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Let the litigation games and perp walks begin. The Securities and Exchange Commission, virtually moribund for the last decade while giant vampire squids looted local, state and union pension funds and misled investors, has finally chosen to take on Goldman Sachs for conning everyone. Who knew?
The New York Times’ Louise Story and Gretchen Morgenson tell the story:
Goldman Sachs, which emerged relatively unscathed from the financial crisis, was accused of securities fraud in a civil suit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly devised to fail.
The move marks the first time that regulators have taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market. Goldman itself profited by betting against the very mortgage investments that it sold to its customers. . . .
The instrument in the S.E.C. case, called Abacus 2007-AC1, was one of 25 deals that Goldman created so the bank and select clients could bet against the housing market. Those deals, which were the subject of an article in The New York Times in December, initially protected Goldman from losses when the mortgage market disintegrated and later yielded profits for the bank.
As the Abacus deals plunged in value, Goldman and certain hedge funds made money on their negative bets, while the Goldman clients who bought the $10.9 billion in investments lost billions of dollars.
According to the complaint, Goldman created Abacus 2007-AC1 in February 2007, at the request of John A. Paulson, a prominent hedge fund manager who earned an estimated $3.7 billion in 2007 by correctly wagering that the housing bubble would burst.
Goldman let Mr. Paulson select mortgage bonds that he wanted to bet against — the ones he believed were most likely to lose value — and packaged those bonds into Abacus 2007-AC1, according to the S.E.C. complaint. Goldman then sold the Abacus deal to investors like foreign banks, pension funds, insurance companies and other hedge funds.
This is just the beginning of what looks like many likely civil suits and, one hopes, criminal complaints against Wall Street giants. There have been numerous similar reports recently involving other Wall Street firms that suggest the housing bubble was artificially sustained through fraud long after the market had become saturated under any reasonable, non-predatory lending practices.
It seems the demand for highly risky mortgages — and hence the plague of predatory lending practices — was goosed by Wall Street firms that created collateral debt obligations from junk mortgages primarily to bet against them. The Wall Street hustlers then duped investors to pour billings into CDO securities they had designed to fail. The whole point was to make money by betting against securities the hustler and/or its CDO maker created to fail.
What’s astonishing is that it has taken this long after the initial 2007-2008 bailouts to awaken the regulators to their duties. [On the other hand, the Bushies did hollow out the agency.]
Update: Felix Salmon in Goldman’s Abacus Lies parses the SEC complaint to get to what Goldman was allegedly doing:
With this suit, the SEC has finally uncovered the real scandal behind the Abacus deals. The NYT tried, back in December, but it didn’t quite get to the nub of the story — although Paulson was mentioned in the NYT story as someone who was generally short the subprime market, there was no indication that he played any role in structuring the deals. Neither was there any mention of ACA.
The scandal here is not that Goldman was short the subprime market at the same time as marketing the Abacus deal. The scandal is that Goldman sold the contents of Abacus as being handpicked by managers at ACA when in fact it was handpicked by Paulson; and that it told ACA that Paulson had a long position in the deal when in fact he was entirely short.
Related, similar stories:
h/t to BooRadley, whose earlier Seminal post grabs the Wall Street Journal version.
Gretchen Morgenson/NYT: Banks Bundled Bad Debt, Bet Against it and Won
James Kwok/The Baseline Scenario: SEC Charges Goldman with Fraud
Yves Smith/Naked Capitalism: SEC Sues Goldman for Fraud
Yves Smith: Doth Magnetar Speak with Forked Tongue?
Yves Smith: On Goldman’s (and Now Morgan Stanley’s) Deceptive Synthetic CDO Practices
ProPublica: The Magnetar Trade; How One Hedge Fund Kept the Housing Bubble Going
110 Comments
The show trial of the century? (Also: pour billings? billions of billings?)
Maybe you can help disabuse me of the suspicion that’s been bugging me all this time.
After the telecoms went ahead and spied on us for BushCo, they made the argument that they shouldn’t be prosecuted for being led around by the nose by authorities acting under the color of law; similar to what intelligence community defenders are saying.
Here’s my big if: if the goosing of the bubble was official policy, then will banksters like Blankfein make the same argument? LB’s already made the notorious claim that he’s doing god’s work.
So how will little SEC fair in a behind-the-scenes power battle with the masterminds of disaster capitalism? Will Blankfein pull the “we did it on orders from on high” defense?
We can’t be guilty of crimes, we’re doing the work of the Biggest Man Upstairs. Would that be god, the president, or the Fed Chairman?
The McClatchy series, by Greg Gordon, that may have led to the suit:
How Goldman secretly bet on the US housing crash
I never thought I’d live to see this day. I know it’s not time to pop open the champagne yet, but maybe it’s good for a celebratory martini or spritzer. USA!
