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Let The Reign Of Terror Begin

Econophile's picture




 

From The Daily Capitalist

Congress has been looking for a scapegoat for the crash. It appears that Goldman Sachs is it. Let the show trials begin.

The government always finds someone who did something rotten, blames them for everything, they are tried and convicted with proper bloodletting, the public is satisfied, and everyone forgets about it. This is what happens after every economic crisis yet the cycles keep coming and no one seems to know why other than the usual answer that "greed" caused it.

Greed has nothing to do with the crises, boom or bust.

Greed is a human trait and as such it always exists. This trait is magnified on Wall Street where legions of young MBAs are turned loose, striving to become another Paulson, Soros, or Buffet. Nothing wrong with making money. Greed is moral issue not a legal one. Yet if greed is always there, why aren't business cycles perpetual?

If you are a follower of J. M. Keynes, then the reason we have business cycles is "animal spirits." Not a very satisfactory answer from such a lauded economist. All of a sudden, for no apparent reason, our animal spirits, greed or whatever, turn loose and we create booms and busts. Keynes just couldn't think it through very well.

Fortunately, Ludwig von Mises did. In 1912 he wrote his famous The Theory of Money and Credit which is a groundbreaking study of money in the Austrian tradition. It looks at individual action rather than "national" economic quantities. Begun by Carl Menger, this Austrian School created what is now known as the Marginal Revolution. It rejects the aggregate approach of looking at the economy such as espoused by Keynes. Keynes was an arrogant technician and liked the idea of manipulating things like national money supply, national demand, national wages, and like. Austrians view the economy as the behavior of billions of individuals (Mises referred to this as "human action" or by the Greek name he invented, "praxeology"). Good luck, the Austrians say, trying to figure out what the multitudes are all up to at any given time.

What creates the business cycle, says Mises, is the inflation of money and credit. Only the Fed can do that. This is the key ingredient that Keynes and many Classical economists missed. Turn lose the money spigot and it will flow where opportunity exists. Flood the economy with money and of course greed will occur. So will a boom and bust.

Yes, I know this is quite technical. But the point is that Mises and the Austrians have discovered something quite extraordinary and it was rejected by Keynesian technocrats, now called econometricians, who like national aggregate concepts because they want to control the economy. The only problem is that they don't know how to do this and their nostrums have never worked in real life. They think that we humans are just some dumb tool to manipulate, sort of a mechanistic, Newtonian view of human behavior. I think we all know that we aren't "units." If there ever was a maxim to capture this it would be "I think therefore I am ...  going to do what I damn well please, so piss off!"

Which gets back to the cause of our crisis. Most Congressmen are Keynesians, whether they know it or not. They believe companies like Goldman caused the crisis by their egregious behavior. All members of Congress want to be re-elected and greedy business people are always good vote getters. They are looking for heads to chop.

This is what is called a "show trial" in less free economies. Stalin loved them because no one knew who would be next and the terror it caused was delicious for a dictator. Chávez is doing the same thing now: Let's create new laws today and then arrest people for what they did yesterday even though it wasn't illegal then.

So here is the first trial in a reign of terror on Wall Street:

Federal prosecutors are conducting a criminal investigation into whether Goldman Sachs Group Inc. or its employees committed securities fraud in connection with its mortgage trading, people familiar with the probe say.

 

The investigation from the Manhattan U.S. Attorney's Office, which is at a preliminary stage, stemmed from a referral from the Securities and Exchange Commission, these people say. The SEC recently filed civil securities-fraud charges against the big Wall Street firm and a trader in its mortgage group. Goldman and the trader say they have done nothing wrong and are fighting the civil charges. ...

 

Prosecutors haven't determined whether they will bring charges in the case, say the people familiar with the matter. Many criminal investigations are launched that never result in any charges.

 

The criminal probe raises the stakes for Goldman, Wall Street's most powerful firm. The investigation is centered on different evidence than the SEC's civil case, the people say. It couldn't be determined which Goldman deals are being scrutinized in the criminal investigation.

Here it comes:

The development comes amid public calls for more Wall Street accountability for the industry's role in the financial crisis. Though there are multiple ongoing criminal and civil investigations, no Wall Street executives connected with the meltdown have been convicted of criminal charges. ...

