Wednesday, July 15, 2009

Let's rename the 4th: Oligarch's day! for this is what America is truly for

The news looks good in the Zona!

“Goldman posted the richest quarterly profit in its 140-year history and, to the envy of its rivals, announced that it had earmarked $11.4 billion so far this year to compensate its workers.

At that rate, Goldman employees could, on average, earn roughly $770,000 each this year — or nearly what they did at the height of the boom.”

Mr. and Mrs. America have something to be proud of, here. There has never been another epoch when the level of servility, the level of cowardice, the level of conformity, the level of child like dependence, the level of passivity, the level of sloth, the level of ignorance, the level of self-lobotomy matched today’s astonishing Zona generation in all its YouTube glory. These are the people who would trade their birthright for, say, tickets to some Michael Jackson funeral replay at a sports bar. These are the mighty fighters for freedom who, after having bled Iraq and being bled, figuratively, at home, have responded with all the gumption of your average garden slug. They are not going to take it any more! Their staging a general strike – no more extra spending at the mall!

It calls, does it not, for a sweet little Zona countdown! A chronology of how those lucky dogs at Goldman Sachs went up up up as employment went down down down.
So: Here’s a story of how heroes rushed in, at great sacrifice, to rescue America.
We knew this on September 28, 2008:

(from the NYT) “Because of an editing error, an article on Sunday about the financial problems of American International Group referred incorrectly to the timing and participants at meetings at the New York Federal Reserve between Saturday, Sept. 13, and Monday, Sept. 15. Although there were indeed meetings that weekend, there was also a separate meeting on Monday to discuss financial aid for A.I.G. Lloyd C. Blankfein, the chief executive of Goldman Sachs, was the only Wall Street chief executive who attended the Monday meeting, not the only chief executive who attended weekend meetings. Also, Henry M. Paulson Jr., the Treasury secretary, did not lead or attend the Monday meeting. (Both Mr. Blankfein and Mr. Paulson did attend the weekend meetings.).”

We know now thiat Blankfein was doing this wholly, wholly out of the goodness of his heart. After AIG had to disclose who it transferred money to in those stressful days when the U.S. began stuffing the company with money, it turned out that AIG got 12.9 billion dollars. But did it want it? Did it need it? Not our patriotic heros!
This is from 21 March 2009:

“Hoping to reduce a swirl of speculation over its role in the bailout of the American International Group, Goldman Sachs reiterated Friday that its direct losses would have been minimal if A.I.G. had failed.
Goldman also described how, as early as July 2007, it began to have ''collateral disputes'' with A.I.G. as the companies disagreed on the value of the mortgage-backed securities that were the basis of multibillion-dollar contracts between them.
David A. Viniar, Goldman's chief financial officer, walked reporters through a thicket of numbers Friday in a conference call that the company held to ''clarify certain misperceptions'' about its positions with A.I.G.
While Mr. Viniar acknowledged that Goldman's relationship with A.I.G. raised what he called a complex set of issues, he was adamant that, because of the collateral Goldman held and hedging trades with third parties, it would not have been damaged directly if A.I.G. had been allowed to collapse.
Since September, the government has set aside more than $180 billion to support A.I.G., the Government Accountability Office reported.
A significant part of that money has flowed through A.I.G. to various trading counterparties, many of them large financial institutions, which A.I.G. at first refused to identify.
Under intense pressure from lawmakers, A.I.G. recently released a list of counterparties, and Goldman was among the largest, accepting $12.9 billion of the insurer's bailout money. For some, this raised questions about the government's motivations for not letting the insurance company go into bankruptcy protection.
Henry M. Paulson Jr., the Treasury secretary at the time of the first A.I.G. bailout, was Goldman's former chief executive.
Goldman has said all along that its exposure to A.I.G.'s troubles was immaterial because of outside hedges that would have protected it.”

Of course! Given the heady market at the time, awash with cash, surely GS would have done just fine if AIG had failed. They were simply trying to cure the hysteria of the Treasury secretary, a Goldman Alum, and the Fed in New York, with one of its governers heavily investing in Goldman stock at the time, by nobly accepting the 12.9 billion thrust upon them.
This is absolutely believable. Totally credible. They would totally have moved on over this petty 12.9 billion business. Their counterparties - reportedly slot machines in Las Vegas - would totally have paid off.

