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The Ever Increasing Parallels Between AIG And Greece... And The CDS Puppetmaster Behind It All

Tyler Durden's picture





 

David Fiderer's below piece, originally published on the Huffington Post, continues probing the topic of Goldman and AIG. For all intents and purposes the debate has been pretty much exhausted and if there was a functioning legal system, Goldman would have been forced long ago to pay back the cash it received from ML-3 (which in itself should have been long unwound now that plans to liquidate AIG have been scrapped) and to have the original arrangement reestablished (including the profitless unwind of AIG CDS the firm made improper billions on, by trading on non-public, pre-March 2009, information), and now that AIG is solvent courtesy of the government, so too its counterparties can continue experiencing some, albeit marginal, risk, instead of enjoying the possession of cold hard cash. Oh, and Tim Geithner would be facing civil and criminal charges.

Yet as we look forward, we ask, who now determines the variation margin on Greek CDS (and Portugal, and Dubai, and Spain, and, pretty soon, Japan and the US), the associated recovery rate, and how much collateral should be posted by sellers of Greek protection? If Greek banks, as the rumors goes, indeed sold Greek protection, and, as the rumor also goes, Goldman was the bulk buyer, either in prop or flow capacity, it is precisely Goldman, just like in the AIG case, that can now dictate what the collateral margin that Greek counterparties, and by extension the very nation of Greece, have to post on billions of dollars of Greek insurance. Let's say Goldman thinks Greece's debt recovery is 75 cents and the CDS should be trading at 700 bps, instead of the "prevailing" consensus of a 90 recovery and 450 spread, then it will very likely get its way when demanding extra capital to cover potential shortfalls, since Goldman itself has been instrumental in covering up Greece's catastrophic financial state and continues to be a critical factor in any future refinancing efforts on behalf of Greece. Obviously this incremental margin, which only Goldman will ever see, even if the CDS was purchased on a flow basis, will never be downstreamed on behalf of its clients, and instead will be used to [buy futures|buy steepeners|prepay 2011 bonuses|buy more treasuries for the BONY $60 billion Treasury rainy day fund].

In essence, through its conflict of interest, its unshakable negotiating position, and its facility to determine collateral requirements and variation margin, Goldman can expand its previous position of strength from dictating merely AIG and Federal Reserve decision making, to one which determines sovereign policy! This is unmitigated lunacy and a recipe for financial collapse at the global level.

This is yet another AIG in the making, with
Goldman this time likely threatening to accelerate the collapse not
merely of the US financial system, but of the global one, in order to
attain virtually infinite negotiating leverage. Of course, the world will not
allow a Greece-initiated domino, allowing Goldman to call everyone's bluff once again.

As the amount of gross and net sovereign CDS notional is constantly increasing, as more and more hedge funds join the shorting fray with Goldman as the intermediate (just like in AIG), it behooves any remaining regulators and any sensible Federal Reserve parties to supervise precisely what the terms of Goldman's collateral margins with various sovereign debt sellers are, especially when it pertains to increasingly distressed CDS, where a liquidity squeeze, again as in the AIG case, would have tremendous adverse downstream consequences. If indeed Goldman's counterparties are the banks of respective countries, then the parallels with AIG are nearly complete. And we all know what happened then.

Furthermore, we are now convinced that Goldman will join the government in facilitating the engineered market swoon with a bifurcated goal: while the Treasury will take advantage of a sell off to offload as many UST as it can in the rush for safety (which could backfire now that Gold is increasingly seen as a dollar alternative), Goldman (with or without Warren Buffett - it depends on what the actuarial tables say) will jettison its own stock price in order to go private in an increasingly hostile world.

We will discuss all these issue further in the near future, and in the meantime David Fiderer provides yet another nail in the AIG-Goldman coffin.

 

 


The Times Story on Goldman's Role In AIG's Downfall Is More Damning When Placed In Context

 

Placed in a broader context, the front page story The New York Times,
is even more damning of Goldman Sachs than readers might realize.
Goldman played an active role in the destruction of AIG. During Hank
Paulson's tenure as the firm's CEO, Goldman engaged in a series of sham
transactions designed to give the false impression that it was buying
credit default swaps as an instrument for risk management. In fact, it
acquired those swaps in order to double down on bets against
collateralized debt obligations, or CDOs, which it knew to be fatally
flawed. In the latter part of 2008, Paulson and his proxies maneuvered
AIG into a liquidity crisis in order to protect Goldman at the expense
of the U.S. taxpayer.

To appreciate how the Times piece fits into a larger picture, you need to understand why these CDOs were so obviously toxic.

The Fatal Flaw Of These CDOs

AIG went bust because it sold credit default swaps for CDOs stuffed
with slices of subprime mortgage bonds. Those subprime mortgage bonds
all had remarkably similar capitalization structures, divided among
different classes, or tranches, of seniority. The top 80% in seniority
had a credit rating of AAA. The bottom 10% was rated A and below.

The bottom 10% was especially vulnerable because of something that
was an open secret at the time. The subprime mortgage market was
riddled with fraud. So the data used by Goldman and others to structure
these bond deals was highly suspect.

Who bought the bottom 10% of these subprime bond deals? A lot of
those lower-rated tranches were not sold directly to investors. Rather
they were stuffed into CDOs. This point is critical. These CDOs were
not comprised of mortgage loans, or even slices of mortgage loans.
Rather, they held deeply subordinated claims on risky subprime
mortgages. Because these tranches were the last ones to get repaid, it
was easy to foresee, at the time these CDOs were put together, that
investors would lose significant amounts of principal.

People marketing these CDOs claimed that they were safe, because the
risks were diversified, and because of excess collateral cover. But
that line of reasoning never made any sense. The lower rated tranches
were like the passengers in steerage on the Titanic. Once the ship
starting sinking, those passengers were the last ones given access to
the lifeboats. As soon as the housing market started sinking, those
lower-rated tranches would be the last ones given access to any
foreclosure proceeds.

AIG thought it was selling credit protection for AAA risk. And in
fact, these CDOs, like subprime mortgage bonds, were tranched in a way
that made them top heavy with AAA ratings. Consider, for example, for Adirondack 2005-2,
a CDO arranged by Goldman, which "sold" almost all of the AAA tranche
Societe Generale, which in turn bought credit protection from AIG. Of
Adirondack 2's $1.55 billion capitalization, $1.42 billion, or 91%, was
rated AAA.

2010-02-08-Screenshot20100208at12.14.40AM.png

So how could anyone get comfortable with the notion that 90% of a
portfolio, heavily weighted with deeply subordinated claims on risky
mortgages that were likely to be infected with fraud, represented a
AAA-quality credit risk? It's a question for which there is no good
answer. If anyone looking at these deals had done proper due diligence
and done a common-sense analysis of the structural risks, he would have
realized three things:
1. The original credit ratings for lower-rated slices of these subprime bond deals were meaningless;
2. The original credit ratings on these CDOs were even more meaningless; and
3. The CDOs were destined in fail in a big and obvious way.

Goldman's Malign Intent

Obviously, the people at AIG never figured out what was going on
until it was too late. But there's a mountain of circumstantial
evidence that the people at Goldman had a keen grasp of the fatal flaws
of these CDOs, which they structured. The Times piece is a major addition to that mountain of evidence:

[Former AIG executive Alan] Frost cut many of his deals
with two Goldman traders, Jonathan Egol and Ram Sundaram, who had
negative views of the housing market. They had made A.I.G. a central
part of some of their trading strategies.

Mr. Egol structured a group of deals -- known as Abacus -- so
that Goldman could benefit from a housing collapse. Many of them were
actually packages of A.I.G. insurance written against mortgage bonds,
indicating that Mr. Egol and Goldman believed that A.I.G. would have to
make large payments if the housing market ran aground. About $5.5
billion of Mr. Egol's deals still sat on A.I.G.'s books when the
insurer was bailed out.

"Al probably did not know it, but he was working with the bears of
Goldman," a former Goldman salesman, who requested anonymity so he
would not jeopardize his business relationships, said of Mr. Frost. "He
was signing A.I.G. up to insure trades made by people with really very
negative views" of the housing market.

