matt taibbi, american badass

[Strangelet]

this was on front page huffpost but in case you missed it, this has the potential to be big.

http://www.rollingstone.com/politics...machine/print#

This guy is one of the few american journalists not on the dole and with enough bitterness to say it like it is. I've been following his appearances, books, articles for a while and his basic views are...

1. If you're "too big to fail" you're too big to exist. Which is, like, duh! Companies getting bailed out by both Obama and Bush administrations because they are too big to fail, should instead be broken down. What system allows corporations to get so important that they reach a level where they are no longer responsible for their actions, but can just embezzle the entire system with impunity, only to get saved like a sweet-natured sibling with a drinking problem?

2. This is nothing less than a coup instigated by bankers. Which is insteresting because this is coming from Rolling Stone, not alex jones. His reasoning is that the bankers have managed to make the system so complicated that the system's failures are also complicated, which means the only people who have rigged the system are the people who can save the system. In other words, the modes and means of production have been re-engineered, patented, and copywritten by a select group of pinhead accountants and wallstreet sharks to the point where any public oversight is useless. People can't manage what they can't understand. Then there's no democratic process that can exists anymore in our economy.

3. Investors dogpiling on the commodities is still a bad idea, still creates artificial bubbles of value on things like gas, food, etc. The anti-monoply legislation passed in the 30's along with the glass-steigle act that prohibited things like citigroup and goldman sachs to exist in their current state were not dismantled by a conservative free market nob, nor a republican administration, but by larry summers, robert rubin, and the democrats under bill clinton. Which is why people should stop acting like democrats act more in their interests than the republicans.

Anyway, i'd go out and find stuff on him before basing things on my half-formed summaries. Here's a few quotes from the article.

Any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

The history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who's Who of Goldman Sachs graduates. By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup — which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the asshole chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibillion-dollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden-parachute payments as his bank was self-destructing. There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailed-out insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman.

After the oil bubble collapsed last fall, there was no new bubble to keep things humming — this time, the money seems to be really gone, like worldwide-depression gone. So the financial safari has moved elsewhere, and the big game in the hunt has become the only remaining pool of dumb, unguarded capital left to feed upon: taxpayer money. Here, in the biggest bailout in history, is where Goldman Sachs really started to flex its muscle.

[Strangelet]

are you guys following this goldman sachs thing?

So apparently they have cornered the market in not only commodities hedge investments but also "program trading" and is also at the heart of a program called the "Plunge protection team", a government program to provide liquidity to markets in the time of a crash. Both systems require super fast (microsecond) event driven trading based on complicated math.

So this russian guy wrote it but then decides to download the code and go work for some other company for a bunch more money. gets caught, and all of a sudden goldman sachs is not even on the nyse list of high activity brokers, even though around 40% of all trading is program trading and they dominate that system with their new software, making up to 100 million in profits a day.


I mean this shit is fucking insane and I'm hoping it causes more a stir in the american public than a hollywood movie where sandra bullock runs from the shadowy APOCALYPSE INC. and learns an important lesson about love.

Up until about two weeks ago, Matt Taibbi's favorite Goldman Sachs' market observers, the folks over at the Zero Hedge blog, had been continually commenting over the past six-plus months about how Goldman had all but cornered the market on program trading within the NY Stock Exchange. (Program trading is the automated stock trading via computers by firms specially authorized by the NYSE to facilitate same.) Clearly, according to Zero Hedge publisher Tyler Durden, something was up

Speculation is running rampant throughout the blogosphere tonight regarding matters as diverse as the fairly well-known fact that Goldman is at the heart of the government's Plunge Protection Team, a/k/a the "President's Working Group On Financial Markets," (thus making this a matter of so-called national security, since the "PPT" group, created during the Reagan administration, is supposed to step in and prevent our markets from crashing), to the possibility that Goldman could have easily been "frontrunning" the rest of the market due to the implementation of their exceptionally fast proprietary code, identifying others' market-making trades and strategies, then acting upon them for Goldman's own benefit, executing in-house trades before the third-parties' trades were even concluded.

In the 5 days immediately preceeding his departure from "Financial Institution" (potentially GS), Sergey allegedly downloaded 32 megs of ultra top-secret quant trading proprietary code, that, according to Special Agent McSwain's affidavit, he then proceeded to encrypt and upload to a website in Germany, with a UK owner. One can only imagine the value of this "code" not only to Goldman but to the highest bidder. After all, from the affidavit: "certain features of the [code], such as speed and efficiency by which it obtains and processes market data, gives the Financial Institution a competitive advantage among other firms that also engage in high-volume automated trading.The Financial Institution further believes that, if competing firms were to obtain the [code] and use its features, the Financial Institution's ability to profit from the [code]'s speed and efficiency would be significantly diminished." Needless to say, many others are now also likely hot on the trail of the code.

