A.J. DiCintio
Perverse financial elites
By A.J. DiCintio
February 27, 2010

The financial scandal in Greece proves once again that governmental financial elites are as much a gang of Wizard of Oz frauds as so many of Wall Street's biggest bigwigs.

But before getting to the latest instance of this perversity and the lessons we should draw from it, a little history is necessary, beginning with a passage from Matt Taibbi's widely quoted Rolling Stone piece titled "Inside the Great American Bubble Machine."

The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

To common sense folks, it is inarguable that Taibbi's metaphor — which dramatically expresses Wall Street's reason for being — deserves lavish praise.

Yet it's not surprising that big shots at the Treasury Department, the Federal Reserve, and lavish salons where Democrat and Republican VIP's come and go talking about Campaign Dough reacted to it with a carefully calculated indifference.

Neither is it surprising that an angry Goldman HQ shot back at Taibbi as follows:

We reject the assertion that we are inflators of bubbles and profiteers in busts, and we are painfully conscious of the importance in being a force for good.

"A force for good"? Well, pardon us ordinary folks if mention of the bank doesn't send our collective stream of consciousness rushing to images of the Salvation Army.

And for good reason, too, because we have learned that Goldman's idea of being a "force for good" consists not of having its execs march a hundred miles in the shoes of an altruistic volunteer but of encouraging them to slip on their $1,000 Berlutis and walk a red carpet to a very important desk at Treasury or the Fed.

Yes, in the last twelve months, John and Jane Q. Public have gotten a blue chip education about the fact that a powerful bank doesn't manage to suck more than $12 billion of taxpayer's money at 100 cents on the dollar out of an essentially bankrupt, bailed-out AIG by sending its top brass to perform good works on behalf of the needy.

Which brings us to the latest instance of Goldman's being "a force for good," specifically, its efforts in helping Greece carry out a financial subterfuge.

Here is how Beat Balzli reported the "good work" in spiegelonline:

Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules.

Now, for those who can't bear the thought of once again trying to tangle with the intricacies of Wall Street's inscrutable derivatives, the following exercise will help make the deal easy to grasp:

. . . Imagine Greece as an irresponsible person burdened by an incubus of debt that never should have been granted.

. . . Imagine that to help the person hide the truth about his fiscal condition so that he can borrow even more money, a bank devises a financial shenanigan that pushes payments on the debt into the future.

. . . Next, imagine that when Reality bites, the debtor not only finds himself up to his chin in financial quicksand but also demands his neighbors pony up an Olympus-sized pile of money to mount a rescue effort for him.

. . . Finally, imagine that the bank, having pocketed $300 million in commissions from the debtor, now finds itself in the position of making more cash by taking advantage of the consequences of the debtor's shameless profligacy.

(Regarding how currency trader Goldman could find itself in a win-win position as a result of acting as a "force for good" with respect to Greece, consider the full implications of the following headline, which recently appeared on Bloomberg:

"Goldman Sachs Cuts Euro Forecast Versus Dollar on Greece Turmoil.")

That's basically it regarding the deformed issue that is the product of the Greece-Goldman tryst. And we should praise the media for having brought it to light. After all, we Americans have witnessed this kind of behavior before and know a thing or two trillion about its disastrous effects.

However, in its reporting about the scandal, the media is once again ignoring a crucially important issue, which is this:

From Berlin to Washington, governmental elites failed to blow the whistle about, much less put a stop to, the trick, which, reports indicate, was also played in debt-burdened Italy with the help of another American bank.

And let's remember that these elites weren't duped by a financial genius operating secretly; for their abject failure to act occurred despite the fact that the deal was openly known, as Aaron Task points out in a Yahoo post:

. . . the transaction was disclosed to the Greek parliament in 2001 and profiled by Risk Magazine in 2003. . .

The big news, then, regarding this scandal is that the elites of Europe's finance ministries and central banks didn't sound the alarm about it.

The same is true here at home, where "What, Me Worry" Treasury and Fed aristocrats such as Henry Paulson, Timothy Geithner, Alan Greenspan, and Ben Bernanke didn't think it important to speak out forcefully about the global implications of the Greece-Goldman machinations.

Then, there's Barack Obama, who is hailed as an intellectual giant by his sycophantic supporters, but who responded to a Bloomberg/Business Week question about bonuses at Goldman not by taking the opportunity to comment about smart, substantive reform of the financial industry but by blabbing the following sound bite tripe:

Well, look, first of all, I know both those guys [Goldman's Blankfein and Dimon]. They're very savvy businessmen. And I, like most of the American people, don't begrudge people success or wealth.

The politicians and bureaucrats mentioned above also have an obligation to let the American people know whether Goldman and other banks have provided or could legally provide the same kind of "derivative services" not just to Washington but to fifty Sacramentos as well.

Clearly, however, they don't perceive one.

Finally, there is this question:

What are the most important lessons to be learned from the scandal in Greece?

There are many, but two stand out.

The first is this: Although the glaciers called central governments will forever be treacherous places characterized by thousands of wasteful, power-loving, money-sucking crevasses, the past four decades have seen the arrogant, gluttonous, incestuous, self-serving, depraved members of the Political/Bureaucratic Class disfigure the American central government with gorges so profoundly dangerous and deep that they openly mock and endanger the Constitution's "We the People."

The second lesson is that in defense of "their" Oz, that Class will continue to ridicule and otherwise deride the Tea Party movement or any other coalition of ordinary citizens who share a belief about what has made America free, good, and prosperous.

After all, if the fraudulent wizards know anything, it is that they should regard such Americans not just as inferiors but as an enemy dedicated to bringing the nation closer to Lincoln's ideal of government of, by, and for the people.

© 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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