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Texas AG Candidate Sues Goldman et al For Causing "Recession, Unemployment" And Everything Else That's Bad
Yesterday, NY's pension fund sued BP for having the temerity to see its shares drop. Today, the Democratic candidate for Texas AG has filed a Legal Complaint and Legal Brief against Goldman Sachs et literally al for "causing financial crisis and physical harms; recession; unemployment;
home and wealth loss; forced cutbacks in a wide variety of critical
areas, including medical care, social services, and environmental
protection" and pretty much everything that is bad in the world. Tomorrow, one million Americans file a class action lawsuit against E-Trade for experiencing a downday.
In an action that is undoubtedly predicated by the plunging cash coffers and the drop in Texas pension funds, coupled with Wall Street's less than stellar popularity rating, the Democrat candidate for Texas Attorney General,
Barbara Ann Radnofsky, has decided to put the two together, and to get her campaign off to a rock solid start, by suing Goldman Sachs Group, Morgan Stanley, UBS, Merrill Lynch/BOA, Citigroup,
Credit Agricole, Credit Suisse, Deutsche Bank ("the Banks"), Moody’s,
Standard and Poor’s, Fitch (“the Ratings Agencies”), AIG Insurance
Company (AIG) and other John Doe defendants. The basis of the lawsuit apparently comes from this: "the U.S. Supreme Court recognizes the State's right to sue to protect its
physical and economic well being and that of its citizens and the
State's possession of Quasi Sovereign Interests in physical wellbeing
and economic prosperity. The doctrine permits damages from such underlying theories as common law
fraud and RICO, and survived Motions to Dismiss in the State tobacco
litigation."
In other words the vampire squid has become nothing more than a pack of cigarretes: Goldman Lights (recessed filter) anyone? Soon, we will be adding cancer to the list of evils unleashed upon the world at the breaking of the seventh seal.
Not sure what to make of this - you see we have no legal Ph.D., but blaming someone for all the troubles in one state based on years of imprudent and reckless decisionmaking, coupled with legislative and regulatory capture, sure sounds like the July 4th thing to do. Some Ph.D.'s who however are smarter than us, and as a result can opine (in this case affirmatively), are the following:
"Having reviewed the Complaint, and bringing their expertise to explain
this action as viable, reasonable, plausible are:* Former Texas Attorney
General and Gov. Mark White.* Dean Erwin Chemerinsky, UC Irvine Law
School. * Prof. Charles Silver, UT Law School. * Forensic CPA and Senior
Business Evaluation Analyst Jeannie McClure and other experts with whom
she works (liability, causation, damages, economic modeling).* A
variety of prominent lawyers, including Steve Malouf, Larry Joe Doherty,
Tommy Fibich, and Mark Mueller."
The full complaint is below:
1. Plaintiff State of Texas ("the State") sues Goldman Sachs Group, Morgan Stanley, UBS, Merrill Lynch/BOA, Citigroup, Credit Agricole, Credit Suisse, Deutsche Bank ("the Banks"), Moody’s, Standard and Poor’s, Fitch (“the Ratings Agencies”), AIG Insurance Company (AIG) and other John Doe defendants for causing financial crisis and physical harms; recession; unemployment; home and wealth loss; forced cutbacks in a wide variety of critical areas, including medical care, social services, and environmental protection. Damages to the State include but are not limited to reduction in the value of state investments and the increased costs to governmental units, including increased insurance costs to Texas governmental units seeking to issue bonds whose reputation has been unfairly impaired. Defendants caused budget shortfall of at least $18 billion to the State of Texas. The environment, health and wellbeing of the State and its citizenry are directly harmed. The first manifestations to children and other vulnerable citizens include hunger, disease and medical complication.2. The U.S. Supreme Court recognizes the State's right to sue to protect its physical and economic well being and that of its citizens and the State's possession of Quasi Sovereign Interests in physical wellbeing and economic prosperity.
3. AIG negligently ran and ruined its own and other businesses and the economy by failing to act as a reasonable and prudent insurance company, costing over $180 billion for bailout. AIG foolishly insured many hundreds of billions of dollars of loan agreements: bets as to whether borrowers would default. In insuring these credit default swaps, AIG knew or should have known that massive defaults would occur and AIG would be left holding the bag. AIG’s misconduct included intentional and fraudulent acts and omissions. AIG engaged in fraudulent misrepresentations aware of the significant risks, but claiming credit default swaps were selling insurance for “a catastrophe that would never happen.”
4. The Banks negligently ran and ruined their own and other affected businesses and the economy. Wall Street Banks created financial products such as Collateralized Debt Obligations, derived from bonds, which they marketed and sold as legitimate investments, using credit default swapping to allow investors to also bet on failure/default. The Wall Street Banks, negligently and intentionally, allowed the ratings received on their own products to falsely portray the investments as better than in truth the investments were. Had investors or ratings companies been properly informed, they'd have known the products were designed to fail, intentionally favoring bettors-on-default. The Banks’ misconduct included intentional and fraudulent acts and omissions.
5. The rating system fostered by all defendants added to the deception including failure to disclose and eliminate banks’ control over ratings and payments. The ratings agencies also acted negligently, fraudulently and with gross negligence in their conduct. Each defendant’s private worries were not expressed publicly. In the September 2008 Financial Crisis, Ratings Companies downgraded hundreds of billions worth of Collateralized Debt Obligations, massive dollar amounts of which remained AAA rated up to that point. Significant amounts were not only degraded, but had filed default. Defendants acted, individually and together, in concert, conspiracy and enterprises. One now discovered email reflected the attitude: “Let’s all hope we are all wealthy and retired by the time this house of cards fails.”
6. Defendants’ gross negligence, and intentional torts, including omissions and acts and their toxic product offerings and sales were fraudulent as well as negligent.
7. The Defendants continue in their negligent, grossly negligent and intentional practices described, allowing their greed and egos to dominate their continued, poor decision making. The State's protection of its Quasi Sovereign Interest serves the public's interest in making Wall Street accountable for its actions, past, present and future, and seeks all injunctive relief to which it is entitled, as well as damages, to compensate for harm caused and prevent further damage. Wall Street continues its wrongful activities involving financial products. Texas sues to remedy and prevent further physical and economic injury to its citizenry, the state generally, and its economy and budget. The State is entitled to seek relief. The matters complained of affect her citizens at large. The environment and economy of Texas and the physical, economic and general welfare of its citizens have seriously suffered as a result of the toxic products and activities described. Texas sues for its damages caused by Wall Street's fee-churning, insider-favoring, betting-on-losers default misadventures.
8. The Texas Attorney General, on behalf of the people and State of Texas brings this suit under Texas law and the well recognized doctrine of Quasi Sovereign Interest for the following damages:
A. Money damages to the State of Texas for at least $18 Billion;
B. Requirement that Defendants disgorge their economic benefits, including claw back of any and all bonuses paid since the beginning of the harmful practices outlined;
C. The State's attorneys fees, costs, and expenses;
D. Punitive damages for the outrageous ruinous conduct described. Without the massive damages such as those suffered by Plaintiff, the wrongdoers would never have been caught. No self regulation, governmental regulation, or outside force exposed the wrongdoing. The massive harm (including self destruction) provided no halt to bad business practices. Without punitive damages, the harmful practices will continue into the future, exposing the State and its citizens to further damage.
E. Such other and further relief as to which the State may show itself justly entitled.
And if you just can't get enough, here is the legal brief of the litigation which is fully supported by the Texas Democratic party.
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when do we sue ourselves for sitting quietly while GS and the other banks took over the country? stole the treasury? and basically bought the Congress? We have no one to blame but ourselves for sitting and watching this all happen live and in color on every network....
I know Zh often published under one name, but at times theis gets schizophrenic. You publish huge amounts of data showing the way goldman rigs the markets, they way the did the cds, tc. then another person says it is crazy to be suing goldman. It's not crazy, there is an overhwelming amount of evidence showing fraud, cover up, etc. the government isn't going after these crooks, so why shouldn't the states. after all they were only rigging the muni bond market as well. the truth is these companies should have been gotten rid of a long time ago. Over and over they find criminal doings, yet the firms live on.
Please give me a break
I hear ya. These dogs must be put back in the pound and that's the only principled stand here. There is no room for ambiguity here.
