What Yves said

Yves Smith at Naked Capitalism has a long post about former Goldman Sachs Vice President Greg Smith’s new book on the company.  Smith’s book, Why I Left Goldman Sachs, describes the atmosphere at Goldman and how vulnerable clients are in an environment when making a deal and the gigantic fees that come with it is more important than selling a complicated and flawed financial instrument to unsophisticated clients.  Yves gives her own insider view of Goldman and why the company has gone ballistic over Smith’s book while at the same time insisting that Smith was too junior to know what was going on.  The money quote comes at the end of her piece:

Goldman has such a strongly developed internal culture that even a change at the top would take a while to percolate through, and Smith appears to have seen the impact.

I can relate.  Those of us in the lower rungs of the pharmaceutical industry witnessed a similar phenomenon.  At one point, we were governed by scientists and MDs who rose through the ranks to head the companies.  But that started to change radically in the 90’s during the era of many mergers and acquisitions and it really accelerated in the 2000s.  The financiers began to have more influence at about that time and we read accounts of CEOs under fire from analysts to cut research and outsource heavily. In retrospect, it looks like they were setting up pharma companies for their next M&A deals but eventually, all of the restructuring and Wall Street culture of constant change tricked downwards. The performance and compensation system changed, adopting Jack Welch’s program that was designed for GE salespeople, until it resembled Enron with even the lowly lab rats ranking each other, hoarding resources and actively engaging in cutthroat activities in order to avoid the ax.  And that, my friends, is about the worst thing you can do to a research organization.  Collaboration is essential to research.  By the time Wall Street values had trickled down to our level, we could see that they were more suited to the sales executives but in the labs were alien, out of place and destructive.  When it got to the point that lab equipment repairs had to be justified and we were forced to charge other departments for services we used to provide as part of our project collaboration, it was over.

So, I have no doubt that whatever Smith witnessed at Goldman was significant, profound and deeply disturbing.  It may be a similar situation where the business has begun to run amok and eat itself from the inside out, where policies no longer make sense and where the bulk of his time was spent pushing the competition in the next office off of his pedestal.  At that point, it’s no longer a functional business.  It’s a game of winner take all musical chairs.

Yves speculates on the reasons why Smith doesn’t spill all of the beans on Goldman or is even as detailed in his account as someone like Michael Lewis.  Some of those reasons include his relatively low level and institutional omertà.  But another possible reason is that there are few former insiders, even low level insiders like Michael Lewis who can write well on what are pretty complex financial instruments and make them intelligible to the average consumer.   I loved Lewis’s book The Big Short but it wasn’t until I was halfway through the book before I understood enough of it that I saw the humor in some of Lewis’s passages.  Now I know what Wall Street was up to but I doubt that even many Wall Street analysts truly understand the math and models behind their dynamic proprietary programs.  If Greg Smith understands them, there’s probably a lot he can’t divulge without  getting the Goldman legal department to bear down on him.

In any case, Smith’s book sounds interesting but I probably won’t be adding this one to my audible queue.  It’s not because I don’t think it is a worthy read or can’t learn more.  It’s just that through Karen Ho’s book Liquidated, and Lewis’s The Big Short and Boomerang, I think I get the picture well enough to know what went wrong.  But if you don’t have the time or patience for more than just a high level summary. it sounds like Greg Smith’s book might be just the horror story to keep you up on a cold and stormy October evening.

The Ring of Gyges or Why Study the Classics at UVA or Why anti-Regulators are full of $#*!

About 2500 years ago, the philosopher Plato told a story that even the most dedicated Fox News viewer can understand.  Here it is in text form:

According to the tradition, Gyges was a shepherd in the service of the king of Lydia; there was a great storm, and an earthquake made an opening in the earth at the place where he was feeding his flock. Amazed at the sight, he descended into the opening, where, among other marvels, he beheld a hollow brazen horse, having doors, at which he stooping and looking in saw a dead body of stature, as appeared to him, more than human, and having nothing on but a gold ring; this he took from the finger of the dead and reascended.

Now the shepherds met together, according to custom, that they might send their monthly report about the flocks to the king; into their assembly he came having the ring on his finger, and as he was sitting among them he chanced to turn the collet of the ring inside his hand, when instantly he became invisible to the rest of the company and they began to speak of him as if he were no longer present. He was astonished at this, and again touching the ring he turned the collet outwards and reappeared; he made several trials of the ring, and always with the same result–when he turned the collet inwards he became invisible, when outwards he reappeared.Whereupon he contrived to be chosen one of the messengers who were sent to the court; where as soon as he arrived he seduced the queen, and with her help conspired against the king and slew him, and took the kingdom.

Suppose now that there were two such magic rings, and the just put on one of them and the unjust the other; no man can be imagined to be of such an iron nature that he would stand fast in justice. No man would keep his hands off what was not his own when he could safely take what he liked out of the market, or go into houses and lie with any one at his pleasure, or kill or release from prison whom he would, and in all respects be like a God among men. Then the actions of the just would be as the actions of the unjust; they would both come at last to the same point.

And this we may truly affirm to be a great proof that a man is just, not willingly or because he thinks that justice is any good to him individually, but of necessity, for wherever any one thinks that he can safely be unjust, there he is unjust. For all men believe in their hearts that injustice is far more profitable to the individual than justice, and he who argues as I have been supposing, will say that they are right. If you could imagine any one obtaining this power of becoming invisible, and never doing any wrong or touching what was another’s, he would be thought by the lookers-on to be a most wretched idiot, although they would praise him to one another’s faces, and keep up appearances with one another from a fear that they too might suffer injustice.

The Greeks go on to say that King Croesus, you know, the guy who had more money than God, was a descendent of Gyges.

Now, the more zealous whip kissers out there will ask why even bring up this stupid story.  I mean, it’s not even in the Bible, right?  I have no way of knowing for sure but I suspect that Jesus would have gotten around to it eventually but his career was cut short by the anti-Occupy forces of the Roman Empire.  You know how it goes, some rowdy bunch of activists for social justice and equality who sleep outdoors and make noisy spectacles of themselves in public places and carry out unpermitted marches into Jerusalem are reported to the authorities for disrupting the peace, keeping everyone up at night, and making everyone uncomfortable and, before you know it, someone gets crucified and the whole group scatters.  So many parables, so little time.  Still, Jesus was totally into shepherds so I think he was leading up to it.

The Ring of Gyges story is pretty easy to understand and there is a reason why we call stuff like this “the classics”.  The classics never go out of style and say something that is universally true.  So, let me give you my spin on this and why the Ring of Gyges should be invoked whenever some politician starts using the evils of “regulation” to persuade others to vote for him.

The power that the ring gives the user is the ability to do what he wants without accountability.  Gyges gets away with murder and seduction and theft because no one can see him.  In other words, shit just happens. Mistakes are made.  We don’t know who.  Maybe Gyges did it, maybe someone else did it.  We can’t hold anyone responsible because no one is able to see or use indirect methods of seeing who did what.  That is, there is no way to measure who went in and out of the palace that doesn’t rely on our own eyes.  There’s no safeguarding person watching over the treasury who has the power to see through the ring’s power and detect Gyges robbing the bank.

