"Why Goldman Sachs is a Gold-plated Target"

"Why Goldman Sachs is a Gold-plated Target"
by Gary Lamphier

"Goldman Sachs has been called a lot of things, from Government Sachs - for its cozy ties to the White House- to Golden Slacks (stock tout Jim Cramer's nod to the fat bonuses the bank pays its execs). But when it comes to scathing labels for the financial powerhouse, Rolling Stone writer Matt Taibbi takes the crown. Here's how he opens a recent feature piece on Goldman's various alleged market manipulation schemes (The Great American Bubble Machine) in the popular U. S. entertainment magazine: "The first thing you need to know about Goldman Sachs is that it's everywhere," he writes. "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."

Got that? It's a giant blood-sucking squid. Now that's what newspaper editors call a "killer lede" (opening paragraph). If you think Taibbi's language is over the top, you might want to read his piece. It's a devastatingly detailed critique of Goldman and its practices, and it seems to have unleashed an outpouring of like-minded vitriol from various other quarters, including The New York Times. In fact, many of the adjectives hurled at the influential Wall Street bank of late can't be repeated in a family newspaper. From left-leaning magazines and blogs to key financial publications, bashing Goldman has become a virtual cottage industry.

Its uncanny ability to manufacture huge trading profits in volatile markets has prompted some to question what's really behind Goldman's magic touch, besides the queue-jumping technology known as "flash" trading, which effectively allows big players like Goldman to eat the little guy's lunch, even before it lands on his plate. During the second quarter, for instance, Goldman earned more than $100 million on its trading activity on 46 separate days, Bloomberg News reports, based on a review of bank regulatory filings. Meanwhile, Goldman suffered daily trading losses just twice during the quarter, and it made at least $50 million on 58 of the quarter's 65 trading days, for a staggering success rate of 89 per cent, says Bloomberg. With a winning percentage like that, who needs lotteries?

Even as America's Great Recession grinds on- a downturn many blame on the reckless investment practices (I'm being diplomatic here) of Goldman and other Wall Street banks- leaving U. S. taxpayers with a $2-trillion budget deficit, Goldman hasn't missed a beat. Its huge trading-fueled profits, and the massive bonuses it pays out to staff, have only gone up, not down. In mid-July, less than a year after Goldman pocketed $10 billion in bailout cash from the feds (funds it later repaid, although it has pocketed tens of billions of dollars in additional subsidies from other U. S. federal programs), it announced second-quarter earnings of more than $3.4 billion, a record high. The bank promptly shovelled more than $6.6 billion into its compensation pool for staff, bringing the first-half total to a staggering $11.4 billion.

Of course, Goldman isn't the only big U. S. bank that has accepted taxpayer cash on the one hand, while recycling billions of dollars to staff with the other. Last week, New York Attorney General Andrew Cuomo reported that Citigroup, Merrill Lynch, Goldman and six other top U. S. banks forked out $32.6 billion in bonuses in 2008 --smack in the middle of the worst recession since the 1930s--while pocketing $175 billion in taxpayer dough. "When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well," said Cuomo, in his 22-page report. "When the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well."

Cuomo's study, titled "No Rhyme or Reason: The 'Heads I Win, Tails You Lose' Bank Bonus Culture," prompted the latest in a series of firestorms over Wall Street's blatant use of taxpayer dollars to enrich its own traders. In fact, Cuomo's report revealed that almost 5,000 bankers pocketed bonuses worth upwards of $1 million last year, even as millions of workers lost their jobs.

So far, the response from the White House and the U. S. Congress has largely consisted of empty rhetoric. Although lawmakers approved a bill last week to impose curbs on executive pay, and discourage the kind of gambling behavior that brought several Wall Street firms to their knees last year, it's unclear whether any of this will ultimately be enforced. Since the financial crisis began, in fact, politicians have demonstrated a pattern of playing to the cameras when the public's fury reaches a fever pitch, then dragging their feet when the anger ebbs. As for Goldman, it continues to do what it has always done: make bags of money.

In a recent commentary on the rising tide of Goldman bashing in the mainstream media, Bloomberg columnist Michael Lewis - a Goldman alumni- takes a tongue-in-cheek approach to the issue. "America stands at a crossroads, and Goldman Sachs now owns both of them. In choosing which road to take, ordinary Americans must not be distracted by unproductive resentment toward the toll-takers," he says.

As for Taibbi's description of Goldman as "a great vampire squid wrapped around the face of humanity," Lewis begs to differ. "(This is) transparently false. For starters, the vampire squid doesn't feed on human flesh. Ergo, no vampire squid would ever wrap itself around the face of humanity, except by accident," he notes. "And nothing that happens at Goldman Sachs - nothing that Goldman Sachs thinks, nothing that Goldman Sachs feels, nothing that Goldman Sachs does- ever happens by accident."

- Gary Lamphier, http://www.edmontonjournal.com/business/fp/Goldman+Sachs+
gold+plated+target/1863936/story.html

So, these creatures believe they own the economic toll road of America,
and they alone are entitled to it's benefits?

Share this post