 

[I]n the more than two-century history of the U.S. financial markets, no major financial firm has survived criminal charges. Securities firms E.F. Hutton & Co. and Drexel Burnham Lambert Inc. crumbled after being indicted in the 1980s. In 2002 Arthur Andersen LLP went bankrupt after it was convicted of obstruction of justice for its role in covering up an investigation into Enron Corp. The conviction was later overturned by the Supreme Court.

 

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Sat, 05/01/2010 - 14:23 | 327120 jdrose1985
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Congress has been looking for a scapegoat for the crash. It appears that Goldman Sachs is it. Let the show trials begin.

 

would that be the last crash or the coming one? My bet is on the coming one...

Sat, 05/01/2010 - 10:44 | 326866 GoldSilverDoc
GoldSilverDoc's picture

Goldman did not cause this crisis.

The Fed (primarily), and the US government (secondarily, and in collusion), did.

They did so because they believe that they can plan one particular part of the economy - the money.  They cannot.

Goldman took advantage of the idiocy of the Fed and the USG, and stole while the stealing was good.

Mises was right; Keynesians are fools.

Watch and learn.

Sat, 05/01/2010 - 14:38 | 327132 JR
JR's picture

No! Not Keynesians. Not Fools.  They are dictators and thieves. These people are not economists.  It is not a math system.  It a dictatorship, a takeover. It is not Keynesianism versus a free market.  These people are taking over everything; they are making all the decisions.  They are not putting money into the economy; they are putting the money into their pockets.

Like Stalin, they use an euphemism for an economic system, such as Keynesian, on the way to totalitarian government.

Sat, 05/01/2010 - 11:40 | 326837 williambanzai7
williambanzai7's picture

I rather doubt that anyone at Goldman will be going to jail. What is on trial is a system that fosters massive misallocations of resources that are becoming more and more scarce for all but the priveleged few. If the mighty Squids have perfectly positioned themselves to be dragged through the media muck in order to accomplish this difficult but obviously necessary exercise:  "I pity the fools."

I am surprised no one has taken up Minsky's Financial Instability Hypothesis in this discussion...

A NIGHTMARE ON WALL STREET:

http://williambanzai7.blogspot.com/2010/05/nightmare-on-wall-street.html

Sat, 05/01/2010 - 23:27 | 327489 moneymutt
moneymutt's picture

Steven Keen is one of the few economists to build on Minsky...but yeah, its a media blackout on Minsky

Sat, 05/01/2010 - 09:55 | 326828 dcb
dcb's picture

You need to break up these big firms. On charlie rose Blankfien talks about his role as a "market maker" that gives him cover. But weren't all the sides to the transactions writing each other e-mails.  Too many hats under one roof creates too many conflicts. The fab put together the security (originator) I believe sold it (sales) and talked about trades (prop desk and market maker).  the market maker title gives cover to the "illegal activity". I saw very little of divided toles and chinese walls.

does the guy on the prop desk have to do his own research to see that goldman has crap in the cdo. no he benefits from his role as an originator (inside information). tell me how you divide market maker from internal prop desk. are they seperate, was there communication at all between parties. Yes. these groups do not function independently. this is why they want to keep the big structure. it isn't becuase of clients, it is becuase it llows gaming of the system under the guise of performing a market function.

Sat, 05/01/2010 - 05:36 | 326752 Basia
Basia's picture

Karma is hell.

Sat, 05/01/2010 - 04:05 | 326729 berlinjames02
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Hey Money Mutt,

I like your comment... it reminded me of a Dave Chappelle's skit... check it out for some chuckles.

http://dailybail.com/home/dave-chappelle-on-white-collar-crime-i-plead-t...

Sat, 05/01/2010 - 03:00 | 326707 dcb
dcb's picture

As for the "goldman argument" there are two sides to the trade. there are two sides to any transaction. any purchase has two sides. buying a product or service. My simple mind sees no difference. so why is a financial transaction different.

Sat, 05/01/2010 - 02:56 | 326703 dcb
dcb's picture

BP is on the hook for the oil spill. Why if you sell crappy mortgages aren't you on the hook for the damage. As far as I have seen nobody has explained why the financial industry gets to be treated differently than other industries.  Sell a faulty product that does damage and you bear the cost of the damage. toyota recalls their cars.  Maybe it these behaviors really cost the firm money, and the players real money as well investment banks would act more rationally instead if pumping bubbles they would damp the highs and lows. i.e. the public should have animial spirits, the invetment banks should in theory be rational and moderate this behavior by their actions. that is the system we should be attempting to build.

