Thursday, May 12, 2011

Matt Taibbi's must read...

Click this link for the article:
The People versus GoldmanTax

This article is a must read. I have some commentary as we implode in another cronyist experiment gone awry - front and Center Goldman Sachs and JP Morgan. It must be understood that the conflicts in our system are now so absolutely dreadfully big that the leverage ratios of both Goldman and JPMorgan are allowed to be at the highest ever...that's EVER and this while they represent the greatest threat to the stability of the financial system after a period in which we learned that a leverage ratio of 30 to 35 was enough to cause nuclear fusion for the financial system. These assholes are at it again with leverage ratios far in excess of that...and whats worse is that all their hold-to-maturity debt is accounted for on their books at 90 to 100% of its par value. The consequences of that are not factored into their leverage assessments...and even without that consideration these instituations are the highest leveraged ever!

WHY...WHY...WHY...WHY is this ok. Well, we will find out the consequences in a "GIANT thunderbolt of truth" margin call that will implode the orgy of excess that Fed driven/induced leverage, fraud, lies, misrepresentations and balance sheet bloating, not just of itself, but of its cohorts can do. Double and triple theft has been the result it will be revealted ofr all to see.

The Fed's QE program supposedly created new money out of thin air...the program did do that...but it use that money as fuel to light the incendiary sparks of financial destruction. It has destroyed far more money than it has created and I venture to say that the $600 billion QE program has created well north of $1.2 trillion on monetary contraction...and they accomplished this task through their overleveraged, cronyist cohorts...of which JPM and GoldmanTax ar but two. Howver, the damage is most likely double that number...I will get into that at another time.

In any case...this is not the first time that Wall Street deception has used leverage and pyramiding to facilitate conflict of interest and cronyism at the highest levels that ultimately passes the rewards to the few and losses to the many...below are two notable quotes from Taibbi's article I find outrageous given the wreckage these guys are creating with their deplorable antics and motivations:
in the 1930's:
...The trusts, were a major cause of the market's historic crash; in today's dollars, the losses the bank suffered totaled $475 billion. "It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity," Galbraith observed

Converting to a bank-holding company has other benefits as well: Goldman's primary supervisor is now the New York Fed, whose chairman at the time of its announcement was Stephen Friedman, a former co-chairman of Goldman Sachs. Friedman was technically in violation of Federal Reserve policy by remaining on the board of Goldman even as he was supposedly regulating the bank; in order to rectify the problem, he applied for, and got, a conflict of interest waiver from the government. Friedman was also supposed to divest himself of his Goldman stock after Goldman became a bank holding company, but thanks to the waiver, he was allowed to go out and buy 52,000 additional shares in his old bank, leaving him $3 million richer. Friedman stepped down in May, but the man now in charge of supervising Goldman — New York Fed president William Dudley — is yet another former Goldmanite.
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