You are correct that we're seeing conflicting assertions -- but that's also because we are seeing conflicting principles. Much of what we're seeing on a daily basis is knee-jerk thrashing that is itself inconsistent, or which is addressing fundamentally different social issues. They don't all use the same yardstick (they are different topics on different scales). There are tradeoffs. Classic tradeoffs are "freedom v. security", or "speech v. libel", or "entrepreneurialism v. regulation".
The world is insane.
In this case, sadly, the lawsuit is entirely consistent: If we can retro-actively demonize-and-sue an industry to extort cash for what was legal at the time (e.g. "tobacco"), then we can do that for anything (e.g. "Goldman and Wall Street").
Yes, Goldman is actually legally guilty of a lot of stuff, but we have no regulators, so they won't be caught. However, this lawsuit isn't about what's "legal" or not, though. It's about extorting cash because they have it and we want it. Nobody is safe. However, this is nothing new (nobody has been safe for a long time, and karma is a bitch):
It's merely a shakedown. It doesn't take much to get Goldman to cut you a check so you'll just move along.
Remember, this is America, so if something bad happens to you, find a lawyer and get rich. Sadly, as ridiculous as this lawsuit sounds (and it is), it is entirely consistent with how we've decided the government can unilaterally execute (kill and liquidate) any company or industry at-will. Works for Argentina and Cuba also. I'm sure it would work for North Korea if they had an industry.
I think Goldman should have been liquidated through bankruptcy in 2007. I think Goldman daily does illegal and immoral things, and should not be subsidized by the taxpayer (which it is). However, neither of those things will be addressed in this lawsuit, which is mere extortion by an insane government in an insane world, and which is entirely consistent with how the people decided they will accept "governing".
http://www.theglobeandmail.com/globe-investor/investment-ideas/get-out-o...
Robert Prechter says it's time to get out of stocks before the biggest stock market decline in 300 years.
If so EVERYONE must file a lawsuit against them till they are rendered BANKRUPT. Goldman DESERVES to be shaken down. How can a firm that has raped and pillaged the citizenry expect "fairness"?
you beat me to it Gecko...
If frickin' Space Aliens wanna come down and fuck with Goldman, let's start building a landing pad! If the fish begin marching on Wall Street let us wet their purposeful way!!!!
FUCK GOLDMAN
By us using a technique involve pruning shears to perform what I cal "The Banksters Briss".
Don't you get it? "Tyler Durden," in both the movie and the book, is a schizophrenic character who has a separate personality and doesn't realize it's him. Same thing here; the Goldman-accusing TD and the Goldman-loving TD are the same person; they just don't realize it.
"Same thing here; the Goldman-accusing TD and the Goldman-loving TD are the same person; they just don't realize it."
Closer to the Dick version.
https://secure.wikimedia.org/wikipedia/en/wiki/A_Scanner_Darkly
A Scanner Darkly
Philip K. Dick
The protagonist is Bob Arctor, member of a household of drug-users, who is also living a parallel life as Agent Fred, an undercover police agent assigned to spy on Arctor's household. Arctor/Fred shields his true identity from those in the drug subculture, and from the police themselves. (The requirement that narcotics agents remain anonymous, to avoid collusion and other forms of corruption, becomes a critical plot point late in the book.) While supposedly only posing as a drug user, Arctor becomes addicted to "Substance D" (also referred to as "Slow Death," "Death," or "D"), a powerful psychoactive drug. An ongoing conflict is Arctor's love for Donna, a drug dealer through whom he intends to identify high-level dealers of Substance D. Arctor's persistent use of the drug causes the two hemispheres of his brain to function independently, or "compete." Through a series of drug and psychological tests, Arctor's superiors at work discover that his addiction has made him incapable of performing his job as a narcotics agent. Donna takes Arctor to "New-Path," a rehabilitation clinic, just as Arctor begins to experience the symptoms of Substance D withdrawal. It is revealed that Donna has been a narcotics agent all along, working as part of a police operation to infiltrate New-Path and determine its funding source. Without his knowledge, Arctor has been selected to penetrate the secretive organization.
As part of the rehab program, Arctor is renamed "Bruce" and forced to participate in cruel group-dynamic games intended to break the will of the patients. The story ends with Bruce working at a New-Path farming commune, where he is suffering from a serious neurocognitive deficit after withdrawing from Substance D. Although considered by his handlers to be nothing more than a walking shell of a man, "Bruce" manages to spot rows of blue flowers growing hidden among rows of corn, and realizes the blue flowers are Mors ontologica, the source of Substance D. The book ends with Bruce hiding a flower in his shoe to give to his "friends" – undercover police agents posing as recovering addicts at the Los Angeles New-Path facility – on Thanksgiving.
A Scanner Darkly is a roman à clef (a fictionalized account of real events) based on Dick's experiences in the 1970s drug culture. Dick said in an interview, "Everything in A Scanner Darkly I actually saw."[2]
Keanu Reeves
Bob Arctor
A Scanner Darkly
In the not too distant future in Orange County California, an undercover narcotics agent is known internally in the force only by his code name, Fred. His identity within can be kept secret as the scanning suit he dons hides his true identity. In reality, he is Bob Arctor. His assignment is to infiltrate a drug ring dealing in a hallucinogen known as Substance D, the ultimate goal to find the source of the drug. Arctor's own use of Substance D and moving within this drug world is making him lose his true identity, which includes a family life with two young daughters. As Fred, he is also assigned to monitor his own movements since one of Arctor's drug colleagues, James Barris, has come to the authorities to report Arctor's drug dealings, although Fred's superior, code named Hank, knows that Fred in his true identity is one of the people in the drug ring being monitored. But Hank and Hank's colleagues will do anything, even sacrifice Fred/Arctor, to achieve the ultimate goal of finding the source of Substance D.
America should just quit screwing around and just do what you do best ... Entertain Us.
you mean like this:
http://maxkeiser.com/2010/07/04/his-name-was-rico-he-wore-a-diamond/
In this case I'm not sure it is Goldman-loving as much as recognizing the absurdity of one AG suing pretty much anyone they can pin the blame on (and get money from) - in what seems like a thinly-veiled campaign move to appease the pitchfork-wielding masses. Echoing a comment above, it perpetuates the "let's sue 'em for the money and pin the blame on someone else" part of our society. The slow death of personal responsibility. The propensity to seek recompense in the courts instead of really learning the lesson and moving on. How any company can be sued in retrospect for what was 'accepted' at the time. How, even if the AG wins, they lose (Texas pension funds and citizens see lower stock values), as the interconnected nature of the economy reveals itself (shareholder lawsuits take money from the company to pay the aggrieved shareholders with a commission to the lawyers).
How's an investor/businessperson to know what the political/legal environment will be in the future? It's the raccoon bitting off their leg to get out of the trap. True, it might work, but at what cost? Unfortunately, 'we' are currently caught between a lot of unhappy choices...
How am I responsible for Moody's et al committing fraud? For GS and other investment banks pressuring the reporting agencies to do it? Underreporting risk is fraud, and gross negligence.
No one had to listen to and trust their ratings. Those pension fund managers didn't have to buy the paper solely based upon a AAA rating. How many pension fund managers have been sued (or even fired) for not doing their own research? For malfeasance and gross negligence? The point I am making is that there is lots of blame to go around - to the homeowners who wanted to re-fi to pull out some money to buy a boat, or lied on their loan applications just so they could flip the house in two years. The whole system was complicit in the game of the musical chairs and the problem is now: (1) the system is being propped up on the backs of the responsible/savers/prudent ones (because everyone deserves to get bailed out) creating vast moral hazard; and (2) we aren't addressing the structural problems in our economy. We're just bickering and having a bunch of partisan (and legal) wars to cover up the past.
A bit disingenuous, don't you think? "You should have tested that lettuce yourself for e coli", or "why didn't you double check all the Toyota engineering calculations yourself?" etc etc. Of course you are right about the lies told by mortgage applicants, but this would never have flown unless there was a ready market for the crap paper enabled by the securitizers and rating agencies.
There were plenty of signs that the housing market was over-heated. Several analysts were singing this song since 2003-2004. The inherent conflict of interest with the credit rating agencies was well-known. How many buyers of the paper actually understood what they were buying? Equity tranches of CDO's? It was simply a house of cards, with A LOT of willing participants. I remember quite vividly during that time how everyone was concerned with reaching that little extra yield, without really understanding the risk. The whole system was both self-referential and complicit. Except for the few/brave that didn't participate. Much better to address the future, avoiding the past, then to spend time constantly looking back and looking for blame in others. I am most certainly not trying to defend any one party in all of this.