The moral of the story is if there’s nobody watching, no justice system in place that is able to hold you accountable, and even the most honest and ethical person can become corrupted.  It is human nature to desire things and if there is no way to hold you accountable for taking what you desire, then you might as well take it.  In fact, you’re going to look like a fool if you have access to unlimited power and the things you desire and don’t take full advantage of it and the power you have over others.  If you don’t have access to the ring, well, you’re just a fricking loser.  Keep that in mind when you listen to this act from a This American Life episode called “Crybabies” about Happy Hour on Wall Street. Try to ignore the fact that Adam Davidson is reporting. The piece is actually quite good and illustrates the power of the ring of Gyges perfectly:

Wall Street: Money Never Weeps

Plato couldn’t have written that act any better.  Isn’t your blood boiling?  Don’t you want to hurt those bankers?  I know I do.  I think, who the f^*$ do those assholes think they are?  Oh, yeah, they’re the guys (and they’re almost always guys.  Women rarely get away with behaving badly.) who think they don’t have to answer to anyone.  They can do pretty much whatever the hell they want because no one can do a thing about it.  And they attribute their success to their smartness.  They’re just smarter than you losers who work at a regular job.  But that’s not why they’re so amazingly successful.  No.  They’re so successful because we have removed just about all the regulation from the financial industry.  There’s no oversight.

Oversight-1.a : watchful and responsible care b : regulatory supervision <congressional oversight>

In other words, those bankers are invisible to the justice system.  They can do what they want because no one can see what they’re doing.  No one can see what they’re doing because they keep telling everyone that regulation is bad.  They convince voters that regulation is bad by focusing the voters’ attention on the plight of small business owners.  And it probably is bad for small business owners.  But the effect of deregulation virtually never benefits small business owners.  It almost always benefits the guys at the top with the ring.  And the more money they get with their rings, like Croesus, the more money they can spend on advertising and Fox News and bribing politicians to make sure that no oversight is ever imposed on them.  Remember Elizabeth Warren?  She was supposed to head up a new oversight commission for the consumer financial products.  But the bankers wouldn’t have any oversight so Obama never appointed her.  Therefore, they can do whatever they want to consumers without oversight.

This is the real story of Elizabeth Warren and what she stands for.  She should be using that against Scott Brown.

And here is the most recent manifestation of the power of the ring of Gyges as explained by Matt Taibbi and Eliot Spitzer with regard to the fraud that Goldman-Sachs perpetrated on unsuspecting pension fund managers.  Goldman-Sachs is negotiating its way out of prosecution with the consent of our US attorney generals.  Matt says:

I was trying not to be too obvious in making the point that Spitzer is an example of the kind of guy you would want looking at that Goldman case. Not only did I not want to look like a suck-up, but I wasn’t sure how, “As you know, Eliot, a prosecutor is supposed to be kind of a dick!” would go over. Because I would have meant it in the most complimentary way possible. And it has nothing to do with politics. If you read James Stewart’s Den of Thieves you can see that Rudy Giuliani had some of the same key qualities. A good prosecutor should look down the barrel of a bunch of millionaire lawyers at Davis Polk or White and Case and feel turned on by the challenge of combat. Making a deal with any devil should burn him at the core, keep him awake at night.

But that’s exactly who Eric Holder and Lanny Breuer haven’t been, exactly who Bob Khuzami at the SEC hasn’t been. Instead of being fighters, they’ve been dealmakers and plea-bargainers. They’ve dealt out every major financial scandal, from Abacus to the Muni-bid-rigging cases (they prosecuted a few low-level guys at GE but let the big players at the big banks skate) to the Citigroup fraud settlement that was so bad a judge threw it back at the govenment’s face. In that latter case, amazingly, the govenment is now fighting not for its constituents, but for its right to give out crappy deals to repeat-offender banks without judicial review.

I’m not surprised that the Obama administration’s justice department has been reluctant to use regulation to its benefit and prosecute the criminals with the full force of the law.  It was evident early on (April 2009, to be exact) that this was the approach that Obama would use when it came to Wall Street.  All of the “oversight” would come in the way of ad hoc deals, each company getting a custom made solution that allowed them to skirt the law and get away with a slap on the wrist.  That’s because Obama doesn’t have any principles that he isn’t willing to bargain away on the negotiating table and he always starts his bidding on terms that are heavily favorable to the other side.  It’s not a bug, it’s a feature.

It goes without saying that you don’t have to be of any particular political persuasion to be incensed that the banking industry is getting away with murder and theft without any oversight.  It goes without saying but for some reason, I feel compelled to say it anyway.

Just because people on the left are the most vocal and angry and disappointed and irate about the fact that the financial industry is going unpunished doesn’t mean they are wrong.  Just because a bunch of Occupiers are calling attention to the financial industry and how the fact that it is not accountable screws all of us doesn’t mean that they’re bad people.

What I wonder is why it is that so many people on the right are focusing all of their attention on abortion and gay rights and how unemployed and poor people are unconscionable deadbeats but giving the real parasites in the finance industry a pass.  And I can only come to two possible conclusions: 1. The people on the right are easily lead and gullible and respond well to authoritarian messaging because it is all over the place or 2. It’s because they hope to *be* part of that privileged group of power ring owners in the future so that they can have all of their desires met without accountability.

Now, I will be the first one to mock the left for their crazy ass beliefs about GMO crops and homeopathy and nuclear energy and that the pharma industry is trying to poison them (because they’re not and anyway, it’s just another way for the trial lawyers to sink their fangs into the money stream. The left has its own unaccountability problem.)  But if you’re on the right or leaning right, or used to be a Democrat but are so pissed off about what Obama and the DNC did in 2008 that you’re letting your anger blind you to what these criminals on Wall Street are doing now, then you need to do some soul searching and get to the bottom of your orneriness because it’s really not helping.

It’s the right that relies on religion to keep everyone in line with threats of hellfire if you’re sexually active and not married.  You can always count on the religious to condemn everyone who doesn’t believe strictly in the Judeo-Christian version of the ten commandments.  They have a holy fit if you’re an atheist.  But they seem to be perfectly Ok with giving Wall Street a pass.  It’s like, “there’s nothing we can do.  They’re evil and we’re scared of them because they have all the power to make our lives miserable.”  Bullshit, of course there’s something you can do.  Stop voting for the politicians who keep asking for fewer regulations.  It doesn’t get any simpler than that.  Unfortunately, they’re also the politicians who hide behind religion or pander to religious people.  Show me a religious politician and I’ll show you someone who doesn’t believe in regulation.  That’s all there is to it.  They want to let the criminals operate without boundaries.

If these wealthy, unaccountable assholes continue to do what they’re doing without oversight, they’re going to bring the entire world’s financial system down.  That’s what happens when you can’t stop yourself from taking whatever you want and no one else has to power to interfere.

