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Like A Swiss Watch, The Witchhunts Are Here: Blankfein, Fuld, Bernanke, Geithner, And Schapiro All To Testify Before Congress As Distraction Game Continues

Tyler Durden's picture


In keeping with the tradition of bread and circuses, Obama has managed to channel the public anger at precisely the right time to deflect from the fact that today the US debt increased by $51 billion as seen below. This has many wondering if the whole SEC action against Goldman (which some have already pointed out is a rather weak case) is nothing but smoke and mirrors to distract the broader public for a few weeks until anger once again dies down while in the meantime the administration pushes this country deeper and deeper into insolvency. If it means sacrificing the SEC which, whose downfall is a given anywa, and will take a few years of legal wrangling and millions in legal fees charged to Goldman's shareholders, so be it. For those who care where the real news is, we direct your attention to today's Daily Treasury Statement, which disclosed that total US debt just jumped to $12.817 trillion, $51 billion higher on the day, $101 billion higher for the month of April, and $965 billion higher for the fiscal year beginning October 1, 2009 (so six months ago).

And so, in the absence of good prime-time TV in the next few weeks, here is what is on tap. From Reuters:

Federal Reserve Chairman Ben Bernanke joins Treasury Secretary Timothy Geithner next Tuesday to testify before Congress on the 2008 collapse of Lehman Brothers amid the peak of the financial crisis.

The two, along with Securities and Exchange Commission Chairman Mary Schapiro and former Lehman Chairman Richard Fuld, will be before the U.S. House of Representatives Financial Services Committee, starting at 11 a.m. (1500 GMT)

And just so today's events are put into full cause and effect perspective, here is the real highlight from the upcoming witchhunt circuit:

The pressure on Goldman Sachs will intensify this month when Lloyd Blankfein, the US bank’s chief executive, faces tough questioning from a high-powered Senate panel as part of a probe of Wall Street groups.

People close to the situation said Mr Blankfein would testify before the Senate’s permanent subcommittee on investigations on April 27 after months of questioning of Goldman executives by the panel’s staff, including sworn depositions about the bank’s activities leading up to the global financial meltdown.

If anybody thinks that Goldman will be impacted by anything more than a $5 million settlement fee as a result of today's festivities, they are sorely mistaken. After all, don't forget just who the 29 year old COO of the SEC is. Also, the SEC needs jobs on Wall Street too - after all, all that tranny porn bandwidth costs money, especially in the private sector. 


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Fri, 04/16/2010 - 17:59 | 304806 sysin3
sysin3's picture

Ooh, a target-rich environment.  Luckily, I will be more than 200 miles away from that place, at that time.  Gonna wear shades, though ;-)

Fri, 04/16/2010 - 17:59 | 304807 THE DORK OF CORK
THE DORK OF CORK's picture

Burn them burn them all.

Fri, 04/16/2010 - 19:01 | 304891 ZerOhead
ZerOhead's picture

Correct me if I am wrong here Mr. Cork... but wasn't the proper medieval procedure to submerge them in water to see if they float first?

Witches, as we all know, are made of wood... and wood floats. Then if they float... we can burn them, thus avoiding the unfortunate colateral damage caused by burning those who we merely mistake to be witches. In these trying times it is important to see justice administered properly. Can't allow ourselves to be ruled by mobs you know!


Fri, 04/16/2010 - 19:48 | 304946 THE DORK OF CORK
THE DORK OF CORK's picture

I guess there are many ways to skin a cat  


   If you feed the rats to the cats
and the cats to the rats
you get the cat? skins for nuthin


Fri, 04/16/2010 - 20:40 | 305015 ZerOhead
ZerOhead's picture

Best just to feed the rats to the cats and leave it at that... (of course I may have a bias here)

(Banker = rat)

Fri, 04/16/2010 - 21:12 | 305062 JohnG
JohnG's picture


I thought they used ducks for that?

(And who are you to be so wise in the ways of science?

A king must know these things....)

  -- Monty Python

Sat, 04/17/2010 - 14:51 | 305864 ZerOhead
ZerOhead's picture

Indeed! :)

Fri, 04/16/2010 - 18:05 | 304813 Mentaliusanything
Mentaliusanything's picture

I hope thats an Excel Chart so the columns can be widened to accommodate the numbers for the coming QEII 

Fri, 04/16/2010 - 18:09 | 304819 Alienated Serf
Alienated Serf's picture

"In keeping with the tradition of bread and circuses, Obama has managed to channel the public anger at precisely the right time to deflect from the fact that today the US debt increased by $51 billion" 

that is pure art

Fri, 04/16/2010 - 18:23 | 304847 spekulatn
spekulatn's picture


Fri, 04/16/2010 - 18:46 | 304875 Cistercian
Cistercian's picture

 Tyler rules.

