Early Retirement Blog

Goldman Sachs is in public relations hell.   Record bailouts quickly followed by record profits and record bonuses, allegations of software generated insider trading, selective sharing of information with top clients, selling sub-prime mortgages to clients while shorting the market with their own money, bullying bloggers, and more.

The once quiet, behind the scenes investment firm, has been so stung from critical press articles and populist outrage, that it is actively seeking a brand manager to re-shape it’s increasingly tarnished image.

It better hurry.   More and more people are coming to the conclusion that Goldman Sachs purposely caused and profited from the global economic collapse, that it not only has the ability to manipulate the stock market, but also manipulates the White House, Congress, and the media, that it makes it’s money from creating and popping economic bubbles – creative destruction.

Goldman Sachs are the Masters of the Universe, they own the stock market casino, everyone is invited to play, but the tables are rigged, and in any case, they are the house and so they always win.   Even the usually compliant pro-business Wall Street Journal and the SEC are writing exposes and launching investigations.

So, what is going on with Goldman Sachs?   Are the perceptions and allegations true? Does Goldman Sachs control Wall Street and Washington? Did Goldman Sachs cause the global economic collapse?   Are the anti-Goldman Sachs bloggers right?

The answer is yes, but as I will explain, Goldman Sachs are not the Masters of the Economic Universe.   And in any case, the important point that the bloggers and everyone else is missing, is not that Goldman Sachs is dangerous because it can manipulate Wall Street and Washington.   It’s been doing it for years.   The reason that Goldman Sachs is dangerous is because now everyone now knows it.

Goldman’s recent record profits came from proprietary trading, in other words, from trading it’s own money (generously provided by U.S taxpayers) in the stock market, commodities markets, overseas markets.   And, from the revelation via the arrest of a computer programmer, that Goldman Sachs has developed a   software trading program, which in the words of Goldman Sachs, could be used to “manipulate markets in unfair ways.”   Using this software program which is located on a server at the New York Stock Exchange, Goldman Sachs knows your stock bets before you place them, and can place their own bets accordingly.

Since March of 2009, Goldman Sachs has only had two losing days trading it’s own money, a statistically suspicious statistic.

Whether it’s profits came from a software program or proprietary trading,   is irrelevant, because Goldman Sachs has something more powerful than a computer program, a method of generating profits older than computers   – inside information.   Goldman Sachs has a revolving door of junior and senior executives who flow back and forth, between the firm and the U.S. Government, loaded with information on the future policy moves of the government.

Goldman Sachs can then  use this information to anticipate, and place itself in position to profit, before anyone else in the market is aware.   Rent the movie “Trading Places” with Eddie Murphy   to see how this age old scam works.

The even bigger story, than the fact that Goldman Sachs can derive profits from manipulating markets using a software program, or that Goldman Sachs has insider information, is the fact that as Matt Taibbi describes in his excellent Rolling Stone article, Goldman Sachs can manipulate information itself.   “Goldman has its alumni pushing its views from the pulpit of the U.S. Treasury, the NYSE, the World Bank, and numerous other important posts; it also has former players fronting major TV shows. They have the ear of the president if they want it.”

If Goldman Sachs can manipulate the market with computer programs, insider information, and the ability to manipulate information itself, how then did Goldman Sachs get literally caught with it’s shorts down during the economic collapse? Why did Goldman Sachs have to send Treasury Secretary Paulson, it’s former CEO, to Congress threatening economic armageddon and martial law unless a nearly trillion dollar taxpayer bailout was passed?

Why did Goldman Sachs have to set-up AIG, with it’s former Goldman Exec Edward Liddy in charge, to be the funnel for billions of dollars of taxpayer money for Goldman Sachs?

Greed and arrogance.   Goldman Sachs CEO Lloyd Blankfein knew that the sub-prime mortgage market, that his firm helped create was going to implode, and placed his firms money in a position to take advantage of the housing bubble collapse.   Goldman Sachs’s competitors, Bear Stearns, Morgan Stanley, Lehman Brothers, were not as smart   or well connected, and were left holding bags of toxic assets when the credit crisis started.

Bear Stearns was the first to get into trouble.   Paulson picked up the phone and got $10 billion in Chinese money to keep Bear Stearns afloat.   Citigroup was next to get into trouble, and again Paulson picked up the phone, and got $5 billion in Arab money to keep Citigroup going.