A couple of months ago, we also learned through Zero Hedge that Goldman had profited greatly from a sweetheart deal with the federal government concerning a new program instituted by the Feds known as "The Supplemental Liquidity Provider" Program ("SLP"), launched this past Thanksgiving, which was supposed to provide "market liquidity" (i.e.: an ongoing, active market) for selected groups of 500 different NYSE stocks per SLP participant. As Durden pointed out to all who were interested, it certainly appeared to him that Goldman was the only active participant in the program.

[bryantm3]

Strangelet,
Although it does appear that the folks at Goldman Sachs take advantage of the boom-bust cycle, I wouldn't say that they are the ultimate cause of it. The fact of the matter is that there are hundreds of thousands of investors who do the exact same thing, in addition to other companies, on the principle that if prices are going up, you sell, and when prices go back down, you buy. To say that Goldman Sachs is responsible for the entire worldwide economic crash seems to be looking for a scapegoat in this complex recession.

I will not admit that de-regulation has caused the problem; however, I think that our banking regulatory system is outdated, and much of the investment banking that goes on these days is much different than the banking that went on 20-30 years ago, and much of it has fallen underneath the radar. Goldman Sachs is responsible for expanding the types of banking that they do and doing it in such a way that it does not fall under a regulatory agency, but they're not the only ones.

[Strangelet]

I agree with you that not just one company is responsible, and that it isn't helpful to look for a scapegoat, but if you enjoy such an expansive, dominating monopoly on so much trading on wall street, and the thing sinks, people have a right to ask questions, don't you think?

i also found this editorial interesting.....


http://www.news.com.au/business/stor...50-462,00.html

Unfortunately for Mr Taibbi - whose gifts of prose cannot be underestimated - his entire thesis was large on colour and sparse on new facts.
Thanks to reporters at The Wall Street Journal, New York Times and the New York Post, we already knew Goldman Sachs alumni had positions in governments and influential bodies around the world.
We also knew that the firm was the biggest contributor to Barack Obama's presidential run and that key members of its management and board were at the sides of Hank Paulson (another alum) and Timothy Geithner (another alum) throughout the financial crisis.
We also knew that Goldman Sachs profited more than any other bank during the sub-prime mortgage mess and that it sold out of its positions before the downturn hit hard.
We also knew that the company had been part of talks about whether to keep its competitor Lehman Brothers afloat.
Unlike Mr Taibbi, we knew all of this - and didn't think it amounted to sinister conspiracy. Instead we thought this is what the biggest guy on The Street does.

So basically its a non story because all the economic trainspotters understood it, but who cares if none of pensioners looking at eating ketchup packet soup in their twilight years understand it.



Its also a non story because they dominate wall street, and so of course they have so much clout in the government, federal reserve, imf, and every major global. What should we expect, right?


Its also a non story because of course they would profit massively while the rest of the economy tanks. They're just smarter than everyone else, that's why they've gotten where they are. Insider trading based on knowing the real values beyond what has been presented through accounting and trading scams, its completely absurd to harp on.



sorry, i just don't get it.

[Sean]

I'm fully in agreement that no company should be large and powerful enough that it's demise has such a sweeping affect on the economy. Those 3 points in your initial post make tons of sense to me, Strangelet.

[cacophony]

most of this goes right over my head. too right-brained, and my right brain is threatening a meltdown.

so it's not that i'm not interested in this thread, it's that i lack the adequate understanding to really make an informed and intelligent reply.

[bryantm3]

ouch. algebra getting to you? today i was dealing with a fellow who wants to buy our house at a price based on an inverse function where when the down payment increases, the cost of the price decreases and i've been running numbers all day. hope you don't look like peter gabriel 3 soon.

[Strangelet]

Originally Posted by cacophony

most of this goes right over my head. too right-brained, and my right brain is threatening a meltdown.

so it's not that i'm not interested in this thread, it's that i lack the adequate understanding to really make an informed and intelligent reply.

i'm learning along with you. I have no clue about global finance. I just know what feels right when I hear someone speak, which unfortunately lean to towards the conspiratorial side.

But I rationalize that by the argument that things are so fucked right now, there must be a conspiracy. If its not a conspiracy of insidious intent, there's a conspiracy of idiocy or a conspiracy of short sighted incompetence.