Yes. That was important. Thanks for the link.
The nice thing is, every time there’s a story on Goldman, there will likely be a mention they’re being sued for defrauding investors. But we need a few more of these suits against other firms for a practice that seems to have been well known and possibly wide spread.
NPR reported that the DOW and the Nasdaq are both down big because (poor old) Goldman Sachs is being sued.
In other words, it is important that Goldman Sachs – the Masters of The Universe – be left in peace to do as they will, so that the stock market can continue to make positive gains.
Remember the guy who absconded to Russia with some stolen proprietary Goldman software?
Goldman warned that the scoundrel should be arrested quickly. He could manipulate the stock market with that (Goldman) software.
I want to see the dots connected between this allegation (and similar cases, such as Magnetar) and the scheme by which mortgage lenders set out to rope in people they knew would default, and somehow coerced them into taking out defective mortgages. In other words I want to see the SEC, or whoever is the appropriate authority, show those who blame the CRA and poor people, that it was the Wall Strreeters who cooked up this scheme to enrich themselves and purposely coerced ill-informed people to sign up for mortgages designed to fail, by intentionally seeking them out, misleading them, falsifying documents, etc. I want to see the dots connected in a way that absolves millions of foreclosees who never would have gotten mortgages, if the banks had to hold onto them, from blame for being fooled into this scam.
Granted, many people who have decent incomes took advantage of the easy money they received from refinancing and HELOCs, and are taking vacations on the money they’re saving via strategic defaults, but I’m not concerned with those folks. I want to see vindication for those who were never mortgage-worthy but who were used by Wall Street to set up their designed-to-fail CDOs.
George W. Bush was in on the scam, touting the ‘American Dream Downpayment Act’ http://counterpunch.com/whitney04132010.html There’s no other reason to do this, other than as a scam. Only the scheme to securitize these bogus loans, foisting them on unwary investors, and using them to ‘loot main street’ by bribing pension fund managers to buy the risky CDOs and other financial instruments created from the subprime mortgages, would incentivize any banker or mortgage company to lend money it knew would not be repaid. Alan Greenspan’s frequent visits to the White House and refusal to raise interest rates to stanch this, show collusion. The FBI knew this was a scam and said so in 2004. Eliot Spitzer wrote about how the Bush Administration sicced the OCC on the state AGs to prevent them from prosecuting predatory lenders…………
That’s too rich! Pretty soon, thanks to all the malicious myth-making, no one involved will be able to say a word without contradicting themselves.
Sorta like DOJ these days.
My question is, what did Blankfein mean by “god”? On whose orders does he think he’s acting? Is this a repeat of the “break the law now, it’s post 9/11, we’ll cover you” MO of BushCo under the color of law: obligating Obama to honor them?
We’ll say we’re immune ‘cuz we’re (acting under the color of, hiding behind a stolen Mandate of Heaven that ordinarily informs) the Law; you say, we’re immune, ‘cuz we were acting on (bogus) lawful orders. POOF! No more legal jeopardy for anybody.
Worked for the telecoms, it’s working for the torturers and their enablers. Will the banksters be the next to try a new-and-improved Nuremberg defense?
I’ll bet it will turn out that both the major European Banks on the losing end, ABN AMRO and IKB, will have insured via default swaps with AIG.
Since we the tax payer bailed out AIG, it will mean that ABN, IKG, Paulson and GS all made out just fine, thank you very much.
Thank you for your clarity on that. I, too, want to see all of that, as well, but I don’t hold out a lot of hope. A lot of real $@!* happened that made a lot of already wealthy jerks even more obscenely wealthy. And due to the credulousness of a lot of our population, they were easily led to blame it on “poor people,” aka the usual suspects.
Yes, everyone has some accountability and responsibility for their decisions, but there was definitely a lot of perfidious skulldudgery to dupe “teh poors” and rope them into acting against their better interests in order for the one percenters to make a boatload of cash at the expense of everyone (all over the world, not just here). It’s just disgusting.
Sad to say, I hold little hope of the real light of day being shed on this and the real dirty bastards getting busted. Some lower level flunkies may end up in jail or something, but the real fat cats will continue to laugh all the way to their Swiss and off-shore accounts, whilst thumbing their noses at likes of serfs like us.
I have always wondered how much this financial crisis was a true systematic problem unfit for large finance firms and horde mentality and how much it was just massive wide spread good old fashion fraud and criminal activity going unpoliced.
I remain skeptical that anything of real consequence will emerge from what is probably a stage show. To date, the Obama team has acted as an extension of G-S whenever G-S has interests in an issue. Wait and see actual results emerge.