As further evidence that Goldman used AIG to profit by shorting CDOs, rather than to manage its preexisting risk exposure:

[N]egotiating with Goldman to void the A.I.G. insurance was
especially difficult, Federal Reserve Board documents show, because the
firm did not own the underlying bonds. As a result, Goldman had little
incentive to compromise.

Goldman's seven Abacus deals [Abacus 2004-1, Abacus 2004-2, Abacus
2005-2, Abacus 2005-3, Abacus 2005-CB1, Abacus 2006-NS1, Abacus
2007-18] were unique among all the CDOs in AIG's portfolio. For all the
other deals, the collateral manager, the entity that oversaw and
managed the CDO after closing, was entirely independent from the bank
that originally arranged and structured the transaction. For all the
Abacus deals, Goldman acted both as both the arranging bank and the
collateral manager. This is no small technicality. In other Abacus
deals, Abacus 2006-13 and Abacus 2006-17, Goldman used its "sole discretion"
to retire lower rated CDO tranches without regard to seniority. This
approach, under documentation drafted by Goldman, upends the entire
premise of structured finance.

Most importantly, the government never purchased the Abacus deals when
it bought $62.1 billion other CDOs at par, back in November 2008. Why
didn't the parties feel a need to take the Abacus deals off of AIG's
balance sheet? It's an extremely important question, for which we will
not have an adequate answer until we see the actual documentation,
specifically: the offering memoranda, the performance reports and swap
agreements.

Hiding Behind Societe Generale

The Times story also suggests that Goldman used Societe
Generale as a front, to conceal from Frost and others the size of their
cumulative bet against these CDOs.

Mr. Sundaram's trades represented another large part of
Goldman's business with A.I.G. According to five former Goldman
employees, Mr. Sundaram used financing from other banks like Societe
Generale and Calyon to purchase less risky mortgage securities from
competitors like Merrill Lynch and then insure the assets with A.I.G.
-- helping fatten the mortgage pipeline that would prove so harmful to
Wall Street, investors and taxpayers. In October 2008, just after
A.I.G. collapsed, Goldman made Mr. Sundaram a partner.

Through Societe Generale, Goldman was also able to buy more
insurance on mortgage securities from A.I.G., according to a former
A.I.G. executive with direct knowledge of the deals. A spokesman for
Societe Generale declined to comment.

It is unclear how much Goldman bought through the French bank, but
A.I.G. documents show that Goldman was involved in pricing half of
Societe Generale's $18.6 billion in trades with A.I.G. and that the
insurer's executives believed that Goldman pressed Societe Generale to
also demand payments...On Nov. 1, 2007, for example, an e-mail message
from Mr. Cassano, the head of A.I.G. Financial Products, to Elias
Habayeb, an A.I.G. accounting executive, said that a payment demand
from Societe Generale had been "spurred by GS calling them."

As noted earlier in the story:

In addition, according to two people with knowledge of the
positions, a portion of the $11 billion in taxpayer money that went to
Societe Generale, a French bank that traded with A.I.G., was
subsequently transferred to Goldman under a deal the two banks had
struck.

See here for an analysis of the ten-figure purchases and sales between Goldman and SG.

The AAA Pyramid Scheme Embedded Inside AIG

The Times reports that Goldman tailored the terms of the swaps to exploit these defective credit ratings:

The terms, described by several A.I.G. trading partners,
stated that A.I.G. would post payments under two or three
circumstances: if mortgage bonds were downgraded, if they were deemed
to have lost value, or if A.I.G.'s own credit rating was downgraded. If
all of those things happened, A.I.G. would have to make even larger
payments.

Here's an example of how terminology for a general news readership can lead to confusion. In the context of the story, the Times
seems to be referencing the ratings of the CDOs, not the subprime bonds
held by the CDOs. The distinction is critical because almost all
subprime bonds were downgraded in 2007, whereas most of these CDOs were
not downgraded prior to May 2008, when they received minor downgrades.

2010-02-08-Screenshot20100208at4.12.14PM.png

Most importantly, almost all these CDO tranches were rated AAA during November 2007, when, as the Times
reports, Goldman was demanding billions in cash collateral. There is no
way to reconcile a 40% diminution of value, which Goldman repeatedly
asserted, with a AAA rating. It's like saying 2 + 2 = 11. In effect,
Goldman was admitting that the CDOs' ratings were a joke.

It was an especially cruel joke on AIG and on the American taxpayer.
If the ratings agencies had severely downgraded the CDOs in 2007 or
earlier in 2008, AIG's day of reckoning would have come sooner.
Instead, that day coincided with Lehman's bankruptcy. The ratings
agencies announced their major downgrades of AIG after the close of
business on September 15, 2008. Those downgrades triggered cash
collateral calls and on AIG on September 16, 2008, the same day that a
money market fund, which wrote down Lehman paper, broke the buck and
triggered widespread panic in the money markets.

As noted before, the timing of the CDO downgrades looks suspicious. Eric Kolchinsky, a former managing director at Moody's, has alleged
that the ratings agency deliberately and deceitfully delayed the
announcements of downgrades of various CDOs.
The House Oversight
Committee is still investigating the matter.

Why Goldman Pressured AIG to Hand Over Cash

The thrust of the front-page Times article was that Goldman
aggressively pressured AIG to hand over cash collateral beginning in
2007, Goldman asserted, because, the CDOs "were deemed to have lost
value." But negotiations were always at an impasse, for an obvious
reason. There was no way to settle on agreed-upon "market value" for
the CDOs. These securities weren't bought or sold, like Treasuries or
shares of IBM. Nor was there any market benchmark upon which the CDOs
could be valued. The only way to set a price, according to auditors for
AIG and the Federal Reserve, was according to internal valuation models.

The Times reports:

[D]ocuments show there were unusual aspects to the deals
with Goldman. The bank resisted, for example, letting third parties
value the securities as its contracts with A.I.G. required. And Goldman
based some payment demands on lower-rated bonds that A.I.G.'s insurance
did not even cover. A November 2008 analysis by BlackRock, a leading
asset management firm, noted that Goldman's valuations of the
securities that A.I.G. insured were "consistently lower than
third-party prices."

The Times reporting suggests that Goldman wanted to control
the dispute by using a nominally independent third party,
PricewaterhouseCoopers, which had shifted into Goldman's camp:

Adding to the pressure on A.I.G., [David] Viniar, Goldman's
chief financial officer, advised the insurer in the fall of 2007 that
because the two companies shared the same auditor,
PricewaterhouseCoopers, A.I.G. should accept Goldman's valuations,
according to a person with knowledge of the discussions. Goldman
declined to comment on this exchange.

Pricewaterhouse had supported A.I.G.'s approach to valuing the
securities throughout 2007, documents show. But at the end of 2007, the
auditor began demanding that A.I.G. provide greater disclosure on the
risks in the credit insurance it had written. Pricewaterhouse was
expressing concern about the dispute.

The insurer disclosed in year-end regulatory filings that its
auditor had found a "material weakness" in financial reporting related
to valuations of the insurance, a troubling sign for investors.

Of course, a highly plausible explanation is that Pricewaterhouse,
like AIG, had assumed that the CDOs' AAA ratings were credible, until
Goldman set them straight. But again, this gets back to the issue of
whether Goldman knew these deals were toxic from the start. Goldman
opposed proposals that would have enabled it to make its case to others:

When A.I.G. asked Goldman to submit the dispute to a panel
of independent firms, Goldman resisted, internal e-mail messages show.
In a March 7, 2008, phone call, Mr. Cassano discussed surveying other
dealers to gauge prices with Michael Sherwood, Goldman's vice chairman.
At that time, Goldman calculated that A.I.G. owed it $4.6 billion, on
top of the $2 billion already paid. A.I.G. contended it only owed an
additional $1.2 billion.

Mr. Sherwood said he did not want to ask other firms to value the
securities because "it would be 'embarrassing' if we brought the market
into our disagreement," according to an e-mail message from Mr. Cassano
that described the call.

The Goldman spokesman disputed this account, saying instead that
Goldman was willing to consult third parties but could not agree with
A.I.G. on the methodology.

