Lets compare two financial companies, Goldman Sachs and CIT Group.
Goldman Sachs is a, um, well... it is very hard to describe what exactly it is.
It is not a bank (although to get our tax money, the so called bailout or even more laughable name "economic stimulus") it became one.
I think the best definition is of a leech on our financial system.
A leech is a parasite, an organism that feeds off its host while giving nothing back in return.
There, lets keep it simple, I say.
No wonder it's called "Government Sachs."
It seems that every few weeks, another Goldman Sachs executive goes to work for a government agency, with bankers landing in positions of power at the Treasury Department, the Federal Reserve, and pulling the levers of the massive trillion-dollar federal bailout.
At the same time, the bank, which announced on Tuesday that it was hiring former Securities and Exchange Commission Chairman Arthur Levitt, has received $10 billion in TARP funds.
This dual role - with former Goldman executives directing the financial rescue even as the bank took TARP funds - has aroused concern about potential conflicts of interest and excessive influence.
Goldman Sachs is "a political organization masquerading as an investment bank, and they're sitting at the table with the top people in government," says Goldman critic Christopher Whalen, the managing director of Institutional Risk Analytics, which rates banks and provides customer analytics. He calls Goldman "the most political firm on Wall Street."
Do tell more.
Examples include former Goldman exec Henry Paulson, who led the Treasury Department when the bailout was first formulated last September, and who appointed former Goldman vice president Neel Kashkhari to oversee the massive $700 billion TARP fund. There is also the current Treasury Secretary Tim Geithner, who installed a circle of former Goldman bankers to help him navigate the country through the financial crisis.
In case you missed it, libertarians, here is how the REAL WORLD works.
The corridors of power are populated by cliques. A clique is a group of allied individuals, who help each other overtly and covertly.
A perfect example is when you get a job in a company, and then try to get your buddies in there also. I know, I did it myself - not only is it more pleasant to work alongside intelligent, like minded folks whom you trust but also you get allies in the political backstabbing office games.
Oh wait - if you are a white American, you were taught to go it alone and compete based on merit.
My, you ARE a moron, aren't you, my naive whitey-American?
Don't let the door hit you on the ass on your way out as the nice Indian manager replaces, quietly and slowly but always steadily, everybody in his department with his buddies.
Ahem, sorry for the tangent, but this will help explain the following.
Goldman Sachs is a clique, the most successful clique in the US government right now.
"He who controls the gold makes the rules", right?
Well, as you should have gotten from the article I quoted from, Goldman works exactly like the Indian manager in your office, like me in your office (even though I am white, I am an immigrant, and know about cliques. I am NOT like you at all. Beware).
Goldman guys got into the government, and each one tried (and succeeded) in pulling his buddies into positions of power.
One person joins an organization, gets others in, and if it so happens that he is an incompetent boob and one of his buddies gets promoted ahead of him - no worries, he will get pulled up alongside others.
The group takes care of its own, the group moves as one, and the idiotic "strong individuals", who whine about fairness, ethics and, this is most funny, libertarianism are laughed all the way out of the workplace - whether it is a corporation's office, or the US government.
Now you can read this sentence from the article and understand it fully:
There is also the current Treasury Secretary Tim Geithner, who installed a circle of former Goldman bankers to help him navigate the country through the financial crisis.
Yes, I am sure that Timmy boy got all his buds from Goldman Sachs into government positions... for the good of the country.
And Goldman has more than 30 ex-government officials working as registered lobbyists on staff, including former House Majority Leader Richard Gephardt (D-Mo.) to represent its interests on issues related to TARP, according to Mother Jones.
This is a great clique, indeed.
Just to ram this point down your throat into the places where the sun don't shine, and then out again, lets go to another random article on the web.
The Nation: 'Government Sachs' Strikes Gold... Again :
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.
Lehman Brothers was a competitor of Goldman Sachs, but, alas, they were clueless about how the game of life is played.
And so they were fucked.
To receive government bailout money, YOUR tax money, your organization could not have been a financial Wall Street predator - it must have been a bank.
Why, Lehman Brothers, you were an investment predator, and made some bad calls and trades, lost your money, so kindly roll over and die, mmmkay?
On the other hand, Goldman Sachs, which was exactly the same kind of a Wall Street financial predator, was allowed to become a bank overnight and then receive unlimited funds to help it out in its time of need.
Another thing that not many understand is that Goldman Sachs DID NOT pay back the money it was given by the government.
Oh, they paid back the TARP money all right - and the paid media, like the GE channel with "money honeys" will say this again and again, but the real bailout happened differently.
AIG, the insurer, was used by the financial predators to insure the bad investments and loans they made and increase their ratings (so a bunch of shitty loans, rated F for "fucked up never will get repaid" became insured through AIG and suddenly, through the magic of the capitalism fairy, became AAA++++++++ superb investments - I wrote about that before - look at the post below, in fact).