Sat, 05/01/2010 - 02:49 | 326698 dcb
dcb's picture

Although goldman is in the cross hairs now, it was clear that both Wamu and Citi engged in fraud in their mortgage portfolio. Unfortuneately the rating agencies may give cover to their behavior.

I care less about the case, but do hope the "trial" will enlighten the public as to how thins work on the street. the thing I find interesting is that nobody has the probelm that if I sell food that is toxic to you, then buy an insurance policy on you, then buy inurance on the company (aig)that I know insured a bad risk (you) people would consider this illegal.

But lets add the role of the prop desk to dump the positions. how can you say that is kosher. It may not be currenctly illegal, but it sure as hell should be. It would be one thing if they just dumped their mortgage longs. it is the other stuff that is disgusting. Let us not forget that they (while being short AIG) forced them to post higher collateral further hurting the company and making the stock fall more. Making more money.

 

This is why you have to break thes comanies down to size. because of the size of goldman by taking this position they effectively determine the direction of the market. Lets be clear as per tabbi they did the same with dot.com stocks, oil (ramp up then dump). did they do the same with Greece?

 

If you want to admt it or not. If china did something similiar it would by dumping treasuries and fucking around with the dollar, etc. it would be considered an act of war.

Sat, 05/01/2010 - 23:20 | 327479 moneymutt
moneymutt's picture

i agree, this "theater' is getting more people thinking about our financial system...a good thing

Sat, 05/01/2010 - 02:25 | 326686 heyligen
heyligen's picture

Guess Bin Laden was a scapegoat too...

Sat, 05/01/2010 - 00:40 | 326640 Chris88
Chris88's picture

Great article.  More people would do themselves a favor by understanding the trade cycle by picking up a Mises or Hayek book as opposed to ignorantly believing that some investment bank brought the whole system down.  Every economic downturn is preceded by the expansion of credit, the greater this expansion is the worse the bust is.  The Fed, FDIC, and every other joke of a government institution prevent this expansion from being checked by things such as bank runs.  You can't lower the rate of interest from its natural, market level and NOT distort the entire process of production. Akak - your post was spot on.  Everybody claims to be in favor of markets but doesn't talk about Karl Marx's 5th plank (the Fed).  Anybody who supports central banking is the furthest thing from a free market advocate.

The only reason Goldman Sachs and every other financial institution was allowed to go on and ride the wave of the boom and act recklessly was because of the Fed and the government in general.  With a central bank and FDIC banks can be as careless as they want because they don't need to compete on safety, only returns.  Get rid of the government and let's see just how risky financial institutions are when they know they don't have a printing press there to back them up and distort interest rates.  Goldman and others would have to be responsible or else they would go broke - something no large company/corporation in the US can do anymore thanks to the DC circus. 

The market wasn't the cause of a country with a negative savings rate having record low interest rates.  Really, how can any human being think that makes sense.  If there is such a tiny supply of loanable funds and a huge demand for it (as the US government/consumers run on credit) that interest rates should be near zero?  Did these idiots really think there would be no consequences? 

Sat, 05/01/2010 - 00:56 | 326645 moneymutt
moneymutt's picture

so if using a certain drug becomes in vogue because everyone is doing it, but then we realize it has horrible impacts on peoples health/mental health and it is way worse than alcohol and weed...then we are not supposed to correct ourselves and start enforcing our drug laws again to get that bad drug off the streets??? you say "its the cycle man, everyone was into robbing banks, why convict me of it"....the whole point is we were not policing and regulating like we should and that messed things up, and so your fix is to not hold any accountable, not even the worst offenders that broke our current weak laws? Apologists....wrong is wrong regardless of culture at the time, and if you broke law, go to trial..

Sat, 05/01/2010 - 01:35 | 326666 Chris88
Chris88's picture

I don't think that's a very good analogy.  If a drug is bad and harmful, which most are, it doesn't mean that an extortion racket should threaten me with violence and steal my money to throw people in prison for making what you arbitrarily believe is a poor personal health choice.  Instead, they should be left on their own to suffer the consequences which I could care less about.  The same thing with financials or any part of the economy.

It's only a cyle because people for some reason believe credit can be continually expanded beyond the supply of savings; which is a ridiculous notion.  Then when this causes a recession/depression people think that doing the same thing again will fix it; an even dumber notion. 