The dispute would have been more than embarrassing for Goldman. It
would have shed light on the fatal flaws of these CDOs, which, at the
time, were not known to the broader financial community. These flaws
were not known because so few parties took a serious look at the credit
risk, which was largely assumed by a handful of companies: AIG
Financial Products (under a guarantee by its parent) and the monoline
insurance companies. In early 2008, the monolines started settling
their contingent CDO obligations for a fraction of par. As noted earlier,
they were able to do so because they had the backing of their
regulators. AIGFP, which was unregulated, was on its own. Ever
prescient, Goldman never bought credit protection from the monolines.

Goldman did not "own" the cash it held. Rather, the cash represented
margin that could, in theory, be returned to AIG if the CDOs' value
rose again. Of course, in reality, if you hold the cash you have the
upper hand in any negotiation. Also, the way structured finance deals
work, if early credit losses are worse than expected, the diminution of
value is permanent. The other borrowers in the pool, who never pay more
than 100% of their principal and interest, won't make up the
difference. Finally, as noted before,
the cash collateral for derivatives, like credit default swaps, is very
different than the cash collateral for a loan or other obligation.
Goldman's claims had preferred treatment, another reason why, once it got its hands on the cash, it held the upper hand in any negotiation.

How Hank Paulson Used Proxies to Rig the Eventual Outcome

One thing is as certain as death and taxes. During 2007 and 2008
Edward Liddy was repeatedly briefed, at length, by Pricewaterhouse and
by senior management at Goldman, about the firm's CDO exposure with AIG
and about the valuation dispute. If the matter was so important that
Goldman's CFO and vice chairman took an active role in negotiating the
circumstances for simply attempting to resolve the dispute, then Ed
Liddy thoroughly understood the matter and the stakes that were
involved. This will all come out when Liddy's briefing books, and other
related documentation and correspondence, are obtained by the House
Oversight Committee, which is investigating this matter.

Liddy was the Chairman of the Audit Committee
on Goldman's Board of Directors. Every audit committee of the board of
every publicly held financial institution is briefed in depth about
risk concentrations at the firm. There is no way that Pricewaterhouse
would leave itself exposed by not thoroughly briefing Liddy about these
matters. While it may be a part-time obligation, being Chair of the
Audit Committee at Goldman is a very important job. And during one
all-important week, Liddy did some moonlighting.

A few minutes after he spoke with Goldman's CEO, Lloyd Blankfein, on
September 16, 2008, and shortly after he first considered a government
bailout of AIG, Hank Paulson unilaterally decided that Liddy should
immediately become AIG's new CEO. Unlike Liddy, AIG's CEO at the time,
Bob Willumstad, had relatively clean hands in the CDO saga. Willumstad
had been part of AIG's management for about three months, and had
joined the AIG board in April 2006, when most of Goldman's toxic CDOs
had already been insured by AIG.

That same afternoon, Liddy was on a plane to New York, to start at AIG the next day. Liddy was officially made CEO and Chairman of AIG on September 18. And of course, he immediately immersed himself into negotiating the terms of the government bailout facility, which he signed on September 22. Only on the following day, on September 23, 2008, that Liddy chose to make his resignation from Goldman's board effective.

That was also the week when Paulson spoke to Blankfein 24 times by phone. For further clarification at to why it an innocent explanation of all this is beyond any realm of plausibility, see this earlier piece.

"Who the heck is Dan Jester?" asked Times Opinionator columnist William D. Cohen,
who answered his own question last week. Jester was the former Goldman
deputy CFO who was plucked by Treasury Secretary Paulson in the summer
of 2008 to act as his "contractor," i.e. someone for whom usual
formalities pertaining to government accountability would not apply.
But Tim Geithner made more calls to Jester, during the fall of 2008, than to any other bona fide Treasury employee, with the exception of Hank Paulson. Cohen writes:

One former A.I.G. executive told me that Jester was calling
many of the shots at the insurer between mid-September, when the New
York Fed decided to go ahead with the bailout, and the end of October
2008, when Jester was replaced at A.I.G. by another Treasury official
because, according to The New York Times, of Jester's
"stockholdings in Goldman Sachs." "He was Paulson's man," the former
A.I.G. executive told me. "He was the Treasury's representative, and he
was at every meeting" during that mid-September weekend.

One of the shots being called during that period was the decision for AIG to hand over $18.7 billion in scarce cash to the CDO counterparties in exchange for zero concessions.

At one point, on the following Monday, Sept. 15, as the
A.I.G. situation was spiraling out of control, Jester phoned the three
major credit-rating agencies and asked them to hold off from
downgrading A.I.G. any further, since that additional downgrade would
force the insurer to make even more collateral payments on the spot to
counterparties, further depleting its dwindling cash. Jester's efforts
weren't persuasive. "It was pathetic," the former A.I.G. executive told
me.

There are many people who do not know how to speak forcefully and
effectively to the rating agencies, but that group would not include a
former deputy CFO from Goldman. It would be somewhat analogous to Katie
Couric getting flustered when asked to read a teleprompter. There is no
way that the agencies could have been aware of AIG's difficulties and
not have been equally aware of their own role in contributing to those
difficulties. Nor could they have been unaware that a downgrade would
trigger AIG's liquidity crisis. On the same day that the markets were
absorbing the shock from the Lehman bankruptcy, if the government asks
the agencies to wait just a bit longer to see how the evolving
situation plays out with regard to delicate negotiations for a private
bank deal to provide new liquidity for AIG, the agencies would
ordinarily be inclined to pause for a bit.

For those and other reasons,
I believe Jester's feeble performance was deliberate, that the endgame
was to trigger a liquidity crisis at AIG in order to force a government
bailout, which would be a backdoor bailout of Goldman. The House
Oversight Committee should review Jester's public and private emails
and phone records to get more clarity on this point.

As Paulson wrote in his new book,
"Much of my work was done on the phone, but there is no official record
of many of the calls. My phone log has many inaccuracies and
omissions." Why would the electronic records of his phone calls be
inaccurate, or have any omissions? It's the sort of disclaimer Dick
Cheney would give.

 


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Mon, 02/08/2010 - 22:12 | Link to Comment bugs_
bugs_'s picture

"Who the heck is Dan Jester?"  LOL

 

Mon, 02/08/2010 - 22:24 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

everybody asks once.

Mon, 02/08/2010 - 22:12 | Link to Comment Cistercian
Cistercian's picture

 Excellent commentary Tyler.GS as the global financial deathstar...they are utterly mad aren't they?One wonders when the national interests will declare GS a clear and present danger to their sovereignty?They are bent on global domination, which immediately poses the obvious question, how much "juice" does GS have?Does the CIA et al back/run them?

 It really makes me wonder how far down the rabbit hole goes.

Mon, 02/08/2010 - 23:09 | Link to Comment Anonymous
Tue, 02/09/2010 - 04:52 | Link to Comment jeff montanye
jeff montanye's picture

oh yeah

Tue, 02/09/2010 - 09:17 | Link to Comment Anonymous
Tue, 02/09/2010 - 11:46 | Link to Comment MarketTruth
MarketTruth's picture

They belong to, or are highly influenced by, AIPAC and hold dual citizenship with USA and Israel. Then ask yourself who owns the Federal Reserve and where is their alliance.

To get to the heart of a problem one needs to start at the top of the food chain that is causing major problems.

www.save-a-patriot.org/files/view/whofed.html

 

Mon, 02/08/2010 - 23:51 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

This all going to be revealed in time.  Conspiracies this big always do.  Too many people, too many mouths for this to stay suppressed forever.

At some point even the chickensh*ts in Congress or Justice will be forced to act, prosecute and throw some of the bums in jail.  It will happen, but there may be a very painful time before so.

So the Squid is now all over Greece...  And, as you kind of ask Cistercian, where else is the Squid sucking dry its victims?  Or perhaps better asked, which victims matter? 

Black Swans could be everywhere.

Tue, 02/09/2010 - 00:51 | Link to Comment Anonymous
Tue, 02/09/2010 - 09:36 | Link to Comment Miramanee
Miramanee's picture

Ahmadinajad is converting to Zoroastrianism

Tue, 02/09/2010 - 00:02 | Link to Comment Missing_Link
Missing_Link's picture

It really makes me wonder how far down the rabbit hole goes.