 ZH is EPIC.


Fri, 04/16/2010 - 20:39 | 305016 Alienated Serf
Alienated Serf's picture


ZH is Alaric, and we are his barbarians whom will sack the new Rome!!

Fri, 04/16/2010 - 21:22 | 305084 Pure Evil
Pure Evil's picture

Now, do I have to get off the couch and put down the remote to get in on that sacking of the New Rome?

Seems like an awful lot work to me.

Sat, 04/17/2010 - 08:52 | 305449 Missing_Link
Missing_Link's picture

Hey guys, Bill Clinton says you shouldn't talk like that  ...  According to him, you're all "deeply, deeply troubled" and because of Tim McVeigh, that kind of talk now qualifies as thoughtcrime:

Fri, 04/16/2010 - 18:11 | 304823 Catullus
Catullus's picture

Speaking of distractions ... Radio zero! Do it. In fact, everyday you set new records for traffic, you should hold celebratory radio zero. I'm going to get a chant going and then you'll have to.

Fri, 04/16/2010 - 18:11 | 304824 Lord Blankcheck
Lord Blankcheck's picture

$2 million fine,free porn for a year!

Fri, 04/16/2010 - 18:18 | 304835 neophyte
neophyte's picture

Have'nt stopped laughing since I heard the news this morning and now this. Can I buy a CDS that the administration will fail in its attempt to collar GS.

Fri, 04/16/2010 - 18:22 | 304844 TwoJacks
TwoJacks's picture

as long as they are selling while their right hands are in the air, I say march 'em all up there for the show.

Fri, 04/16/2010 - 18:31 | 304859 anynonmous
anynonmous's picture

I posted earlier, over at Barry Ritholtz's blog they sure are going after good ol' ZH challenging a minor post Tyler made a few weeks ago. What did ZH ever do to Barry?

Fri, 04/16/2010 - 20:27 | 305000 Hansel
Hansel's picture

Stole his blog traffic.

Sat, 04/17/2010 - 09:20 | 305460 Absinthe Minded
Absinthe Minded's picture


Fri, 04/16/2010 - 21:32 | 305092 JohnG
JohnG's picture


And that WangerHarry was dissing ZH (and it's readers) in the comments.

Good fucking riddance dickweed Wanger.

Fri, 04/16/2010 - 18:35 | 304860 carbonmutant
carbonmutant's picture

And mysteriously Treasury demand is up...

Mary Shapiro to grandstand before the cameras at noon...

Fri, 04/16/2010 - 18:38 | 304864 jules from aus
jules from aus's picture

one day there won't be a river to sell everyone down

good luck

Fri, 04/16/2010 - 18:45 | 304873 King_of_simpletons
King_of_simpletons's picture

Why bother. In a few years Trillion will be the new Billion and firms will need trillion dollar bailouts, national debt will be in  the Quadrillion.

Fri, 04/16/2010 - 21:26 | 305085 Pure Evil
Pure Evil's picture

All hail!

Long live the new King!

From the mouth of simpletons the truth will flow.

Eey Hah, eey hah!

Sat, 04/17/2010 - 03:06 | 305354 LeBalance
LeBalance's picture

Need to switch numbering system to British system in anticipation of QEII and beyond:


0's Name samples of some of them
3 thousand 1,000
6 million 1,000,000
9 milliard 1,000,000,000
12 billion 1,000,000,000,000
15 billiard 1,000,000,000,000,000
18 trillion 1,000,000,000,000,000,000
21 trilliard 1,000,000,000,000,000,000,000
24 quadrillion 1,000,000,000,000,000,000,000,000
27 quadrilliard 1,000,000,000,000,000,000,000,000,000
30 quintillion 1,000,000,000,000,000,000,000,000,000,000
33 quintilliard 1,000,000,000,000,000,000,000,000,000,000,000
36 sextillion 1,000,000,000,000,000,000,000,000,000,000,000,000
Fri, 04/16/2010 - 18:59 | 304890 Fritz
Fritz's picture

You nailed it. A giant distraction that will capture the attention of the public until the next episode of Family Guy airs.

Meanwhile, I'm sure it was just another +$100mm day for the bucket shop (aka Goldman Sachs) since they knew the fraud charges were coming.

Fri, 04/16/2010 - 20:40 | 305017 Alienated Serf
Alienated Serf's picture

family guy rules.  bird is the word.