I'm not trying to vindicate or villanize Goldman Sachs; but them doing illegal or stupid things was simply nowhere near the cause of the crisis as economic theory has demonstrated throughout history.  The whole point is that it doesn't matter if "you police and regulate" because the idiots in charge of the policing and regulating caused the problem.  Why don't you go ahead and put a bunch of pedophiles in charge of a pre-school and then when a kid gets molested complain that you just didn't have a clear policy on not touching kids. 

The market should be the sole regulator because it is the only one that will punish those who don't meet the most urgent needs of consumers and reward those who do.  The people you want to be in charge of the duty to "police and regulate" are the antithesis of what should be a common sense idea.

 

Sat, 05/01/2010 - 23:17 | 327477 moneymutt
moneymutt's picture

I do think fighting the herd is difficult, but from what I have seen happen in very unregulated times in history, it does not seem that they have some sort of superior solution. Point to me a country/time with a weak govt and little policing of markets that dissolve into cartels, monopolies, trusts, gangs...some sort of parasitical situation. Tyranny of concentrated private wealth can be just as troublesome as tyranny of parasitical govt.

I do agree if we have debt, we have to have default to restabilize, whatever you call it Jubilee, bankruptcy, so I think we agree no govt bailouts...just let it crash. I do believe we have options to tho, I'm with Steven Keen on this.

I however, reject financial anarchy. Cops might be too powerful with insufficient democratic checks to stop them from being corrupted and cops can also be too weak and just get run over by gangs, cowering in their stations while honest citizens are abused....but neither of these situations tells me we should cease trying to fairly, uniformly police with many checks and balances. I feel same way about financial system policing.  You probably don't like this analogy either...

Sat, 05/01/2010 - 14:45 | 327137 Econophile
Econophile's picture

+1000

Sat, 05/01/2010 - 00:33 | 326614 GBT
GBT's picture

Ah scapegoat schmapegoat. Don't go all limp dick on us now. I say cut their heads off with a fruit knife, starting with Blankfein, and kick them all down the courthouse steps like that scene in Apocalypto. Fuck 'em.

Sat, 05/01/2010 - 14:15 | 327112 akak
akak's picture

Good suggestion --- I like the imagery!

We could, of course, go all the way and let the temple priests rip out their beating hearts and throw them on burning braziers, but that assumes that Blankfein et al actually posess hearts in the first place.

Fri, 04/30/2010 - 23:40 | 326588 moneymutt
moneymutt's picture

Sorry, was GSacs being charged with being the only entity that caused our unstable debt bubble? Yes there is some rhetoric about that but congressional hearings, SEC investigation and possible Fed criminal charges are about real illegal behavior, fraud.

If Madoff should be hated for trashing peoples money and should go to jail for fraud, so should GSacs...just cause they got a pass on all their illegalities and corruption in good times does not mean what happens to them in bad times is morally wrong, irrational revenge populism. They are finally being put under the law like the rest of us, not above it...you may cry they are the scapegoat...but that's like saying after a rash of violent drug gang crimes ruin a Mexican town, jailing the biggest gang leader is scapegoating...whatever, its call the rule of law...and yes everyone, govt and private business and regular workers/consumers participated in perpetuating the debt bubble, and if a politician, a business owner, a mortgage broker, or a home buyer lied to leverage themselves, they committed fraud too and should be held accountable...but as this blog has been showing for over a year now, GSacs is the biggest, worst gang leader and should be priority in law enforcement, just DEA would look to take down drug kingpins...

Fri, 04/30/2010 - 23:30 | 326573 doolittlegeorge
doolittlegeorge's picture

It was called "the Holocaust."  If Lloyd Blanfein gives you "million mile stare" when you bring it up then they really do have it coming.  OF COURSE the government is going to scape goat Goldman.  Their testimony i think could have been summed up in two words:  "blow me."  Well as Jewish Senator Levin apparently excaimed later:  "friggin' Jew.  Now you pay." 

Fri, 04/30/2010 - 23:16 | 326561 Eally Ucked
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All those economists discussed and created theories for traditionally balanced economies. In case of US, financial sector delivered 45% of GDP in 2007. This sector does not create anything, except money from thin air. So if there is no money created almost half of GDP disappears, that is not the goal of government, and it explains actions undertaken by current and previous administrations. 20% of GDP (roughly) is manufacturing, the rest are middle men for Chinese, peddling their products. I think numbers would be much worse if we deducted military manufacturing component. Can you imagine government destroying those TBTF monsters? Don't you think there is structural problem with US (and most western countries) economy leading to current problems?