Oh, and by suing the corporations you are suing the shareholders, and therefore the citizens of Texas. Better to sue the individuals for specific acts, therefore this conduct might actually be dissuaded in the future.
"Don't you get it? "Tyler Durden," in both the movie and the book, is a schizophrenic character who has a separate personality and doesn't realize it's him. Same thing here; the Goldman-accusing TD and the Goldman-loving TD are the same person; they just don't realize it."
Hmmm... I think you are unto something here.
As one who hates Capitalism in its present form so viscerally and yet trades for a living, I can relate.
Bravo dcb! - Yes , rampant criminal activity must be attacked head on. The Texas lawsuit needs to spur criminal prosecutions, not just civil lawsuits. The greatest financial crimes in U.S. history cry out for justice! Take off the kid gloves, and hit these criminals with the iron fist of justice. We need coast-to-coast arrests, from Countrywide to ratings agencies to Goldman Sachs and every one in between. We need Shock and Awe RICO prosecutions and mass trials in style of the Maxiprocesso (Maxi Trial) of the Mafia in Sicily during the mid-1980s that resulted in hundreds of defendants convicted.
It takes only one prosecutor to investigate just one crime, and follow the money and the connected crimes, and bring down the overlapping criminal enterprises using Racketeer Influenced and Corrupt Organizations Act (RICO) prosecutions.
This is a target rich environment, and the criminal activities (fraud, Ponzi schemes, extortion, looting of treasury, cover-ups, etc.) are continuing today. So the investigation and prosecution can begin anywhere and follow the trail: Countrywide, the mortgage industry and the appraisers or Freddie and Fannie or Citi and the big banksters or with Goldman Sachs and other Wall Street banks or the rating agencies or AIG or with the federal co-conspirators at U.S. Treasury, SEC, OTS, and the Federal Reserve, especially FRBNY, and any members of Congress who aided and abetted.
These overlapping criminal enterprises raped and pillaged the mortgage industry, ruined the housing market, destroyed the credit system, endangered federal/state/municipal financing, pension funds, and the banking system, caused massive unemployment, sent the economy into a downward spiral, endangered the world financial system, extorted the U.S. and the world to pay them billions in ransom or face the destruction of the world financial system and economy, and now are costing taxpayers hundreds of billions, even trillions of $.
We need RICO confiscations of the hundreds of billions in illegal "profits" from the criminal enterprises of the banks, mortgage industry, and Wall Street Mafia. We need prosecutions, RICO convictions, RICO confiscations of mega-billions of dollars of ill-gotten gains, repayment of taxpayers, and 20 years-to-life hard time prison sentences.
The Attorney General or prosecutor who leads the charge will become a national hero.
Look; it is not GS fault most of their counterparites were retarded or seriously gravitated towards said classification. Every counterparty that lost money when trading with GS [or any other bank, fund, or individual] lost money either because they were too retarded to do due diligence or just too greedy when they looked at yields offered. Should GS, should anyone be criminally prosecuted just because most of the population is no smarter than a fucking plank of wood; but wants to up the appearance by conducting acts for which they are not intellectually suited?
Im the last one to defend GS [mostly due to what they are doing to EQ markets and some composits in FI] but when populism transforms into farce I will always take the side of those who are subjected to said farce; even if those "others" are GS and banks named in this piece of shit lawsuit.
Plus I dont think you have ANY idea what would a ruling in favor of plaintiff do to the markets and the economy.
Every person who manages money for any other individual or institution would become criminally liable if they produce a loss. You do know what that means; dont you; effectively it means the death of any kind of market. No one will subjugate themselves to even a possibility of becoming a defendant in some lawsuit similar to this one. No one would trade anything.
Cheeky - I am talking about prosecuting crimes, such as fraud. I am not talking about folks who lost money because they were not sophisticated investors.
You create a straw man: "Every person who manages money for any other individual or institution would become criminally liable if they produce a loss." No, what I am saying is:Every person who manages money for any other individual or institution would become criminally liable if they commit fraud or other crimes.
And where exactly is/was the fraud in all of this? Can they name individual actions in which said defendants perpetrated fraud? Was ABACUS a fraud I dont know; was GS buying CDS from AIG and in the same time buying CDS ON AIG a fraud? No. It was pure and simple a hedge of the counterparty risk/risk concentration.
What should they be accused of? Accused of all this garbage listed in the suit? Ha; good luck proving that GS actions had a direct influence as described by this lawsuit; its like trying to prove that a fire in 1456 is the cause of drought in Eritrea; impossible.
I dont have a Juris Doctor attached to my name; but I'm sure there is a vast system of laws and regulations already in place which address this issue. And also there is a methodology of establishing proof as viable or not viable also in place to address these concerns.
They misrepresented to purchases of CDOs what garbage was in these tranches, while participating in the con with Paulson. The reason they got caught is because they were late to the game on the CDS front and made mistakes that they will pay for.
The counterparty could have easily hedged the cash exposure with buying a CDS on the $ value of the CDO; easily with no problems. They could have even buy a CDS on a non-limited $ amount referencing the CDO which they bought. Also; there is this thing called "mortgage database" where everyone can check the current state of a mortgage just by entering a CUSIP #. Who ever got fucked by both Paulson and GS deserved it. The hedges were available, due diligence tools ditto; the only thing that was apparently lacking was some level of intelligence for the counterparty. Yes, stupid people deservedly get fucked because they are stupid and unwilling to learn a goddamn thing or do anything about it.
Blame the RA who rated the structure referencing some self-referential LTV, DSCR 5y averages etc etc variables which determine the rating of the structure. Rant against their valuation methods; I mean they are as equally stupid as ABACUS counterparties were; but thats really not important in this discussion.
The rating agencies are named in the lawsuit, specifically for committing fraud and acting under gross negligence.
Acting as if a known risk does not exist is negligence. Doing it on a massive scale is gross negligence. Reporting that a risk does not exist when it is known to exist, in the context of a financial disclosure, is fraud.
My understanding form reading "The Big Short" by Lewis is that the ratings agencies only used credit scores not income for detrmining the stability of a loan. Therefore, even migrant workers and maids making minimum wage, but with excellent credit were buying multiple condos and houses (piggybacking). The system was corrupt from the 1st floor (brokers) to the 5th floor (investment houses like GS).
The whole web of deceipt was possible because of the bubble in housing perpetuated by easy money. People will get away with what they can legally. GS was making the CDO market and policing it which they shouldn't have been allowed to do. It was a massive conflict of interest. I still say they oversteppedbecause they were late to the game unlike some others who owned CDS for a year or more before the shit hit the fan.
GS was careless in the handling of the Abacus tranche because they panicked when they knew that RE was falling apart. They didn't perform ethical conflict of interest due dilligence because they were rushed. There is a fine line between fraud and blaming somebody else for not doing their due dilligence.
Sure the whole system was corrupt, but they were on the top floor of the elevator. Somebody big had to pay. They got caught.
"I dont have a Juris Doctor attached to my name;"
No Shit. Look, lawsuits are ALWAYS a fishing expedition. A shotgun approach in a suit is beyond common for a reason. During the discovery process, you winnow your arguments and theories. If you had to plead a precise theory and argument out of the chute, the odds of success drop even further. Do think the defendants are going to voluntarily give up the keys to the kingdom? Jeebus! Wake up! The plaintiff controls the litigation process and when the defendant is actively hiding information, your only hope may be to turn over a rock that has been overlooked.
Maybe restore integrity and confidence, bring back capital, flush the fraud. I can't see the downside to the criminals who were playing with money that didn't even exist being made to pay the piper.
On a side note, I remember a case in Texas where a Texan shot and killed a carpet bagger after being scammed on some deal, when the case got in front of a judge, he ruled thusly; "case dismissed, I'd a shot him to". Fuck those assholes in the DC/NY corridor who think they can pillage without consequence.
I cannot believe that you're using the same argument as all those in many levels of government and regulatory bodies:
"Plus I dont think you have ANY idea what would a ruling in favor of plaintiff do to the markets and the economy."