Fri, 04/16/2010 - 21:17 | 305072 Catullus
Sat, 04/17/2010 - 00:41 | 305281 Alienated Serf
Alienated Serf's picture

stewie putting gun in mouth is one of the great television moments of all time.

Fri, 04/16/2010 - 19:01 | 304892 girl money
girl money's picture

Tyler proposed that an orchestrated market panic would be arranged when demand for treasuries was needed.

It'll be fun to watch... especially if it doesn't work.  Nervous market plus ripping yields?!

That would be justice.   

Fri, 04/16/2010 - 19:03 | 304895 rawsienna
rawsienna's picture

I took the time to read "Rules for Radicals". It is right out of the Alinsky playbook. If you want to understand the Obama mindset I suggest you read it.

Fri, 04/16/2010 - 19:13 | 304915 sheeple
sheeple's picture

nice catch on debt increase thanks

Fri, 04/16/2010 - 19:17 | 304917 lindaamick
lindaamick's picture

Another great story to watch:  Today on news show it was revealed that Bradley Birkenfeld the UBS whistleblower who turned in to the Justice Department information regarding rich amerikans who hide money in Swiss banks included top US lawmakers. 

It is worth a watch.

Sat, 04/17/2010 - 10:15 | 305529 Absinthe Minded
Absinthe Minded's picture

Please give us a reason to impeach Obama. It will be a miracle though if Birkenfeld sarc on/ doesn't get so distraught about being in jail that hangs himself. /sarc off

Fri, 04/16/2010 - 19:17 | 304918 MrPalladium
MrPalladium's picture

The SEC case against Goldman Sachs is strong.

There are only 3 elements to a 10-b-5 fraud case. The defendant sold a security, the defendant knew (or ought to have known) of a material fact that might cause buyer not to buy, defendant did not disclose.

Whether the defendant profited or not is irrelevant. Thus all this yammer about whether Goldman had a long position in the security will not help Goldman. The fact that others were doing the same thing will not help Goldman. The fact that the buyer was a sophisticated institutional investor and should have done his research and will not help Goldman.

The SEC discloses evidence right in the complaint that goes beyond the bare minimum and indicates the Goldman had actual knowledge - scienter - sufficient for a criminal complaint, assuming the U.S. Attorney goes along. Thus there is a non-trivial risk that this case, and all the other private class actions and private fraud suits shortly to be filed, will result in a criminal case which would result in Goldman being barred from the securities business, and thus going into liquidation.

The non-lawyers should go get the securities law hornbook and do a little research.

That said, I do think the timing - morning of options expiration - fits with the Treasury agenda of capping the stock market rally to ease the sale of bonds and the lengthening of Treasury debt duration.


Fri, 04/16/2010 - 19:36 | 304944 Entremanure
Entremanure's picture

Jim "I didn't go to law school for nothing" Cramer vigorously disagrees with your position.



Fri, 04/16/2010 - 20:50 | 305025 MrPalladium
MrPalladium's picture

Cramer knows perfectly well what the elements of 10b-5 civil fraud are. He also knows perfectly well the elements of criminal securities fraud and how dangerous this complaint is and how it could crash the markets.

The Goldman script says to call the case weak in hopes that hundreds of plaintiffs' lawyers will be deterred from filing copy-cat civil suits - class actions and individual civil fraud actions - on Monday morning. Cramer is performing and hyping as usual.


Fri, 04/16/2010 - 19:20 | 304923 faustian bargain
faustian bargain's picture

Whoa...less than 30 more days like this ($51B in the red), and they'll have to raise the debt limit again.

Fri, 04/16/2010 - 19:21 | 304925 johngaltfla
johngaltfla's picture

The debt is not the issue. The massive foreclosure wave is not the crisis. Cap and trade will not be the big issue. The language that will be inserted into the new "financial regulations" that will empower the Treasury to seize your 401K and IRA's in the event of a financial "emergency" WILL be the big story.

Watch for a Saturday night special on this bill as it is inserted and a "sudden" vote is held with some Republican support right before the Memorial Day break.

The MSM will discover it around December. ZH or his team will find it the minute it is published. Or I will, that's for damned sure.

Fri, 04/16/2010 - 20:34 | 305010 Tethys
Tethys's picture

Have to agree with pretty much everything you said - it all sounds quite likely.