Sat, 05/01/2010 - 23:00 | 327464 moneymutt
moneymutt's picture

Mish had a great graph showing how much current manufacturing production in US is due to military...its scary....people don't often discuss this, but defense and its contractors fighting wars are a huge jobs program...

I saw some Florida Tea Partiers at a protest complain about Obama shutting down Shuttle program (long-since decided) and not creating new make-work tasks for these shuttle workers, like going to moon. What are good govt jobs, what are bad? We need to put everything on table, prioritize, and cut.

Fri, 04/30/2010 - 22:20 | 326519 Madcow
Madcow's picture

Better to pretend there are a few bad apples that can be thrown out than to admit that fiat money and central banking are a dead end.

 

you can send a couple traders and fund managers to jail. but there's no way to imprison "math."  We're in the ninth inning here - of a long game of human ambition versus compound interest.  now that the power curves are going parabolic, the game is over. 

 

 

Fri, 04/30/2010 - 22:03 | 326487 Marvin_M
Marvin_M's picture

1.     In the beginning everyone started off with the same amount of bones, trinkets and gold

2.    

Some of the bigger and smarter (let us say) early humans figured out that they could easily get their unfair share – one way or another

3.    

The bigger and smarter continued to accumulate their unfair share until the rest of the smaller and dumber folks had nothing

4.    

The smaller and dumber folks decided they had enough of that crap and ganged up out of desperation on the bigger & smarter rich guys

5.    

The smaller and dumber folks finally got their money back by uniting to defeat the bigger and smarter guys.   But, since the biggest and smartest of the smaller and weaker crowd all got killed fighting the big guys, the survivors were even weaker and dumber.  When the next wave of bigger and smarter guys (whose survivors of the last round were even bigger and smarter than the last batch) came along it all started again...only each time gets easier for the big guys

Wash, rinse, repeat for the entire history of mankind and here we are…

All economic theories are useless academic excercises in futility in the real world.  The game of “Monopoly”, much like the “Hokey Pokey” is what it’s all about...let's keep it simple

Fri, 04/30/2010 - 22:59 | 326550 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

Playing Twister at the age of 16 with two 17 year old girls wearing cut-offs and tube tops was by far the best day of my life, at the time.

Sarah and Lisa and me, what a great day.

Fri, 04/30/2010 - 23:08 | 326555 Marvin_M
Marvin_M's picture

thank you for sharing this Mr.....er....uh....

Fri, 04/30/2010 - 21:43 | 326476 Privatus
Privatus's picture

Keynes's superficial intellectual rigour ultimately implodes into a voodoo dance of irrationality. Animal spirits? Ooga-booga-booga. Keynesianism reigns simply because it provides unparalleled cover for deficit spending. In our age of self-deception and unreason this royal scam has so much momentum that it will not stop until sovereign credit is ruined. Greece today; America tomorrow. Bailout Nation will be devoured by Default Nation. The kids cannot and will not pay.

Sat, 05/01/2010 - 10:52 | 326878 TBT or not TBT
TBT or not TBT's picture

Yep, statists love Keynes because his theories empower statists.   Keynesian theory "works" for them, and how!   Each downturn permits incremental permanent increases in the part of the economy swallowed by government, thanks to Keynes.

Sat, 05/01/2010 - 00:24 | 326623 GBT
GBT's picture

Short, succinct and well spoken. +1.

Fri, 04/30/2010 - 21:17 | 326461 imaginalis
imaginalis's picture

Greed is a cloak worn gladly by cheats. 

Fri, 04/30/2010 - 21:00 | 326446 LeBalance
LeBalance's picture

In the beginning there was competition amongst a group of entrepreneurs in a given market, they offered better services, and fought it out to create a better experience in their niche. (Mises, Hayek, Rothbard, etc.)

But then another set of entrepreneurs thought that was too hard, they envisioned a control mechanism, wherein they would be assured of a market share in perpetuity because the mechanism would only allow themselves and their "chosen" to do business.  This might lead to what we have now. /wink/ (Keynes, Rothschild, Rockefeller, Gates, Buffet, Obama, Clinton, Gore, McCain, Paul, Schiff, Warburg, House, Marx, Stalin, Kissinger, Roosevelt (Rosenfeld), Bush, Sassoon, etc.)