It doesn’t matter if you are on the right or the left, everything you own, everything you planned, your health, your retirement, your entire future, is at risk.

Thursday: Things that shouldn’t need to be said but…

1.) Susie Madrak found this post by George Lakoff that I think everyone in the left blogosphere should read and commit to heart.  It’s about the Santorum Strategy and what is really going on with the Republican primary.

Liberals tend to underestimate the importance of public discourse and its effect on the brains of our citizens. All thought is physical. You think with your brain. You have no alternative. Brain circuitry strengthens with repeated activation. And language, far from being neutral, activates complex brain circuitry that is rooted in conservative and liberal moral systems. Conservative language, even when argued against, activates and strengthens conservative brain circuitry. This is extremely important for so-called “independents,” who actually have both conservative and liberal moral systems in their brains and can shift back and forth. The more they hear conservative language over the next eight months, the more their conservative brain circuitry will be strengthened.

This point is being missed by Democrats and by the media, and yet it is the most vital issue for our future in what is now being discussed. No matter who gets the Republican nomination for president, the Santorum Strategy will have succeeded unless Democrats dramatically change their communication strategy as soon as possible. Even if President Obama is re-elected, he will have very little power if the Republicans keep the House, and a great deal less if they take the Senate. And if they keep and take more state houses and local offices around the country, there will be less and less possibility of a liberal future.

I think I’ve said this before (I’ll see if I can find the links to my posts about it) but it bears repeating because the A list bloggers don’t seem to be getting it: the reason why the Republican primary is dragging on is because it works in the Republicans favor.  It changes the national dialog and keeps the issues that Republicans want to talk about out there in the media all the way to August.  Don’t be surprised if there is a brokered convention.  They *want* the whole nation sitting on the edge of its seat waiting to see who the Republicans crown.  That means they can talk about deficit reduction, entitlement reform and women’s reproductive rights for a long, long time. By the time they are done, the general public will believe that reducing the deficit at all costs is the most important thing in the world and that no one should pay for anyone’s health insurance, much less birth control.  If you made the stupid lifestyle decision to be born human and indulged in living, putting your body at risk, that’s YOUR problem. Romney and Santorum are in this together for this tag team event and I wouldn’t be surprised if the Republicans have already issued primary voters their votes in advance.  It only looks like chaos to the lefty bloggers sitting smugly at the top of Maslow’s pyramid.  But come August, the Democrats, who should have been championing Occupy Wall Street without trying to co-opt it (see more on this below) are going to be scrambling to control the message.  Never underestimate the Republicans’ desire to win.

PS: I need a job, George.  Call me.

2.) Lefty bloggers are wasting their time talking about Sarah Palin.  If Democrats need independent women’s votes, maybe they should stop assuming that Palin is the cause of their defection from the Democratic party.  She’s not.  There are just as many of us out here who are independent liberals who are Democrats in Exile, who do not give a flying fuck about what comes out of Sarah Palin’s mouth.  Frankly, we’re turned off by the Palin bashing, not because she’s a viable politician (she’s not) but because she’s a human being and we’re just tired of the left using Palin as the dumping ground for their current round of misogyny.

Can we move on from Palin already?  She disgraced herself last year during the  Gabby Giffords shooting episode and before that when she teamed up with her chum, Glenn Beck.  Palin had a choice after 2008.  She could have become a legitimate politician on the right, and still not to our tastes, or she could have become a hack.  She chose the latter.  Let’s move on.

Palin is not relevant in this election season.  OBAMA is relevant this election season.  Nothing Palin tells women who have flocked to her, and this woman is not one of them, is going to persuade them to vote for a Republican.  What might persuade them is the persistently lagging economy and anger at Obama for doing such a lousy job as president.  We could have had a V8 but we got watered down tomato juice instead.

The rest of us independent liberals are shopping around for a third party.  I would advise the Democrats to stop touting Lilly Ledbetter as the Paycheck Fairness Act.  Not only is this stupidly deceptive, women are not fooled.  It’s an insult to our intelligence.  Even we can figure out that there is still no fairness in our paychecks, if we are lucky enough to still have them.  And instead of being proactive about reproductive rights, the Democrats are not making a full throated defense of them against the Republican juggernaut.  We are going to remember who took down Rush.  It wasn’t president Obama.

By the way, if some of this diatribe about Palin sounds like something the Republican right wing nut cases are saying, it’s because even those vile mouths of Sauron have a point.  Stop being dicks, Democrats.  You’re playing right into their hands.

I’m still hopeful for a third party candidate.  The two major parties are busy talking amongst themselves and leaving the voters out of it.  They are leaving the American electorate on the table.  Some decent politician could see this as an opportunity of a lifetime and consider running as an Independent New Deal Democrat.  Think about it.

3.) When they say it’s not about the money, it’s about the money.  The reason why the Republicans are pulling out all of the stops over paying for women to have sex is because they are working for insurance companies.  Insurance companies do not want to have to pay for this.  They are going to pass the costs onto someone.  Are you kidding?! Did you think the CEO of United Healthcare is going to take a cut to his bonus just because some broad in Washington wants to have sex?  Please.

The argument that Democrats are making that this will actually save insurance companies money doesn’t ring true to me.  Right now, all of the women who aren’t covered by the birth control mandate are bearing the costs by themselves.  That is saving the insurance companies money.  The vast majority are already preventing unwanted pregnancy related expenses for the insurance companies.  But let’s say that the companies end up paying for some unexpected surprises.  The cost of a pregnancy is already factored into the negotiations the insurance company has made with doctors and hospitals.  There’s a flat fee for an uncomplicated delivery.  That could easily be eclipsed by 10 years of oral contraceptives.  And now, they are going to be covering millions of women that they previously didn’t have to cover.  Of course it’s a hit to their bottom line.

If the Democrats were smart, they would have adopted the message of Occupy Wall Street and associated the insurance companies with the 1%, which they are.  They are trying to make a profit at the expense of your health.  They are collecting much more in premiums than they will ever pay out to you.  It’s immoral.  They’re making money hand over fist and giving themselves huge bonuses at your expense.  It’s immoral.  They’re greedy bastards and they’re making you feel dirty for asking for something that should be your right as a premium paying individual.  It’s immoral.

But Democrats are not smart.

3.) Speaking of the morality of Occupy Wall Street, the way that Democrats participated in muting the occupy movement (temporarily) may come back to bite them in the ass.  As I have noted before, the Republicans have a moral worldview and the Democrats do not (will try to find link to my post on this.  Must make better tags.  Sigh.).  You may not like the Republicans’ worldview but there’s no question that any American you ask can explain what it is.

What the Democrats currently have is everything on the table on a slippery slope and no backstop.  Not a winning formula.  They could have let the Occupy movement build momentum and then coasted to a win on its slipstream.  They could have said, “Hey, those dirty fucking hippies have a point!  The 1% *are* greedy fucks who are destroying the American middle class.  Maybe we should redefine what it means to be successful.  Maybe we should make the system more fair and help everyone achieve their goals so that America is number one again in innovation and prosperity.  Maybe we need to treat hard working Americans with more respect and champion their free speech rights.  Maybe we should stand up with them and labor against the soul destroying corporate class. Maybe we should force bankers to be good American citizens.”

