns out, it had one ready, thanks in large part to Rubin.



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.

By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup — which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the asshole chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibilliondollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in goldenparachute payments as his bank was selfdestructing. There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailedout insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman — not to mention …

But then, any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

The bank's unprecedented reach and power have enabled it to turn all of America into a giant pumpanddump 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 consumercredit rates, halfeaten 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.

video: Wall Street 'fraud' victims continue to rise - timesonline

Dec 15, 2008 ... Wall Street 'fraud' victims continue to rise ... EIM, the hedge fund group which is run by Arpad Busson, the multimillionaire who is engaged ...
business.timesonline.co.uk/tol/business/industry.../article5346164.ece
Goldman Sachs accused of fraud; SEC says it hid hedge fund's ...

Apr 16, 2010 ... Goldman Sachs accused of fraud; SEC says it hid hedge fund's involvement in ... deals related to the meltdown continue to be investigated. ...
www.sfexaminer.com/.../goldman-sachs-accused-of-fraud-sec-says-it-hid-hedge-funds-involvement-in-doomed-securities-91158194.htm... - 8 hours ago
The U.S. Securities and Exchange Commission has charged Coadum Advisors, Inc, (Coadum) Mansell Capital Partners III, LLC (Mansell), Thomas E. Repke (Repke), James A. Jeffrey (Jeffrey), and others of operating a hedge fund fraud that raised more than $30 million from 2006 to present. According to the SEC, Jeffrey, of Ontario, Canada, and Repke, of Salt Lake City, Utah, control Coadum and Mansell.

The SEC’s quick action put a stop to the ongoing offering. U.S. District Judge Orinda Evans issued a temporary restraining order, froze the defendants’ assets, and appointed a Receiver. The next hearing in the case is scheduled for January 17, 2008.

SEC Charges Allen Stanford with Multibillion-Dollar CD Fraud - TIME
Feb 17, 2009 ... Hedge-fund and Ponzi scams continue as frauds du jour. Not counting Stanford's alleged crime, seven new hedge-fund or Ponzi scams have been ...
www.time.com/time/business/article/0,8599,1880101,00.html - Similar
New York Hedge Fund Fraud Attorney :: Hedge Fund Fraud ...
In 2006, partner Ross B. Intelisano published, Hedge Fund Fraud - The ... The SEC announced that it will continue to pursue its civil enforcement case ...
www.richintelisano.com/lawyer-attorney-1391275.html - Cached - Similar
Regulators & Courts: Futures-related fraud cases continue to pile ...
It looks like there is an epidemic of futures-related scams, with new ones .... Oct. 2009 | Other Voices: Hedge funds: Consideration of fraud risks in an ...
www.opalesque.com/.../Regulators_Courts_fraud_cases_continue_to608.html - Cached

Citigroup Hedge Funds :: Investment Fraud Lawyer Blog
Citigroup Hedge Funds :: Investment Fraud Lawyer Blog. ... Continue reading "Have You Lost Money in a Hedge Fund?" » Posted by Page Perry, LLC | Permalink ...
www.investmentfraudlawyerblog.com/.../citigroup_hedge_funds/ - Cached

Wall Street Fraud - Fraud in the News
One then must look to other deep pockets which may or may not be available. Continue reading "NFL Players Scammed By Hedge Fund Fraud". February 28, 2006 ...
wallstreetfraud.clarislaw.com/fraud-in-the-news/ - Cached - Similar
A number of FINRA arbitration claims have been filed accusing former Linsco Private Ledger (LPL) financial advisor Raymond Londo of running a multi-million dollar ponzi scheme to defraud investors. The claims allege fraud, conversion, misrepresentation and omissions, and negligence. LPL is accused of failing to supervise, discover, and stop the investment fraud scheme within a reasonable amount of time even though there were numerous signs, such as red flags and customer complaints, to indicate that Londo should have been more closely supervised or even fired.