The small picture is (maybe): "The game is rigged for the owners and you aren't one." - George Carlin

The larger picture is (maybe): "You are here now because you chose to be.  This experience is for you to learn from and you can't help but to that."

There is not an atom here that is not love, it is just our palates that have not been trained to accept a Taser to the genitals as being love.

Fri, 04/30/2010 - 20:39 | 326431 Fazzie
Fazzie's picture

 Who is ultimately at fault and with whom does the solution rest? I refer everyone to their bathroom medicine cabinet or the nearest availiable mirror. Also watch the South Park where the wal mart comes to town.

 We the people elect the crooks who write the laws full of loopholes that greedy businessmen exploit.

 There are a gazillion loopholes that give wall street a liscense to print money that are quite unfair and unethical. The game is rigged to a large degree even without breaking any laws. You and I cant look at their cards, but they see all of yours. They frontrun thousands of times a second; perfectly legal. I get caught cheating and its off to a criminal court; they get caught and its a token fine. And so on.


  Goldman does what they all do its just that finally they went too far with junk derivatives (legal too) and brought the whole shithouse down.

  They did all this with nothing but green lights from the same hypocritical congressmen and regulators that are suddenly scared for THEIR jobs (our jobs go overseas) and suddenly have to actually do something that they were paid to do for decades but were too busy having gay sex with pages among other things.


 I dont think its a diabolical plan by the "elites" and all that crap either. Its just nobody cared when the Ponzi was paying off.


 What they are doing isnt all theatre and a ruse either; they must fix the system by any means they can and they have to get it right. So far the usual throwing money at the problem didnt work, so now they have to do something else and actually enforce a law or two and bring back some regulations that keep wall street from being a big romper room for the privileged, at least so they can keep them from burning the house down.


  The solution imo is to support any other candidates who arent dems or repubs. They like to play good cop bad cop but they are both useless and corrupt. Sure, they will scramble to try to save the system now, but only after the damage is done and they are scared for their own well being.


  I support Ron Paul, and actually send him a little money and would vote for him in a heartbeat.

     Maby our defunct democracy could work after all, if folks could quit arguing over abortion ,gay marrige,queer soldiers,drugs,and crap like that and get to the real important issue of giving the gop and the dems the boot.

Sat, 05/01/2010 - 00:19 | 326618 moneymutt
moneymutt's picture

because we citizens were not vigilant enough, now we should not bring GSacs to justice for crimes they committed under existing law? We should not be outraged morally that they did something immoral even if it was legal. One regulator noted that even when it is legal to do immoral things or even when its not legal but everyone knows its not ever enforced, still many people, many companies do not do the immoral acts...while others run amok. So I'm not supposed go after the immoral ones for actual illegal acts?

Yes I agree, we need better systems and laws and TBTF and speculative and over-leverage aspects of derivatives markets should be stopped. But why does that mean we should not be concerned with GSacs fraud..

I can't believe there are so many comments like this on ZH...no wonder GSacs went unpoliced for so long...even ZHers are massive apologists for them....arrrrggg

Sat, 05/01/2010 - 00:39 | 326628 GBT
GBT's picture

Very intelligent arguments mutt. But you won't hear any apologetics cross my keyboard. I'm up for some Old Testament type shit. Church, y'all.

Sat, 05/01/2010 - 00:48 | 326644 moneymutt
moneymutt's picture

ready to get Medieval?...I try to think of myself not the revenge type, just the consist justice type...and some things get my blood boiling more than GSacs bad acts...but they are especially annoying due to their arrogance...

Sat, 05/01/2010 - 14:41 | 327133 Econophile
Econophile's picture

Mutt, you should actually listen to Paul E. Math. You sound like a politician riling up the ZH masses.

 

Sat, 05/01/2010 - 22:45 | 327456 moneymutt
moneymutt's picture

how are we going to change anything without riling folks up, you may not like direction it is going or what I'm advocating, but surely action and changing is needed? Seems like on both govt and GSacs, other businesses bad acts we have been too sheeple about this stuff.

 

Fri, 04/30/2010 - 20:34 | 326428 Paul E. Math
Paul E. Math's picture

Know this: emotion is the enemy of rational thought.

Not that Goldman is innocent, but prosecuting Goldman and holding endless public hearings is meaningless catharsis.