But the Democrats did none of these things.  In fact, the Democrats were ultimately behind the DHS riot police interventions and the FBI surveillance and the infiltrations.  Oh, no, you say?  Well, who the hell else is in charge of the executive branch these days?

So, you gotta ask yourself, why is it that the Democrats would be more willing to engage in a strategy to enforce learned helplessness in anyone who wants to change the conversation and redirect it away from the ubiquitous Republican austerity message machine?

Who are the Democrats working for?  Hint: it’s not for you.

4.) Greg Smith, formerly of Goldman Sachs, now joins the ranks of the unemployed, possibly forever, after he immolated himself on the Op/Ed page of the NYTimes.  I hope he has a stash to fall back on.

I believe Smith.  I think he was what he says he was and do not question his descriptions of business as usual in the hallways of Goldman Sachs.  Let’s not forget that Jon Corzine was once a top executive at Goldman Sachs and look what wonders he did for the muppet investors of M. F. Global.  Or the Democratic base for that matter.  He has a habit of taking what is not his and giving it away to the undeserving.

Anyway, lest any of us in the pharma research forget, it was Goldman Sachs and J.P. Morgan who coordinated the merger mania that lead to Pharmageddon and all of the jobs we have lost in the past several years.  They do not care that what they are doing to the research industry is destroying it and is going to result in a vastly reduced portfolio of new drug therapies in the future.  All that is important is extracting the last bits of wealth from these ailing industries for the big shareholders and gigantic bonuses for themselves.  The ruined lives and careers that are left in the wake of these restructurings and mergers do not matter to them at all.  We’re losers, muppets and carrion.

This is not going to stop as long as executives are rewarded for short term planning.  It’s really not their fault that they behave the way they do.  It’s what they get paid for.  When we stop rewarding them for it, they’ll stop destroying us and not a second before.  It is stupid and foolish to expect them to act like decent human beings when they don’t have to.

So, what are Democrats planning to do to make sure the incentives are directed towards long term investment and prudent risk and financial stability?  Fuck if I know.

5.) Last but not least, I was looking at the lineup for the Reason Rally and while I am impressed by the great speakers who are going to be big draws for the Humanist, Freethought, Skeptics and Atheist movement, I was a little disappointed to see that many of them are not American.  If the Reason Rally organizers are trying to get attention for their voting bloc, it would be a good idea to ask Dawkins to serve more as MC, rather than headliner and let the American superstars take center stage (Dan Barker, Greta Cristina, Adam Savage etc.).  Otherwise, this rally is going to backfire.  You can already see the spin the Republicans are conjuring up.  Don’t fall into their trap.  I know that the rally attendees are going to be good, hard working, patriotic Americans who want reason to prevail over superstition.  That is what you need to work with.  The last thing you want is an international lineup of eggheads, much as I like Dawkins.  You need to have speakers who can connect with their audience, who come from a genuine place in the American experience and who lead Americans to a better way.  Sort of like this guy, Jerry Dewitt, former Pentacostal-Dominionist pastor and current executive director of Recovering from Religion, who in the span of 12 minutes manages to honor Tim Tebow, Christopher Hitchens, Thanksgiving and Christmas in a genuine, uplifting, positive  and non-theistic way:

Can I get an “Amen!”?

Recovering from Religion is an organization that is helping clergy and other believers make a transition away from more oppressive religious sects.  Dewitt says he gets a lot of inquiries from conservative Christians, Mormons and Jehovah’s Witnesses because these communities tend to isolate their members so when a believer tries to get out, they lose much more than their religions.  They lose their families, community, sometimes their jobs, and they lose their identities.  Dewitt calls it “identity suicide”.  It’s a hard transition to make but people of good conscience who can no longer bear living a lie need a place to go where they will find acceptance and help.  Imagine Jinger Duggar trying to escape her captors and looking for a safe mental haven.  That’s what Dewitt is trying to provide.  So, if you are looking for a place to make a charitable contribution this year, consider donating to Recovering from Religion.  For every person who comes out of the spell, there is one more American who can help set the country back on the right track.  I think this is a mission that is worthy of our support and may even cough up a few bucks myself from income tax return.

By the way, I am astonished by the number of freethought meetings and organizations there are in the reddest states of the union.  I’m talking about Oklahoma, Texas, Arkansas and Nebraska.  These people are very active and they are posting their meetings and media podcasts all over youtube.  Here in NJ?  Ehhhhh, not so much.  I guess that’s because New Jerseyans already feel comfortable as godless heathens and don’t feel the need to organize. I think they’re wrong.  The suburbs of central Jersey are sometimes indistinguishable from the bible belt.

Monday: Well, that went well

Greece is most seriously displeased over the new austerity measures foist upon it by foreign lenders:

Though it came after days of intense debate and the resignation of several ministers in protest, in the end the vote on the austerity measures was not close: 199 in favor and 74 opposed, with 27 abstentions or blank ballots. The Parliament also gave the government the authority to sign a new loan agreement with the foreign lenders and approve a broader arrangement to reduce the amount Greece must repay to its bondholders.

The new austerity measures include, among others, a 22 percent cut in the benchmark minimum wage and 150,000 government layoffs by 2015 — a bitter prospect in a country ravaged by five years of recession and with unemployment at 21 percent and rising.

But the chaos on the streets of Athens, where more than 80,000 people turned out to protest on Sunday, and in other cities across Greece reflected a growing dread — certainly among Greeks, but also among economists and perhaps even European officials — that the sharp belt-tightening and the bailout money it brings will still not be enough to keep the country from going over a precipice.

Angry protesters in the capital threw rocks at the police, who fired back with tear gas. After nightfall, demonstrators threw Molotov cocktails, setting fire to more than 40 buildings, including a historic theater in downtown Athens, the worst damage in the city since May 2010, when three people were killed when protesters firebombed a bank. There were clashes in Salonika in the north, Patra in the west, Volos in central Greece, and on the islands of Crete and Corfu.

3000 years of history and civilization brought down in a matter of months by Goldman-Sachs.  And they thought the Ottoman Turks were bad.

Let’s not excuse the Greeks.  Their failure to collect taxes is one of the reasons they are in this hole.  That and the fact that no one seemed to be using the same spreadsheet once they got those taxes.  The bigger problem is that they were living Goldman-Sachs values with everyone trying to live in total freedom without government supervision, but they didn’t have Goldman-Sachs thuggish power to break a government’s knees.

What I can’t understand is why we keep having to give in to Goldman-Sachs.  Why is it we citizens of so many countries are powerless to make these assholes eat their losses?

They’re few, rich and vulnerable?