Fund Fraud Hits Big Names - WSJ.com

Dec 13, 2008 ... International banks, hedge funds and wealthy private investors have emerged as ... View Interactive. Read more about previous Ponzi schemes. ... Details emerged Friday of how Mr. Madoff ran the alleged scam, fostering a veneer of ... like all investors, will continue to monitor the situation." ...
online.wsj.com/article/SB122914169719104017.html - Cached - Similar

PDF]
U.S. Department of Justice Fact Sheet: Commodities Fraud and ...
File Format: PDF/Adobe Acrobat - Quick View
Oct 25, 2007 ... criminal violations of the commodities laws and will continue to work closely with members of ... Commodity Pool/Hedge Fund Fraud ...
www.cftc.gov/ucm/groups/public/@newsroom/.../pr5405-07_factsheet.pdf

The Tom Petters fraud case | StarTribune.com
Apr 13, 2010 ... Petters scam: Hedge fund exec charged ..... Dominoes continue to fall in the fraud case against Twin Cities businessman Tom Petters. ...
www.startribune.com/projects/30350074.html - Cached - Similar

SEC Complaint Against Florida Hedge Fund Managers for Violations ...
SEC Complaint Against Florida Hedge Fund Managers for Violations of Anti-Fraud Provisions. Posted on January 13, 2010 by Anthony Lake ...
www.federalcriminaldefenseblog.com/.../sec-complaint-against-florida-hedge-fund-managers-for-violations-of-antifraud-provisions/ - Cached

N.C. Hedge Fund Manager Hit With 54 Fraud Counts | FINalternatives
N.C. Hedge Fund Manager Hit With 54 Fraud Counts. Mar 24 2010 | 9:47am ET. The founder of Raleigh, N.C.-based hedge fund Yellowstone Partners saw the number ...
www.finalternatives.com/node/11882 - Cached

Atlanta Hedge Funder Sued for Fraud / Hedge Fund Lounge
Mar 30, 2010 ... Excerpt from: Atlanta Hedge Funder Sued for Fraud / Hedge Fund Lounge. Continue reading here: Atlanta Hedge Funder Sued for Fraud / Hedge ...
globalrealestateforecast.com/?p=21609 - Cached

-- The Washington Post reported that Joe Cassano, the financial products manager "whose complex investments led to (AIG's) near collapse," is raking in $1 million per month in consulting fees from the ailing financial giant to help sort out the toxic sludge on (and off) the bank's books






You take the blue pill, the story ends, you wake in your bed and you believe whatever you want to believe.



"The United States has only one party - the property party. It's the party of big corporations, the party of money. It has two right wings; one is Democrat and the other is Republican."

"Television is altering the meaning of "being informed" by creating a species of information that might properly be called disinformation... Disinformation does not mean false information. It means misleading information - misplaced, irrelevant, fragmented or superficial information - information that creates the illusion of knowing something, but which in fact leads one away from knowing."


"We live in a nation hated abroad and frightened at home. A place in which we can reasonably refer to the American Republic in the past tense. A country that has moved into a post-constitutional era, no longer a nation of laws but an autocracy run by law breakers, law evaders and law ignorers. A nation governed by a culture of impunity ... a culture in which corruption is no longer a form of deviance but the norm. We all live in a Mafia neighborhood now."


As each day passes, we are hearing of more US corporate and financial frauds and scandals.
Wake up all you trusting souls out there before it's too late!

I describe how Americans have been conditioned to "trust" a very corrupt "System."
Then I outline the corruption that permeates the entire "System." HELLO!! The ENTIRE SYSTEM!
Then I focus on the corruption in the financial markets: the illegal naked short selling process; and the federal agency, the SEC, that is failing to perform its prescribed duty to oversee the securities markets and to enforce the federal laws
Finally, I list the necessary action that you can take to both safeguard your own financial well-being and to help eradicate the corrupt "System."


1. The "trusting" nature of the US populace has allowed "special interests" to take control of the US government.
2. The US Constitution has been/is being breached by those "special interests" in the US government.
3. Our entire "system" is corrupt.
4. Before any real change can occur, that entire corrupt "system" must be eradicated.
5. Both the U.S. Stock Clearing and Settlement System and the Federal Reserve Banking System are fractional systems and therefore are the cause of our financial crisis.
6. The proposed "bailouts" are worthless.