However, if it is a big story on ZH that means <1% (assuming < ~3M people will be reading by then) of Americans will know about it.  If it did become a big story in the MSM (seems highly unlikely to me), it would be provided with the proper 'context' to ensure that the less skeptical portion of the masses viewed it as necessary and positive.  Then it would go away immediately, replaced by more important news such as Tiger Woods second return to golf, or some such.  If that doesn't do it, I'm sure they have a few scandals stored up for timely release.  Or they will play up how anyone who doesn't support turning over their 401K in America's time of need is unpatriotic, or racist, or sexist, or ...-ist ad nauseam. And if that doesn't do it, then its to the big guns - market crash/war/etc.

My point - by in large no one will care.  And certainly not enough to do anything more than hold a sign up at a rally or vote for some bankster-beholden candidate who's focus-group molded message takes advantage of their anger.  Or, worst case scenario  - they will replace those corrupt D's with corrupt R's.  Ooooohhhh *shudder*.  That'l show 'em.   L.O.L.

I guess that's why some (most?) empires collapse rather than grow old gracefully.  You can do just about anything to the populace, and unless the pain becomes personal and immediate (not some vague promise of future pain), well, the dogs bark, but the caravan moves on.  And by the time it does become personal and immediate, it is way too late for anything but system reset.


Fri, 04/16/2010 - 19:33 | 304937 mynhair
mynhair's picture

Nothing but the shorters taking the "Make Amerika Work" credit.

Dam shorters have screwed up every down draft in the last 14 months with their stupid covering.

Byte me.

Hope y'all choked on VZ today.

Fri, 04/16/2010 - 19:45 | 304957 lizzy36
lizzy36's picture

The charge against Goldman is a political maneuver designed to make is appear as thought the Washington actually cares about the 47% of those who don't pay federal taxes, but whom may actually vote in the mid-term election circa 2010.   

The perception contained in the soundbite "SEC accuses Goldman of fraud" is all the democrats care about at this point.  I would bet anyone that of the 450+ congresspeople about 10 (at the most) could define a CDO.  But everyone of them will go back to their constituents and pontificate about how they are getting tough will Wall Street. 

Actually todays release was desighned to obscure two fact.  The first Tyler stated in the poetic style we have come to adore at ZH.  The second is the epic fuck-up of the SEC in the Allen Stanford case. 

Fri, 04/16/2010 - 21:16 | 305070 Pure Evil
Pure Evil's picture

Wasn't the Allen Stanford criminal enterprise run under the Bush regime?

Who says republicans are dummer/smarter than democrats?

Sat, 04/17/2010 - 00:18 | 305268 Wilderman
Wilderman's picture

The suit is a real accusation of fraud on the part of GS, and hopefully anyone named Paulson who may have been a party.


The political maneuver will manifest shortly...

Fri, 04/16/2010 - 21:19 | 305065 Pure Evil
Pure Evil's picture

Wait until they start printing more fiatscos for the new space mission to Mars. How many trillions will be needed to fund that fiasco?

Maybe if we're lucky actual US citizens will be put back to work and they won't outsource all the space r&d, along with space vehicle/station manufacturing to India, Russia, and China.

You've been warned about the Military-Industrial complex, now we get a new player on the block called the Military-Industrial-Space complex.

Sat, 04/17/2010 - 00:44 | 305286 Alienated Serf
Alienated Serf's picture

Well, we are fighting 2 wars (that we know of), have massive unfunded medi-care, social security and other entitlement programs, so yeah, trillion dollars to fly a few people to mars sounds brilliant.  pure insanity

Fri, 04/16/2010 - 22:17 | 305136 Ned Zeppelin
Ned Zeppelin's picture

Blodget's defense of Goldman is bullshit.  He reads the lines in the carefully crafted disclosure statement and ignores the reality of what went on here.  He is a Goldman mole and apologist, no better than Cramer.

GS and its cephalod friends will bring out all sorts of characters to fight this.  Now, that's not to saythat it's not carefully timed for many other purposes, just don't believe for a second that GS is not guilty as charged. And this is just the one they caught them on.  So far. 

Understand that on both sides of the aisle, criminal and government, you are watching the most vile forms of pond scum have at it. When I heard the noon annoucement, the only thing that went through my mind was I wonder who at GS pissed off Rahm.

Fri, 04/16/2010 - 22:40 | 305169 Cookie
Cookie's picture

He is a Goldman mole and apologist, no better than Cramer


Note this wanker's blog had not a word on the CFTC hearings. Thanfully the internet is totally democratic, so you can visit his blog directly from a trannyporn website, stay 10 seconds, then on to



Fri, 04/16/2010 - 23:30 | 305229 Madcow
Madcow's picture

Testify Before Congress As Distraction Game Continues

Exactly. Frying witches for practicing witchcraft. 