Whatever it is, changing regulations, laws or law suits this argument is main stay reason for doing nothing. So lets leave everything as it is and play complains game forever. Of course GS is not the main reason for collapse, it's government and its policies on its own, greed and fraud on all levels of corporate America (and not only America) played also major role. Now some minor players are trying to get to higher levels of government play the game of smoke and mirrors to divert attention of general public from real culprit in this disaster.
As CB pointed out, this is like suing the big bang for creating the misery of life. If you want to make an impact, find the weakest link and push. Shotgun approaches like this do nothing but weaken any cases. And furthermore, this diversion is not just against Goldman, but every Wall Street firm... Why stop there - why not the Congress, Senate, the Fed, the Bilderbergs, the Marsians, the lost continent of Atlantis, the Simpsons, etc.
Until serious prosecutions start we won't know how far the trail will lead and how many criminals and crooked companies will be brought to justice. It takes only one prosecutor to investigate just one crime, and follow the money and the connected crimes, and bring down the overlapping criminal enterprises using Racketeer Influenced and Corrupt Organizations Act (RICO) prosecutions.
You don't have to be Sherlock Holmes to follow the billion $ trails of fraud on Wall Street. You do have to have the balls to fight the corrupt system. The male-dominated prosecution establishment in the U.S, has failed so far to bring the tough, up-against-the-wall-you-muthaf**king-pension-robbing-widow-rapers arrests and prosecutions. Maybe the candidate for Texas Attorney General, Barbara Ann Radnofsky, has the balls to bring these bastards to justice and 20 years-to-life hard-time prison sentences.
For one example of the rampant criminality that begs for prosecution, see William Black's "Great American Bank Robbery":
http://hammer.ucla.edu/watchlisten/watchlisten/show_id/129363
Wooo.
Slow there.
Yes, I agree with Cheeky's and your reasoned reply, the ineffectiveness of the whole scheme as well as faulty logic.
Now, what exactly do you mean by "If you want to make an impact, find the weakest link and push."
(If I read you correctly, is it to suffocate the beast via fiscal austerity measures?)
No; I think he means [but cant be sure 100%] is that you find the weakest link in the structure and go guns blazzing against that one part. The best place to attack would be Equities Division where, I am sure; Federales could find a lot of illegal shit [in addition to legally ambiguous HFT trading] re: insider trading, artificially wide spreads etc etc. Do what was done to Capone; catch them on some small offense and slap a fucking penalty that would make their grand-grand-fathers feel the pain. Going against The Firm as a whole is an absolutely ridiculous legal strategy even to me who has no expertise in the legal field.
Ah, thank you Cheeky!
I get it now.
I think everyone is focusing too much on a few trees in the forest, and ignoring the far larger problem that the entire forest will soon be burned down.
And that is a problem that so far, I have not heard or seen any solution to.
the solution....as always... is disco
http://www.bing.com/videos/watch/video/zohan-disco/681ebb5a313e7d2accea681ebb5a313e7d2accea-165784191597
You said trees.
http://www.youtube.com/watch?v=UWHEcIbhDiw
I would think the rating agencies would be a particularily weak link. Evidence of fraud or collusion would have to be sought in the fine print of the legal documents for a given rating, those who drafted the documents would need to be questioned, any internal memos and emails would need to be scrutinized. The models used to transform straw into gold would need to be traced back to their originators (probably the investment banks) and the due diligence of the rating agency in accepting such a flawed model would need to be vigorously investigated, given the inherent absurdity of the ratings. Obviously, the more parties that had a hand in formulating these models, the more spread out is the responsibility. However, it was the fiduciary duty of the rating agencies to protect the end user from any and all scams in the rating process.
The rating agency will undoubtedly claim that the central idea behind the overly optimistic ratings is that in securitizing and thereby spreading risk, the securtization itself was acting as a form of insurance. However, such a conclusion goes beyond their competence to rely on and represents a sea-change in their erstwhile practices. Again, from the point of view of fiduciary responsibility, they were obliged to be conservative and not take such a leap of faith. There was undoubtedly widespread cynicism within the agencies themselves about these models, and the basic issue was that their clients would go elsewhere if they refused to employ the models. If this is so and can be documented, it is a massive conflict of interest and should be actionable.
The prosecutions have to start somewhere, the markets and the economy are lost until the debt is paid. I'd like to see some enterprising sherriff bring charges, I'm sure he would only have to look at his pension statement to find cause.
I now see Eric Holder making big hay out of bringing charges against mortgage brokers for fraud, what a dunce he is to think anyone is fooled by this whitewash.
Gee, I hope fairies fly out my ass and deliver me some Golden Eagles too.
Face it, the regulatory system is completely broken. CTFC? SEC? Justice Dept? Do you see any of these folks doing anything like their job?
Lawsuits are avenues for DISCOVERY. The failure to understand this concept means YOU ARE NOT GETTING IT. Look at GATA, they are on the brink of potentially historical revelations and you guys are complaining about the little guys using a tool in their toolbox to take on the PBTB.
I think they are showing something we need a lot more of in our law enforcement and regulatory system, "big picture" imagination.
Imagination is how Guliani broke Drexel and imagination is what Spitzer had when he was Sheriff. If you go fencing over each element of the grand scheme, they (Wall Street) will parry every move.
Words like RICO put the fear of God in them.
What Obama does not understand is that until the system takes back its pound of flesh, there is no reason for ordinary citizens to support it.
I think blaming subpime borrowers and two bit local politicians is misplaced. The leadership of the country is broken and corrupt.
The lunacy is that the wife is being sued while the husband goes unnamed. Particularly odd is that a democrat is initiating the action. GS is in effect the 'man behind the curtian'. Look to whom GS pays the majority of it's stolen funds too? (71% nigga). It's a racket.
Someone far more cognizant of the true nature of our present reality put it best-
FARCISM.
While we may have ourselves to blame, it is more comfortable, less an affront to our egos, having others make the amends for the very manifestations of our character defects. Through the effective application of hypocritical principles, of merely talking whilst deferring to others for the requisite actions leading to concrete results is the order of the day in our New World of assigning Government to cure all ills.
Including those of our own emotional nature.
Indeed, the fundamental foundation upon which the Temple of Populism securely rests.
I think you'll find most people would have to save up for thirty years in order to hire a lawyer good enough to take on GS.
Banksters of the world unite! Time to stomp out Texas!!
I'd be very curious to know how a CANDIDATE for Texas AG files a suit on behalf of the state.
Dumb be-atches should be banned from public office and made to work at the Bunny Ranch on the housekeeping crew where they belong. But no this cunt-stunt will get her elected.
The more I see stupidity like this the more I wanna become a Hebrew central banker.
I don't like that word. It hurt's PEOPLE
Scoob promises not to use the "H" word again.
Sounds like a prick-trick, but twice as clever. Thanks for sharing.
Who sat still? Every payoff and new law was accompanied by phone calls and letters running 100 to 300 to 1 against, protest marches, upset elections in districts that had an iron clad Democrat majority for 40 years, tea bags, public meetings, and even "open carry" protests in which hundreds of citizens carrying loaded guns politely asked their representatives to reconsider their position.
All of this was laughed off or ignored.
Suggested slogan for the coming elections "You shoved it down our throats in 2009, we'll shove it up your ass in 2010".
I suspect that route is already quite congested by well-monied suitors from 2008.
May I suggest opening the carotid artery instead. It's quick and very messy.
Excellent! Time to test my new invention from the lab!!
The frivolously ridiculous lawsuit!
oh really. well maybe you could point out a few of those frivilous allegations because i can't find any.
You are assuming they didn't have the ability to hit the sell button.
While the fact does remain they did obliterate the entire US financial system is a criminal charge. Personally I hope it goes under fiscal terrorism and the execs are given one prison assraping after another.
The fact an investment group is suing another investment group on their inability to determine it's time to get out of position is banal. All investors, you and I, sign a huge phone book of information that investments (all of them) are risky and should be handled with care.
It's like a car owner suing the car company for hurting themselves while driving like morons. While the car might have been a death trap, it certainly didn't help the matter with the driver having a lead foot, talking on the cell phone while scanning their iPod for tunes.
First of all, this RICO action is a civil lawsuit not a criminal charge.
It's like a car owner suing the car company for hurting themselves while driving like morons.
Perhaps it's more like a car owner suing a car company for selling him a car that self-destructed, the car company designed it to self-destruct, and the car company bought insurance on the car to profit from the self-destruction.