"Now, here, you see," said the Red Queen, "it takes all the running of the dollar printing presses you can do, to keep in the same place. If you want to get somewhere else, you must run the printing presses at least twice as fast as that!"

Tue, 02/09/2010 - 08:47 | Link to Comment Anonymous
Tue, 02/09/2010 - 01:09 | Link to Comment tom a taxpayer
tom a taxpayer's picture

Goldman Sachs Stephen "no conflict of interest" Friedman was Chairman of the President’s Foreign Intelligence Advisory Board and Chairman of the Intelligence Oversight Board from January 2006 to January 2009.

"In 1999, Bill Clinton appointed Friedman to the President’s Foreign Intelligence Advisory Board.  In 2005, Bush named Friedman chairman of that board, a surprise second-term replacement for Brent Scowcroft.  He has been chairman of the Intelligence Oversight Board, an independent body that assesses the state of national intelligence, since January 2006." 

http://www.whorunsgov.com/Profiles/Stephen_Friedman

Mon, 02/08/2010 - 22:25 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Before it is all said and done, Tyler may win a pulitzer.  Probably not though, as the establishment will probably give it to BO ("give him a bunch of awards he doesn't deserve, that will keep the fem dems quiet").... but maybe a post-apocalyptic award. 

Mon, 02/08/2010 - 22:32 | Link to Comment ATG
ATG's picture

Pride goeth before the fall...

Mon, 02/08/2010 - 22:34 | Link to Comment buzzsaw99
buzzsaw99's picture

It worked with AIG so swimmingly, they'd be stupid not to do it over and over. Either the ECB pays/bails or else the fed, which is really just GS in drag, pays/bails. A win-win!

 

http://www.youtube.com/watch?v=uXspUG3vvt0

Tue, 02/09/2010 - 00:45 | Link to Comment moneymutt
moneymutt's picture

that seems to be the attitude embezzlers, I took a little money and got away with it, so therefore, no one will ever catch me, no matter how brazen I get...arrogance does them in every time..

Mon, 02/08/2010 - 22:41 | Link to Comment CombustibleAssets
CombustibleAssets's picture

I'm beginning to develop and attitude problem.

Mon, 02/08/2010 - 22:47 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

The ambition and greed of Goldman is jaw dropping

I am beginning to think that they are no longer a rational entity but a satanic cult  whose sole reason for being is destruction of all civilised life on earth.

Mon, 02/08/2010 - 23:00 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

well, yeah!

Tue, 02/09/2010 - 08:49 | Link to Comment Anonymous
Tue, 02/09/2010 - 01:13 | Link to Comment Anonymous
Mon, 02/08/2010 - 22:56 | Link to Comment RobotTrader
RobotTrader's picture

I guess it is safe to say that Blankfein will soon be selling this substandard residence.

 

And buying something more grand.

Lemme guess.....

He's going to buy Aaron Spelling's mansion, knock it down, and build an even bigger, more lavish residence.

 

Tue, 02/09/2010 - 05:01 | Link to Comment Anonymous
Mon, 02/08/2010 - 22:57 | Link to Comment glenlloyd
glenlloyd's picture

very revealing. We're finally getting that foul odor one expects from a rotting carcass.

Mon, 02/08/2010 - 23:00 | Link to Comment plocequ1
plocequ1's picture

So basically, GS is attempting to openly destroy the world and the world just sits by and watches their nations go down the shitter. Un fucking beleivable. If GS can get away with this, then the world is weak and Goldman will acheive their goal. How can they get away with this? They are just a corporation. Didnt  they try that shit with China and China said Fuck u Goldman? I give up. Wheres the logic?

Mon, 02/08/2010 - 23:17 | Link to Comment Anonymous
Tue, 02/09/2010 - 08:53 | Link to Comment Anonymous
Tue, 02/09/2010 - 10:35 | Link to Comment Anonymous
Mon, 02/08/2010 - 23:02 | Link to Comment Anonymous
Mon, 02/08/2010 - 23:03 | Link to Comment Anonymous
Tue, 02/09/2010 - 04:03 | Link to Comment The Patagonian
The Patagonian's picture

It's easy to bring them down.  Deploy A Company, 2nd Battalion, 504th Parachute Infantry Regiment of the 82nd Airborne Division to occupy that building in downtown Manhattan and make arrests.

Of course, there would be a lot of issues with the Writ of Habeas Corpus and Posse Comitatus with that option.

But it sure as hell would be satisfying to watch.

Tue, 02/09/2010 - 14:13 | Link to Comment Yophat
Yophat's picture

LOL Fat chance!  Interwoven into government structure.   More likely to deploy A Company, 2nd Battalion, 504th Parachute Infantry Regiment of the 82nd Airborne Division to Stanley, Idaho to quell the rebellion than downtown Manhattan!

Tue, 02/09/2010 - 15:44 | Link to Comment WaterWings
WaterWings's picture

LOL

+ 2. You guys divide it.

Tue, 02/09/2010 - 16:56 | Link to Comment The Patagonian
The Patagonian's picture

LOL, yea, I know, fat chance

But it would still be satisfying to watch

Mon, 02/08/2010 - 23:08 | Link to Comment Anonymous
Mon, 02/08/2010 - 23:09 | Link to Comment Anonymous
Mon, 02/08/2010 - 23:10 | Link to Comment Anonymous
Mon, 02/08/2010 - 23:22 | Link to Comment Tic tock
Tic tock's picture

Oh! I don't know.. I think they're refreshingly unsubtle

Mon, 02/08/2010 - 23:22 | Link to Comment Anonymous
Tue, 02/09/2010 - 14:15 | Link to Comment Yophat
Yophat's picture

Now that's a good question!  Certainly some tricky timing involved there....at least if you want support....and you want to get more than one slimeball!

Mon, 02/08/2010 - 23:24 | Link to Comment ATG
ATG's picture

In other words, the STUPID Ouzo PIIG

global margin call to paraphrase AEP...

http://www.jubileeprosperity.com/

Mon, 02/08/2010 - 23:40 | Link to Comment Anonymous
Mon, 02/08/2010 - 23:47 | Link to Comment Anonymous
Mon, 02/08/2010 - 23:57 | Link to Comment pooplagrande
pooplagrande's picture

Ahh the sweet business of fear and greed. No one is better at it than Goldman. Just too bad they are associated with the United States...they will certainly increase the worldwide hate meter towards us...even though most of us hate GS as well. They just happen to be the nasty underbelly of capitalism gone wrong. No wonder these guys are cruising with body guards and taking weapons seminars.

Tue, 02/09/2010 - 00:53 | Link to Comment moneymutt
moneymutt's picture

I never held Saddam against the Iraqi people, I figured they feared and loathed him, I hope no one holds GS against us for same reason...

Tue, 02/09/2010 - 04:08 | Link to Comment The Patagonian
The Patagonian's picture

+1

Tue, 02/09/2010 - 14:16 | Link to Comment Yophat
Yophat's picture

The CIA flunkee....you must be kidding!

Tue, 02/09/2010 - 09:02 | Link to Comment Argonaught
Argonaught's picture

GS is the nasty underbelly of facism or crony capitalism.  Under capitalism, GS would have failed and gone away.  Please stop blaming capitalism and free markets for problems both systems would have fixed, but couldn't because the gov't got in the way!

Tue, 02/09/2010 - 00:22 | Link to Comment tom a taxpayer
tom a taxpayer's picture

Maybe it will be the Europeans who finally bring Goldman Sachs to justice. The many countries of Europe have enough wild hares in their justice system so that at least one can arrest and prosecute Goldman Sachs.  Just a couple of examples of European wild hares:

"On October 16, 1998, London police arrested General Pinochet on a warrant from a Spanish judge for human rights crimes...The arrest and the subsequent decisions by the British House of Lords to reject Pinochet's claim of immunity were a wake-up call to tyrants everywhere, but more important, they gave hope to victims elsewhere that they too could bring their tormentors to justice.

http://www.hrw.org/en/news/2008/10/16/pinochets-european-vacation

"Italy convicts 23 Americans for C.I.A. renditions"

http://www.nytimes.com/2009/11/05/world/europe/05italy.html

 

And it was the Italians who showed how to arrest and prosecute hundreds of criminals in mass trials in the Maxiprocesso (Maxi Trial) of the Mafia in Sicily during the mid-1980s that resulted in hundreds of defendants convicted.