I have no doubt that yours is the correct description of what went on, and I think many others who are knowledgeable about the markets already know it, as well. But it will take public prosecutions to bring the truth home to the public, and maybe nothing can bring it home to the righties who absolutely NEED to believe it was all the fault of the poor people, and Fannie/Freddie which was enabled by the Dems. We’ll have to wait and see whether the wheels of justice are allowed to turn as they should. Given recent history, I am only cautiously hopeful on that.
The investment bank community made the housing bubble with Greenspan’s cheap money.
Then they planned and timed the housing bubble burst and the global recession.
They essentially took retirement funds for 40% of their value while making major fees on the trades up and down.
Yea, it was the HFT (high frequency trading) code that GS used to intercept trades and to make their own trades before the intercepted trades went through. I don’t know if this is against the law, but it should be. Think of it as if you’re a company trying to do well and GS steals your trades and manipulates the market down because they’ll make millions by short selling your company
And he allegedly put the code on the net … link below
I snagged this from cryptome at the time
I think it’s fair to say that’s been a group effort, and it may not be done yet.
Wait just a minute!
Are you suggesting that fraud might have occurred on Wall Street? How can that be possible?!?
I have witnessed successive waves of market manipulation aimed at getting money away from people who used to be conservative with it. First, the bondholders in the 1980′s via leveraged buyouts, then bank passbook and CD holders via the low interest rates that forced them into stocks in the 1990′s, and then the people who would only risk their money on their own homes, via the housing bubble facilitated by low rates and all the manipulations that have been in the news most recently. In each case, the goal was to separate increasingly risk-averse people from their money. All that’s left now as a target is Social Security.
To hope that this is a minor attempt to address some of the many obvious frauds is a worthy thing. Unfortunately we get so many stories of what can only be referred to as insider collusion that the apparently illegal parts are the tip of the iceberg. Naked Capitalism had a great story today about the $271 billion that JPMorgan are currently borrowing from the Fed. A huge sum to be sure, in our free-market, but these guys are currently borrowing at –0.05%. The Fed is paying them to borrow that money.
The reason that Paulson was doing this deal with Goldman appears to be based upon the fact that defrauding others is almost part of doing business, especially with respect to CDOs, where not one significant fraud case has ever been brought to court.
The real crime is they played on poor people’s dreams. You have nothing. Someone offers you a chance and you go for it. Everyone, the mortgage broker, the attorneys, the rating agencies were in for a piece of the action. It’s capitalism at its purest. You don’t like it, think of something else.
Securitized mortgage pools were an innovation that came on the scene around 1995. Until then holders of notes held the mortgages. Mortgage pools changed that. Investors in the various tranches were what had been note owners. They called the pools “trusts” but they weren’t trusts in the old fashioned sense of a settlor and a trust res just as the investors are not beneficiaries in the old fashioned sense of the term.
State court judges could stop foreclosures for any number of reasons, but except for Kansas, they are not inclined to do so. It’s another example of getting along by going along. But hey-all of us do that all of the time.
More stuff to go with this story in general, the Magnetar link in particular:
Among other things, these stories will open new vistas in one’s understanding of “failure.” And of course, there’s the question whether investors were informed of Magnetar’s interest, the answer to which appears to be “no, and by careful design.”
My comment from David’s post on the subject:
The complaint is here (pdf). One of the juicier parts, from Tourre’s email
“More and more leverage in the system, The whole building is about to collapse anytime now…Only potential survivor, the fabulous Fab[rice Tourre]…standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!” Similarly, an email on February 11, 2007 to Tourre from the head of the GS&Co structured product correlation trading desk stated in part, “the cdo biz is dead we don’t have a lot of time left.”
it’s good for a celebratory martini or
spritzerSpitzer, Elliot.Also shocking, SEC uses GS filing for cover for releasing their IG report, acknowledging they knew about Stanford ponzi scheme since 1997. Aaaahhh, Friday data dumps.
You might find this interesting…
Since Paulson is the answer to the question of cui bono? in this case, I’ve been googling him.
Guess who Paulson acquired?
Mr. Andrea Mitchell
Goldman Sachs employee: “This isn’t going to affect my bonus, is it”?
That is sooo funny (in a gallows humor sort of way).
Laughing my head off so I don’t just kill myself, because there is such an inevitability factor attached to that info. All one big criminal machine. Deliberate, ingenious manipulation, not the incredulous stupidity they are all trying to claim and hide behind.
Why…? GS alum head all the regulatory agencies…! ;-)
Looks like the Republicans are all in with cozying up to the banks against financial regulation. Have they finally jumped the shark? This might be an untenable position for them to take even with the traditional media in their pockets.