We're frustrated and angry and want to beat on someone.  But it accomplishes little.

Like after 9/11, we were emotional and glad when Saddam gave us an excuse for some 'shock and awe'.  Now, hundreds of billions of dollars later, we are no more safe from terrorists than we were on 9/12.

And we need to flush Greenspanian central banking down the toilet of economic history but we are engaging in courtroom theater while leaving the entire flawed economic structure and overarching philosophy in place.

 

Sat, 05/01/2010 - 00:35 | 326610 moneymutt
moneymutt's picture

ummm....we are not tarring and feathering Goldman, no one is burning down their offices, no one is going after them with pitchforks, they are being charged by law enforcement and being tried in courts, not hacked with a machete nor are we sending troops into their NYC mansions and seizing their land...

How is civil, rule-of-law, holding a corrupt and criminal organization accountable for its misdeeds by rules of evidence in court of law equivalent to declaring war and invading a country that had not attacked us? You're right, sheeple who fell for the stupid reasons we were given for going after Saddam after 9/11 )(I was not one of them, never believed the BS slung, actually read the news like McClatchy's debunk of "facts" presented to us, what i thought in 2001 is what is widely know fact in 2010) were swayed by knee-jerk emotions and did not step back to cooly to reflect on the irrationality of what we were told or asked to do in reaction. But this legal action against GSacs is in no way analogous to the invasion of country. Saddam did not attack us, had nothing to do with 9/11, Goldman Sacs did commit fraud and much worse but they have practically un-policed for the last 15 years..

So, by your thinking, is it too emotional to arrest and jail, for life, a proven serial child molestor?....just because this will not wipe out all child molesters?!?!? For years, many bishops in Catholic church did not punish or send child molesters to criminal authorities....so if parishioners now demand that known molesters be turned over to authorities to be tried for their crimes...is that just getting over-emotional because we so angry? Just because it was okay culturally in Catholic church hierarchy to be a child molester means a shift in mood to get tough on them now is just an over-emotional knee jerk reaction. Slavery was once acceptable, to be outraged by human slavery now would just be sooo unreasonably over-emotional??

Maybe the whole Catholic church should be flushed, I don't know, but going after the priests in criminal courts IS REASONABLE regardless of what is done in regards to church leaders. Being very angry about what they did is reasonable, compassionate.

Everybody went nuts when Sinead OConnor ripped up the pic of the pope on SNL, like it was just some punk kid stunt with no meaning, when she specifically said at the time it was a protest against the massive physical and sexual abuse the children of Ireland had been subjected to by many Catholic authority figures and due to her well-reasoned-out connection of the church heirarchy in the allowance and defense of the abuses. Many years later she looks rational, and the invovlement of many leaders in church including past and current pope is being exposed in MSM, just as she said back then. She saw it all along, she was not over-emotional nor our the current Catholic church members demanding justice.

You say don't blame GSacs, Greenspan did it all...where is the logic in that?...you are the emotional one...if I'm drug dealer over a major sections of a big city, by your logic I would say, "don't blame me, its been factually proven corrupt people associated with CIA/arms-for-contra mess flooded crack into LA in the 80s, so don't look at me, you should flush your corrupt govt, but coming after me is just a waste of time and over-emotional" Maybe we should flush the whole CIA and convict Oly North and the those that flew planes full of drugs onto Homestead Air Force base to pay for arms for contras (against laws passed by Congress to stop such weapons trade)...but I say we should still lock up local drug king pin too. Is that emotional?

As always, the rich white guys should feel no fury nor have law applied to them, once they are in the legal cross hairs, everyone starts saying its the system, not them, and folks say going after them specifically is so revengy and not very touchy feely...we should always have a bleeding heart for rich power mongers but are hyper critical of moral lapses of all others...what is wrong with us?

Is it irrational populism to want to enforce drug or child abuse laws??? but hey rich white guys that commit fraud, contribute greatly to economic horrors,  we should be more rational...arggggg...you are right....you always have a "rationalization" 

Sat, 05/01/2010 - 07:53 | 326780 Paul E. Math
Paul E. Math's picture

Nice rant but most of it is pretty tangential to what I was saying.  Thank you for proving my point that when you act on emotion you make mistakes, my friend.

I was not excusing Goldman (nor child molesters), only stating that if the sheeple's attention is focussed on these court cases it will be distracted from the real problem.