So as our Government was forking over the unnecessary 12.9 billion to Goldman, what was happening in God’s Own Country?

Well, the losers weren't doing so well.. A mere 500,000 jobs were shed in October, going to over 600,000 in November and over 700,000 in December – and it was obvious as heck that such terrible behavior on the part of the lazy couldn't be revwarded. We couldn't up the unemployment benefits when we had important money to hand over to important people. Who were going to use it for us. Because they care about us. Because all the little people out there deserve a really fine investment banking sector.

So - it is obvious when the unemployment soars that Wall Street will need loans – trillions of dollars in loans – to feel better about themselves. Which is what the Bush-Obama regimes did. For us, for all of us.

Meanwhile, let us not forget that Goldman Sachs was not only selflessly taking 12.9 billion dollars, but it was giving. It was giving the U.S. leadership:
From the NYT, Oct. 9, 2008.

“But much of the political and financial world was surprised to learn this week that the man was Neel T. Kashkari, 35, a former Goldman Sachs investment banker whom Mr. Paulson has tapped to oversee the $700 billion bailout effort as interim assistant secretary for financial stability.
Mr. Kashkari, who has only six years of experience in finance and government, said he knew he seemed young to be shouldering so much responsibility for the world's financial stability. But, he said, Mr. Paulson will oversee every step he takes.
''This project is Secretary Paulson's highest priority,'' Mr. Kashkari said in an interview on Wednesday. ''He is all over it. Our team is just executing his strategy.''
Even so, some experts question whether Mr. Kashkari is up to the job.”

That was so ridiculous and probably anti-semitic as well. He had all of six years and had surely, surely severed all loyalty to Goldman Sachs. He was the only man available for the job. How lucky we are.
And there were other heroes too. As we all know, the man who Paulson appointed to head AIG was made of the finest stuff:

“Edward M. Liddy, the dollar-a-year chief executive leading the American International Group since its bailout last fall, still owns a significant stake in GoldmanSachs, one of the insurer's trading partners that was made whole by the government bailout of A.I.G.
Mr. Liddy earned most of his holdings in Goldman, worth more than $3 million total, as compensation for serving on the bank's board and its audit committee until he stepped down in September to take the job at A.I.G. He moved to A.I.G. at the request of Henry M. Paulson Jr., then the Treasury secretary and a former Goldman director.
Details about his holdings were disclosed in Goldman's proxy statement and confirmed by an A.I.G. spokeswoman, who said they constituted ''a small percentage of his total net worth.'' Mr. Liddy had already owned some stock in Goldman Sachs before joining its board in 2003.
He has said that he considers his work at A.I.G. to be a public service, performed on behalf of the taxpayers, who ended up with nearly 80 percent of the insurance company. His goal is to dismantle the company and sell its operating units, using the proceeds to pay back the rescue loans. On Thursday, A.I.G. said it had sold its car insurance unit, 21st Century Insurance, to the Zurich Financial Services Group for $1.9 billion.” (17 April, 2009 NYT)

We can see, then, that Goldman Sachs is an example of Capitalism pursued the American way - like a metastasizing cancer in your lower intestine.

And thus find incomprehensible the haters. Like this, from 15 April, 2009 by William Cohan in the NYT:

“During yesterday's conference call, Guy Moszkowski, an analyst from Merrill Lynch, asked Mr. Viniar what role the $13 billion Goldman has collected from A.I.G. had on its first-quarter showing. But Mr. Viniar would have none of it: Profits ''related to A.I.G. in the first quarter rounded to zero.'' Hmm, how then did Goldman make so much money if that multibillion-dollar gift from you and me had nothing to do with it?
Part of the answer lies in a little sleight of hand. One consequence of Goldman's becoming a bank holding company last year was that it had to switch its fiscal year to the calendar year. Previously, Goldman's fiscal year had ended on Nov. 30. Now it ends Dec. 31.
As a result, December 2008 was not included in Goldman's rosy first-quarter 2009 numbers. In that month, Goldman lost a little more than $1 billion, after a $1 billion writedown related to ''non-investment-grade credit origination activities'' and a further $625 million related to commercial real estate loans and securities. All told, in the last seven months, Goldman has lost $1.5 billion. But that number didn't come up on Monday. How convenient.”