It makes people feel better if people are going to prison. Makes it seem like something can be done about it all. By pointing out a couple publicly recognized 'frauds', it somehow seems the rest is 'not fraud.'  If there are criminals, there is restitution, and everyone's going to get their money back ... 

they will not get their money back. instead, they're going to get wiped out completely, stripped of their assets, and designed to eternal debt slavery with an impossible loan burden, and fining their financial assets and "retirement funds" vaporized by the collapse of the $IMFS.

it looks more and more like the whole thing is a fraud by origin, purpose, and necessity. you can think of it as optimistic thinking and dreaming if you need to.  and heck, maybe we can build an even bigger, better compounding paradigm some day.

compound interest has an inherent time limitation due compounding. inevitably, things goes hyperbolic. they have to. some up, some down. but the impact is the same. 'poof'.  this includes fractional reserve central banking, fiat currency, and lots of assets and liabilities. there's no saving the Washington Bubbleheads now. 




Fri, 04/16/2010 - 23:44 | 305239 trav7777
trav7777's picture

Yeah, the gov't debt figures are why I still believe in the inflation case.

Against that, I have to stay long, GS fraud or not.  They don't own the only computers that can fluffer this market.  Equities will do as they do in inflationary climates, and that's inflate.

Mar 09 was when it dawned on people that yes the Fed was really gonna print.  A rise in yields crushes what's left of every debtor, which just happens to be like every government on the planet.

Sat, 04/17/2010 - 00:16 | 305265 nathan1234
nathan1234's picture



Sat, 04/17/2010 - 00:18 | 305269 Uncle Remus
Uncle Remus's picture

"Now, do I have to get off the couch and put down the remote to get in on that sacking of the New Rome?

Seems like an awful lot work to me."


Comparatively speaking, revolts are cheaper these days (well, at least in the US - population is already well-armed) and likely have a better ROI. And it might not be televised, but it'll be streamed.

Sat, 04/17/2010 - 00:38 | 305279 Alienated Serf
Alienated Serf's picture

i suppose virtual sacking with suffice for now...

Sat, 04/17/2010 - 00:52 | 305291 smashmouth football
smashmouth football's picture

Am I missing something here? Yesterday was tax day, presumably when people who weren't getting a refund filed, and the Feds still went $51B deeper in the hole in one day??? What does that portend for the rest of this fiscal year? This country is f---ed.

It reminds me of something I read on a blog years ago. The writer said the dollar is a belief system, meaning that the reason people exchange real physical goods and labor for fancy pieces of paper with dead U.S. Presidents printed on them was because everybody believes they can freely exchange these pieces of paper for real physical goods and labor later on, when they need to. Eventually, however, the way the inner party manages things (rampant corruption, looting and self-dealing), a day would come when that belief was shattered. That day is coming soon, I'm afraid. I think I can see the QEII on the horizon. Dollars for Zimbucks, anyone?

Sat, 04/17/2010 - 02:25 | 305346 dumpster
dumpster's picture

geithner as  secretary of the treasury raise your right  hand ..  Geithner.... your right hand lol

Sat, 04/17/2010 - 02:37 | 305348 dumpster
dumpster's picture

congress chairperson


'It Looks Like We've Got Company'


Geithner .. please the right hand lol the other one

Sat, 04/17/2010 - 19:01 | 306069 RichardENixon
RichardENixon's picture

I apologize in advance for my ignorance or perhaps naivete, but what's with all these references on ZH to "tranny porn" and other even worse types of porn and the SEC? Is there some evidence that this is what they were up to when they were supposed to be working? I thought maybe they just played too much fantasy football or something.

Mon, 04/19/2010 - 00:59 | 307395 dark pools of soros
dark pools of soros's picture

i take it as they are all blackmailed into doing nothing...  but i think you only get hired at the SEC after you are ALREADY blackmailed

Sat, 04/17/2010 - 20:42 | 306163 Grand Supercycle
Grand Supercycle's picture

Overtextended SP500 / DOW daily charts show more bearish warnings and the next few days will tell us more.

DOW chart :

Sat, 04/17/2010 - 22:35 | 306288 where is my mind
where is my mind's picture

This case was politically timed so as to diffuse any republican counter concerning the upcoming financial reform...........If the GOP caves......look for this to be the only case the SEC brings to court.  If, somehow, the GOP does stall, or even defeat the legislation, the SEC will do the president's biding in bringing more cases.  So as to say....see? We really do need this "reform."



Sun, 04/18/2010 - 00:43 | 306382 GottaBKiddn
GottaBKiddn's picture

Is this a Congressional Bar Mitzvah?

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