"The point of public relations slogans like "Support our troops" is that they don't mean anything... That's the whole point of good propaganda. You want to create a slogan that nobody's going to be against, and everybody's going to be for. Nobody knows what it means, because it doesn't mean anything. Its crucial value is that it diverts your attention from a question that does mean something: Do you support our policy? That's the one you're not allowed to talk about."

"Media manipulation in the U.S. today is more efficient than it was in Germany, because here we have the pretense that we are getting all the information we want. That misconception prevents people from even looking for the truth."

"While free markets tend to democratize a society, unfettered capitalism leads invariably to corporate control of government."

"To oppose the policies of a government does not mean you are against the country or the people that the government supposedly represents. Such opposition should be called what it really is: democracy, or democratic dissent, or having a critical perspective about what your leaders are doing. Either we have the right to democratic dissent and criticism of these policies or we all lie down and let the leader, the Fuhrer, do what is best, while we follow uncritically, and obey whatever he commands. That's just what the Germans did with Hitler, and look where it got them."

Furthermore, the Securities and Exchange Commission is clearly guilty of complicity by failing to perform its prescribed duties which are to oversee the securities markets and to enforce the federal securities laws.
Moreover, the SEC attempts to hide its complicity in the collusion and attempts to protect the wrongdoers by creating worthless laws, such as Regulation SHO, that are rife with loopholes.
The SEC enacted Regulation SHO in January 2005 to target abusive naked short selling by reducing failure to deliver securities. It states that a broker or dealer may not accept a short sale order without having first borrowed or identified the stock being sold. A major loophole in Reg SHO exempts the market makers from being required to locate stock before selling short because, according to the SEC, naked short selling, when transacted by the market makers, contributes to market liquidity.
Before we can address that loophole, we must first examine what a market is.
All markets are simple. Their primary purpose is to distribute, at a reasonable price, a limited supply of stocks, commodities, widgets, or whatever to those buyers who want it the most. They do that by finding and then defining the exact price in which, at any given moment, an absolute balance exists between the buyers and the sellers.
In other words, all markets are created when two or more people have an equal agreement on price and an equal disagreement on value.
For example, Buyer A bids $10 for 1 share of XYZ company. Seller A asks $10 for 1 share of XYZ company.
Both Buyer A and Seller A have an equal agreement on price: they both agree on the price of $10.
Both Buyer A and Seller A have an equal disagreement on value: they both value what they want more than what they have; Buyer A obviously values 1 share of XYZ company more than $10; and Seller A values $10 more than 1 share of XYZ company.
Furthermore, $10 is the exact price in which an absolute balance exists between Buyer A and Seller A.
In essence, Buyer A and Seller A have just created a market. And that is the natural market process.
But now the SEC attempts to rationalize the loophole it creates in Reg SHO, and in the process circumvents the natural market process by posting on its website under "Division of Market Regulation: Key Points About Regulation SHO" the following: "market makers stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers. Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market. This may occur, for example if there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time. Because it may take a market maker considerable time to purchase or arrange to borrow the security, a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares."
Stop this tape now and go back and listen again to my explanation of the natural market process.
Now listen again to the SEC's pathetic rationalization and compare it with my explanation of the natural market process and you can readily see how the SEC's rationalization is totally illogical and how it conflicts with my explanation of a natural market process.
1. SEC's illogical rationalization: "market makers stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers."
Pertinent question: If "there are no other buyers or sellers," who are the market makers going to sell to or buy from?
2. SEC's illogical rationalization: "Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market. This may occur, for example if there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time."
Natural market process: "If there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time" simply means an imbalance exists between buyers and sellers because they disagree on price and agree on value. In a natural market process, the price of the stock will rise to the point in which the buyers and sellers have an equal agreement on price and an equal disagreement on value.
The following is from SEC's own website: "Although the vast majority of short sales are legal, abusive short sale practices are illegal. For example, it is prohibited for any person to engage in a series of transactions in order to create actual or apparent active trading in a security or to depress the price of a security for the purpose of inducing the purchase or sale of the security by others. Thus, short sales effected to manipulate the price of a stock are prohibited."
Therefore what the SEC alleges "contributes to market liquidity" are just "abusive short sale practices" and are "illegal" because they artificially "manipulate the price of a stock" and should be "prohibited."
3. SEC's illogical rationalization: "a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares."
Pertinent question: Why would a "market maker," "particularly in a fast-moving market" which of course indicates numerous buyers and sellers (otherwise the market would NOT be "fast-moving"), "need to sell the security short without having arranged to borrow shares?"
Furthermore the SEC solidifies its complicity in the collusion by deciding that, after a year of comments pertaining to the market maker exemption loophole, more comments are needed.
As Bob O'Brien asserts, "Yep. Seems that, as if allowing one sort of participant to print stock out of thin air, as often as they like, solely in order for the participant's customers to have inexpensive options pricing in dangerously overshorted issues, WASN'T ENOUGH REASON TO SHUT THE EXEMPTION DOWN IMMEDIATELY. No, a long study was necessary, while every day countless investors were harmed and companies destroyed. The result, that indeed the companies and investors were being hosed by the options market makers, now goes out for comment yet an umpteenth time."
As Bud Burrell asserts in a recent interview: "Regulation SHO is a Fraud. They [SEC} Grandfathered failures to deliver after they looked at the failures at the systemic level they realized they could not force all the failures to settle in the market place without essentially wiping out the Brokerage industry and the Hedge Funds. The List was fraudulent did not list all the stocks that had these persistant FTD's.
"The Brokers realized the way to hide their Fails or to create Naked Shorts so that they couldnt be seen was to do them outside of the system of the Depository Trust custody and clearing system which is a Monopoly in this country in a thing called Ex-Clearing."
So why is the Securities and Exchange Commission failing to perform its prescribed duties, hiding its complicity in the collusion, and protecting the wrongdoers?
Because the SEC is being controlled by the same entity, the U.S. Stock Clearing and Settlement System, that it is supposed to be overseeing.
Therefore do you "trust" that the Securities and Exchange Commission is "honest and reliable?"
Furthermore, the wrongdoers who own the fractional U.S. Stock Clearing and Settlement System also own the Federal Reserve System and control the Internal Revenue Service....