Notice the date Mr. Andrea Mitchell joins Paulson; Jan 15th 2008.
From the complaint:
Greenspan was there just in time for Paulson’s victory lap.
thanks for the additional Magnetar links. I meant to include the ProPublica one and will add it.
The last two days I keep seeing “Magnetar” – hopefully, based on what I’ve read, they will be the next in line for prosecution. Even more hopefully, there will be a long line behind them, linked by leg irons.
I’m not a lawyer, and I understand that this is probably a stupid question. However, I’m going to ask it anyway.
Can RICO statutes be applied anywhere in this miasma? Sounds like “corrupt organization(s)” to me.
Maybe O set a trap for the GOP. You know, the kind you made when you were a kid with the cardboard box, a stick to prop it up and a string with bate under the box. Is O that smart? Or are the repugs that stupid?
Don’t answer that.
I vote for the second half of your compound sentence, albeit there was probably some element of the first half as well.
These people should be prosecuted as the crooks and liars that they are. Look, I’m no financial whiz kid, and I’ve never even owned a house. But it was clear to me that something was rotten. I happened to change jobs and move right before the tippy-top of the housing boom occurred. I looked around at houses and condos for a while in my area, and it was clear as day (if one kept one’s wits about them) that the prices were just nonsense. There’s NO WAY that it made any sense to buy, and anyone who did was gonna be upside down. Like I said: I’m not whiz kid, but somehow I think I have my feet much more on the ground than some.
That’s also when I started shifting my portfolio around, too, to cushion me for the crash that came shortly thereafter. I just knew that those bastards were up to know good, much like the Savings & Loan “crisis” in the 1980s, and the idiocy of the dot.com boom of the 1990s.
Repeat after me: there is no such thing as “easy money,” unless you’re a member of the one percent club (which nearly no one is or will be).
That’s one of those bajillion-dimensional chess moves.
thanks for link to the filing. Interesting reading.
I’m surprised it happened this quickly, in all honesty. I thought it would take a couple more years… that said, I expect little to come out it, but I will dream anyway.
Don’t Republics repeatedly jump the shark only to be saved by Fox Nooz, Limpy Limbaugh, and most of the rest of the media?
More like dominoes. :)
Oh thanks! This is a classic Friday:
Isn’t a WaMu report due out today also?
It’s the regulators’ turn today before the Levin committee, video to be archived.
And all the CIA/prisoner/torture material that slipped out today.
More on Goldman Sachs:
Or tic tac toe.. heh…
Sure thing. If nothing else, that case has been presented so clearly in several places that it’s a good learning tool. Bet it winds up as a classroom essential.
Wow. Giant Vampire Squid Hires Chummer
I’ve been wondering how O is gonna protect his fincorp donors from reform. The secret is out. He’ll veto the legislation.
None of this fraud would have happened if only we’d deregulated more. These poor uber-rich were forced into committing fraud by all the nasty regulations placed on them just to be able to afford to keep up their lifestyle. /s
My email tells me OFA just fired out a mass mail: Support Wall Street Reform.
The Machine is in well-oiled order.
Civil suit?
How can you unknowingly (I assume “knowingly” is needed for criminal intent) set this up?
Someone mentioned earlier that SEC can file only civil suits. Don’t know if that’s true or not.
Once one has removed a sufficient number of laws and regulations, fraud ceases to be a legal issue. Probably devolves back to a debt of honor.
From what I’ve read today, that is correct. A criminal suit would have to be filed at the DoJ level.
Yep, they don’t have criminal authority
A thought: if omertà is all the fraudsters have to fall back on now that one of their basic games is getting plenty of air,* this will not be the last case.
And you know how it is when an unwieldy stack gets to sliding …
—–
* Link hunting. Have heard that one of J. Paulson’s men kind of dropped a dime.
From your Felix Salmon link:
So ostensibly Cuomo can charge criminally as the NY State AG, or the US AG for NY, Preet Bharara
WORD! How are we to differentiate between Wall Street accountancy/control fraud, and malfeasance by public servants, when there’s not a whit’s difference ‘tween the ‘twain? Either way, we got, and are still getting, taken for the proverbial Ride of Our Lives.
Yet Paulson is not being mentioned even though he was apparently the architect because he didn’t sponsor or initiate. Seems kind of like having someone killed but not being accused because you didn’t pay to have it done.
Read The Big Short by Michael Lewis
For those interested, this book explains (in a way even I could understand it) exactly what went on. A worthwhile read.
I read somewhere that the Republican (House??) caucus attended a talk on this subject by the author and walked away outraged by what he told them was going on.
In a civil suit, will the fines be funneled from government to Goldman Sachs to government?
