Government Sachs and the Fleecing of America
David Ginter | Dec 28, 2009 | Comments 4
My family doesn’t typically show too much interest in my views on things unless something happens in their lives that pushes them to seek my perspective. Obviously, over the Christmas holiday there were two big stories: the addition of 30 second video clips to Santatracker and the senate passing a health care bill.
So I wasn’t surprised to find myself engaged in a handful of expository discussions about politics and health care over the course of several days. As I sat at a fold-out table reminiscing about a summer’s camping trip as well as complaining that I had eaten too much, I heard my name called from another room. I entered the kitchen to see my parents, my aunt, uncle and the mother of my cousin’s brand new fiance (he proposed on Christmas morning) all hunched over the dinner table. I have no idea what the preceding conversation had been, but as soon as I crossed the kitchen’s threshold my mother blurted out “David, is America a capitalist country?
“No” was my one-word answer as I stood there eyeing the food, more concerned with broccoli casserole than with politics. “Well then what are we?”. I said that I wasn’t entirely certain what to call America, maybe a pseudo-oligarchical corporatist country that is now leaning towards a market socialist society. This essentially means that our government isn’t able to disaggregate the perceived “good” of some major corporations or business industries from the perceived “good” of the public at large.
Incidentally, I had just found a 6-month-old Rolling Stone article that brought back the memory of a rather enlightening moment. Instead of going off in some esoteric prolix to explain myself, I recalled a story of meeting a woman that worked for the poster child of governmental nepotism: Goldman Sachs.
Rubin asked a team of traders if they had turned in donations to the political party of their choice. He asked each of them – one by one – right on down the desk. If they said no, he told them he wanted to see a signed check soon. When he walked away, Diane asked what he was up to. The guys on the desk laughed and just told her to cough up a thousand for the Democratic Party by tomorrow. She protested: “But I’m Republican.”
The response: “Not anymore!”
It’s interesting that my family would ask about capitalism the day after I read Matt Taibbi’s fantastic Rolling Stone article about Goldman Sachs. The article is a true “exposé” of the BS that goes on in the financial world. Taibbi shreds Goldman (by now, known by many as “Government Sachs”) in an article titled The Great American Bubble Machine.
The article claims Goldman has helped engineer most of the great asset bubbles of the past 80 years… including the tech bubble, the credit bubble, and last year’s enormous rise in oil prices. Taibbi also writes Goldman has packed the highest levels of government with former employees, who help it suck billions of dollars from a gullible public. It’s one of the most damning articles I’ve ever read from mainstream media.
With no knowledge of this article, the corruption of the financial sector elites and the heavy influence on government was just one of the things I gleaned from my encounter with Diane. She also describe to me how people she worked with were able to manipulate financial accounting rules for their benefit.
I don’t begrudge any smart banker or trader for making money within the rules. It’s the way Goldman has stuffed its alumni into the most important positions in government; it’s similar to mafia corruption. It ensures they play a major role in fixing the rules for their cronies’ benefit… and your loss.
A short list of ex-Goldman heads who’ve held powerful political office includes: Henry Paulson (former CEO, went on to become Treasury Secretary under Bush), John Corzine (former CEO, soon-to-be-former governor of New Jersey), Stephen Friedman (former director, became Chief of the New York Fed), the aforementioned Robert Rubin, Mark Patterson (ex-Goldman lobbyist now Matt Geithner’s chief aide), Gary Gensler (current head of the Commodity Futures Trading Commission and former partner at Goldman Sachs before being brought by Robert Rubin to the Clinton Treasury Department). Our current treasury secretary Geithner has not been on Goldman’s payroll directly but his involvement with Goldman Sachs should be more than a little unsettling. (You can read about plenty more “implants” here, here and here.)
Current and ex-Goldman employees probably didn’t even consider the possibility there were conflicts of interest with Secretary Paulson (ex-Goldman head) deciding to let one of Goldman Sachs’ main competitors – Bear Stearns – go belly up.
It’s insulting to think a government employee can give my tax money to a company that was going bankrupt, especially one that enjoys congressional protection but little – if any – congressional oversight (not that I think that would help). I’m talking specifically about AIG Insurance, which, incidentally, had big deals with Goldman that would have gone sour without the bailout.
Goldman Sachs – and nearly every other Wall Street institution – is not in the business of helping you find safe investments. It’s in the business of selling overpriced stocks and bogus mortgages to anyone it can find. It’s in the business of siphoning big fees from your 401(k) plan, your mutual fund, your annuity, and your kid’s college fund.
This is how Wall Street bankers live in million-dollar mansions in the Hamptons, drive Maseratis, and dash off for $20,000 weekends in London. It’s why you probably haven’t made a dime in stocks over the past 15 years. Wall Street doesn’t care if you make any money just as long as you keep paying their fees. The financial policymakers in Washington D.C. aren’t all socialist morons (though many are). They’re just more concerned with the folks they encounter while living in their insulated bubble on Capital Hill – a place where you have to check reality and common sense at the door. It’s a mixture that loads the system with huge risks.
Most are already downright cynical of everything Wall Street does, and maybe the new car smell accompanying regime change hasn’t worn off enough for the masses to distrust Washington D.C. in a like manner. The sooner we wake up, the better. As of this writing it’s December 27th. I’m wondering: would it be a violation of Christmas tradition to watch “How the Grinch Stole Christmas” again?
Filed Under: The Soap Box
About the Author:
I don’t think you should be so easily convinced by Taibbi’s silly paranoid article.
I don’t think you should leave anonymous comments so as to avoid being held accountable for the validity of your statements. Ya know, unlike Taibbi and the multiple other sources I linked to, as well as myself – who’s had substantial conversations with more than one employee from Goldman Sachs.
for what it’s worth, here was Goldman Sachs’ attempted response to the Taibbi article
http://blogs.reuters.com/felix-salmon/2009/06/26/goldman-sachs-responds-to-taibbi/
Although your opinion is based on a compilation of clear and reasonable sources, full understanding of how these things work takes years of insider perspective. What specifically are you accusing Goldman of? Have they trespassed somewhere? Just like many corporations gain tax credits at the end of the year instead of paying taxes, and commit no crime, so Goldman makes large sums by legitimate means (I have not heard any serious criminal accusations…)
What’s wrong with some of the smartest people in the world getting together and trying to make money? Put the paychecks aside, I-bankers are some of the smartest in the country (and hardest working), and Goldman is reputedly the best & smartest. Goldman made some very insightful calls on the market, and made lots of money as a result.
Let’s not forget that our current circumstances are due to collective ignorance of risk (yes, that’s you and I and all our neighbors). Some insightful, highly experienced, best-in-field bankers avoided catastrophes & profited from the resulting circumstances (although not all). Similar to the cricket and the ant don’t you think? Except here, instead of asking for a slice everyone’s blaming them for slicing it up amongst themselves. They have every right to do so!
I have no doubt that G-man’s influence has been exerted on the government to push policy in Goldman’s direction. I also have no doubt that every other major corporation does the same.
No crimes here. This is the pursuit of power. Want to change that? How about a revolution…