So, when the general public in Greece or Portugal or Spain or Italy see what Goldman Sachs is doing to Euroland, the public outrage may spur swift action to bring Goldman Sachs to justice. 

Tue, 02/09/2010 - 00:24 | Link to Comment darkpool2
darkpool2's picture

as I read through it, you cant help but be somewhat impressed by the intellectual rigor and discipline of GS, and on the other hand the appalling weakness and incompetence of many of those with whom they were dealing. Were there really so few smarts at AIG that they couldnt/wouldnt research what they were getting into? In this sense you cant really blame GS for taking advantage of a weak opponent.....wouldnt we all when it comes right down to it?

But then there is the incredible over-playing of their hand by GS....the back deals, connections, conflicts of interest. Oh how hard was it for AIG to have realized their own perilous position, and then to have sat on their hands and said "so what?, who cares?....we can only go bankrupt once"   Would that delay and calling of bluff have tipped the scales away from GS and would THEY have panicked ?  Its all guess work, but one has to wonder just WHY no-one had the balls to stand up to the pressure.........or is there still yet more to that part of the story? 

Tue, 02/09/2010 - 02:05 | Link to Comment scaleindependent
scaleindependent's picture

Come on, IMO AIG was in the deal too!

They knew the Real Estate market was crumbling.  They just need(ed) the appearance of ignorance and naivete. 

Like you asked "is there still yet more to that part of the story?"...

Tue, 02/09/2010 - 00:27 | Link to Comment Anonymous
Tue, 02/09/2010 - 00:32 | Link to Comment Anonymous
Tue, 02/09/2010 - 00:35 | Link to Comment Anonymous
Tue, 02/09/2010 - 00:40 | Link to Comment Anonymous
Tue, 02/09/2010 - 00:44 | Link to Comment Going Down
Going Down's picture

 

In every stockjobbing swindle every one knows that some time or other the crash must come, but every one hopes that it may fall on the head of his neighbour, after he himself has caught the shower of gold and placed it in safety. Après moi le déluge! is the watchword of every capitalist and of every capitalist nation. Hence Capital is reckless of the health or length of life of the labourer, unless under compulsion from society.

 

Karl Marx, Capital, Volume I, Chapter 10 (1867)

 

 

Tue, 02/09/2010 - 02:53 | Link to Comment faustian bargain
faustian bargain's picture

<eye roll>

Tue, 02/09/2010 - 05:31 | Link to Comment jeff montanye
jeff montanye's picture

roll your eyes all you want but the marxist critique of capitalism will see a whole lot more play in the years ahead.  there is much there of value and insight.  please distinguish between it (the critique) and the alternate economy/society on which marx spends relatively little effort (and which seems, imo, absurd).  the hideous failures of so-called twentieth century "communists" like lenin, stalin, mao, etc. in no way affect the cogency of marx's critique of capitalism's weaknesses, which do exist.  

of course this present (and long-standing) pernicious mixture of capitalism with the power of the state is predictable but hardly a "free market".  there is no perfect answer;  one is reconciling the irreconcilable.  as adam smith noted, whenever two capitalists meet they attempt to pervert the market (which works to the extent that they are rivals not allies).  perhaps the most one can hope for is a less malign dynamic flux of countervailing forces:  capital/labor/a government of laws not men.  some places and times have it and some don't.

Tue, 02/09/2010 - 08:02 | Link to Comment The Patagonian
The Patagonian's picture

I think you are correct.  Most people who disparage Marx do so because the Manifesto is all that they read, if even that.  But Das Kapital is very heady reading and most people don't even bother to read it, and a good dose of Hegel's philosphy would do wonders for understanding.  Smith and Marx should be required reading in any MBA school equally.

I think Marx will be getting a second look in coming years.  His theory of dialectical materialism certainly applies to today's world.  Unfortunately once you mention even the name Marx, eyes roll like above.

You make a good point about Lenin, Stalin, and Mao.  They readjusted Marxist theory for their own political ends, not economic ends.  The Bolsheviks had a problem that Russia was an agrarian society.  There were no proles.  So they had to create proles in order to exploit them for the coming revolution and we got "military communism" in the early 20s for that very purpose. However, like Dawin's evolution of nature, you can't force it, it has to happen naturally.  The Bolsheviks tried to force it, it didn't work.  Now, however, it might happen naturally if the time is ripe: strikes in Greece may or may not set off the resistance to predatory capitalism as practiced by the likes of Goldman Sachs.

Funny thing about FDR.  He's criticized as a traitor to his class, but what he actually did was save his class by allowing a safety valve to let off steam from the worker.  The Bolshevik revolution in Russia was still fresh in the collective memory.  The New Deal allowed workers to get their miniscule "theirs" at the same time allowing the Masters of the Universe to keep their wealth.

This is why I don't understand the wealthy today.  They need to allow the little people to keep some wealth in order to preserve their own wealth but they are not doing that.  I don't know why they don't keep Ford's philosophy of allowing the worker or middle class to afford the very products that they make.  That would seem to be the ideal way to keep wealth.

But reading Marx, what he actually said or wrote, one would realize that he himself had no idea what communism would look like.  It could very well end up like the Star Trek utopia where no one pays for anything but their food magically appears.  It could also end up like an Orwell  dystopia.

However, Marx did set up and illustrate the natural course of Capitalism and how it operates.  We're in a different dialectical stage of Capitalistic history.  There really is no more capitalism but rather a hyper-capitalism.  If we still had capitalism, firms would be investing into their own factories and production facilities, investing into machinery and human operators as capital.  Now we just invest into bits and bytes of computer code.

Like fiat money, what is the Marxist use-value of bits and bytes?  Well, I can use a dollar bill as fuel to start a fire or roll it up to snort cocaine with.  That's the use value of a dollar-bill note.  Any other value attributed to it is merely society's constructed value.

If my hard drive goes tits up again, I can't even snort coke through it - give me a dollar bill or euro note any day

 

Tue, 02/09/2010 - 13:05 | Link to Comment WaterWings
WaterWings's picture

Great post. From further above:

In every ["five-year plan" or "Great Leap Forward"]every one knows that some time or other the crash must come, but every one hopes that [guilt] may fall on the head of his neighbour, after he himself has caught the shower of gold and placed it in safety. [After me the flood!] is the watchword of every [central planner]  and of every [communist] nation. Hence [torture and starvation] is reckless of the health or length of life of the labourer, [especially in a] society [without the rule of law].

Criticizing capitalism because of those that wrap themselves in its banner and proceed to commit atrocities is akin to the Rep/Dem paradigm we are forced to live with today. Marxism was used to lure masses into complacency (if the poor farmers paid any attention at all in the first place) - but the revolution never ended because its main proponents would stop at nothing to maintain their power.

Faustian rolling his eyes is quite apropos! The story of a man thinking he can escape the consequences of his own deception.

He's criticized as a traitor to his class, but what he actually did was save his class by allowing a safety valve to let off steam from the worker.

It's funny you should say that:

http://www.nisk.k12.ny.us/fdr/1937/37_scgifs/large/37012202.gif

http://www.granitegrok.com/pix/chitrib34.jpg

http://thepeoplescube.com/images/FDR_Cartoon.jpg

http://jasonpye.sycks.com/images/fdr_stalin.gif

FDR betrayed millions to death in work camps via the Yalta agreements; at least the ones that survived interrogation and torture...what a champion of freedom!

Maybe he really did share the Marx philosophy:

http://2.bp.blogspot.com/_orkXxp0bhEA/Suo4YZuUj8I/AAAAAAAAXMs/WDVNwEheyH...

There really is no more capitalism but rather a hyper-[corruption]...It could also end up like [a Gorewellian] dystopia.

The pain is especially acute when your persecutor believes it is for your own good:

http://www.youtube.com/watch?v=Wq58zS4_jvM

What is the secret to success in society? Absolute freedom of the Press to win the asymmetrical information war emboldened by immediate and full prosecution of those that violate the rule of law. Without it the word "capitalism" is a clever scapegoat.