As I posted on another thread. Beware. This is a little sweetener before a very, very bitter pill.
You may have noticed those recent stories about container ships heading off in large numbers to Diego Garcia.
Get ready for your 3rd (and possibly final) simultaneous war. They’re revving up the B-52′s as we speak is my guess. GS ‘take down’ * (civil suit, big deal) is supposed to make this appear better somehow.
* no actual banksters will be harmed or inconvenienced.
Are you saying, no oligarchs will be harmed in the making of this show trial cum dislocation of public opinion expectations intervention? That’s changeless change I can believe in. /s “to the nth”.
Links? Proof? Or is this BS?
Well, the container ships taking huge numbers of bunker busters to DG is fact. The idea that the GS take down is a classic diversion tactic worthy of Goebbels is a supposition, but a reasonable one given all that has gone before.
I’d say war is 50% plus likely before summer.
Good questions, didn’t intend to impart undue credibility. Make that,
That’sThat would be changeless change yada yada yada.Very plausible, but, obviously, war is always “50% plus likely” for us. Pretty weak tea, what else you got?
Well I obviously haven’t got access to classified war planning documents etc. etc. Nor would I want them. No, it’s just a supposition that ‘joined up government’ under Rahm is handing out a sop before something that, let’s face it has continued to brew in the background all along is finally acted on.
I’ve seen a year and half of Bush III from my safe vantage point. Like Bush II, only more cynical. Check where your aircraft carriers are. Anyone who has relatives in the military, ask if anything ‘odd’ is happening. What else can I say.
But it would not surprise me in the slightest to see a real steaming turd emerge from the Whitehouse in the next couple of days even.
The great harm done to billions of people in the world is the major crime. fraud lawbreaking is so minor to the damages.
If recovery lawsuits are filed by big pension funds it could bring the banksters to their knees. And put them out od usiness.
Well, AAMOF, my dad served on almost all the carriers of the 7th Fleet, and one or two of the 6th. But he retired in 82.
I barely eluded two appointments to the service academies, ending up at U Washington by default. But that’s a different chapter.
Today, I live so close to Naval Air Station Whidbey Island, I can hear F/A-18s and EA-6Bs flying around, right now.
Yesterday, I heard something huge approach and land. Maybe a C-135. Definitely four giant engines. Shook the earth, not just the house. I always wonder, WTF? And when the skies are quiet around here, where has “the sound of freedom” gone?
(A billboard used to proclaim: “Please pardon our noise, it’s the sound of freedom,” near the entrance to the base.)
Well, if they do it, they aren’t going to bother announcing anything beforehand. The Colin Powell ‘pleading’ (and flat out lying) at the UN is a nicety you’ve long since dispensed with. Rahm and da boyz have bankster blood in them. That’s psycho-blood. Oh, and remember the new “nook” doctrine à la Bambi, with its rather important caveats. No seriously. This guy is THAT crazy and deluded, and above all corrupt.
That, you can be certain, will never be allowed to happen.
It’s only a civil suit, and if you need any indications of how utterly pointless this is probably going to be just google for, “Bank of America SEC settlement”
If there’s legitimately fraud here, then one ought to be wondering… where the hell is the justice department?
What, Holder’s Heroes? They’re busy being the ridiculously compromised tools of a vicious oligarchy.
Good point, NA, that’s what I’m seeing: a show trial, the obligatory (and wholly insincere) self-flagellation, a pittance of a fine, and then, business as usual.
Who watches?
Who promulgate new regulations?
Who regulates?
Who refers prosecutions?
Who prosecutes?
These are key questions to the current regulation legislation debate.
Clearly, letting the industry regulate itself hasn’t worked.
For example, Fed Chair Bernanke argues that the Fed should retain power to regulate all banks so they can gather information on the whole economy. It seems to me that’s a weak argument and they should simply argue to be in a position to continue gathering information and that regulation is a separate issue which can be debated.
Another for example is whether an agency such as the SEC or DoJ should prosecute. It seems clear to me, but perhaps someone can explain why SEC should be charged with that instead of simply observing & promulgating regulations and referring cases.
Watching/oversight, gathering information, promulgating regulations, referring cases and prosecuting cases are all important.
I’m going to be contrarian here, but in reading the filing it doesn’t look like there is a strong case in this particular instance. It seemed like the SEC filing was bending over backwards to protect ACA Capital when from my reading of it, it look like ACA should bear some culpability. Frankly I’m wondering if this is meant to distract attention away from when the Fed paid par value on CDSes and other such things that have been swept under the rug. I encourage people to look up ACA to see that they aren’t exactly innocent victims, but more like co-conspirators.
