More Evidence Found Of Goldman Sachs' Blood Funnel
By dday Sunday Jul 26, 2009 8:00am
I saw Bill Maher offer Matt Taibbi some pushback last night about his Rolling Stone piece on Goldman Sachs. Maher wasn't willing to believe that Goldman has been uniquely positioned to profit from the breakdown of the financial system and the various bubbles created. Maher offered the predictable "why just Goldman" response, and Taibbi decided to talk about the many Goldman officials in high positions in the government. He could have just pointed to this story that leaped from Zero Hedge to the New York Times yesterday.
It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices.
It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets [...]
Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed. High-frequency trading is one answer.
And when a former Goldman Sachs programmer was accused this month of stealing secret computer codes — software that a federal prosecutor said could “manipulate markets in unfair ways” — it only added to the mystery. Goldman acknowledges that it profits from high-frequency trading, but disputes that it has an unfair advantage.
Yet high-frequency specialists clearly have an edge over typical traders, let alone ordinary investors. The Securities and Exchange Commission says it is examining certain aspects of the strategy.
“This is where all the money is getting made,” said William H. Donaldson, former chairman and chief executive of the New York Stock Exchange and today an adviser to a big hedge fund. “If an individual investor doesn’t have the means to keep up, they’re at a huge disadvantage.”
They literally place their super-fast computers physically close to the machines that govern NYSE trades, to get the jump on competitors and make enough pennies off of the brief ups and downs of stocks to rake in mounds of cash. And in some cases, investors can buy access to buy and sell order information on certain exchanges that can be used to make these quick orders. When Chuck Schumer is calling for an investigation of Wall Street, you know something has gone horribly wrong.
No, Goldman Sachs is not the only organization profiting from this scheme, or any of the numerous others. But their name keeps surfacing among those that are, in pretty much every case. I don't know how much evidence it takes to understand their role in all of this. Taibbi may not have gotten every single solitary thing right in his very long piece, but he got enough right to make some very powerful people nervous. And rightly so.
We need to go further in determining what caused this financial crisis and what pitfalls remain. The new iteration of the Pecora Commission, a Depression-era panel that uncovered the origins of that crisis, can lead the way.
We, the undersigned, call on you to fulfill the responsibilities of your position by joining together in non-partisan cooperation to investigate the origins of the financial crisis in ways that lead to a full understanding of the institutions, people and practices that are responsible for our economic collapse.
In particular, we encourage the adoption of three guidelines that history has taught us are essential to an effective inquiry:
Appoint a single investigator. This individual must have a proven record of exposing fraudulent elites and institutions, and must provide a professional, non-political spirit to the investigation.
Afford no special treatment. No one is off-limits or gets special protection in the investigation.
Provide the tools to do the job. The investigator must be given ample budget and time, full subpoena authority, and the ability to hire and fire staff.
These principles were applied in the 1930s when Congress launched a formal inquiry into the causes of the Great Depression. That commission - led by Ferdinand Pecora - was willing to reach into the highest levels of Wall Street and finance to determine the causes of the economic collapse of 1929. The courage with which the commission greeted its task - and the revelations that courage ensured - inspired the sweeping banking and financial reforms that were the bedrock of our financial system for decades.
Building a new financial foundation requires us to begin on solid ground - the truth. It is only by illuminating the mistakes of the past that we will be able to meet the great challenges of the future.
And they can start by photocopying Matt Taibbi's notes.
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Chuck Schumer? Calling for a Wall Street investigation? Grab your socks and hold your c**ks!
lovely. There's a change for you - things staying the same.
Barry might have some tricks up his sleeve. He's just getting started.
Simon Johnson and John Talbott at Salon
"Who Caused the Economic Crisis?"
Part 1 - here
Part 2 - here
Part 3 - here
The TARP is a swindle without end, the FEDs pump the money out, some comes back, they pump it out again.
It seems to be VERY difficult to track where and how the money is being used.
Neil Barofsky is the TARP COP.
The most usual thing about Barofsky is that he apparently sees his job as being a watchdog for the PUBLIC INTEREST and he takes his job SERIOUSLY.
That is NOT done in Washington where nearly everyone is on the TAKE. Consequently he has a bullseye on his BACK.
Glenn Greenwald here
I got physically ill when he said that the bailout was enough $$$ for 20 years of health care for this country.
What a great way to put this whole issue in perspective.
Lobbying is bribery
they better put the health care through, and Goldman Sacks can bloody well pay for it!
"Made"? I readily admit I have too much common sense to understand complex moneyology, but doesn't that money have to be coming from somewhere? I mean, unless they have their own printing... oh. Fuck.
Here is something I haven't heard too many people mention.