While I agree that child molesters should rot in jail, the fundamental flaw with the Catholic church is the whole rigid hierarchy, secrecy, pope and priest worship (instead of God) and this whole unnatural vow of celibacy.  If all you do is jail the priests that get caught, 20 years after the fact, then this will keep happening.  It is a symptom of a much more insidious disease.

Like Fazzie says below, there are many more unfair advantages that financial firms get over us worker bees (the ones who actually create value).  Goldman's crimes are just a symptom of a much larger disease.  Court cases treat only the symptoms.

The system is fundamentally flawed and we may miss this opportunity to fix it if we are consumed by show trials. 

Much like your rant that probably felt good to write but spent most of the time completely off topic.

Sat, 05/01/2010 - 22:41 | 327452 moneymutt
moneymutt's picture

one mans rant is another's analysis apparently... I'm too long winded, admitted, always, does not need emotion, bad habit...

you started by saying emotional outrage was counterproductive. My "rant" did make you evolve, or to be more generous, clarify your analysis. Many others here have stated your more recent point, that the whole system is rotten and petty reform is not worthwhile, and might even be counter productive.

I don't agree with that point and ZH itself seems to be about exposing financial problems with the idea we should insist on reform.

I gave multiple examples in the hope I hit on something that people relate to.

Not applying legal, political and moral standards evenly is a flaw we all suffer from to some degree, some suffer to the point of extreme hypocrisy and double standards...analysis and arguments are a way to suss out if we are off base and for people to call us on it...

Sat, 05/01/2010 - 04:05 | 326730 berlinjames02
berlinjames02's picture

Hey Money Mutt,

I like your comment... it reminded me of a Dave Chappelle's skit... check it out for some chuckles.

http://dailybail.com/home/dave-chappelle-on-white-collar-crime-i-plead-t...

Sat, 05/01/2010 - 02:29 | 326687 Rick64
Rick64's picture

Very well stated.

Fri, 04/30/2010 - 20:11 | 326407 anarkst
anarkst's picture

All systems are just that.  Go outside of its boundaries and you are going to get smacked.  When you look at GS's behavior, it was only a matter of time before those with a great deal to lose (everybody else besides GS feeding at the trough) took them down. 

Fri, 04/30/2010 - 20:05 | 326400 Thoreau
Thoreau's picture

In theory, capitalism looks solid; in practice, not so much. The proof is in the pudding, and you can put Monsanto on the cover of the box. It's not the cream, but the sociopathic that rise to the top in capitalism. You can discount any monetary system that relies so heavily on our better human natures.

Sat, 05/01/2010 - 15:58 | 327211 sgt_doom
sgt_doom's picture

You, sir (Thoreau), are channeling Karl Polanyi, and I thank you, sir!

Sat, 05/01/2010 - 14:35 | 327129 Econophile
Econophile's picture

Moneymutt, this is what I'm talking about. Henry David here thinks that business controls we automatons yet it's really the other way around. Consumers dictate who wins in commerce. Ask GM. Economic ignorance is rife because of the sad state of our education system and because generations of Keynesians are pouring out of academia to fkcu up the economy and then blame it on capitalism.

Thoreau, I only ask that you study a bit of econ to understand it better. Try Economics in One Lesson by Henry Hazlitt for a starter. Sorry to single you out, but ...

Sat, 05/01/2010 - 22:07 | 327431 moneymutt
moneymutt's picture

i get your point and you may have seen me rail against the all or nothing analysis of many folks on economics ..they either say "its all big govt and supposed US socialism that caused this" or they say "its all private businesses, unregulated, running amok causing all the problems" when I am a believer that it is both, and in a sort of way neither. What is a captured govt/regulators beholden to big business that favors one business over another and uses tax dollars to subsidy business in when it asks? - is that capitalism run amok or too much big govt? Surely Fed (not govt, private cartel that controls a function that constitution says should be govts), Fan, Fred, FDIC etc caused issues, surely unregulated derivatives caused problems, surely un-checked leverage of private business caused problems, Countrywide did not need a dime of Fan an Fred to get into trouble, in Cali it was all about MBSs sold on private markets etc...

I have a problem with people, in my mind, overemphasizing one over the other...that does not mean Goldman is simply an innocent scapegoat. That the govt screwed the pooch does not absolve Goldman nor does Goldman's bad acts absolve corrupt short-sighted politicians of their bad and stupid acts.

 

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