AIG spending $440,000 on luxury retreat days after government bailout......6 Days after getting 85 Billion Taxpayer Dollars

The tab included $23,380 worth of spa treatments for AIG employees at the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy.
Invoices obtained by Waxman's committee showed that AIG spent $139,375.30 on rooms, $147,301.71 for "banquets,'' and $1,488 at the resort's Vogue Salon, which offers manicures, pedicures and hairstyling. The group spent $6,939.09 on golf, $2,949 for gratuities, $5,016.32 at the StoneHill Tavern and $3,064.71 for in-room dining and the lobby lounge.
The group booked the resort's 3,100-square-foot presidential suite for $1,600 a night for five nights, a discount from the standard rate of $3,200 a night, a hotel document released by the committee showed. It also paid $1,075 in "no-show fees.''
"Have you heard of anything more outrageous?''
The taxpayer is burdened by another $250 billion rescue of mortgage giants Fannie Mae and Freddie Mac. On Sept. 7, Secretary of the Treasury Henry Paulson led federal efforts to seize control of these government sponsored entities that own or back half of the nation's mortgages The champagne bottle corks were popping as Treasury Secretary Henry Paulson announced his trillion-dollar bailout for the banks, buying up their toxic mortgages
$524.6 Billion Tax payer bailout of financial institutions payed from 1986-1996, ridiculous.
Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper.

The now-bankrupt investment bank Lehman Brothers arranged millions in bonuses for fired executives even as it pleaded for a federal lifeline, lawmakers learned Monday, The panel unearthed internal documents showing that on Sept. 11, Lehman planned to approve "special payments" worth $18.2 million for two executives who were terminated involuntarily, and another $5 million for one who was leaving on his own.

“King” Henry Paulson, our Treasury Secretary, is a former CEO of Goldman Sachs. That means he comes directly from the very crowd that created the current financial mess, the ever-greedy investment banks led by the elite, who now together demand, daily, from Congress, pushed on by Dubya, a speedy, yes speedy, blank check for perhaps over a trillion US Dollars which they will spend without real oversight! And yet, despite all of this, you stupid Americans are seriously thinking of voting for that guy who has his whole political life basically taken his orders from that same elite!
If you cannot wake up from your own madness, you deserve every ounce of terrible, unrepresentative government you get!