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Let The Reign Of Terror Begin
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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The FED = Goldamn Sucks = BIS= CFTC = IMF = NY Fed, and on and on and on and on...
They are everywhere a key financial decision is to be made.
Read: Taibbi for Giant Squid tentacles all over the face of the globe to get up to speed.
Excellent. Goldman, NYFed, Bob Rubin’s Club, Rothschild’s Rolodex, all are interchangeable terms. We have come too far down the road to suggest one of those terms, Goldman, wasn’t the cause of the boom or bust--and it’s wrong to name it a “scapegoat.”
Add people like Vernon Jordan and all of the other Bilderberg racketeers.
(For the record I never mentioned the Carlyle Group. Not once.)
Hey. I noticed you didn't mention Dillion Read either. I wouldn't have.
GS cannot be the scapegoat ... they have way too many skeletons that they can release from way too many closets. Remember zombies abound at 85 Broad St.
This is a simple case of Theater for the Masses (TFTM), remember GS gave Obama a cool Mil.
GS responds: baaaah....baaah....baaaaah.....
Econophile, I will happily march you to the guillotine....
For an "econophle" you sure as hell don't know what Capitalism is, and therefore your analysis such as it is should be viewed with deep scrutiny.
When did Goldman become a "scapegoat"? It was and is NECK DEEP in all the corrupt and criminal activities occurring on Wall Street. Actually, Goldman did cause the crisis since it controls the Fed/US Government and therefore the money supply, so it most definitely is not a "show trial". BTW, whoever said the US economy is freer than Russia's? Anyways there is no need to worry all you Goldman-lovers out there - with a fully purchased "President" and CONgress, nothing will come of this dog and pony show anyways - so yeah, maybe it is a show trial.
"Goldman was not the cause of the boom or the bust, but Congress is looking for heads."
Right on, Gekko maestro, and that sentence above is such an obvious GS advert!
Econophile is definitely in the filly status. Gee, Goldman Sachs as part of the Derivatives Policy Group pushing for the adoption of unregulated credit derivatives, so one day, with the aid of JPMorgan Chase and Morgan Stanley (and the financing and owernship of InterContinental Exchange - ICE - ICE Futures, ICE Clear, et al., and Climate Exchange PLC, and DTCC, and ELX Futures, and Swaps Wire, etc., etc., etc.) they could rig, manipulate and do ultra-leveraged speculation on said manipulated markets utilizing the aforementioned exchanges.
Casino and bets, my ass!!!!!
Thanks, Gekko man....
Who shut down Brooksley Born? Greenspan and Rubin.
Actually, Goldman did cause the crisis since it controls the Fed/US Government and therefore the money supply, so it most definitely is not a "show trial".
Who benefitted the most and came out of this crisis with more power, control, and wealth? What institution is above the law and has no accountability to anyone? What institution can cook its books any way it wants to? Who controls the money supply and interest rates? What institution stands to loose the most if the financial system fails?The FEDERAL RESERVE. This trial is meant to take away any bad publicity from the FED and if the sacrificial lamb is GS then so be it. Where has Geithner been? Not in the spotlight. GS deserves to be tried and convicted but don't loose sight of the real criminal and grandaddy of them all. Wealth is just a byproduct of power.
GG- Yes now we everyone seems to be playing 'Who wears the crook hat' game, GS, the gubmint, the FED...its all the same animal- the politicians ARE GS ARE the FED, its a revolving door and all the same people...hope the crook hat is 1 size fits all!!
can always trust the Gekko to cut straight to it. Last time I checked, a scapegoat is a symbolic offering to atone for others sins
Exactly.
The article flags itself as nonsense from its first sentance.
Capitalism fails? Unbelievablely uncultish.
Governments fail, people fail. Capitalism, never.