SEC’s case rests on this being fraud/misrepresentation on GS’s part because Paulson bought CDSes, but with the arguments used in the case I don’t see how if Paulson had been long (as apparently ACA got the impression) how that would make any difference. Under either scenario ACA was the “portfolio selection agent” and ACA didn’t do their due diligence – just because GS knows some investor who apparently wants to go long is no excuse as ACA was supposed to reach their own judgment. The claim is that ACA wasn’t the only PSA because of Paulson’s involvement as a short, but even if Paulson was long that is true just as well, so it just doesn’t pass the smell test to me that ACA is some poor victim here. The SEC admits that ACA signed off as being the PSA after the involvement with Paulson, so it doesn’t seem logical for the SEC to praise ACA.
Also in the filing it talks about how ACA put out a CDS, but again this goes to due diligence. ACA first hand got to see everything that was put into the CDO and knowing precisely what the product was, they sold a CDS. Just because you hear that someone wants to buy something that doesn’t mean that not only should you give it your approval but you should offer insurance on it (conversely just because you hear someone wants to sell something it doesn’t mean that it is automatically junk and you’ll make money taking out insurance based on it failing) – again DUE DILIGENCE. The SEC’s portrayal of ACA as some poor victim just doesn’t wash with me, so it raises red flags with me. ACA on their own should have determined that Paulson was a sucker (if they believed he was long) based on their own independent analysis rather than not only rubber stamping Paulson, but doubling down that he wasn’t sucker by issuing a CDS.
Also I’m taking a contrarian stance because of the level of sophistication of all those involved. These were all very large banking companies – not just large companies, but companies in that industry. In no way am I trying to give the impression that I support GS in general – frankly from reading the filing, I’d say not to touch GS with a ten foot pole and there’s probably more than a few that should be behind bars, but from this specific litigation it just doesn’t come off that strong. I am suspicious that ACA might fit somewhere with Geithner/Bernake/etc questionable dealings with Wall Street and that might be why there is an attempt to do a whitewash of ACA.
Do ya figure they plan to join Iran in bombing Israel or join Israel in bombing Iran or both? /s
Not arguing, just clarifying
Diego Garcia is a B-2 base. And yes, the Bunker Busters are on the way. Doesn’t mean anyone will get bombed but …
http://www.informationclearinghouse.info/article23658.htm
http://www.defense.gov/contracts/contract.aspx?contractid=4132
Yes, all the above. /s
As Big Oil Tony Blair and his partner in crime, the lesser Bush, did, the argument will be tailored to selling the product.
Which brings us back to Goldman Sachs and ABACUS. It’d be a grand cycle, worthy of veneration, but it’s based on the age-old illusion of selling our whole lives, today, for the promise of a mess of pottage someday. In the meantime, our “stewards” live like royalty, with no intention whatsoever of giving up what wasn’t theirs to begin with. So of course, when it comes time for us to materialize our wealth, temporarily stored in accounts in terms of dollars and cents, there’s no there there.
The figurative ‘one dollar,’ at the base of traditional fractional reserve banking, has been loaned out countless times and replaced with Jamie Dimon’s or Lloyd Blankfein’s IOU.
A) Loan money into existence to your buddies at next to no cost.
B) Keep the regulators off the scent (suborn, intimidate, transfer, character assassinate, etc.)
C) Let your buddies move the numbers, most of which are, in reality, standing in for our homes, educations, health care, and so on, from one column to another of the self-same institutions (proprietary trading).
D) Take the money and run for office. Or, take the money and retain your benefice, maybe even “fail upward,” no matter how utterly obvious your role in jacking the economy for all she’s worth.
E) Damage control may require a symbolic flogging and rendering of a pound of flesh from a sacrificial scapegoat du jour. Rest assured, no old-school oligarchs will be harmed in the process of mythologizing this latest crime of empire into another vindication of “The American Way, Inc.”
Agree. Bread and circuses for rube voters, no prison.
McClatchy the only one left chain wise still doing investigative.
I’m STILL LMAO!!!!
*G*
Thanks to Parsnip for saying this: In other words I want to see the SEC, or whoever is the appropriate authority, show those who blame the CRA and poor people, that it was the Wall Streeters who cooked up this scheme to enrich themselves and purposely coerced ill-informed people to sign up for mortgages designed to fail, by intentionally seeking them out, misleading them, falsifying documents, etc. I want to see the dots connected in a way that absolves millions of foreclosees who never would have gotten mortgages, if the banks had to hold onto them, from blame for being fooled into this scam.
Amen for that hope; my blood has boiled for ages on that issue. Thanks for articulating the issue, Parsnip.
Scarecrow thanks so much for doing this post and thanks to your commenters who gave further insight into what is or may be going on.