Tue, 02/09/2010 - 14:00 | Link to Comment The Patagonian
The Patagonian's picture

I'm not sure I particularly agree.  I mean, if FDR truly shared Marxist philosophy, we wouldn't have had oligarchs Joe Kennedy or Prescott Bush.

I think he was a middleman, which is why he was hated.

As far as betraying millions to labor camps at Yalta, what could he do?  What was the alternative?  What choices did he have?  Invade the USSR?

Funny thing about the Russians.  Throughout their entire history they have always been terrible at offensive military operations, even Peter the Great got his ass kicked when he tried it.  But every time they've been invaded, they come back very strong and in turn kick ass.  It happened with Alexander Nevsky, the Napoleonic invasion, and the fascist invasion of the 20th century.  I don't think stopping millions from dying in the labor camps by force was an option for FDR.

Tue, 02/09/2010 - 15:45 | Link to Comment WaterWings
WaterWings's picture

+1

Tue, 02/09/2010 - 14:09 | Link to Comment The Patagonian
The Patagonian's picture

I'm not sure I particularly agree.  I mean, if FDR truly shared Marxist philosophy, we wouldn't have had oligarchs Joe Kennedy or Prescott Bush.

I think he was a middleman, which is why he was hated.

As far as betraying millions to labor camps at Yalta, what could he do?  What was the alternative?  What choices did he have?  Invade the USSR?

Funny thing about the Russians.  Throughout their entire history they have always been terrible at offensive military operations, even Peter the Great got his ass kicked when he tried it.  But every time they've been invaded, they come back very strong and in turn kick ass.  It happened with Alexander Nevsky, the Napoleonic invasion, and the fascist invasion of the 20th century.  I don't think stopping millions from dying in the labor camps by force was an option for FDR.

Tue, 02/09/2010 - 09:05 | Link to Comment Argonaught
Argonaught's picture

You would have been right 40 years ago; but not today.  Why choose a failed system over a failing one?  That's really pretty stupid...then again, stupid is as stupid does and look at congress!

Tue, 02/09/2010 - 09:20 | Link to Comment Anonymous
Tue, 02/09/2010 - 18:10 | Link to Comment The Patagonian
The Patagonian's picture

Well, since Marxism has never been applied practically it's hard to say that it is a failed system - we actually just don't know if it works or not, there is simply no empirical evidence.  What has been called Marxism before has actually been dictatorships wrapping themselves up in disguise.  And all attempts to reach it have been utter failures.

That doesn't mean it is a failed system, just that all attempts to implement that system have been failures

Tue, 02/09/2010 - 00:45 | Link to Comment Anonymous
Tue, 02/09/2010 - 00:46 | Link to Comment Anonymous
Tue, 02/09/2010 - 00:47 | Link to Comment moneymutt
moneymutt's picture

Max Keiser had it right all alone...I'd like to hear him rant on this info...

Tue, 02/09/2010 - 00:50 | Link to Comment TimmyM
TimmyM's picture

It is all very simple. We declare all CDS contracts null and void. If you own one, fuck you. They are illegal-problem solved. No one on main street will feel a thing. They provide no social utility. They are an illegal method of synthetically creating debt outside the governance of the fractional reserve system. Debt is dangerous and it is regulated for good public purpose. Avoiding this regulation is fraud.

Tue, 02/09/2010 - 01:22 | Link to Comment moneymutt
moneymutt's picture

synthetics beyond fractional reserve...now that you say it that way, that is really bad...

I agree, wipe them out...

then start in on the fractional reserve thing, if some one is going to create money for nothing, it should be owned by public and have democratic controls, like oil in Alaska, let the oil companies/banks take their due for operating the extraction/distribution/retail but the rest is ours to give back to people or to replace taxes or build infrastructure...whatever, and we also get to control how much money is made rather than elite banksters deciding by levering up insanely and get to keep the consequent spoils

Tue, 02/09/2010 - 05:35 | Link to Comment jeff montanye
jeff montanye's picture

(see faustian?)

Tue, 02/09/2010 - 01:21 | Link to Comment bonddude
bonddude's picture

China said they would do it so....why not !

Tue, 02/09/2010 - 01:42 | Link to Comment calltoaccount
calltoaccount's picture

 

Credit Default Swaps:   Basic principles of insurance law which require an insurable interest (ownership or risk of commensurate loss) in that which you insure, were legislatively trashed to enable rapacious, ethically bereft speculator banks and hedge funds to erect a new and extremely lucrative swindle using a kind of debt insurance product they called credit default swaps (CDS); so named, because by their rightful name, bond insurance, they would violate every state’s insurance laws and be void as against public policy without ownership of the underlying bonds—which was certainly not in the predators game plan.  Parlaying never having to actually buy or own the underlying bonds along with the ability to broadly manipulate and malign their market price downward, made 40-1 leveraged CDS bets almost sure winners; outcomes dictated from the sidelines by greedy gamblers with little or no risk of commensurate loss.  And they’re still at it today, unregulated, and operating in almost total secrecy; a Quadrillion Dollar Derivatives Death-Star that may well some day implode all.  http://calltoaccount.wordpress.com/

 

Tue, 02/09/2010 - 03:46 | Link to Comment Rick64
Rick64's picture

 I think you nailed it. Almost impossible to unwind because of the complexity and huge size without a financial meltdown.

Tue, 02/09/2010 - 05:36 | Link to Comment jeff montanye
jeff montanye's picture

naked shorts much?

Tue, 02/09/2010 - 01:04 | Link to Comment ShankyS
ShankyS's picture

Just wondering why ZH is the only site on the net that consistently brings the truth into the light. Others try, but nothing like this. we're so fucked. Maybe seeds and ammo are the best investment at this time.

Tue, 02/09/2010 - 01:14 | Link to Comment moneymutt
moneymutt's picture

why are we yellow on this map, we should be red

http://en.wikipedia.org/wiki/Corruption_Perceptions_Index

 

Tue, 02/09/2010 - 01:28 | Link to Comment Arthur
Arthur's picture

I say go Goldman.  The U.S. economy could use the cash GS is about to extract from Europe.  Allow GS to take down the remaining PIIGS and the O man can nationalize GS and solve our debt crisis.  Oops, don't call it nationalize, just take GS over to prevent a looming "default" due to financial irregularities.  There crisis solved.

Tue, 02/09/2010 - 01:42 | Link to Comment moneymutt
moneymutt's picture

so I used to think our only exports were guns, movies, hip hop music, and search engines...but now we know, fraud is our biggest export...

Tue, 02/09/2010 - 02:55 | Link to Comment faustian bargain
faustian bargain's picture

i thought inflation was our biggest export.

Tue, 02/09/2010 - 06:47 | Link to Comment Anonymous
Tue, 02/09/2010 - 01:40 | Link to Comment Anonymous
Tue, 02/09/2010 - 01:43 | Link to Comment Anonymous
Tue, 02/09/2010 - 01:44 | Link to Comment Lord Blankcheck
Lord Blankcheck's picture

Playing God is hard work,errr... doing Gods work...

Tue, 02/09/2010 - 01:50 | Link to Comment Stevm30
Stevm30's picture

Fascinating piece, but I don't agree with the author's conclusion.  I hate Goldman employees, and Paulson and Blankfein as much as the next guy.  They are all greedy, single-faceted and ugly people.  But I do not think they deliberately, knowingly brought AIG down, or that they are deliberately, knowingly plotting to bring Greece, and the global financial system down. 

They may have done so with AIG, and they might do so with Greece... but I don't agree that it is their PLAN.  Instead, the crises are/will be the cumulative result of many individuals acting in their own interest (one trader wants to short sub-prime - good bet), (one executive doesn't want outsiders inspecting the shit they sold - smart move), (one former CEO wants a guy he knows to be CEO - debatable)... these things don't add up to an evil mastermind or master plan... just a bunch of thoughtless people who should never have had access to taxpayer dollars.

Tue, 02/09/2010 - 02:20 | Link to Comment Altan311
Altan311's picture

in the words of shakespeake: fuck you

Tue, 02/09/2010 - 03:45 | Link to Comment arnoldsimage
arnoldsimage's picture

+1000

Tue, 02/09/2010 - 03:47 | Link to Comment Stevm30
Stevm30's picture

Oh, I see... "fuck you"... great point... and "+1000"... so original... wow!

