'Government Sachs' Strikes Gold ... Again
By Robert Scheer
Truthdig: July 14, 2009
Connect the dots: Goldman Sachs made $3.44 billion in profit this past
quarter, while the U.S deficit topped $1 trillion for the first time in the
nation's history and appeared to be headed toward doubling that figure
before the budget year is out. Since most of the increase in the federal
deficit is due to bailing out the banks and salvaging the greater economy
they helped destroy, why is the top investment bank doing so well?
Well, because that was the plan, as devised by Bush Treasury Secretary Henry
Paulson, a former CEO of Goldman Sachs. Remember that Lehman Brothers,
Goldman's competitor, was allowed to go bankrupt. The Paulson crowd wouldn't
let Lehman change its status to that of a bank holding company and thus
qualify for federal funds; soon afterward, Goldman was granted just such a
deal, worth a quick $10 billion. Much is now made of Goldman paying back
part of its bailout money, but forgotten is the $12.9 billion that Goldman
got as its cut of the $180 billion AIG payoff. That is money that will not
be paid back.
Goldman is considered a very smart bank because it was early in reducing its
exposure to the mortgage derivatives that in large part caused the meltdown.
However, it had done much to expand the market and continued to sell suspect
derivatives to unwary buyers as sound investments, even as Goldman divested.
The firm still holds $1.85 billion in real estate and lost $499 million in
the previous quarter on bad loans, but made up for it by playing the vulture
role and issuing high-interest debt to governments and companies made
desperate by the recession that the financial gimmicks of the banks brought
on in the first place.
And Goldman was not just another bank. Before Paulson ran the Treasury
Department, another former Goldman head, Robert Rubin, pushed through the
repeal of the Glass-Steagall controls on banking activity. While some now
play down the significance of this radical deregulation, not so Goldman
Sachs CEO Lloyd C. Blankfein-at least not back in June 2007, when the
markets were still doing well. "If you take an historical perspective,"
Blankfein told The New York Times by way of explaining his company's
spectacular success at the time, "we've come full circle, because that is
exactly what the Rothschilds or J.P. Morgan the banker were doing in their
heyday. What caused an aberration was the Glass-Steagall Act."
That 1933 act was repealed in a law signed by President Bill Clinton at
Rubin's urging, and in the following eight years Goldman Sachs recorded a
265 percent growth in its balance sheet. "Back then," The Wall Street
Journal reports, "Goldman was churning out profits by trading credit
derivatives, speculating on currencies and oil and placing big bets [on] the
roaring stock market."
Big bets made in a casino designed by Goldman, which now makes money off
loans to the victims. High on the list of victims are state governments that
have to turn to Goldman for money because the federal government that saved
the banks won't do the same for the states, which have watched their tax
bases shrink because of the banking meltdown. As the WSJ noted, "issuing
debt to ailing governments" is now a growth industry for Goldman.
Why didn't the federal government just lend the money to the states? Why was
all the money thrown at Wall Street instead of needy homeowners or
struggling school systems? Because the federal government works for Goldman
and not for us. Indeed, when it comes to the banking bailout, Goldman Sachs
is the government.
So much so that last fall The New York Times ran a story, headlined "The
Guys From `Government Sachs,' " that stated: "Goldman's presence in the
[Treasury] department and around the federal response to the financial
bailout is so ubiquitous that other bankers and competitors have given the
star-studded firm a new nickname: Government Sachs."
One of those stars was Stephen Friedman, another former head of Goldman.
Friedman was both a director of the company and chairman of the New York
Federal Reserve Bank when he helped work out the details of the Wall Street
bailout. The president of the N.Y. Fed at the time, Timothy Geithner, now
secretary of the treasury, requested a conflict-of-interest waiver that
allowed Friedman to buy more Goldman Sachs stock, and Friedman ended up with
98,600 shares. At market close on Tuesday that was worth $14,756,476. That's
nothing - three years ago, the 50 top Goldman execs made $20 million each,
and this year could be better.
They're not hurting.
***
Gallup poll in Honduras: Zelaya 46% approval, Micheletti 30%
Posted by: "A Beltran" a.beltran@ymail.com a.beltran@ymail.com
Wed Jul 15, 2009 3:37 pm (PDT)
[See also serious lawyer & doctor threats/arrests in Honduras: a lawyer from
Honduras who was on CNN yesterday, had his family terrorized during or
shortly after the interview, including armed forces threatening his mother
and the arrest of his daughter.
See http://www.democracynow.org/2009/7/15/honduras,
which inclues interview with Dr. Juan Almendares, who said that two leaders
of popular movements have been killed. AND: Dr. Luther Castillo, president
of the first graduating class of the Latin American School of Medicine in
Havana, and an inspiring star of the movie "Salud," is also named in a
decree to arrest him and to shoot him "if he resists," according to
www.medicc.org. He was calling out reports on the situation of resistance in
the coup, but his cell phone service has been cut.
(The wonderful film Salud is worth showing at any time, but it is
particularly timely now, esply its c.20 min. on the general health situation
in Honduras, particularly among the Afro-Indigenous Garifuna people, and the
inspiring hope of Dr. Catillo and other Garifuna doctors; see
http://www.saludthefilm..net/ns/index.html.) -- AH]
Gallup Poll: Ousted leader with 46 pct approval
8 minutes ago
http://www.google.com/hostednews/ap/article/ALeqM5jQ47HikfV5jORm67rF1LxBSr0WswD99F4ECO0
TEGUCIGALPA, Honduras (AP) ????? More results from a Gallup survey in
Honduras were published Wednesday, showing ousted President Manuel Zelaya
remains more popular than his interim replacement Roberto Micheletti.
The nationwide survey ????? which was done after Zelaya was sent into forced
exile in a military coup ????? shows Zelaya with 46 percent favorable and 44
unfavorable, compared to 30 favorable and 49 unfavorable for Micheletti.
Earlier findings from the same poll were released to The Associated Press by
Gallup after La Prensa, a leading Honduran newspaper, published some of the
results on Thursday. They showed that 46 percent of Hondurans opposed
Zelaya's removal, 41 percent approved of it and 13 percent were unsure or
declined to answer.
The face-to-face survey of 1,204 adults in all but two states showed Ho
ndurans evenly divided on Zelaya himself, close to findings of a similar
poll four months ago in which positive views outpaced negative by 4
percentage points.
The survey also asked Hondurans whether they felt Zelaya's removal was
justified because he had pushed to add a question on a national ballot about
whether to have a constitutional assembly, which the nation's highest court
had ruled to be unconstitutional. Forty-one percent of respondents said this
did justify his removal, while 28 percent said it didn't and 31 percent were
unsure or declined to answer.
The survey was done from June 30 to July 4 and had an error margin of 2.8
percentage points, according to CID-Gallup, which is based in Costa Rica.
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