On a final note: asked to comment on the Goldman $$$$ yesterday, William K. Black noted what nobody seems to want to note for some reason - the fact that the Geithner doctrine has nailed in place this whole new way of treating recessions by bloating the plutocrats:

Goldman is the textbook case of “moral hazard.” It recognizes that both administrations have guaranteed that it will not be allowed to fail no matter how badly it is run. (Treasury Secretary Geithner, in a portion of a speech ignored by the media, twice used the phrase “capital insurance” to describe our new policy. The taxpayers no longer insure only depositors — we insure the shareholders, or more precisely, the senior officers.)

I would say: its your America. But let's get fucking real. We lost America a long, long time ago. This experiment in "hope" has ended in the endlessly demoralizing successes of a small, crippled group of oligarchs, who will not be stopped until they have eaten everything.


bakunin said...

As the excellent Ran Prieur pointed out, one reason people are so sheeplike is that they are too busy at their jobs. If you lose your job you lose health insurance, and have trouble making the rent and mortgage payments, themselves inflated by the real estate bubble.

If lots of people lose their jobs anyway, they have time to think. If the government is smart enough to extend unemployment benefits and put in a public health care system, we'll just get a big group of long term unemployed with time on their hands like in France. If these people are cut off then the government will have alot of desperate people on their hands.

I don't mean to ignore the other constraints such as bad food, bad media, etc. but having lots of people work in bs jobs so they can get medical care and shelter really helps out the establishment.

Roger Gathmann said...

Bakunin, excellent point. I exaggerate the mass servility to stir up anger. But the trivialization of modern life has pretty obvious drivers. It is one of the effects of the insane increase in inequality, and the struggle for remaining in place - the society gets richer and richer, and can "afford" less and less.

northanger said...

roger. conservatively, it takes 3 missions and 491 days to install a Kibo. it's day 178/1461 for Hope.

Ran Prieur got me thinking re: "mass servility": exactly which group of sheep, if they changed, creates the greatest impact?

northanger said...

this is interesting:

Roger Gathmann said...

North, I didn't see your comments until today! Sorry.

I may well agree with you about Hope. But, as with installing a Kibo, unless people are bitching, it won't get done. FDR said about Social Security that he wanted to be "forced' to do it. Obama's politics play on the conditions of the political - that is, he has initiated a politics in which the white house is not the direct cause of reform, but sets up the conditions under which we - res publica - holler for reform. So I am hollering in my own way.

northanger said...

Obama has a huge peanut gallery. not surprising—lots more cheap seats nowadays.

Roger Gathmann said...

North - far from being a regular peanut, I like to think I'm like one of your astronautical M and M's with a peanut inside.

northanger said...

well, if i transform you into an m&m you have to post it. is your inner M a true blue burnt orange & white texas longhorn?

Roger Gathmann said...

There's no such thing as a burnt orange M and M! Don't be teasing me!

northanger said...

burnt orange it is! i'll do the frankenstein thingy when the sun goes down.

Roger Gathmann said...

Frankenstein thingy? Is this going to hurt?

northanger said...

i don't think so.

northanger said...

i gave you earphones so you could hear the beat.

Roger Gathmann said...

North, I got it!
So, how do I post it? I can't seem to download it as an image. I want to share my M and Mness with the world!

northanger said...

if you got the email one, forward it to me so i can see if it can be posted.

Roger Gathmann said...

North, I figured I could use the pic you linked to. I want to make that my author pic. Unfortunately, the template doesn't seem to have an author pic function. So I think, when I have time today, I'm going to find some author pic code, insert it in my template, then put the image in there.

northanger said...

okie dokie. if you need a smaller version let me know. btw, you look kinda cute as a peanut!

talking about peanuts, can you help get a clearer pic on TAX THE RICH! meme & health care?