Tue, 02/09/2010 - 08:10 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

I see the Goldman apologists are as eloquent as ever this morning.

Tue, 02/09/2010 - 09:30 | Link to Comment Altan311
Altan311's picture

Man they come out in force sometimes, huh Neddy boy?

Tue, 02/09/2010 - 05:40 | Link to Comment jeff montanye
jeff montanye's picture

the secret to goldman's "success"?  thoughtlessness.

Tue, 02/09/2010 - 10:56 | Link to Comment Stevm30
Stevm30's picture

Basically yeah - on the part of the taxpayer, and their elected officials. 

Tue, 02/09/2010 - 08:33 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

I agree less a full blown plan or conspiracy, than the simple fact of a common bond of similar objectives among an insular group of sociopathic business people, who may be summed up as "all greedy, single-faceted and ugly people" - if you understand their mindset, it is a small jump to understand that when they are presented with a given set of business options, it is almost inevitable the ones they will pick every damn time.  An unrestrained juggernaut, taking actions over a period of time, governed by a set of sociopathic principles, gives rise to the appearance of a plan.

This is important in my book because a fundamental criticism leveled at this sort of discussion is "just another tin hat conspiracy," meaning that normal people could not possibly develop such far reaching plans and then execute them in total secrecy.  You don't need that if you understand it is the virtually identical, yet amoral and sociopathic, mindset of the herd of individuals that is in control, not a plan.  I'm convinced "normal" people can't believe greed can operate so powerfully, so as to mute all other "normal" concerns, at such a level, yet that is what is going on and who we are dealing with. 

I hasten to add that as with any organization of Goldman's size and nature, not all of the employees, professionals and traders are afflicted with this mindset. I'm sure many there are not, and are nodding their heads in recognition of the problems, and perhaps wish for changes in policy there, even as they recognize they are utterly powerless to make it so (indeed, they would lose their jobs). But as you rise through the ranks, the percentage of those "of like minds" increases until you reach the very top, which I guarantee is 100% of this mindset.

Tue, 02/09/2010 - 18:12 | Link to Comment Stevm30
Stevm30's picture

"gives rise to the appearance of a plan"

Yes but was it planned or not?  According to the author, the people at Goldman are so masterful that they planned ahead of time that Paulson would appoint Liddy, and that Jester would make an unsuccessful effort (but just enough to have said he tried, not enough to actually succeed) to get the rating agencies to hold back.  It's pretty fantastical if you apply common sense, and actually shows a WILD overestimation of the people at Goldman (giving rise to the tin hat claim). 

I'm not an apologist - like I said, what happened WAS criminal.  That being said, I don't give Goldman that much credit - to me they're a bunch of hacks.  The word (and idea of) "PUPPETMASTER" is what I take issue with.

Tue, 02/09/2010 - 02:10 | Link to Comment Anonymous
Tue, 02/09/2010 - 02:34 | Link to Comment JimboJammer
JimboJammer's picture

The   Truth  is  starting  to  come  out... Lots  of  corruption  here..

Tue, 02/09/2010 - 03:35 | Link to Comment Bylinka (not verified)
Tue, 02/09/2010 - 03:38 | Link to Comment Kreditanstalt
Kreditanstalt's picture

Unmitigated lunacy, perhaps...

But should we care?  Even sovereign entities can go bust, if they borrow too much.  They didn't have to borrow. Their government could have said "no!" to the demands of the proles for more social welfare bread and circuses.  They could have lived within their means, spending out of cash flow and keeping the crippling burdens of the welfare state at bay.  They could have merely done their homework and thoroughly investigated the intricacies of their borrowings, the position of GS, of collateral needs, of  possible black swans...

They could have had VISION.

They can go under just as can any corporation lacking cash flow.  It won't be the end of the world.  Not for you or me.  Not for others in Euroland.  Not even, I venture to say, for the middle classes of Greece, who have been getting a free ride welfare system on borrowed money for a long, long time now.  It will be paid for and, after it is, honesty in government spending and perhaps honest straight talk from politicians will return...

Tue, 02/09/2010 - 05:57 | Link to Comment jeff montanye
jeff montanye's picture

the rich in greece don't pay their taxes more than the rich most other places don't pay their taxes (which is saying something).  if you think the proles have been the primary beneficiaries of the modern nation state's accumulation of debt you have not been watching very carefully.  and re should we care, given your name, one might expect more sensitivity to how bankruptcies are transferred in a deflationary depression.  and from where will "honesty in government spending and ... honest straight talk from politicians ... return"?   

Tue, 02/09/2010 - 11:16 | Link to Comment Kreditanstalt
Kreditanstalt's picture

I'm getting tired of cursing bankers and shouting about how evil they are, even though it may be true...the only constructive thing to be done is this:

Bottom Line: The overspending, over-borrowing, over-consuming and low-productivity middle classes of western countries are, at root, to blame for the sovereign debt debacle.  Sorry, but the relatively small financial sector is a small potato.

People, take charge of your own finances!!  Don't go on and on whining about villains and playing victim.  If you weren't frugally saving and investing during the good times, who is to blame NOW?  It IS possible to stay above water financially in these markets but it does take sensible risk acceptance, perspicacity, knowing when to sit on your hands, and CAPITAL...if you have any.

If you don't...who is to blame?

Tue, 02/09/2010 - 13:13 | Link to Comment TimmyM
TimmyM's picture

You make a good point, but the US middle class problem is also complex. For fifty years we have suffered a triple punch of government foolishness. Military Keynesianism has squandered the benefit of our relative global fortune. Misguided malinvestment into excess dwelling capacity has been variously promoted and crowded out material,financial and labor resources from selfsustaining productive business enterprise. And our central banking system has stolen from savers to subsidize a non-productive financial sector and its credit bubble. Our incestuous participation in these foolish schemes was a vain attempt to maintain a standard of living against the headwinds.

Wed, 02/10/2010 - 08:02 | Link to Comment Kreditanstalt
Kreditanstalt's picture

I agree with your last sentence TimmyM...though high (and expensive) western  living standards constitute those 'headwinds' IMO. High salaries, ruinously expensive social programs, oversize housing expectations and demands for "job security" resulted in western economies becoming uncompetitive in the face of globalization.  But the alternative is state socialism!   Living standards will fall until western labour becomes productive again cost-wise.  That will take years, decades...

Tue, 02/09/2010 - 05:00 | Link to Comment Anonymous
Tue, 02/09/2010 - 05:07 | Link to Comment Anonymous
Tue, 02/09/2010 - 07:09 | Link to Comment John McCloy
John McCloy's picture

Anyone know what the wonderful news is that deems the S&P Futures up 8 points? Perhaps it was the wonderful news out of UBS that they posted a profit because of tax credits? Maybe its because they are seeing record redemptions?

Or Maybe its just the same game players cannot move the markets upward when the markets are open since October and have to resort to games in order to distribute 

Wed, 02/10/2010 - 09:17 | Link to Comment Anonymous
Tue, 02/09/2010 - 06:37 | Link to Comment Anonymous
Tue, 02/09/2010 - 07:10 | Link to Comment Anonymous
Tue, 02/09/2010 - 07:22 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

I note Hank Paulson's very central role in building the AIG-Goldman relationship and then fast forward to fall, 2008 and the need to fund a bailout of AIG due to "systemic risk."

What a traitor, what a scumbag.

Is there a hole for me to get sick in?

Tue, 02/09/2010 - 08:24 | Link to Comment Instant Karma
Instant Karma's picture

So you're making the arguement that Goldman sold financial products it knew would blow up and simultaneously purchased insurance to profit from the explosion. In the meantime systemic "hubs" like AIG were destroyed and created a systemic risk to the entire intertwined financial system.

Well then, although difficult to prove, this is obviously some form of massive financial fraud, maybe under the RICO law for organized crime. Send in the FBI, seize the records, and unwind the company, selling off parts to other companies.

Just because you can do something doesn't mean you should, and, it may be illegal.

Tue, 02/09/2010 - 08:37 | Link to Comment Anonymous
Tue, 02/09/2010 - 08:42 | Link to Comment Johnny Dangereaux
Johnny Dangereaux's picture

This is one of the architects/ring leaders. Find out what he's been up to.