Pearls of Wisdom:  “If you offer to do demonstrations at a science fair hoping to pick up some networking business cards, your profession has just slid off the deep end”

Picked up at Susie Madrak’s site, this study purports to show who are the richest of the rich and how they are interconnected in a network of influence and interdependency.  I read it briefly last night but it was math intensive and it was starting to give me math anxiety (the bane of my existence.  Not the math, the anxiety.), which is never a good thing when you’re trying to get to sleep.

This is an excerpt of the Discussion section of the paper The Network of Global Corporate Control:

The fact that control is highly concentrated in the hands of few top holders does not determine if and how they are interconnected. It is only by combining topology with control ranking that we obtain a full characterization of the structure of control. A first question we are now able to answer is where the top actors are located in the bow-tie. As the reader may by now suspect, powerful actors tend to belong to the core. In fact, the location of a TNC in the network does matter. For instance, a randomly chosen TNC in the core has about 50% chance of also being among the top holders, compared to, e.g., 6% for the in-section (Tbl. S4). A second question concerns what share of total control each component of the bow-tie holds. We find that, despite its small size, the core holds collectively a large fraction of the total network control. In detail, nearly 4=10 of the control over the economic value of TNCs in the world is held, via a complicated web of ownership relations, by a group of 147 TNCs in the core, which has almost full control over itself. The top holders within the core can thus be thought of as an economic “super-entity” in the global network of corporations. A relevant additional fact at this point is that 3=4 of the core are financial intermediaries. Fig. 2 D shows a small subset of well-known financial players and their links, providing an idea of the level of entanglement of the entire core.

One thing is for sure, this group of 147 individuals might look like a tight little network but as I have learned from looking at proteins closely that initially look invulnerable, there are always weak spots that can be exploited.  A little push here, a bond broken there and the whole shebang is rendered unworkable.  It’s probably no different for spheres of influence like wealth networks.  What we need is someone who can analyze the network with some kind of sensitivity analysis program.  (For all we know, someone is already busily analysing this. Not me.  That s%^& just makes me nervous.)  I’m *sure* that it can be done.  The parameters of power and money most likely are the same for all of the major players. And once we know where the weak spots are, ooo, baby, I wish I had the big bucks to bet on how it unravels.  I could buy my own pharma and employ all my friends.  By the way, this looks like old data from before October 2008 because Bear Stearns and Lehman Brothers are included in the 147 firms.  Recent historical data shows just how vulnerable and interdependent this network is since the collapse of Bear Stearns and Lehman Brothers threatened to derail the entire global economy.  It also shows how 147 firms can hold the world hostage.  It looks like the authors are publishing their oldest stuff first, which suggests they have something newer coming up.  I can hardly wait.

Hmmm, I just noticed that my 401K manager is on the network.  Better move my money first…

Wednesday News

Good Morning Conflucians!!!

First up in weird news, in case you’re not already getting that apocalyptic vibe from earlier this week, more birds have suddenly died, this time not in Arkansas, but in Louisiana:

Birds dropping dead from the skies and rivers flowing with tens of thousands of dead fish sounds like a cheesy Hollywood movie about the Apocalypse. Or the ravings of a Revelation-obsessed street preacher.

But residents of several US states are coping with the reality of mystery mass wildlife deaths, which have left officials scratching their heads and jumpy members of the public joking (nervously) about the end of the world.

Today it emerged that about 500 red-winged blackbirds and starlings had been found dead in Louisiana. Their tiny corpses littered a short stretch of highway near the city of Labarre after apparently falling dead from the sky.

That would be spooky enough. But the Louisiana bird die-off came just a few days after up to 5,000 blackbirds fell to earth in neighbouring Arkansas in the small town of Beebe. Residents there had reported stumbling upon the bodies littering the ground and even being hit by them as they fell. One woman said she was struck while walking a dog. Another avian corpse bounced off a police car.

In even more grim news, anglers and other members of the public reported that more than 80,000 drum fish had suddenly died in the state’s Arkansas river, about 100 miles west of Beebe. The silvery bodies of the fish floated in the river and washed up on its sides having died at roughly the same time. In another incident, hundreds of miles away on the Maryland coast of Chesapeake Bay, tens of thousands of dead fish also washed up on the shore.

Yea, that’s what I said. WTF? I’ve got rosary beads, incense, a statue of Sheba, among a few other things. What are you holding onto for dear life? What was the name of the other horseman anyway?

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In a related news, Goldman Sachs and some Russian group invested nearly 1/2 billion in Facebook. That’s right, those two know everything there is to know about a whole hell of a lot of people now. Wonder if their joint bank account number is 666 by any chance. Note to self, get more statues of other religious figures. Here’s some coverage:

The “great vampire squid” of finance, Goldman Sachs, has invested $450 million in the emerging great vampire squid of cyberspace, Facebook. As the New York Times’ DealBook reported, the deal is gives Goldman a leg up on the huge fees investment banks will get when the social-networking company eventually sells shares to the public. And as the Times and Wall Street Journal also report, Goldman will also haul in huge fees from those clients who want to invest themselves.

Meanwhile, Facebook gets the capital to keep buying talent and startups, and to fuel its expansion in all kinds of other ways — and it gets to sell stock in what amounts to a shadow stock market that’s growing faster than regulators seem willing or able to understand, much less deal with.

This looks like a better deal for Facebook than its investor, putting Facebook’s value at $50 billion, which makes sense in today’s increasingly bubble-like market. Silicon Valley is going a bit wild again– not as crazy as the late 1990s, mind you, but there’s a froth element to the local economy.

Given a deal of this size and importance, there should be some SEC scrutiny. Yea right. But some report that there might be:

Goldman Sachs Group Inc.’s plan to offer clients up to $1.5 billion in Facebook Inc. equity may invite U.S. regulators to take a closer look at whether the owner of the world’s most popular social-networking site is circumventing disclosure rules, securities lawyers said.

The Securities and Exchange Commission, whose rules require any company with more than 499 investors to disclose financial information, is already scrutinizing the market for trading shares of closely held companies including Facebook, according to a person familiar with the inquiry, who declined to be identified because the matter isn’t public

Goldman Sachs invested $450 million in Facebook and is planning to create a special purpose vehicle for its clients to make additional investments worth as much as $1.5 billion, according to two people familiar with the matter who spoke on condition of anonymity because the deal is private. Some private companies avoid crossing the disclosure threshold when investors’ funds are channeled through a single entity, such as a private equity firm or hedge fund.

“The real question is, what are the details of this special purpose vehicle?” said James Angel, a finance professor at Georgetown University’s business school in Washington. If the investment is designed to circumvent the rule, “the SEC should be looking very closely at it.”

Good thing we have a Democratic president that is looking out for us and will do what’s right. Oh wait, no we don’t, she was tossed under the bus. Instead we have an empty suit actually owned by Goldman Sachs. Oh yea. Why is this feeling even more biblical all of the sudden? Maybe we could have some leaks about all these things, about how Goldman Sachs helped fund an unknown candidate, about the Banks and their shady deals, about corruption in government at many levels. No, instead we get none of those useful leaks, but instead leaks that lead us to more wars in the middle east. Nice distraction.

