A.J. DiCintio
Goldman Sachs' America
By A.J. DiCintio
July 25, 2009

We must believe in luck; for how else can we explain the success of those we dislike.

Guy de Blonay certainly knows that those who "dislike" Goldman Sachs don't attribute its success to luck. Therefore, in the UK's Telegraph this week, he employs that line from poet Jean Cocteau only to poke fun at skeptics who have other reasons for believing the bank doesn't come close to speaking the entire truth when it attributes its remarkable money-making success to an "unusual effort . . . to recruit people who . . . share [its] commitment to leadership in business and to the communities where [it] works."

In contrast to Mr. de Blonay, an apparent admirer of GS's all-around good works, Matt Taibbi, a libertarian blogger and Rolling Stone contributor, is a GS critic, actually, a severe critic who describes the bank with images that evoke thoughts of an amoral, frighteningly dangerous rapacity, for example, when he depicts it as "a great vampire squid wrapped around the face of humanity" or a "planet-eating Death Star of political influence."

The question, then, is this: Whom should we believe regarding how Goldman Sachs does it and plans to do it better in the future?

With respect to that question, I'm in the Taibbi camp for this simple reason:

In the neighborhood where I grew up, a gushing Pollyanna would have been on the receiving end of the double exclamation that follows if he or she had lavished praise on a monster of a bank that defines its success in achieving community "leadership" by counting how many of its former executives hold powerful positions in our federal government, other governments, and quasi-governmental institutions such as the World Bank:

"Unbelievable! You've gone off your medication — again!"

I realize, however, that what constitutes sufficient reason for me falls short of the facts most people require.

So, here are some details about GS, beginning with information regarding a few people who, the vampire squid is happy to inform us, were willing to forgo Pacific Ocean sized bonuses in order to devote their lives to serving humankind — with exquisite impartiality, of course.

Under Bill Clinton, former GS partner Robert Rubin successfully led a coalition of Clinton Democrats and Country Club Republicans to repeal the Glass-Steagall Act, arguing that in the New World Order, U.S. commercial banks would — oh, let's say "teeter on bankruptcy" — if they weren't permitted to enhance their banking activities with the securities business.

Well, as we have seen in infinitely ugly detail, Rubin's modern medicine turned into poison for many of the nation's largest banks, including Citigroup, which paid an ocean of money to Robert the Know It All who turned out to be Robert the Know Nothing About Insanely Stupid Risk.

But what of his former Wall Street employer? As it turns out, GS wasn't so much a user of the drugs that nearly killed the financial system as it was a seller or, as some prefer to say, "a dealer."

The bank, however, did need a certain amount of rehab. But would its bottom line suffer as a result? Not to worry; for as we shall see shortly, the planet-eating Death Star's insurance policy (i.e. "political influence") would — let's just say "pay off."

Moving on to the next administration, we find that "Dubya" appointed GS bigwigs to important economic posts at a rate one would have thought applied only to Yale grads. And the most significant of those appointments went to former Goldman CEO Henry Paulson.

Yes, that's the Henry Paulson who allowed GS competitor Lehman Brothers to go bankrupt.

The Henry Paulson who suddenly had a change of heart about bailouts and brought in 35 year-old GS star Neel T. Kashkari to oversee the TARP program. (The wunderkind immediately added maturity to his staff by hiring former GS exec Reuben Jeffrey to help him bail out deserving financial institutions.)

The Henry Paulson who bailed out AIG — which just happened to owe GS billions.

And the Henry Paulson who ousted AIG's CEO, replacing him with former GS director Edward M. Liddy.

(What giants are these, born in the trading rooms, offices, and culture of the Goldman Sachs headquarters, the true "Athens of America"!)

We come now to Barack Obama, who won the Election of '08 with a message of "hope and change," the latter part of which GS employees had every reason to believe didn't apply to them because of their friends in high places, especially the very high and very secret place called the Federal Reserve System.

Remember that in September of '08, it was the Fed that allowed Goldman Sachs the investment bank to become Goldman Sachs the bank holding company that can borrow from the Fed's discount window at interest rates — O! Happy Coincidence! — close to zero.

(One doesn't have to be an economic genius to see that the Fed has put the "fix" in for banks to recoup their losses — on the backs of the American people, of course. And one doesn't have to be a political genius to understand why Fed monetary policy represents one of the main reasons "change agent" Obama opposed Congressman Ron Paul's bill to provide for a public audit of the Fed.)