But then AIG (and the rest of the used patsies) caught on to the fact that even though the CDS, CDO and whatever the fuck else acronym was made up and then insured was shit and worth nothing... or close to nothing.
And AIG guys noticed that they do not have enough money to pay out all these insurance claims on these superb AAA rated financial doo doo.
Government to the rescue - and, while Americans were told that AIG, the insurance giant, must be rescued, in reality AIG was simply a funnel through which the government gave money to the Wall Street financial predators.
So, now you understand the two sentences from the 2nd article:
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.
For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman's collapse, they feared a systemic failure could be triggered by AIG's inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG's trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.
It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure.
Repeating - the taxpayer money funneled through AIG to Goldman Sachs (and others) will NOT be paid back.
It leads us back to the concept of a clique.
It helps when reading this sentence from this 3rd article I linked:
(...)we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke(...)
to realize that all the names mentioned who were deciding which financial predator, bank and investment organization would receive the most money, and how, and which organization would get less, much less, all of these names are either current members of or past members of Goldman Sachs... well, except for Ben Bernanke.
Odd man out, I guess.
So, in effect, to make it painfully obvious, the men were deciding whether to help their own organization which made them (and continues to make them and their cronies) rich.
I wonder how long they debated IF your tax money should be funneled to Goldman Sachs through TARP and then, by way of deception, through AIG.
But why do I (and Matt Taibi and others) call Goldman Sachs a vampire - indeed, I call it a leech, a parasite?
Because it brings nothing to the system, it is a leech.
The following also illustrates the concept of the GS clique, and brings another player from the past - Rubin, as well as showing what Goldman actually does (from The Nation again):
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 stock market."
Goldman was churning out profits by trading credit derivatives, speculating on currencies and oil and placing big bets [on] the stock market.
To those laissez faire, libertarians and other assorted idiots who state that trading in this way in the market is what capitalism is all about may I give a hearty FUCK YOU!
A Joe Schmoe investing in a company and holding the stock, that is bringing something to the market - that is helping the economy by giving funds to companies so they can produce, provide services, and employ people like you and me.
A bank getting your money and then giving you a small percentage interest each month while loaning this money to businesses and making even bigger profits that way - that is the way capitalism works.
A gigantic clique of ultimate government and business insiders, manipulating the market for bigger personal gains, gaming the marketplace by "pump and dump" and now using more and more sophisticated computer programs to shave nanoseconds off a transaction (yes, my naive libertarian friend who is a day trader - that is what you are up against) brings nothing to the marketplace or the economy.
That is not capitalism - that is laissez faire gone amok.
Speaking of craziness:
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.
But wait, I started this article promising to compare and contrast two financial companies, Goldman Sachs and CIT Group.
I hope you get the general idea of what Goldman is - a leech, a parasite.
Time to look at CIT Group.
Lets use wikipedia, why the hell not.
CIT Group Inc. NYSE: CIT (an abbreviation of an early corporate name of Commercial Investment Trust) is a leading global commercial and consumer finance company, founded in 1908. CIT has more than $70 billion in managed assets. CIT is a Fortune 500 company and is a part of the S&P 500 Index, and is a leading participant in vendor financing, factoring, equipment and transportation financing, Small Business Administration loans, and asset-based lending, and does business with more than 80% of the Fortune 1000.
CIT Group is a bona fide small business lender.
When a small business needs money, it cannot do what the savvy politically connected big boys at Goldman do and simply tell their buddies now in government to "gimmie!".
A small to medium business goes to a bank, to a credit union, to CIT Group.
To get equipment, to buy factories, to get trucks, trains, product, to employ people like you and me.
This is a pillar of capitalism - without credit to small and medium business everything stops and you get the financial catastrophe that we have now.
CIT Group is EXACTLY the kind of a company that should be first in line to receive financial help from the government.
Guess who got unlimited financial help and who didn't?
CIT Group, an important lender to smaller companies, said last night that it had failed to persuade the federal government to provide further financial assistance to help it avert a likely bankruptcy filing that could hurt thousands of clients ranging from small clothing manufacturers to retailers such as Dunkin' Donuts and Dell.
Riiiight - obviously Goldman Sachs is much more important to the US economy than CIT Group. A company that manipulates the market to make financial profit based on financial and accounting tricks and market manipulation (ohhhhhh, unproven, of course, and Matt Taibi is so full of it, right?) is much more useful than, say, a financial company that loans money to American business.
The people who steal money from the system - in effect, from you and me - are bailed out, while the people who make a living giving loans to small and medium business - you know, the ones who keep US employed - are NOT important.
NEW YORK--(BUSINESS WIRE)--CIT Group Inc. (NYSE: CIT), a leading provider of financing to small businesses and middle market companies, today announced that it has been advised that there is no appreciable likelihood of additional government support being provided over the near term.
Feel free to click on that link and join the outrage.
Bravo, Obama, fucking B R A V O.