Common law fraud has nine elements:
And the likelihood of it ever being resolved in the court system? Probably never. Unlike the death trap car, the engineering of the car can be pointed out by any number of qualified engineers.
In the case of investment vehicles how will they take the same approach, it will just turn into a SLAP suit with an endless parade of "experts" in respective fields.
The RICO act is fairly toothless especially when the government is ignoring the fact GS is full to the brim with potential organ donors that should be recycled properly into something useful. Hoping on a prayer of a wish won't make it happen, that's all this is looking at the article.
Unless it's tried by a municipal court with a judge that hasn't been hand picked by the powers that be this won't go anywhere except the media circus to pump some political points into the politico's standing for November. OR they get brought up on terrorism charges. Pretty much the only two ways to get chucked in the brig for anything for financial douchebaggery nowadays.
Otherwise, I didn't get hurt by it all. I listened to guys like Schiff and Dr Doom in 07 (and Zero Hedge @ blogspot). They weren't the only ones jumping up and down explaining that debt loads were too high and the balance sheets of the banks were fictitious.
All that happened is the rock of a single company was kicked over and nobody liked what they saw. And it's not just GS doing this. If they want to take a company to court over RICO, why don't they go after the biggest monster of them all like GE Capital? They've been wrecking world economies for 50 years with a license to do it. Will something be done about it? No it won't.
My take it's a tempest in a tea pot, built to make people jump on a populist bandwagon for the re-election of a politico.
Don't mess with... lawyers.
Up against the wall.
1. Politicians
2. Banksters
3. Lawyers
Interesting that my spell checker did not flag Bankster. Now oficially part of our lexicon.
Hey...you're right! Bankster is in the lexicon now.
Weird, usually they (the Oxford folks) announce the new words. I suppose keeping a low profile on that one word is a good thing for some.
Is this the first sign that any and all valuable squid assets have now been successfully transferred out?
Memo to Gulf state AGs. I would get a jump on suing Goldman for the recurrence of El Nino. Little boy will soon be pissing PetroRain (umm...I wordmarked that so be sure to indicate that in your complaint) all over your constituents.
Which is almost exactly what we have asked for. Too bad it is all wrapped up in dualism but it seems to be the only way to capture the imagination of the people. Dress it up like a football game and people have a side to be on. I am pretty sure I want to be on the side of RICO indictments of the major fraudsters. I can ignore the costumes. Texas put Skilling, Fastow, and Lay in prison they should have the expertise that is required to explain to 12 people just how they got raped. It would be a blessing if they pull some politicians down on the Federal, State, and Local levels in the process.
I will have patience and withhold a snap judgement on how this will play out.
I agree, but I wish they had some focus in there and made it far more narrow. It's like anything else, you have to get your foot in the door, so you start out as just a mild inconvenience that may actually have something worthwhile to hear. You can't sound like a crazy loon where people pile up furniture at the door to keep you out.
There has been no criminal indictments passed down which has to be mildly disconcerting to people who actually believe we live under the rule of law. But I would think the second most important thing in these guys lives is their money and how much of it they have and screw the methods they used to get it. If the money was taken from them and I mean all of it, which would probably require a few years of world wide traveling with a Seal Team at your side to remind people that cooperation is far better than the alternative and a remedy that includes disgorgement of profits and a ban on even touching anything other than paper money received from a 40 hour week at Wally World, there would be some serious justice in that.
As it stands now though, this is the kind of suit that begs for summary dismissal.
I like the RICO aspect but she forgot the cornerstone of the banking cartel: the Federal Reserve. Failing an audit of the fed, maybe we could do one by subpoena? Use a civil case to get enough evidence to start a criminal one? An audit of the Fed would certainly reveal enough insider shennanigans to make indictments flow like water.
1. Audit the Fed.
2. Find insider discussions of the housing bubble dating back to 2004 / 2005 or so.
3. Indict Greenspan and Bernanke for perjuring themselves before Congress about bubbles not being detectable.
4. Use Greenspan and Bernanke to pry the whole thing open.
5. Enjoy resulting spillage of beans.
THE "FEDERAL" RESERVE (CENTRAL BANK) IS THE ABSOLUTE REASON FOR ALL THIS MESS.
To put it in Mafia terms, the Frauderal Reserve is the "Boss", current and ex- Goldmanites have populated the majority of the heirarchy: the "Consigliere" (Treas(on)ury?), the "Underboss", the "Caporegimes", the "Soldiers", and the "Associates" all involve the Ratings Agencies, the other banks, the Morgans (JPM), the Rockefellers, etc. (Btw, do some research on who sits on the boards of the top companies of the world-- oil, biotech, etc-- and you will find a common person or two). Informants are placed everywhere else.
Between all of them, they have successfully bought out the Education system, the Mass Media, the Regulators/Cops, and of course Congress. Nothing is allowed unless it is approved by "them". Only God (not Goldman's) can help us at this point. But it is up to the people to do their part first...
"Permit me to issue and control the money of a nation, and I care not who makes its laws." Mayer Amschel Rothschild
"The modern theory of the perpetuation of debt has drenched the earth with blood, and crushes its inhabitants under burdens ever accumulating. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks. . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. . . the issuing power should be taken from the banks, and restored to the people, to whom it properly belongs." - Thomas Jefferson
"History records that the money-changers have used every form of abuse, intrigue, deceit, and violent plans possible to maintain their control over governments by controlling money, and its issuance." - James Madison
"I see in the near future a crisis approaching that unnerves me, and causes me to tremble for the safety of our country. Corporations have been enthroned, an era of corruption will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people, until the wealth is aggregated in a few hands, and the republic is destroyed. The Government should create, issue, and circulate all the currency, and credits needed to satisfy the spending power of the Government, and the buying power of consumers. By the adoption of these principals, the taxpayers will be saving immense sums of interest. Money will cease to be master, and become the servant of humanity." - Abraham Lincoln
"If Congress has the right under the Constitution to issue paper money, it was given them to use themselves, not to be delegated to individuals or corporations." - Andrew Jackson
"The modern banking system manufactures money out of nothing. The process is perhaps the most astonishing piece of slight of hand ever invented. Banking was conceived in iniquity, and born in sin. Bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of a pen, they will create enough money to buy it back again. Take this great power away from them, and all great fortunes like mine will disappear. And, they ought to disappear, for then this would be a better and happier world to live in. But if you want to continue to be the slaves of the bankers, and pay the cost of your own slavery, then let bankers continue to create money, and control credit." - Sir John Stamp (former governor of the Bank of England)
"No man is good enough to govern another man without that other's consent. . . . These United States of America can never be destroyed from forces outside its borders. If America falls, it will fall from within. Brought down by apathy. When good people do nothing, Anarchy reigns."
- Abraham Lincoln in a 1854 letter to Congress
"We the people are the rightful masters of Congress and the courts, not to overthrow the Constitution, but to overthrow men who pervert the Constitution." - Abraham Lincoln
"The aim of socialism is not only to abolish the present division of mankind into small states, and all national isolation, not only to bring the nations closer to each other, but also to merge them. The merging of states is inevitable."
- Lenin in his Imperialism and the Right to Self-determination
I'M NEVER GOING TO CELEBRATE INDEPENDANCE DAY UNTIL WE GAIN INDEPENDENCE FROM THE CENTRAL BANK (THE "fed")!!
What? No quote from Louie? :: As in:
"When the Federal Reserve act was passed, the people of the United States did not perceive that... the United States were to be lowered to the position of a coolie country which has nothing but raw materials and heavy goods for export; that Russia [China, India...] was destined to supply the man power and that this country was to supply financial power to an international superstate -- a superstate controlled by international bankers and international industrialists acting together to enslave the world for their own pleasure."
Rep. Louis T. McFadden, June 10, 1932.
That and others at: http://www.modernhistoryproject.org/mhp/ArticleDisplay.php?Article=McFad...
By the way, this gentleman was poisoned after several unsuccessful attempts.
Yes, thanks. I could have quoted many more: Woodrow Wilson (in deep regret), JFK, James Forrestal... the list goes on and on...
Sweet.
And to have the suit dismissed by a Clinton judge what could be better!
Can't we do the same to the Treaserve for devaluing the dollar?
Nice populist move. How many days until mid-terms?
I could definitely support suing goldman for not having a quiver inducing CEO (a la jamie dimon). But this is just frivolous.