But to get back to the present — When Obama nominated Tim Geithner to head Treasury, GS had a new friend in a high place, a friend all the more special because he previously worked at the very high place that is the office of the President and CEO of the NY Fed.

(The NY Fed, by the way, is also the high place where Stephen Friedman served as Chairman of the Board even while he was a GS director and significant shareholder, that is, until a WSJ article about the simultaneous jobs caused him to resign in May of '09.)

Now, what are friends in high places for except to fume about and demand a retraction of AIG's plan to pay $165 million in bonuses (as Geithner and Obama did) while doing nothing about the fact that bankrupt-if-not-for-bailout-money AIG was at the same time paying obligations to banks at 100 cents on the dollar — Goldman Sachs receiving 12 billion of the 70 billion dollar total.

What a tribute that financial shenanigan was to the genius of the satire that has Inspector Clouseau threatening an organ grinder performing on the sidewalk in front of a bank while a gang of bank robbers flees out the bank's front door!

Here, I must admit that this list of missionaries GS sends out into the world is incomplete, in fact, so miserably incomplete that it fails to mention even the good works being accomplished by disciples such as Mark Patterson (former GS lobbyist) who is Geithner's chief of staff, Robert Hormats (former GS vice chairman) whom Obama nominated for a top economic job at the State Department, and Dianna Farrell (former GS analyst) whom Obama appointed to serve as deputy director of the National Economic Council.

But to keep things manageable, it's time to move on to the final topic: How GS intends to keep "doing it" in the future.

Well, if GS knows anything, it knows that "If it ain't broke, don't fix it." So, "Government Sachs" (as many Wall Street denizens call the bank) will keep churning out profits from its investment bank activities as well as by trading derivatives and speculating on currencies, commodities (including oil), and the direction of stock markets.

GS will also continue to fulfill its — let's call it "social responsibility" — in the same $30 million manner that since 1988 has made it Number Four among organizations that drop money into the political collection basket. (see Center for Responsive Politics)

And not into any basket, mind you; for as the CRP reports, 63% of the $30 million went to Democrats. Barack Obama, for example, received $1 million from GS employees.

Moreover, according to Matthew Vadum (American Spectator), "Goldman Sachs also has a history of caving in to left-wing pressure groups, such as Jesse Jackson's Citizenship Education Fund and the extremist Rainforest Action Network (RAN). Its corporate foundation's donations go exclusively to the left, according to a study that appeared in the August 2006 Foundation Watch."

Social responsibility also means paying big money to hear "important" speeches from politicians. For example, CNS News reports that of the $2.1 million former President Clinton received for 13 speeches delivered to Wall Street audiences, $950,000 came from GS.

However, even as it continues the tried and true, GS knows that a successful business must always keep both eyes wide open for new opportunities.

How can I be so sure about that?

Well, in November of '08, Kate Galbraith (NY Times) wrote this:

"Goldman Sachs has recently bought pieces of two carbon-offset companies, in the latest sign of investment banks' interest in the area."

And this, which she learned from a person in the "carbon brokerage" business:

". . . buying into the offsets business could benefit [banks] if a federal carbon-trading system took hold in the United States. President-elect Barack Obama favors such a system . . ."

"Could benefit"? My dear Ms. Galbraith, it's "will benefit enormously" as banker vampires are certain to suck billions in profits from "Cap and Trade," a maniacal monstrosity that will lay on the already burdened backs of the American people a triple incubus of fattened utility bills; larded bills for other goods and services; and an emaciated economy.

I can see it now:

A carbon finance market swirls furiously as carbon credit packagers deal (no more euphemisms such as "trade") carbon credits, carbon credit default swaps, and inscrutable collateralized carbon credit obligations — not to mention their "subprime" cousins.

And, in perfect imitation of what happens regarding the lawsuit cycle, in which legal Visigoths play their huge role in the sacking of America, the dealers meticulously return an "appropriate" cut of their blood money to the politicians who make it all possible.

© A.J. DiCintio


The views expressed by RenewAmerica columnists are their own and do not necessarily reflect the position of RenewAmerica or its affiliates.
(See RenewAmerica's publishing standards.)

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A.J. DiCintio

A.J. DiCintio posts regularly at RenewAmerica and YourNews.com. He first exercised his polemical skills arguing with friends on the street corners of the working class neighborhood where he grew up. Retired from teaching, he now applies those skills, somewhat honed and polished by experience, to social/political affairs.


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