I’m unclear about the prospects for a war; I assume you all are linking the prospect to today’s report that Obama is very serious about the need for peace in the middle east. If not that, what all are you all talking about?
Thanks to windge (?) for recommending the Lewis book, which I’m dieing to read. I’ve found his interviews to be fascinating and I think his chosen way of telling the larger story through the experiences of three participants who saw the disaster coming and got out, but not before making tons of money.
Blessings
Add them both up, add in corporate fascism and ownership of our government and you have demonstrated intent with the will to do so.
It’s been plain for ever.
Certainly Since THIS Was Published
All the methods, ruses, scams, cons and names top to bottom are there, and this was known in 2005.
I’m sure a lot of this was known long before Deep Capture was published, too.
CA’s Energy Crisis was a manifestation of the organized corporate greed and corruption coupled with government.
We can go back to Milken’s Junk Bonds, for that matter.
Once Glass-Steagall went by by, it was all over.
And frankly, although Scarecrow paints a great picture of the present, and others comment in a positive way about ‘accountability’ and change and reform, until a Glass-Steagall returns, until the foxes are not the guardians of the hen house (Congress????? Congress is gonna govern reform? HAH!), until corporations are HEAVILY regulated in all sorts of ways including on size and tax deductions/off shoring, etc. I see no real indices of real reform or change coming to we the people.
I see no real hope over the G/S hoo doo. It will be swept away, forgotten, a hand will be spanked, at most.
There’s no WAY our present system of rule/ownership as is will permit real reforms of ANY sorts.
And I think that’s been proven since Reagan ran CA. And then the nation. Ran them into the ground.
Unless the people revolt and demand it, there will be no real change or reform. Obama is a corporatist shill, he’s proven it with his admin/cabinet picks from day one and thru his behaviors and decisions since he assumed the office.
Yves has this.
“Second update 12:00 PM: Reader Hubert points out that the SEC suit was announced minutes before this e-mail was sent out in Obama’s name. Coincidence?
I cannot stand these Obama missives, so I am only including the beginning, which is sufficient to give you the drift of the gist.
Friend –
It has now been well over a year since the near collapse of our entire financial system that cost the nation more than 8 million jobs. To this day, hard-working families struggle to make ends meet. [....]”
There’s more that she quotes, all of this is political. Nothing to do with justice or honor.
http://www.nakedcapitalism.com/2010/04/sec-sues-goldman-for-fraud.html
I know mostly nothing about European Banking other than from Deep Capture and AIG-London, so thanks for that comment.
Interesting, for sure. Thanks for sharing.
It’s a global pillage!
Which tin foil hatted folks have been arguing since money left Europe for America in the 1900′s. The whole Rothschild Like moneyed families controlling the planet thru wars and such.
Given all that’s taken place since 1900 to now, it’s hard NOT to think this is all organized by the 1%. They broke Europe, twice, and now they are breaking USA. When there’s nothing left to pillage, I wonder what the 1% will do as it all burns down????
Yep. Glad I’m not alone in these thoughts.
And now that’s 3 who are skeptical!
*G*
That’s certainly part of the grand rip off taking place.
I’ll echo that it’s not the FIRST grand rip off in history, either, since the 1900′s.
This is EXACTLY part of the madness that Deep Capture Reveals.
Thanks for sharing that, John.
They treated us to a one time lobster luncheon and lifted our wallets from the coat room?
well done firedogs ! what a fabulous and illuminating thread.
what a boffo comment. there are multitudes of otherwise smart, perceptive (non wall st) people who would consider themselves well informed, yet never connect those now glaringly obvious dots.
underscores our communal dread(ok, horror) on entitlement reform
@Marchan
Peace through war. You’re into pure-Orwellian territory in case you hadn’t noticed.
I’m pretty serious in my idea though. I see you at war with Iran in months or less even. Whether the GS show trial is just to distract or not, will never be proven, but grounds for believing that are the fact that Rahm is in the government.
Once I lived thru and came to understand the dynamics of the leveraged buyout boom in the 80′s, it was glaringly obvious to me that the victims were the people who bought bonds because they thought stocks were risky gambling, and they were willing to settle for low but safe bond yields because they believed, based on a lifetime of experience, that there would never be a default on a bond. My mother and many in her generation were like that. They did not understand that the value of a bond itself would go up and down depending on how much debt, i.e., how creditworthy, the issuer of the bond was. The LBO’s changed company indebtedness levels radically overnight, cutting the value of the corp bonds by 50% or more. Total rape.
So, when I saw Greenspan keep passbook and money markets rates at 1/4% in the early 90′s, it was instantly apparent to me that the purpose was to force that even-more-risk-averse bank money into the stock market, because you felt like a fool getting 1/4% from your bank when inflation was running at least 5% a year.