When Goldman Sachs was re-imbursed on their lost investments through AIG, they were paid 1:1 return on the bad investments (some were credit default swaps and were worthless)
Goldman Sachs uses margin to buy these investments. So they could put down $1 billion and get control over a $10 Billion dollar investment, for example.
Was Goldman Sachs re-imbursed for the investment value or were they re-imbursed for the principle they had put up? If they were re-imbursed for the investment value, they made up to a 300% return even though the investment never appreciated past 100%.
What was his fucking problem ?
Umm, it's called playing Devil's Advocate. There is nothing wrong with making someone back up what they are claiming. It's called critical thinking...
in that I think Taibbi makes the payments to AIG sound like some super-suspicious behavior. they were not. AIG really did, technically, owe that money. of course, Goldman should have taken a loss because it should have been obvious that AIG itself couldn't come close to backing its policies with actual $$s, and therefore GS was being negligent in the business they were doing just as AIG was. but I don't understand why anyone was so shocked that tons of $$ going to AIG went from there to GS. what the hell did people expect? WHY would AIG need money if they weren't in debt?
and at the same time, the question of 'what would happen if we hadn't bailed out these institutions' is a valid one and needs to be asked. that shouldn't justify the horrible deals the govt accepted in return for the $$, just a statement that the question is valid. of course the government should have acquired much, much more in return for what was given out.
to pull up a pop culture reference, but wasn't there a movie a few years back starring Sean Connery and some busty bimbo that took pace in Indonesia in which these two crooks made millions from a bank transfer time delay at midnight, 2001? A millennialist's wet dream??
...should read: "This is how all the money is being STOLEN!"
Barofsky's estimate of the amount involved in TARP is $23 TTTTrillion.
That's money that we - US taxpayers - owe....we'll have to work at slave wages for 100 hrs. a week for the next century to repay the crooks and fascists who own the banks and corporations.
Barofsky should sit down with Spitzer and take some notes regarding how to cover up that bullseye on his back!
You have got to be kidding me, right?
No way! Gotta love this democracy in action.....
This entire economic crash was no accident, either.....these elites want the "little people" to be insecure as they get wealthier and wealthier.....
That's the plan---weaken the nation to which is no longer is a "democracy" except in name only....
The facade of choice and a "democratic process" are here, but in reality, the U.S. is run by the few over the many and the worse has yet to come.....
Goldman Sachs being tied in the way it has been is not a big surprise at all.....After all, Bill Clinton got Robert Rubin out of there to his administration.....and the rest is History....
Republicans and corporate dems are like the mafia, they want blood money from American citizens, they see us as little more than sheep to be fleeced every once and a while like Reagan, Bush and Paulsen, and sadly Obama and Geithner are doing. Every election is an opportunity for these gangsters to get in their position of power, which they always relentlessly abuse to enrich their greedy stinking rich base. One solution is never to vote them in again, that would require their other base of conservative morons to vote in their self interest. Progressives have a lot of work in converting those ignorant folks into knowledgeable citizens. Success in that means the real death of the republican party and along with it regaining a democratic country.
The Nader Commission. I wouldn't want him to be prez, but I could see him in a role like this.
would work for me
I think the evidence of this high-frequency trading is the current barrel price of oil. There is no basis in reality for it; the world is swimming in overcapacity yet the price remains high.
Just like housing bubble dollars were being funneled into bonusii for Wall Street @ssholes, John & Jane Q. Public once again have the honor of coming up with the dosh for this years bonusii. Not to mention the bailout money.
Not only do these vampires want every dollar in your pocket, they want you to borrow even more. From them. With interest.
Hooray!
Freeze the taxpayer's assets that Goldman Sachs was given, then take back we need to pay for the new health care system. goldman sachs isn't doing what they said they would with the money so take some back for health care! easy as pie.
The clawback isn't legal. The contract was with AIG, and the feds propped up AIG, and so AIG was obligated to make good on its insurance contracts. The thing to do was let AIG go bankrupt. Then nullify the counterclaims, and pay back only the premiums on the default swaps rather than paying out the full, purely hypothetic, value of the insured swap. That would have been legal as AIG was insolvent.
That would have been fair. That would have been capitalism, free-market. And it would have applied consequences to the parties who knew exactly what game they were playing on the backs of all of us suckers.
So too bad, we were suckers, got scared, and didn't say NO to our elected officials back in October. People were saying "OMFG you have to do something!!!" So you know, suckers don't get claw backs. Next time, don't be a sucker.
So, Paulsen got his bonus. Rumored to be $29 million. Get it? Paulsen was rewarded for a failed corporation AND given the job of rewarding himself. Why do you think he was Secretary of the Treasury after leaving Goldman - Sachs? He needed to reward someone - himself!
Bush has to be the dumbest screwup in American history. He turned America's treasury over to the James Gang, John Dillinger and Bonnie & Clyde.
