Tails, You Lose: The Amazing Goldman Sachs

No, Goldman Sach's did not create the insane, senseless collectivist free for all that passes for our system of government these days- a system based on the blind belief that a small group of elite folks will serve and protect "the public interest".

Of course, most folks smart enough to work at a place like Goldman Sachs know there is not and will never be a way for anyone to know what might best for millions of living, thinking changing human beings. Goldman, and it's employees and alumni however have had an amazing record protecting their own interests.They didn't invent the game but man can they play it.

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Was Hank Paulson- the former Treasury Secretary and former Goldman Sachs CEO protecting his own interests when thought it critical to bail out AIG-- a firm that just happened to owe Goldman 13 billion or more?



Is it any wonder why we can't audit the FED?

Elizabeth Warren On TARP

This post was also orignally put on Smart Girl Politics a few days ago



First, one has to wonder if she doesn't have a degree in diplomacy for spinning her panel's review of the TARP program. In spite of this, a few problems seem too big to ignore.

First is that it's basic "stress assumptions" were a joke. The worst case scenario for employment assumed for this year was blown through in four months and we are now within easy striking distance of the worst case test for next year of I think 10.3% unemployment, which is projected as the recession low. (A note here. One needs to understand just how much faulty inputs like the Birth/Death model are already understating the real unemployment rate.)

Second, she notes that the entire stress time frame is only two years long, even
with a long pipeline of suspect mortgages and debts out there.

Third, She points out that the raw data that goes into the tests about just what assets and bad loans banks hold has been kept from the public, making it impossible to cross check the results.

What comes across is that the Treasury, FDIC and FED are in no way instruments of real transparency but are obstacles to it.

This fits with the "shut up, elitist, experts know best' attitude of this administration. She does, correctly point out just how against the FED's grain any level of transparency is.

Her last comment about the very ambiguous way the TARP law was written means that it is in fact a blank check for the executive to do as it wishes.

Great Report On The Housing Crisis

I found this long and interesting report on the housing crisis which recaps a lot of info we know and also suggests it's likely far from over. Check out the rising default rates in prime and jumbo loans as well as the mega disaster-- called Alt-A which will create huge losses and powerful downward pressure on housing in places like California.

A big unknown is how long the recent surge in mortgage rates will last and what effect this might have on a market that seems to need these absurdly low rates.

For the most part, the Fed's role in causing the bubble is not discussed.

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Racist Chinese Disrespecting Obama Again

Here in the good old USSA, where all the children have drinken deeply from the state's endless Kool aid supply, we all know that critics of Obama are driven solely by "white male rage." But what's going on overseas? First, Pravda the former voice of the Soviet Union say's we are Commies and now this...

Tim Gethner, one of a parade of officials panning the globe for spare change; while at the same time assuring everyone what a good credit risk we are; is now in China. Kool Aid seems scarce there.

A number of students laughed heartily at the bromide swill, we suck up here.

"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s. (refering to their holdings of U.S. Treasury and agency debt)

His answer drew loud laughter from his student audience, reflecting scepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home."

Comments from a former Central bank advisor, Yu Yongding were even more blunt and filled with disparaging references to American officials and their policies.

In response to Obama's current promise to cut federal deficits from close to 13% of GDP to 3, Yu said:

"It may be helpful if “Geithner can show us some arithmetic,” said Yu. “We need to know how the U.S. government can achieve this objective.”

Fed Chairman Ben Bernanke gets it worse.

"Referring to the Federal Reserve “as the world’s biggest junk investor,” and to Chairman Ben S. Bernanke as “helicopter Ben,” Yu said the Fed has dropped “tons of money from the sky since the subprime crisis.”

“The balance sheet of the Federal Reserve not only has expanded like mad but is also ridden with ‘rubbish’ assets,” he said".

Are these "people of color" crazed with racist rage or just stating simple questions we all should be asking. Thankfuly the rest of the world is looking fairly and squarely at Barak Obama and judging him and his administration by the content of the character they have shown.

March Consumer Credit Plunges

The chances this recession/depression is over are close to zero. Reuters is reporting a massive plunge in consumer borrowing showing that both borrowers and lenders are starting to realise how broke they are. As they say-- when in a hole-Stop Digging!

"March consumer credit fell at an annual rate of 5.2% to a total of $2.55 trillion. This was the biggest percentage drop since December 1990.

February's decrease was revised to $8.1 billion from an originally reported $7.5 billion drop.

Analysts polled by Reuters were expecting a $3.5 billion drop in consumer borrowing for March."

Mish as usual has a good take on this along with this chart.



Notice that until the 1980's and throughout American history, consumer credit played a small role in our economy, with most houshold purchases funded by savings and income and most credit used for business investment. This worked fine, but the Fed and it's statist pals thought we could do better and our "consumer economy was born."

We are starting to see the results. Unlike, the bulk of business investment in a free economy-- most consumer purchases do not lead to higher levels of earnings or productivity to pay off the loans. They can, for a time result in higher asset prices, providing there is more and more credit available to push up prices. But at some point, the last dollars of true savings are spent and the last solvent creditors have borrowed and the cycle goes into reverse.



Well, at least the Feds can borrow and spend for us right??? Well, I serously doubt it. Sadly, American consumers now will not only have to pay for their own mistakes but for the insane policies of our government as well.

Fascism Update: NY FED Chief Makes Two Million Dollar Score On Goldman Sachs

People who look at Fascist and other economies of that type have a hard time telling whether corporate interests and insiders have taken over the state or the other way around. Anyway, the recent revolving door between Goldman Sachs and government and quasi governmental agencies is a perfect example.

Here we have the NY Fed chief not only keeping his Goldman Sachs position after Goldman became a bank but using likely inside knowledge to double down on his investment.

"The New York Fed asked for a waiver, which, after about 2½ months, the Fed granted. While it was weighing the request, Mr. Friedman bought 37,300 more Goldman shares in December. They've since risen $1.7 million in value.

Mr. Friedman also was overseeing the search for a new president of the New York Fed, an officer who has a critical role in setting monetary policy at the Federal Reserve. The choice was a former Goldman executive."

Remember, the exact actions of the FED such as what bad assets it may have bought or guaranteed from Goldman or any of it's counterparties are kept secret.

Goldman was one of nine big banks the Treasury aided with capital injections in early October. The prior month, the government decided, partly at the urging of New York Fed officials, to bail out insurer American International Group Inc. The initial $85 billion provided to AIG enabled it to pay a portion of $8.1 billion it owed to Goldman, stemming from past trading agreements. By the end of the year, Goldman had gotten all of the $8.1 billion as AIG received more government aid.

Find Out The True Numbers

I am not an accountant, but I have some knowledge of it.

True accounting is about trying to get an accurate picture of not just one's current"cash flow" but also all assets and liabilities. A person for example with $5000 in the bank, no job, negative home equity and a leaking roof in need of $40,000 in repairs would be called broke by an honest accountant. Suppose that person had also co-signed loans promising to bail out everyone else on the block.

Let's be honest, American's would likely not have bought into most of "free" gifts offered by the government, if they knew their true cost, to themselves and future generations.

Look up the film IOUSA on the internet, to get some idea of the real reality which has only gotten much worse since the film was made.

Here is an organization dedicated to exposing the ponzi frauds both our federal, state and local governments are running.

(No, printing monopoly money in your basement, like our federal government does doesn't make you rich either)