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Let’s see what our grand congress has in store for us this session. First we have this from Slate about how the Dems sound like Repubs and the Repubs sound like Dems:

The parties have switched not only offices but arguments. Democratic Rep. Debbie Wasserman Schultz said Republicans were going to spend “countless hours trying to repeal health care reform rather than focusing on jobs, the economy and deficit reduction. Every minute wasted on trying to repeal health care reform fruitlessly is one less minute the Republicans will spend on job creation and turning this economy around.” If that sentiment sounds familiar, it’s because it was a Republican refrain during the House’s debate over health care in 2009 and 2010.

Sometimes this required the Democrats to contradict themselves. They complained that the GOP House effort to repeal health care was a meaningless show because the Democratic Senate will never allow such a measure to proceed. But when defending their record on economic issues from the last session, they pointed to bills they passed that they knew would never get past a Republican filibuster in the Senate.

Democrats also complained that the Republicans were adding to the deficit and have shut them out of the legislative process. Next week, when the House votes to repeal health care (or, “job-killing health care,” as they call it), Democrats will not be allowed to add amendments. They were also not allowed to participate in writing the rules under which the measure will be considered. Democrats did this kind of thing when they were in power, of course, but they say Republicans had pledged to be more open and transparent.

Oh dear. WaPo has more coverage on the upcoming battle over health care insurance bailout. Expect this to be a lot of noise and distraction for a while. Such theater. A Republican bill written by the health insurance lobby where the Repubs (and insurance companies) pretend to hate it and Dems (sadly actually) like it. And the working class are screwed again. As usual.

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It looks like there will be some turnover from both the WH staff and the VP staff. There’s some noise about Gibbs possibly leaving. And now we’re hearing that Biden’s CoS is stepping down. Along with that, LATimes has a few more rumors:

The White House staff reshuffle continued Tuesday with Vice President Joe Biden announcing that his chief of staff is leaving, while speculation swirled that the president may appoint a well-connected Chicagoan to a top post.

Biden’s chief of staff, Ron Klain, is resigning to become president of Case Holdings, the holding company of AOL cofounder Steve Case. Over the last two years, Klain helped position Biden as an influential figure in the White House while assisting in the confirmation of a pair of Supreme Court nominees: Sonia Sotomayor and Elena Kagan.

His departure surprised even some members of Biden’s staff. Klain had been mentioned as a possible candidate for President Obama’s chief of staff, but the president may be opting for someone with a higher profile.

After Rahm Emanuel quit to run for mayor of Chicago, Obama appointed longtime aide Peter Rouse to the chief of staff job on an interim basis.

Now, Obama is considering William Daley for a senior position, possibly chief of staff. Daley is the brother of outgoing Chicago Mayor Richard M. Daley, and he served as Commerce secretary under President Clinton.

As the great David Bowie once said: “Ch-ch-ch-ch-Changes.” Something tells me none of these changes are going to be for the better. Any bets?

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In some rather funny, in a macabre sort of way, news, a murderer was found guilty in part because of his google search history:

Julie Jensen died as a result of ethylene glycol in her system, an ingredient found in antifreeze. On the morning of her death, someone attempted to “double-delete” (apparently unsuccessfully) the computer’s browsing history, which included a search for “ethylene glycol poisoning.”

Jensen was found guilty of first-degree homicide in 2008 based on this and other incriminating evidence, including a letter written by his wife before her death. He appealed the conviction, arguing for one that the warrantless police search of his computer violated his Fourth Amendment rights. The Wisconsin Court of Appeals did not agree as he had signed a consent form.

As the article humorously mentions, does that mean we’ll be getting a CSI Internet Division spin-off?

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In sort of related news, CA Supreme Court ruled that police can search your cell phone without a warrant when you’re under arrest:

The California Supreme Court ruled Monday that police do not need a warrant to search a cell phone carried by someone under arrest.

The justices determined a Ventura County deputy had the right to conduct a warrantless search of the text messages of a man he had arrested on suspicion of participating in a drug deal.

The state court ruled 5-2 that U.S. Supreme Court precedent affirms that police can search items found on defendants when they are arrested.

I understand this in terms of searching your pockets, etc. But the problem with this ruling is one of not keeping up with technology. With smartphones these says, searching what’s in your very powerful large computer (in a small space) that can include pretty much every important document found in your house, bank, accountant, etc. That is, all of your personal records of note could actually be on your phone. This can also provide full access to all of your email, all of your social media accounts, and all of your history of communication of every sort for years. It’s possible that your smartphone could easily be the equivalent of raiding your home, your lawyers office, your doctors office, etc. I hope this issue is revisited with those issues in mind sometime soon. In the mean time, I’ll suggest some privacy protection ideas in a later post.

In other court news, CA Prop 8 is heading directly to the state Supreme Court and bypassing the 9th circuit (more accurately, the 9th circuit just punted):

Instead of resolving a thorny “standing” issue itself, and thus launching the appeal on its way to the United States Supreme Court, a three-judge panel instead first asked the Supreme Court of California for guidance on whether the private litigants who appealed the August 2010 ruling striking down the same-sex marriage ban had the legal right to do so.

The 9th Circuit just acted, to be sure, but not even the most conservative legal scholar can dare call this an instance of “judicial activism.” Instead, the tactical punt from one San Francisco court to another is consistent with a centuries-old judicial concept: never decide what you don’t really have to decide, especially when you have a plausible excuse for not deciding it. Here, the 9th Circuit blamed the not-completely-unexpected detour on the lack of “controlling state precedent” on the question of what to do with an appeal where, as here, both the sitting governor (the since-departed Arnold Schwarzenegger) and the sitting attorney general (the since made-governor Jerry Brown) refused to carry it out.

By diverting the case away from the federal courts and toward the state supreme court, by asking for clarification of state law by and from the state’s highest court, the 9th Circuit has almost certainly delayed a substantive ruling on the merits of the case for at least a year and likely longer. The standing issue will likely have to be briefed all over again before the state high court, and a new oral argument date will likely have to be set, and then a new vigil will begin for people all over the world who are waiting for final word from the courts on whether same-sex couples have a constitutional right to marry.  All of this will take six to nine months, at least.

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In news of the “is that news?” department, many people are obsessing and perplexed that Sarah Palin re-tweeted a pro DADT tweet. Yes, you got that right, just by Palin re-tweeting something (with no extra quote), people are actually spending time trying to figure out what she might have meant. I kid you not:

Online pundits are trying to interpret Sarah Palin’s stance on “don’t ask, don’t tell” after she echoed an Internet post by a conservative lesbian commentator who slammed the opposition to the policy’s repeal.

Tammy Bruce wrote Monday on Twitter that “this hypocrisy is just truly too much. Enuf already – the more someone complains about the homos the more we should look under their bed.”