U.S. Treasury Secretary Paulson, and former Goldman CEO,   assured foreign investors that their investments were safe.   Six months later Bear Stearns filed for bankruptcy,  poof went the $10 billion Chinese investment, and a Goldman Sachs competitor.   Bank stocks were tumbling, Chinese investors, Arab investors, Singapore investors, everyone who had been convinced by Paulson to invest in the U.S. financial system was losing money.

Instead of using the money and trust of foreign investors to reform and fix the U.S. financial system, the former Goldman CEO maintained an obviously flawed and corrupt financial system, that continued to benefit Goldman Sachs.

Next came Lehman Brothers and Morgan Stanley.   Again, Paulson picked up the phone and called foreign investors, having been previously burned by Paulson, they decided to not take his calls this time around.   In a move that benefited Goldman Sachs, but would cause the global economic collapse, Lehman Brothers was not saved by Paulson.   Morgan Stanley, another Goldman competitor was forced into a merger with Bank of America, only after Paulson put a gun to BofA’s CEO Ken Lewis’s head.

For Goldman Sachs, the credit crisis and housing market collapse was not only profitable, it also helped eliminate long-time competitors.  What Goldman Sachs did not anticipate, or prepare for, was a global economic collapse.   In their arrogance, they just assumed that their man in Washington (Paulson), would be able to secure the financing needed to keep the game going.   In their greed, their man in Washington permitted Goldman Sachs’s competitors to fail, even if it posed the risk of crashing the U.S. financial system.

Goldman Sachs was positioned to take advantage of a U.S. economic collapse.   Their greed and arrogance, their lust for financial domination, their blind belief in their ability to shape events, did not prepare them for a global economic collapse.

Goldman Sachs, which had been conducting the world’s financial orchestra, got caught when the stage collapsed. Their investments in commodities, in foreign markets, crashed when the U.S. economy crashed.   Goldman realized, that no matter how well they were positioned, a sinking tide sinks all boats.   Goldman Sachs was forced to send their panicked former CEO to Capitol Hill with an $800 billion ransom note and a threat:

-  Give us the money or face a revolution from the American people.   It worked.

Now, instead of fooling foreigners into bailing out the U.S. financial system, Goldman Sachs was forced into fooling American taxpayers.

With their ability to manipulate politicians, and the media, over massive public opposition, Goldman Sachs was able to get their   three page Wall Street bailout bill passed in Congress and signed by President Bush.   Current President Barack Obama was instrumental in getting the bail out passed, taking time out of his campaign, to pressure Democrat Congressmen and women into passing the bill.  Goldman Sachs found their new man in Washington and candidate Obama won the election.

Under the Obama administration, the Federal Reserve and Treasury poured trillions of dollars of U.S. taxpayer money into the financial system,  no questions asked.   Despite the greatest financial crisis the United States has experienced since the Great Depression, the Obama administration has yet to introduce legislation in Congress, that would reform and re-regulate the U.S. financial system.   The Obama administration has obediently kept the game going.

Arrogantly, Goldman Sachs re-payed the foolish generosity of the American people, by using their money to create record profits and bonuses.   Instead of paying the price, for causing the global economic collapse, Goldman Sachs and their Wall Street cohorts have profited.   Under the cover of a populist president, it is the American people, who have payed the price for the greed on Wall Street.

The problem for Goldman Sachs, and their man in Washington – president Obama, and what makes Goldman Sachs so dangerous, is that more and more Americans are starting to figure it all out.

More and more Americans are beginning to realize that their economic future is being squandered, for the benefit of Goldman Sachs,  Wall Street, and the politicians in Washington who represent them.   Foreign investors who were robbed, already found out that Wall Street is rigged, and now only provide enough funding to keep the U.S. financial system on life support, while they learn how to survive without the U.S. consumer.

What makes Golman Sachs dangerous, is that through their greed and arrogance, they have exposed to the American people the extent of their corruption of both Wall Street and Washington.   Goldman Sachs through their behavior risks destroying the confidence Americans have in their politicians and the confidence Americans have in placing their money on Wall Street.

And, here is where we get to your retirement, Wall Street is your Golden Goose.   To successfully and safely retire, requires that you place half of your savings on Wall Street, in order to earn the superior returns Wall Street has historically provided.   If you, the American people lose confidence in Wall Street and stop investing in stocks, you will have a much harder time achieving retirement.   Goldman Sachs through their behavior, their manipulation of the markets, the media, and politicians, risks destroying the confidence the American people have in investing on Wall Street.