No wonder wealthy Pugs don't want Healthcare for America.
Who in their GOP mind would want to spend money on poor and middle class Americans who actually work for a living when the money's there for grabbing up and sending to offshore banks for the "entitled" few?
They're letting it all slide man.
...we can't forget that Obama indeed voted right along with the "Chimpster" and said yes! to a huge "free for all" bailout with no oversite provisions whatsoever...
Obama also appointed Bob Ruben, Tim Geithner, (and that guy) Summers. ...All of whom are insiders with ties (one way or another) back to Goldman Sachs...
Obama was bad too...
(and still is)
Why they are stealing all of this money is far more important than how. They are stealing the money because they get to keep it. In the past the top income tax rate was 80% to 95%. The federal government got the lion's share of their theft. It simple wasn't worth the risk to steal the money if it was going to the IRS. With the top tax rate at 35% and sometimes 15% it became worth while to steal. They could steal enough in a few years to live well for a long time even at the expense of destorying the company they were charge with running. The easiest way to stop the theft is to raise the top tax rate back to 95%. Income over 10M/yr will pay 95% tax rate. That would stop a lot of the theft. It would also limit their ability to control government.
The highest tax rate in this country was 92% in the early 1950's. If you made $10 million, you'd keep just shy of $1 million.
1944 and 1945 it was 94% for anyone making $200,000 or more per year. And it never went below 70% for the top bracket, until 1982./
Actually when you look at the past 20 years or so it's pretty stunning not only how the top bracket income tax rate has gone down, but then also who it applies to. It's really unfair how far down into the middle class the higher rates have come in order to appease the ultra wealthy. I'd tolerate something like 35% (what we have now as the top bracket) for $1 million and less. But for fuck's sake, it should be higher for people making a $50 million a year like these corporate CEOs and wall street bankers with their bonuses. Even keeping $5 million a year out of $50 million is a lot of money.
http://www.truthandpolitics.org/top-rates.php
the sheep satisfied through propaganda
Goldman Sachs last week! (must see! ...on topic)
http://www.youtube.com/watch?v=VSwWy4E6I04&fe...
Max gets angry...funny! (if you like Max Keiser)
about three years the USA (former we're #1) will be sucking China's hind teat, which will be scary because if the neo-cons get back in power they'll start lobbing nukes as a last resort.
The war party would certainly see destroying other people's capacity to be wealthy as a good that they and their friends can profit from. It's happened before. It will likely happen again. The difference is being able to see it in advance, and take out the criminals before their deeds reflect all. Once they are allowed to go to far, we are all complicit.
Just like Iraq.
Just like torture.
The true meaning of freedom for the oligarchs is the freedom to exploit, really
we're slashing services right and left. Think of what the $5 trillion could have been used for out here in the sticks.
CHECK THIS WSJ ARTICLE: JULY 3rd
http://online.wsj.com/article/SB1246499531142...
NYT: "It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets."
NYSE Euronext cut order-execution times 20-fold at the New York Stock Exchange, part of an effort to catch up to faster competitors that have taken market share.
With the implementation of a new system for processing orders on the NYSE, customers will see trades executed within five milliseconds, compared with 105 milliseconds previously. As recently as 2007, the time was 350 milliseconds.
That change is huge in the realm of high-frequency trading firms, which now measure time by the microsecond, or one-millionth of one second.
We watch sci-fi movies and pretend to ourselves that robots and computers could never 'take over'. We don't realize that the complex dynamics created by this automated computer trading system CANNOT BE FULLY UNDERSTOOD. We put the computer code in place, and we wake up scratching our heads when the robots/computers are crashing markets. It's the theater of the absurd.
I'm gonna have to think about that one for a bit.
Since the Federal Reserve was created in 1913 you hear time and time again...either bail us out or you will lose everything" This corrupt failed unConstitutional system has to go. It is truly unsustainable and this last wave of concentrated wealth to fewer and fewer is killing our standard of living and the entire world. From an historic view Goldman Sachs IS part of the FED and its power is institutionalized. STOP PUTTING YOUR MONEY IN THE GIANT CORPORATE BANKS and help nurture your local bank, credit union and s&l. It's at least a start.
He thinks the world would have come to an end if aig failed and took down some banks with it. Even if that were the case, taibbi should have noted that AIG's creditors weren't forced to take even a small loss.
All we have to do is make all these hedge fund and derivatives illegal again except for major commodities like at risk agriculture.
John Talbott is finanly saying it. Those high frequency trading programs should also be made illegal, it's nothing but insider trading. And i believe we can clawback trillions after we throw all of these people in prison and take our money back. We all need to organize and protest on Wall St and Capitol Hill to demand hedge funds and derivatives be made illegal!
http://www.salon.com/opinion/feature/2009/07/...
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