Yeah; imma sue the Big Bang event for EVERYTHING!!!
You are right; this is just a populist bullshit move by a member of a party which will most likely lose every major political area in the next election.
The GOP brand is less unpopular here in Texas than the Democrat brand is, for the time being.
fivethirtyeight says it doesn't look that way. Dems will mostly hold on and it seems irrelevant, unless a zero hedge party arises (much like the proverb of assorted animals exiting random new yorkers' orifices).
This impossible suit will have the opposite effect. Because it has no chance of changing anything it will just be one more case of not being able to beat the system. Perhaps that's the idea. Give the populus the idea that nothing works. Ha!
Can suing politicians for being lying slimeballs be far behind?
Perhaps we don't need all that boiled rope...
Fine print on the "Do not remove label" attached to every politician sez:
"Caveat Emptor: This is a scumbag."
Black's Law Dictionary definition of scumbag is two pages and includes lying and being a slimeball, explicitly.
So that would be a suit without merit on a person without merit.
Will they sue them for rigging the market and pushing it much higher than where it should be at certain times, therefore actually having to pay GS&al compensation for not letting the house of wet cards fall yet as it should?
Secede, Texas, secede!
I think the case is actually pretty sane, but it would get some sharper teeth by suing the feds and the Fed.
It just dawned upon me, how the whole panoply of the Power Elite feed upon one another.
The complaint has been brought by the candidate for AG. Candidate.
The list of defendants is a mile long, comprising and controlling half the wealth of the nation and D.C.
The defendants have greater legal budgets than God hisself.
The defendants have more political sway than God hisself.
The AG makes populist points.
The AG's suit goes no where subsequent to major press coverage and vote attribution.
Thereafter the AG and Defendants remain close friends through the contribution and legislative effort, the politics and financial enablers thereof.
Nothing fucking changes.
A Symbotic Relationship of which Darwin would be Proud.
Plus I would wager that many of the Democrat politiians supporting the bill with one hand have gone along with the watered down financial bill with their signature hand. In addition, the invisible third hand of the defendants has added to the the back pocket wallet of the politians through lobbyists and campaign contributions. They are all worried about their jobs come November.
Lawyers gotta eat too. They aren't any scummier than teh bankstas.
buzzsaw99
"They aren't any scummier than teh bankstas."
Until you need one. Then you praise the scummiest because they tend to win for you.
I'm partial to the one on Breaking Bad. My kind of attorney.
I shouldn't have painted lawyers with such a broad brush. Lawyers who hit banksters with frivolous lawsuits aren't any worse than those whom they sue. Fixed it.
I hope they win.
Also, I hope someone sues the Fed
Why do you hope they win?
As for suing the Fed, see Mark Pittman. I also advise you to read everything he wrote. Seems like a very suitable activity for July 4th.
Net net, one might yield a higher return mowing the lawn.
I disagree that we are only to blame. How can we be blamed when the only choices at the voting booths are between bad and worse? What can you do when those in power enpower through crony capitalism? The term checks and balances in government is a joke when the only people who can vote on term limits for congress is congress itself. We're probably headed for a revolution, and maybe that's not a bad thing.
Chartist
"I disagree that we are only to blame. How can we be blamed when the only choices at the voting booths are between bad and worse? What can you do when those in power enpower through crony capitalism?"
Stop voting. Stop donating to either party.
Start a petition or movement or site. Lay out your points. For example " I will no longer vote or donate money to either party until I see public investigations leading to jail time for the following offenses ( You choose). I will ONLY support any party which achieves RESULTS. Results defined as perp walks and jail time for offenders. If I do not observe these public actions, of which it is a politicians duty, I will vote and donate to the party I find least offensive, The Pirate Party or the Hemp Party".
Once any party or politician sees a threat to their money and artificial mandate they will act.
Someone once said if you want a cure for Cancer infect all the politicians.
This is that method.
But first you need to walk away from both parties. Stop voting.
Think about this, for decades the Democrats have fucked over Blacks. But Blacks have no where else to go. You think they will vote Republican en masse? They get stuck eating shit and voting for Democrats.
Now we are all Blacks.
This lawsuit is another waste of taxpayers money, by clowns hoping to gain political cover in advance of the taxpayers firing Twiddledum for Twiddledee. Hope and Change, anyone?
Wow. We could be eating squid for dinner! Just imagine if that should come to pass ...
The Wall Street Banks, negligently and intentionally, allowed the ratings received on their own products to falsely portray the investments as better than in truth the investments were. ...check
Had investors or ratings companies been properly informed, they'd have known the products were designed to fail, intentionally favoring bettors-on-default. ...check
The rating system fostered by all defendants added to the deception including failure to disclose and eliminate banks’ control over ratings and payments. The ratings agencies also acted negligently, fraudulently and with gross negligence in their conduct. ...check
Defendants acted, individually and together, in concert, conspiracy and enterprises. ...check
This is RICO 101. I'm surprised it took this long to bring a RICO suit.
http://www.youtube.com/watch?v=VSwWy4E6I04
I AGREE with it. sue the fkers.
http://www.independent.co.uk/opinion/commentators/johann-hari/johann-har...
How Goldman Sachs Gambled On Starving the Poor - And Won
by Johann Hari
By now, you probably think your opinion of Goldman Sachs and its swarm of Wall Street allies has rock-bottomed at raw loathing. You're wrong. There's more. It turns out the most destructive of all their recent acts has barely been discussed at all. Here's the rest. This is the story of how some of the richest people in the world - Goldman, Deutsche Bank, the traders at Merrill Lynch, and more - have caused the starvation of some of the poorest people in the world, just so they could make a fatter profit.
It starts with an apparent mystery. At the end of 2006, food prices across the world started to rise, suddenly and stratospherically. Within a year, the price of wheat had shot up by 80 percent, maize by 90 percent, and rice by 320 percent. In a global jolt of hunger, 200 million people - mostly children - couldn't afford to get food any more, and sank into malnutrition or starvation. There were riots in over 30 countries, and at least one government was violently overthrown. Then, in spring 2008, prices just as mysteriously fell back to their previous level. Jean Ziegler, the UN Special Rapporteur on the Right to Food, called it "a silent mass murder", entirely due to "man-made actions."
Earlier this year I was in Ethiopia, one of the worst-hit countries, and people there remember the food crisis like they were hit by a tsunami. "It was very painful," a woman my age called Abeba Getaneh, told me. "My children stopped growing. I felt like battery acid had been poured into my stomach as I starved. I took my two daughters out of school and got into debt. If it had gone on much longer, I think my baby would have died."
Most of the explanations we were given at the time have turned out to be false. It didn't happen because supply fell: the International Grain Council says global production of wheat actually increased during that period, for example. It isn't because demand grew either. We were told the swelling Chinese and Indian middle classes were pushing it up, but as Professor Jayati Ghosh of the Centre for Economic Studies in New Delhi has shown, demand from those countries for them actually fell by 3 percent over this period.
There are some smaller explanations that account for some of the price rise, but not all. It's true the growing demand for biofuels was gobbling up much-needed agricultural land - but that was a gradual process that wouldn't explain a violent spike. It's true that oil prices increased, driving up the cost of growing and distributing food - but the evidence increasingly shows that wasn't the biggest factor.
To understand the biggest cause, you have to plough through some concepts that will make your head ache - but not half as much as they made the poor world's stomachs ache.
For over a century, farmers in wealthy countries have been able to engage in a process where they protect themselves against risk. Farmer Giles can agree in January to sell his crop to a trader in August at a fixed price. If he has a great summer and the global price is high, he'll lose some cash, but if there's a lousy summer or the price collapses, he'll do well from the deal. When this process was tightly regulated and only companies with a direct interest in the field could get involved, it worked well.
Then, through the 1990s, Goldman Sachs and others lobbied hard and the regulations were abolished. Suddenly, these contracts were turned into 'derivatives' that could be bought and sold among traders who had nothing to do with agriculture. A market in "food speculation" was born.
So Farmer Giles still agrees to sell his crop in advance to a trader for £10,000. But now, that contract can be sold on to financial speculators, who treat the contract itself as an object of potential wealth. Goldman Sachs can buy it and sell it on for £20,000 to Deutschebank, who sell it on for £30,000 to Merryl Lynch - and on, and on, provided they think the price can be jacked up, until it seems to bear almost no relationship to Farmer Giles' crop at all.