Palin’s retweet of the post raised questions about her own stance on the military’s policy, which was repealed by Congress late last year. The former 2008 Republican vice presidential nominee hasn’t spoken about the policy except to say last February that she was surprised at President Barack Obama’s support for a repeal because it was not a priority at the time.

Palin representatives did not immediately respond to requests for comment Tuesday, but Politico said the retweet is a hint that Palin supports the repeal. Gawker said Palin is not “in the context of her party, rabidly homophobic,” then wondered if perhaps she didn’t understand the tweet or pushed the wrong button.

Now our pundits are reading tea leaves. Oh wait, that’s what they’ve always done. They really should get out more.

That’s a bit of what’s in the news. Chime in with what you’re reading.

Was Obama Wall Street’s BIGGEST Short?

Blankfein (left) and Jamie Dimon (center) at the White House, March 2009

You gotta love Lloyd Blankfein for finally telling it like it is.  Wall Street thinks we’re all suckers.  If you don’t specifically ask whether a security or CDO is crap, shitty or junk, they have no obligation to tell you.  That’s not their job.  They just sell the stuff.  It’s the 2010 version of “I just take orders”.  There’s got to be another Milgram experiment just waiting for a post doc in yesterday’s hearings.

Here are some gems from Lloyd:

Levin asked Blankfein if Goldman has to disclose to investors in securities it sells that the firm plans to take and keep the short side of the transaction.

“I don’t think we have to tell them,” the chief executive replied. In addition, he said that when underwriting a securities offering, Goldman has an obligation to conduct thorough due diligence and provide full disclosure of the assets and risks involved in the deal.

Mortgage-related securities that Goldman underwrote and sold delivered the specific exposure that clients wanted, Blankfein explained. “There are a lot of opinions about how a security will perform against the market it’s in.

“Investors we’re dealing with on the long or the short side know what they want,” he continued. “If they ask the salesperson their opinion, they have a duty of honesty. But we’re selling securities all the time that are weak. The same securities that were the subject of those comments can probably be bought today for pennies on the dollar.”

and this from the NY Times:

Mr. Blankfein was asked repeatedly whether Goldman sold securities that it also bet against, and whether Goldman treated those clients properly.

“You say betting against,” Mr. Blankfein said in a lengthy exchange. But he said the people who were coming to Goldman for risk in the housing market got just that: exposure to the housing market. “The unfortunate thing,” he said, “is that the housing market went south very quickly.”

Senator Levin pressed Mr. Blankfein again on whether the his customers should know what Goldman workers think of deals they are selling, and Mr. Blankfein reiterated his position that sophisticated investors should be allowed to buy what they want.

Mr. Blankfein was also pressed on the deal at the center of the S.E.C. case. He said the investment was not meant to fail, as the S.E.C. claims, and in fact, that the deal was a success, in that it conveyed “risk that people wanted to have, and in a market that’s not a failure.”

Risk.  That’s what Goldman Sachs was selling.  It was all wrapped up in a pretty fiction of established Wall Street investment houses, where bankers arrive at their offices in chauffered limos and eat in luxurious dining facilities and work out in gold plated gyms.  It all looks very clubby.  But the reality was that these people were running a giant Monte Carlo casino using the hard earned retirement funds of carpenters and other working class people.

Behind the plush digs and $600 suits and cottages on The Pond are a bunch of guys with serious gambling addictions.

Sometime back in 2006 as housing prices peaked and started to decline some of them must have started to get a little concerned.  In fact, Michael Lewis, who wrote The Big Short, says that outsiders looking in had the bankers’ number in 2003-2004.  It was March 2007 when the money started to drain away in earnest.

So, when did Wall Street decide to short the presidential election?

Think about it:  Many of the people on Wall Street should be at Gambler’s Anonymous.  in 2007, they were about to lose everything if they couldn’t find suckers to play their games and cover their bets.  Politics could have had a big influence on how much of a hit they actually had to take.  Charlie Ledley, the garage-band head fund guy with a conscience who actually tried to explain the bets to the SEC, was concerned with his own short positions.  He naively thought that if the federal government came to the rescue of homeowners, his CDS’s would be worthless.  As it turned out, the government bailed out the banks instead so Charlie made out big.  The CDO’s are still crap.

But if you are a Wall Street banker, you have to account for all kinds of possibilities.  Picture the following three scenarios:

1.) A Republican wins.  His party saw what happened during the last financial meltdown 80 years ago.  That New Deal thing was a disaster for his party.  He’s not going to make that mistake.  Screw Keynes, enter The Great Depression 2.0.  Oddly, Wall Street is probably not too keen on this idea.  You can’t play the game if you don’t have easy marks on the other side of the bet.  Depressions severely depress the number of easy marks.

2.) Democrat #1 wins.  But she’s too much of a New Dealer type.  She’s got mortgage bailout written all over her.  That would mean regulation and mortgages will be adjusted and bankers will have to take a loss.  That’s too much reality.  She’s like frickin’ rehab.  And besides, there’s always that remote possibility that the people who took out “liar’s loans” will suddenly have stupendous wage increases just in the nick of time when their 2 year teaser rate is up.  It could happen.  So, no, Democrat #1 is out.

3.) Democrat #2 is narcissistic one-trick pony with a pregnant mistress.  Nominating him means the Republican wins.  Moving on.

4.) Democrat #3.  Ooooo, this one is intriguing.  Did Wall Street court him or did he court Wall Street?  Recklessly ambitious type.  Muy simpatico.  He certainly looks like he could fit into Wall Street.  He wants to “form multi-disciplinary task forces to re-engineer our core processes so that we’re a world class organization”.  He speaks their language.  It’s meaningless, of course, and they all know that way down deep inside.  It’s code.  He’ll scratch their backs if they scratch his, to the tune of $900K in campaign contributions from Goldman Sachs employees alone.  With Dem #3, it will be an exciting spin of the wheel.  They’ll get close to the edge, probably a little too close for comfort, but in the end, they’ll be able to walk away with big profits, big bonuses and they can keep on playing.  This guy is an enabler.  Double down.

Obama sure made a lot of campaign money from Wall Street.  His small donors accounted for something like 30% of his campaign stash.  You don’t get a cool billion to run for president without making a lot of banker friends.  It was their biggest short.

In light of that very real possibility, can we on the left finally dispense with the idea that Obama was the Change! agent?  Lots of money will get you a very good PR firm with all of the marketing, astroturfing and social engineering you can eat.  Maybe he’s not the civil rights hero, politically brilliant, 11 dimensional chess playing, post partisan Messiah everyone thought he was.  Maybe he was just the best hedge Wall Street ever made and nothing more than that.  You can stop pinning your hopes and dreams on him.

As Lloyd would say, “the investment was not meant to fail, as the S.E.C. claims, and in fact, that the deal was a success, in that it conveyed “risk that people wanted to have, and in a market that’s not a failure.””

The Obots bought it and made suckers of us all.

Extra: Michael Lewis has a lengthy piece in Slate where he plays his tiny violin for the bond market traders who are suddenly getting blamed for everything they do.

