Tuesday, April 27, 2010

"A Shitty Deal"

In lieu of a longer post for now, I encourage readers who missed today's testimony of current and former Goldman Sachs executives in front of the Senate Subcommittee on Investigations to watch a tape of it. This was a seminal event with political and social ramifications far beyond the sometimes arcane subject matter. For those who understand those ramifications and their dangers, the highest priority should be to ensure that these people and the firms they represent are never again bailed out by doctors, teachers, cops, farmers and scientists. Wall Street employees who are truly interested in the survival of their industry and the long-term viability of their own careers should share that priority.

While the financial reforms currently being discussed are needed, especially concerning derivatives, I haven't seen anything that will prevent bailouts during the next systemic crisis -- an event that by definition involves not one Wall Street firm but many. If the Senate's reform proposals passed tomorrow, would anyone celebrate the end of Too Big To Fail and would the stocks -- and more important, the bonds -- of Wall Street firms immediately reflect that new reality? A Volcker Rule with teeth would be a good thing. But ultimately the only way to end TBTF and the explicit public backstop is to legally prohibit the Fed, Treasury, or any part of the government from providing the next bailout. Until that happens, current and future Fabulous Fabs will act accordingly.


Anonymous Wild Goose said...

I have to somewhat disagree... we will *always* bail out banks (large and/or small) if there is a threat that the financial system will break down. The key is not prohibiting bailouts, the key is preventing banks from doing things that get them in trouble.

4/27/2010 4:59 PM  
Anonymous Fel said...

But isn't that the idea of ending bailouts? So that banks are again motivated by their own self interest to avoid things that get could them in trouble.

4/28/2010 2:52 AM  
Anonymous KAIMU said...


I did not watch the Congressional Inquisition because I do not have TV.

Yet I can only imagine the circus fare of the largest TBTF government in the history of the World grilling one of the largest TBTF global bank CEOs. Who will bail out the US Treasury? Meanwhile over at the US Treasury they recorded on April 26th total US PUBLIC DEBT at $12.824TRIL USD with outstanding guarantees to all the banks and manufacturers/credit issuers sitting at $17.214TRIL USD, more than the total US PUBLIC DEBT. Then over at the US FED they sit on the bloated toxic assets of MAIDEN LANE LLC some 80% rated BBB- or less adding up another $2.6TRIL that we know of. Back of the envelope and were looking at $32.6TRIL and I have yet to count the unfunded liabilities of SS and MED and the rest of the US States sitting on their own version of TBTF.

All of AMERICA is TBTF! America is one giant LIABILITY BUBBLE! So lets point the finger at the only truly deserving culprit for this huge embedded multi-decade crisis machine ... applaud the US VOTER! Take a bow and look in the mirror! Who keeps voting the same lame politicians into office year after year ... decade after decade?

I have two Hawaii Senators who are both 85 years old and Levin is 75 years old. When you vote you vote for a political monopoly that aids and adores the money monopoly at the US FED. Essentially what we had today was the POLITICAL MONOPOLY questioning the MONEY MONOPOLY(a US FED member bank). After 100 years of monopolistic power does your money buy more or less? KLUS-R-US ...

4/28/2010 6:52 AM  
Anonymous Goldhorder said...

It is not their fault Kaimu. The people were made ignorant and easily manipulated for the benefit of the elite. It started 100 years ago with the closing of the one room schools and the adoption of the Prussian style public school system. It took many years to teach American mothers to trust the State to educate their kids but eventually they won. John Taylor Gatto documented this in his book... The Underground History of American Education

4/28/2010 7:46 PM  
Anonymous Anonymous said...

Why I won't be watching the hearings:
1) Wall Street lies. It is a waste of time listening to liars. There is nothing you can do with lies. Can you imagine if our doctors and engineers had those same values. We'd drive over a bridge and fall in. Our houses would crumble. All we can do is hope Congress and the regulators do their jobs, and find the lies and prosecute. Anyone else shouldn't do business with them. You put your hand out to Wall Street, for an honest handshake, and they steal your watch, shirt, pants, eye glasses, and fillings, while betting with their buddies you won't notice.

2) Wall Street is corrupt (making the mob look like model citizens)

3) Congress is owned by Wall Street. This is another dog and pony show. Congress chose to let the Fed and Wall Street rape the American public and now we are suppose to believe all these people in power were not aware. Yeh, right. Go in corner and read your Ayn Rand books. Ay Caramba!

4) We are all aware. Nothing new. Anyone saying otherwise is lying. The games are getting old and we are running out of time. Beef up the regulations and enforce them. Stop saying one thing and doing another.

5) The thing that needs to be done, won't be done. Politics as usual.

6) Take This Hearing And Shove It: [begin snippet]:

It's probably no accident that the best and brightest from Goldman Sachs looked like boiler room numskulls at times today during their Senate testimony: fumbling through exhibits, asking senators over and over to repeat their questions, and otherwise buying time. That's the admitted-strategy of the attorney Goldman has hired to help the firm navigate the hearings, Lee Blalack.

It's another sign that Goldman is playing hardball as its business practices and its role in the financial crisis come under scrutiny. In the genteel world of Capitol Hill, Goldman did the equivalent of showing the Senate its middle finger.
[end snippet]

7) Will Goldman Sachs prove greed is God?, by Matt Taibbi

8) Plunder: The Crime Of Our Time, by Danny Schechter

4/28/2010 11:50 PM  
Anonymous Inthon said...

KAIMU nails it as he always does.

4/30/2010 12:36 PM  
Anonymous Goldhorder said...


This is really...really good. I just want all u liberal wieners to know that me and Bill Clinton agree 100 percent and we are on the same page. You don't hear our betters talk like this in office. They have power to wield and interests to serve afterall. But he knows... More impotantly he knew. Why was the gold standard so important? It placed a limit on our "betters" to the amount of money they could steal from the private sector. I'll post more on this later. I have some interesting insider info on an American company building a new plant in China. Their government supports manufacturing (that old dinosaur) while ours supports the military and financial dominance of the Earth. Of course maybe our political leaders are smarter than Napoleon or Hitler or Alexander... Maybe they will achieve world domination before bankruptcy and collapse.... Lol. Not a chance

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