After that bubble was REAPED, not burst, in 2000, the next place was homes, where people would still put money even if they did not trust a bank.
Now, there’s mattress money, which remains inaccessible, and SS. Bush took a shot at setting that up, and failed, but the Dems will be more successful because they are trusted on SS (Nixon-to-China, Clinton-on-welfare syndrome, it always works.)
Then, the elite will move on to riper markets in Asia. And we will be left here in a used-out husk with no capital. The master plan, now so fully realized that one no longer needs a tinfoil hat to point it out.
Good Linky Love, thanks for sharing!
Larue -
I ran across Deep Capture’s orignal pdf in mid 06. tough for me to follow – 1/3 sanskrit, 1/3 tin foilish, 1/3 grok’able :D. but I sensed I should bookmark it and have gone back to it several times and whenever any major markets story erupted – Didn’t know they were a site now – looking forward to reading them (gulp) thx so much for the link
You should be writing headlines!!!
*G*
And thanks for all the work you do, despite my empty glass comments at times.
I wouldn’t know how empty my glass IS without your keen insights, observations and information sharing.
Appreciate all you do for us readers.
Yes it is. A large machine it is, too.
What war, where, and why?
Becuase if USA or Israel bomb Iran the aftermath blowback will cripple the globe when there are a few sunken ships blocking the Straits of Hormuz.
Not to mention the call the Shiite’s and ALL Muslims will send out for revenge.
Pure folly to consider there will bombing of Iran.
So, what, where, and why?
Welcome. It’s a ton of detailed info. All of it well documented, IMHO.
No tin foil, just facts piled up so high and deep it takes forever to read thru it.
Best read I’ve seen on the level of corruption in our country, top to bottom.
Why, pas de quoi!
I forget my childhood French, but isn’t it ‘Il ne pas de quoi’? Or is that too formal.
*bowslowwhistlesgreetings*
it’s actually
Il n’y a pas de quoi
Yup, it’s wave after wave of looting. And I agree that our criminal class’s next target is benefit programs like Social Security.
Obama and the Democrat leadership have been assigned to benefit program looting which will be painted by mainstream media as “responsible” reform.
Anyway, the SEC lawsuit against Goldman is just the tip of the iceberg of fraud. My bet is that mainstream media will try to make a limited hangout out of this…. sort of like they did with Iran-Contra.
Yep you’re right. It’s just like during the Vietnam War they’d ‘loan out money’ to the Phillipines for the Marcos Regime etc to continue our imperialism there. And, what’s really probably going on right now in Kyrgistan to continue our { military keynesianism }. Of course Goldman Socialism couldn’t continue to get government welfare without our other [economic scientists?], all the Milton Friedman, Spin-Think Tanks.
The most disgusting aspect of it, in my view, is that the perpetrators are the already-wealthy but endlessly greedy, who never do any real, productive work, targeting the hard-working who get modest wages and don’t expect to get rich off their nest egg investments, but really focus on preserving the value of what they have earned, paid taxes on and saved through careful self-denial and discipline.
That latter group, the salt-of-the-earth types, are manipulated by inflation and creative scammery to place their nest eggs into complex risk situations which they can never fully understand, so that the “smart money” can take it all away from them, Like luring suckers into a poker game full of sharpies who constantly need new blood to kepp the game going.
The Obama administration is infested with people from Goldman Sachs. Goldman SAchs was the biggest investor to Obama in his presidential campaign, and before that, in his senatorial campaign in Illinois.
He will protect Bob Rubin and his other friends in and from Goldman Sachs.
This is all window dressing for the November elections because Obama realizes his handouts to Wall St. and big banks have not been popular.
I said tin foil because of the mystery they were chasing down and trying to solve – and you have to remember it was june 06 and I happen to be one of those folks who’s eyes glaze over at the mere mention of anything markets/finance related (not no ‘mo, thanks to y’all) – it was just a lot to digest at the time.
again, I appreciate your’s and the other commenters insights. sadly tragically, it is all so naked and perceptible now.
personally, although I would characterize myself as realistic and cynical, I still had some doubt they would go after SS – now I have no doubt. it wont be as clumsy or naked as GWB’s, but I am convinced they’re going to attempt the grab. your comment up above was a simple but powerful summation and closing argument. thank you
All they have to do is drive that SS money into the stock market-that’s where the most effective reaping can take place.
BTW, the New York Times has several excellent reporting and opinion pieces today re the Goldman story–together, they will give a good sense of how the game is played on Wall Street.
We have to remember, it’s not really about Obama or the Dems, or even right vs. left. Those are just classic “divide and conquer” framings. We need to stay focused on the true underlying dynamic, which is People vs. Big Corporations.