If this seems mystifying, it is. John Lanchester, in his superb guide to the world of finance, 'Whoops! Why Everybody Owes Everyone and No One Can Pay', explains: "Finance, like other forms of human behaviour, underwent a change in the twentieth century, a shift equivalent to the emergence of modernism in the arts - a break with common sense, a turn towards self-referentiality and abstraction and notions that couldn't be explained in workaday English."
Poetry found its break broke with straightforward representation of reality when T.S. Eliot wrote 'The Wasteland.' Finance found its Wasteland moment in the 1970s, when it began to be dominated by complex financial instruments that even the people selling them didn't fully understand. As Lanchester puts it: "With derivatives... there is a profound break between the language of finance and that of common sense."
So what has this got to do with the bread on Abiba's plate? How could this parallel universe of speculation affect her? Until deregulation, the price for food was set by the forces of supply and demand for food itself. (This was itself deeply imperfect: it left a billion people hungry.) But after deregulation, it was no longer just a market in food. It became, at the same time, a market in contracts that were speculating on theoretical food that would be grown in the future - and the speculators drove the price through the roof.
Here's how it happened. In 2006, financial speculators like Goldman's pulled out of the collapsing US real estate market, and they were looking for somewhere else to make their stash of cash swell. They started to buy massive amounts of derivatives based on food: they reckoned that food prices would stay steady or rise while the rest of the economy tanked. Suddenly, the world's frightened investors stampeded onto this ground and decided to buy, buy, buy.
So while the supply and demand of food stayed pretty much the same, the supply and demand for contracts based on food massively rose - which meant the all-rolled-into-one price for food on people's plates massively rose. The starvation began.
The food price was now being set by speculation, rather than by real food. The hedge fund manager Michael Masters estimated that even on the regulated exchanges in the US - which take up a small part of the business - 64 percent of all wheat contracts were held by speculators with no interest whatever in real wheat. They owned it solely to inflate the price and sell it on. Even George Soros said this was "just like secretly hoarding food during a hunger crisis in order to make profits from increasing prices." The bubble only burst in March 2008 when the situation got so bad in the US that the speculators had to slash their spending to cover their losses back home.
When I asked them to comment on the charge of causing mass hunger, Merrill Lynch's spokesman said: "Huh. I didn't know about that." He later emailed to say: "I am going to decline comment." Deutsche Bank also refused to comment. Goldman Sachs were a little more detailed in their response: they said "serious analyses... have concluded index funds did not cause a bubble in commodity futures prices", offering as evidence a single statement by the OECD.
How do we know this is wrong? As Professor Ghosh points out, some vital crops are not traded on the futures markets, including millet, cassava, and potatoes. Their price rose a little during this period - but only a fraction as much as the ones affected by speculation. Her research shows this speculation was "the main cause" of the rise.
So it has come to this. The world's wealthiest speculators set up a casino where the chips were the stomachs of hundreds of millions of innocent people. They gambled on increasing starvation, and won. This is what happens when you follow the claim that unregulated markets know best to the end of the line. The finance sector's Wasteland moment created a real wasteland. What does it say about our political and economic system that we can so casually inflict such misery, and barely even notice?
If we don't re-regulate, it is only a matter of time before this all happens again. How long would it last then? How many people would it kill next time? The moves to restore the pre-1990s rules on commodities trading have been stunningly sluggish. In the US, the House has passed some regulation, but there are fears the Senate - drenched in speculator-donations - may dilute it into meaninglessness. The EU is lagging far behind even this, while in Britain, where most of this "trade" takes place, advocacy groups are worried David Cameron's government will block reform entirely to please his own friends and donors in the City.
Only one force can stop another speculation-starvation-bubble from swelling, probably soon. The decent people in developed countries need to shout louder than the lobbyists from Goldman Sachs. In the UK, the World Development Movement is launching a week of action this summer as crucial decisions on this are taken: text WDM to 82055 for your marching orders. In the US, click here to find out what you can do. The last time I spoke to her, Abiba said: "We can't go through that another time. Please - do anything you can to make sure they never, never do that to us again."
The situation we are in is unwinnable. Corruption has rotted the core. Tea-Parties and other movements are just passing entertainment and talking points.
I hope you don't copy and paste this to all future ZH posts (I saw it on another one this morning). Don't like the ad for the text participation either.
While I am sympathetic to your arguments, it seems the extent of the alleged 'manipulation' is that GS et. all launched some commodities-based index funds and that created lots of long-only interest. Not sure that would be 'manipulative'.
traderjoe
"I hope you don't copy and paste this to all future ZH posts"
No. This is a Goldman thread. It is appropriiate.
I try not to duplicate, unless it is relevant.
I would post links but most people have the attention span of grapefruit and if something is not right in front of their faces the meaning is lost.
good thing you copied the article, link is dead now.
i feel so sick i wonder how these people live with themselfs i really do. they can´t all be sociopaths can they?
Its not sociopathy; its one of the most basic rules of conducting business; you dont get emotionally attached to your position. If you are a corporation every act which diminishes revenues/profits [yes that even means putting ethics in front of your legally defined and limited practice of business action] you are becoming liable to your creditors and shareholders. Dont blame the players; blame the game which created them.
Operating without emotional attachment is the defiinition of sociopathy.
Well fuck; then I'm a sociopath. I go with efficiency when it comes to business; not emotions.
Sociopathy is like everything. It's a continuum. It can range from being polite to the walmart checker when you don't really care to pretending your a impartial legal system when your really a monopoly who gets to say who's right and who's wrong. Or forcing everyone to use one currency or adapt themselves to one economic system even when its extremely damaging to all the participants. And anyone can do it. It's just shutting down your heart chakra mostly and the subsequent fall of every other chakra. Let me do it real quick.
This is me being a total sociopath.
http://www.eclecticenergies.com/chakras/chakraevaltest.php
Test didn't show up but I got like -60 percent on root -50 percent on heart with open everything else. People will either try to match your energy or contrary it in some way or simply engage with one component of it. The thing is there's nothing dangerous about mild sociopathy as they are just survival or coping strategies. It's the sociopaths that won't set boundries to how many people they can affect or bother that becomes so dangerous. God's the worst sociopath which is why I'm heading to the black hole and dumping their ass on the conjunction. Because I'm not going to join something greater than me and serve it by blowing peoples legs off with land mines. Or join a sociopathic corporation and stomp all over everyones dreams and creativity while simultaneously attention whoring all over main stream media.
that's my basic understanding of economics. The best businessmen are sociopaths. Cheeky, go roll in your money now.
These days it's damned if you do, damned if you don't. One is either a sociopath or a Marxist. Personally, I'd take the latter but that puts me in like the 0.0001% here. Intellectual honesty ain't worth a dang. My personal revolt is to sever ties with friends in financial services or ancillary businesses. Not much but within my power.
Efficiency is unstable. We have become too efficient, not enough redundancy, not enough hamburgers.
On the list of defendants, where are:
1) JP Morgan Chase and Blythe Masters (for inventing CDS),
http://en.wikipedia.org/wiki/Blythe_Masters
2) The so called Committee to Save the World for advocating their unregulated use, and
http://www.time.com/time/covers/0,16641,19990215,00.html
3) The US Congress for granting them legal standing under the CFMA
http://en.wikipedia.org/wiki/CFMA
Hrmph, seems like the list is short a few key responsible parties.
Then again, when did personal responbility cease to be an appropriate part of accountability?
in fact, why are we just suing them? isn't public hanging the appropriate response?
He's not really that far off the mark.
Well, in in view of how little progress has otherwise been achieved in bringing the perpetrators to justice, I will accept any attempt to do so.
Short, sweet and right on target.
I concur - sue the fuckers. Sometimes the populist move is the right one.
Ahhhh the fuse has been lit. We now are at a point in time where we will see the potential for passions to rise to point of charging some of the financial heavy weights with treason. As the economy begins to pivot and move downward we will see this sentiment grow across the nation - especially as more and more pension funds begin to fail. The coming of a new age!
We're not there yet...I live in a lilly white suburb of Cincinnati, a town that can't quite determine if it's southern or mid-western....But, if you're educated, life is good.
Here, the only folks I know having trouble are ones that inflicted it on themselves. Of course, the inner city folks are having issues, but they always do. My point is, are some folks just falling through the cracks due to structural unemployment or is this the beginning of a cancer, that left unchecked, kills the organism?