Jacob A. Frenkel

(Israel), Vice Chairman, American International Group; former Governor, Bank of Israel

  Dr. Frenkel is vice chairman of American International Group, Inc. (AIG). He also serves as chairman and CEO of the Group of Thirty (G-30). Previously, he was chairman of Merrill Lynch International. Between 1991 and 2000 he served two terms as Governor of the Bank of Israel. From 1987 to 1991, he was economic counselor and director of research at the International Monetary Fund, and from 1973 to 1987 he was on the faculty of the University of Chicago where he served as the David Rockefeller Professor of International Economics. Dr. Frenkel is a laureate of the 2002 Israel Prize in economics and the recipient of honorary degrees and awards from various universities and governments.

From here:

http://www.cfr.org/bios/5931/jacob_a_frenkel.html

All we really need to do is  'putsch' the CFR and their one-world sycophants into a 'ditch' (a real long one, about 8 feet wide)

Until then, you won't solve a thing.

Sons of Liberty, anyone?

Tue, 02/09/2010 - 09:26 | Link to Comment Hephasteus
Hephasteus's picture

"This is unmitigated lunacy and a recipe for financial collapse at the global level."

Unless of course everyone piles into the lunacy like a clown car and well mitigates the crap out of it.

Tue, 02/09/2010 - 09:29 | Link to Comment Miramanee
Miramanee's picture

http://www.youtube.com/watch?v=cxN7rIBETJA

Replace Jensen with Blankfein.

Arthur Jensen: You have meddled with the primal forces of nature, Mr. Beale, and I won't have it. You are an old man who thinks in terms of nations and peoples. There are no nations; there are no peoples. There are no Russians. There are no Arabs. There is no third world. There is no west. There is only one holistic system of systems; one vast interwoven, interacting, multivariate multinational dominion of dollars. Petrodollars, electrodollars, reichmarks, rubles, rin, pounds and shekels. It is the international system of currency that determines the totality of life on this planet. That is the natural order of things today. That is the atomic, subatomic and galactic structure of things today. It is the international system of currency that determines the totality of life on this planet. That is the natural order of things. You have meddled with the primal forces of nature, and you will atone! Am I getting through to you, Mr. Beale? You get up on your little twenty-one inch screen and howl about America and Democracy. There is no America. There is no democracy. There is only IBM and ITT and AT &T and Dupont, Dow, Union Carbide and Exxon. Those are the nations of the world today. What do you think the Russians talk about in their councils of state? Karl Marx? They pull out their linear programming charts, statistical decision theories, and minimax solutions and compute the price-cost probabilities of their transactions and investments just like we do. We no longer live in a world of nations and ideologies, Mr. Beale. The world is a college of corporations inexorably determined by the immutable by-laws of business. The world is a business, Mr. Beale! It has been since man crawled out of the slime. And our children will live to see that perfect world in which there is no war or famine, oppression or brutality. One vast and ecumenical holding company for whom all men will work to serve a common profit and in which all men will own a share of stock, all necessities provided, all anxieties tranquilized, all boredom amused. And I have chosen you to preach this evangel.
Beale: Why me?
Arthur Jensen: Because you're on television, dummy.
Beale: I have seen the face of God!
Arthur Jensen: You just might be right.

Tue, 02/09/2010 - 09:41 | Link to Comment IBelieveInMagic
IBelieveInMagic's picture

On reading Tyler's rant, I am not convinced that the involvement of GS in Greece is a fact. It appears to be a rant based on rumors. Let me be clear, I am no supporter of GS but I fear that badmouthing based on unfounded facts may boomerang on efforts to reign them in. Let us get the facts right before we skewer them.

 

 

Tue, 02/09/2010 - 09:45 | Link to Comment Anonymous
Tue, 02/09/2010 - 09:46 | Link to Comment Anonymous
Tue, 02/09/2010 - 13:25 | Link to Comment WaterWings
WaterWings's picture

Interesting idea, but the late night sneaky uncle is being protected by family members in denial.

Tue, 02/09/2010 - 10:05 | Link to Comment Anonymous
Tue, 02/09/2010 - 18:58 | Link to Comment Anonymous
Tue, 02/09/2010 - 10:06 | Link to Comment Anonymous
Tue, 02/09/2010 - 18:54 | Link to Comment Anonymous
Tue, 02/09/2010 - 10:47 | Link to Comment Anonymous
Tue, 02/09/2010 - 13:27 | Link to Comment WaterWings
WaterWings's picture

-1 (for not elaborating)

-1 (for posting Anon)

-----

-2

Tue, 02/09/2010 - 11:03 | Link to Comment Anonymous
Tue, 02/09/2010 - 11:12 | Link to Comment Anonymous
Tue, 02/09/2010 - 12:03 | Link to Comment MarketWizard
MarketWizard's picture

Why Greece? Why Now?

New Europe
For the winds to set sail for the troops of the Greek coalition and battle against Troy in the world of Ancient Empires, the Gods wanted the leader of the expedition Agamemnon, to sacrifice his daughter Iphigenia. And, so he did according to the last play by Euripides, written around 408 BC.

Twenty five centuries later, Europe is in deep trouble facing the worst economic crisis ever. Catastrophe is imminent and an Iphigenia is badly needed. The Euro, the common European currency, officially launched on 16 December 1995 was at the time given a life expectancy of 15 years by Milton Friedman. We are now in 2010 and facts prove that Friedman was correct.

Now, Europe needs its scapegoat and this was chosen to be Greece. Not because the Greeks are more corrupt than the Germans or the British neither because Greece has committed any sacrilege. We can give you many examples of British or German corruption cases having occurred with the blessing of the European Commission. Greece is too small to be dishonest by European administration standards. Greece was simply chosen to be, because it has a new government, all honest people acting in good faith with little experience and certainly unaware of how corporate gangs operate in the “civilized” world.

Greece also has a big public deficit accumulated over the last 30 years. Those mainly responsible for the accumulation of this huge deficit are the European Central Bank and the European Commission who allowed the debt to accumulate. The Commission and the ECB were responsible all these years for auditing Greece and all other European economies. The argument that the Greeks were cheating in their statistics all this time is beyond a joke. Indeed, if Greek civil servants at a salary of 800 Euro per month were capable of 30 years of cheating in the face of the auditing “super-brains” of Brussels and Frankfurt who enjoy salaries of 15.000 and 20.000 Euro per month, then Jose Barroso and his colleagues in the College, should turn to something stronger and perhaps more illicit to avoid reality...

In this context, I have to add that the Greek government and the Greek administration claim that Greece is suffering an across-the-board unethical offense by financial speculators. Although it looks to be true, I think that the Greek authorities, in defending their case, have a very limited view of the issue, and therefore are missing the real target of the speculators. That is the European currency itself – The Euro is under fire. The Euro is the target of the speculators where there is real profit.

Why else would two of the world’s leading financial newspapers attack Greece on their front pages every single day?

What is it worth?

No, Greece is not worth that much bad publicity.

The Euro is the target and the target hides political and speculative reasons. The end of the Euro is coming and it is coming soon, as since its introduction, Europe although it had a common currency, did not manage to get a common budget.

Indeed, the common budget would signify the political unification of Europe, foreign and defense policies would have come under, and the combination of a common currency and a common budget, would have brought political unification.

Last but not least, we reprint here above last Friday’s front page of one of the leading financial papers of the world which speaks of the so-called (in Brussels) “the four PIGS” (Portugal, Italy, Greece and Spain). Indeed, what I as a journalist with common sense do not understand is why, among the four PIGS, “Ailing Greece infects market,” when it is the smallest of the four, and from the published table, Greece seems to have the best performance than any the other three.

Tue, 02/09/2010 - 19:10 | Link to Comment Anonymous
Mon, 04/19/2010 - 10:51 | Link to Comment Tom123456
Tom123456's picture

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Sun, 09/19/2010 - 08:38 | Link to Comment sed
Sun, 04/17/2011 - 14:00 | Link to Comment Mugen
Mugen's picture

All that have been said on the news is just a scam. They have planned everything even this crysis.

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Thu, 06/09/2011 - 17:20 | Link to Comment sun1
sun1's picture

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