I propose a shareholder suit against GS on the basis that they have forgone numerous profit opportunities by being insufficiently evil.
I think most of us can agree on one thing and that is the
U.S. Gooberment is corrupt. Using the judicial process
certainly would appear to be appropriate and honorable...
but what about the honorability of the judicial process? How
about the "audit the fed"? Where has that gone? I can go
on and on with examples of corruption within and without
the booberment aka fiatville, but my typing fingers will
be trashed and worn down to the bone.
Let's back up to the time in the 1760's back in the colonies.
Did those in the colonies, whom petitioned their grievances,
get any satisfaction? I think all the students of colonial
history know the answer to that. King George did nothing
to address those grievances. In the end, he sent his paid
bozos and mercenaries out to quell these complainers.
Do we not think that this is a distinct possibility right now?
The parallels between then and now are similar...and human
nature doesn't change very much either.
People, if this is to stop, it can be done peacefully by
simply not participating in this game made up by Hollywood
East. It is a show (IMHO) and nothing more than that. Sure,
it's real enough for many...but stand back and take an
objective bystander look at the big screen. Let's take an
example here: Banks insolvent...how can a bank be losing
money when they lent out "printed/counterfeit/monopoly"
money? In return for this scam, we the people paid it
back with real labor...something of value. In contract law,
there must be an exchange of value and there is none
in this case between lender and borrower and thus is null
and void. So, now think about this, "they" come up with
their so-called accounting standards to convince the people
that their banking procedures are legitimate. They are not!
There is no exchange in value. If they get 10 payments
from us, they win even if it falls far short of the original
contract. A bank can't lose when they hand out monopoly
money and we pay them back with the sweat off our backs>
It's one thing if a bank actually lent out money that was
saved and held in safe-keeping for their customer/savers.
This is not the case, though. You all know that, or you should.
Those that do not know or understand this basic fact of
banking here and abroad, need to update their "knowing"
in this subject matter...now!
My point in this "banking" example is don't participate in
their game. The easiest way to do this is quit going to
work. If everyone (yeah, I already know the answer to
that...oh, I have bills to pay, yada yada) did this, or at
least all those who actually work for a living...then the
"system" could be corrected rather quickly...not necessarily
painlessly. Doing nothing means nothing gets done.
Relying on the judicial system is like going to King George
and asking for his help. Yeah. Since when does going
to your adversary for help going to help you? That is some
rather poor logic lacking a whole lot of common sense. Is
that not a classic example of cognitive dissonance?
Remember, we are not dealing with an honorable "system"
anymore. Remember that, because it's an important fact.
Do you know that "mortgage" means death pledge? Talk
about "in your face" insult upon injury....
It's 4th of July, Independence Day. Reflect upon what is
now and what the founders of this country did and had in mind for you
and I. Tell me now, how free are we...really?
Just fyi-just walked passed Goldman headquarters. Huge police presence with the counter-terrorist teams on both sides of the building. Probably just a drill but thought it was worth noting.
You just saw the real headquarters of the US government which, apparently, needs to be protected at all costs.
Uh oh. Expect some bad news re: GS/BP this week that will send the people crazy.
I think ALL the states need to sue all the TBTF banks along with the Fed. If no action is taken they must secede. Good luck to the present day illegal and unconstitutional US government running its fascist global empire with the resources and tax base of...well...District of Columbia.
The state AGs have been conspicuously absent while the DC/NY crime syndicate is still perpetrating massive fraud. I wish the best to the Texas AG candidate, maybe more will follow. As far as all this crap about "blaming ourselves"...Fuck you! No one elected these representatives to tear down their own homes.
Gekko, you can't be a Lawbug, that's Denninger's turf. ZH is for Goldbugs, MarketTicker is for Lawbugs. The world is binary. So stop the nonsense or I'm packing my shit and heading to Karls Place.
KD is a propeller-head who thinks he understands the law. If he actually did, he wouldn't keep calling for the cops. Hell, in this brave new world, everyone knows that the cops work FOR the government. Everyone except Karl, that is.
by Gully Foyle
on Sun, 07/04/2010 - 13:46
#451830
http://www.independent.co.uk/opinion/commentators/johann-hari/johann-har...
How Goldman Sachs Gambled On Starving the Poor - And Won
by Johann Hari
Gully,
Good post. Same shit on most all commodities markets. Commodities markets should be reserved for actual users and actual producers - anything different and it is harmful speculation. Big money can overwhelm ANY and EVERY market, especially if at low margin in a paper (i.e.simulated) market with impotenet CFTC regulators.
Where's the ADL? Isn't this anti-semetic? Isn't this a threat to the ADL's balance sheet?
GS to AG.. Fuck you and the Horse you rode in on and the Calvery behind you. Ag to GS.. Ok Boss
Can't speak for others. Just two points:
1. Few Texans realize that the state's biennial budget is $18 billion short.
2. Approximately 1/3 of all Texans favor secession, which, if you think about it is about 8 million people.......
Radnofsky saw the mileage Perry got out of his secession comments against Deb Medina. I suspect she knows she's not going to win, but on a populist level my neighbors are going to love this.....
2. 33% components of which
a) 20% still employed on productive ventures
b) 13% unemployed
Doesn't amount to spit in this crap called Democracy. Look around, socialists are everywhere. They're never going to vote for secession.
The secession thing only surprises people who believe in a national interest. There is none. Fiction is nationalism. We are groups and sub groups and more and less, large, larger, orca-like, but one thing is in common. There is nothing in our common interests because we are all different.
Try and find a common thread or belief everywhere and you should go search for treasure on the gulf coast.
I say let the Texans out of the Union, but they have to buy out the people who don't want to secede.
Ayup, (yankee here),
Pay the tories the fair value of their holdings if Texas were to stay in the union. If the secessionists are right, the gov will make out like a bandit. If they're wrong, that's capitalism for ya. Enjoy the taxes.
Good riddance either way.
Frank
Agree without the "good riddance" part which is not dispassionate. The USA as extant is untenable and should be broken down into smaller components, including the once state of Texas. Having worked many years in management consulting I have witnessed many cycles of aggregate and then disaggregate, vice versa and beyond. Split the USA into manageable components, give everyone a year to "choose their "home" and then disaggregate. No more of this stupid liberal east versus conservative south, or whatever other strawman argument you want. Slimmer, more homogeneous, manageable and reactive to citizenry wishes.
The major fly in the ointment is border control, as it is today. Can that be managed in a cost effective and, uhh, effective manner? I remember, seriously, that as a child I thought there was this big insurmountable wall along the US and Mexican border. Dumb fuck that I was.
as well they should!!!
You commit fraud, you usually get sued.
What else is new?
I say, sue away.
For me, it's like watching a mob hang somebody who was supposed to be getting a lethal injection.
Maybe it's not according to the play book, but I'm okay with the result.
Naturally nothing will REALLY happen, but I'm just here for the show anyway, so carry on AG candidates and future AG candidates everywhere.
the texas AG should add the federal reserve bank of the US to the top of that list of defedants!... the rest are just pawns and cover....
Tyler's little sarcastic defense of the brokerage/securities dealers is cute. "File a lawsuit against E-trade for experiencing a down day". Why the F_ck shouldn't small investors file a lawsuit against Charles Schwab, TD Ameritrade etc.. when they can't access their accounts on flash crashes while the bastards at the Hedge Funds are dropping S&P 500 futures like bombs on middle America??? Mr. Durden may think that's funny as hell if he's trading other people's money, but the individual investors out here do not.
i'd vote for him but he needs to sue congress, the bush crime syndicate, and the amerikan people too....
Gully - Great article on the despicable behavior of these speculators who probably caused the death of over 200 million in the the Third World. Makes the Holocaust 12 million look pretty lame, unless you were there of course.
These mega rich banksters will constantly remind you of all of their charity giving but not the fact they were directly or indirectly responsible for murder.
In Soviet Union you don't sue bank. The sue banks you.
It's up to these people to be doing due dilligence ahead of events.
Had the market not crashed, they would have basked in the profits and greed- they are no better than the banks.
Updated DOW chart:
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
Creating a lawsuit based upon digging into a specific financial transactions and doing investigation work is hard.
Creating a lawsuit based upon newspaper articles and internet commentary is easy.
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