Simon Johnson at BaselineScenario.com has a piece about how some parts of Europe have slipped into “emerging market” status overnight and how the rest of the world is turning their eyes to Obama for comfort and guidance to stem the ensuing panic.  Good luck with that.

No, Mr. President, the majority of your campaign donations did NOT come from small donors.

Via Ani at No Quarter, President Obama gave an interview to John Harwood at CNBC this week. Harwood began the interview by asking the following question:

In the 2008 campaign, you got a lot of money, about a million dollars from employees of Goldman Sachs. Your former White House Counsel, Greg Craig (PH) is apparently going to represent Goldman Sachs. In light of this case, do either of those things embarrass you?

Harwood may not be aware that people with Narcissistic Personality Disorder don’t experience secondary emotions like embarrassment. But I digress. Here is the President’s response:

No. First of all, I got a lot of money from a lot of people. And the vast majority of the money I got was from small donors all across the country.

Excuse me? Ani directs us to Politifact, where President Obama’s statement is summarily debunked.

In the general election, Obama got about 34 percent of his individual donations from small donors, people who gave $200 or less, according to a report from the Campaign Finance Institute. Another 23 percent of donations came from people who gave between $201 and $999, and another 42 percent from people who gave $1,000 or more.

His numbers for the primary were similar. He got about 30 percent of his money from donors who gave $200 or less. Another 28 percent of donations came from people who gave between $201 and $999, and 43 percent from people who gave $1,000 or more.

Even if you raise the bar for “small donors” to $1,000, which is ridiculous, they still don’t add up to a majority of those who gave to Obama’s campaign.

Obama supporters like to counter that Obama raised more money from small donors than any previous candidate for president, which is true. But Obama still needed large donors to fund his campaign. Obama implies that he won the presidency without much money from large donors, and the evidence does not support that. In fact, even if we set the bar for small donors higher — if we stipulated that everyone who gave less than $1,000 was a small donor — that still means 43 percent gave more.

Here is the Center for Responsive Politics list of Obama’s top donors in the 2008 election cycle. Goldman Sachs donated $994,795 to candidate Obama. Here is a list of Goldman Sachs employees and the amounts they gave to the Obama campaign. The list goes on for multiple pages.

And, get this, Goldman Sachs comes in 6th on the Open Secrets “heavy hitters” list–“the 100 biggest givers in federal-level politics since 1989.” No wonder Goldman Sachs has such a powerful influence on our federal government.

Furthermore, the financial, insurance, and real estate industries overall donated $39,663,073 to Barack Obama’s campaign. Obama also had hundreds of bundlers who collected between $50,000 and $200,000 each for his campaign. A number of those bundlers were lobbyists, despite Obama’s claims to the contrary. The bundlers list also goes on for multiple pages.

This two-year-old article from the Washington Post analyzes Obama’s “grass roots” campaign support during the primaries. The article is dated April 11, 2008.

Sen. Barack Obama credits his presidential campaign with creating a “parallel public financing system” built on a wave of modest donations from homemakers and high school teachers. Small givers, he said at a fundraiser this week, “will have as much access and influence over the course and direction of our campaign that has traditionally been reserved for the wealthy and the powerful.”

But those with wealth and power also have played a critical role in creating Obama’s record-breaking fundraising machine, and their generosity has earned them a prominent voice in shaping his campaign. Seventy-nine “bundlers,” five of them billionaires, have tapped their personal networks to raise at least $200,000 each. They have helped the campaign recruit more than 27,000 donors to write checks for $2,300, the maximum allowed. Donors who have given more than $200 account for about half of Obama’s total haul, which stands at nearly $240 million.

Hmmm… I notice Obama didn’t promise his small donors access and influence over the policies of his administration, if elected.

Let’s look at Obama statement to John Harwood again:

the vast majority of the money I got was from small donors all across the country.

No, no the majority of your donations came from the rich and powerful, Mr. President. And it shows in your policies. And I’m getting sick and tired of you lying about it. Just sayin’….

Lazy Saturday News and Views

Out of Town News, Harvard Sq., Cambridge, MA

Good Morning, Conflucians!!!!

It’s a gorgeous Saturday morning here in the Boston ‘burbs. I just love Spring!

Personally, I’m still mainly interested in the Blago-Rezko-Obama story, but there is some other news today.

ECONOMIC MELTDOWN

The New York Times informs us that Rating Agency Data Aided Wall Street in Mortgage Deals Yes, as you probably already guessed, the fix was in on those “complex investments” from the very beginning. The ratings agencies were collaborating with the investment banks to make sure all those “high risk” bets came out the way the banks wanted them to.

The rating agencies made public computer models that were used to devise ratings to make the process less secretive. That way, banks and others issuing bonds — companies and states, for instance — wouldn’t be surprised by a weak rating that could make it harder to sell the bonds or that would require them to offer a higher interest rate.

But by routinely sharing their models, the agencies in effect gave bankers the tools to tinker with their complicated mortgage deals until the models produced the desired ratings. [….]

But for Goldman and other banks, a road map to the right ratings wasn’t enough. Analysts from the agencies were hired to help construct the deals.

In 2005, for instance, Goldman hired Shin Yukawa, a ratings expert at Fitch, who later worked with the bank’s mortgage unit to devise the Abacus investments.

It really is time to break up these greedy “too big to fail” (TBTF) banks, but the Obama administration still defends their right to exist. Scarecrow at FDL has a great post on Larry Summers’ latest excuse for TBTF: Why Is Larry Summers Afraid of Having Many Small Banks? Summers says we can’t do that because that’s what was tried before the Great Depression, and it failed.

…if we broke up the megabanks and instead had many smaller regulated banks, it would be the end of America and the financial industry as we know it.

And that would be bad why? Scarecrow:

Funny, I always thought the smaller bank system, if that’s what it was, failed because Wall Street wasn’t sufficiently regulated, and the local bank runs happened because we didn’t have the FDIC at the time. So is Larry now saying that having the FDIC to take over smaller bank failures has been a failure?

And what’s he saying about needing diversified megabanks that lose money on risky stuff but loot, uh, borrow money from better managed activities? Surely he doesn’t mean to argue for letting the investment casino borrow from the government-guaranteed deposit-based divisions?

Reuters: Goldman emails: firm lauds profits from shorts

Goldman Sachs Group Inc officials discussed making “serious money” in 2007 off the subprime crisis as mortgages were starting to falter in rapid numbers, according to a collection of e-mails released by a Senate panel on Saturday.

“Of course we didn’t dodge the mortgage mess. We lost money, then made more than we lost because of shorts,” Goldman Sachs Chief Executive Lloyd Blankfein said in an e-mail from November 2007.

“Sounds like we will make some serious money,” said Goldman Sachs executive Donald Mullen in a separate series of e-mails from October 2007 about the performance of deteriorating second-lien positions in a collateralized debt obligation, or CDO.

Krugman says, “We’re doomed”

Behind the Goldrush Sacks building facade

H/T  to Dhyana on the Beautiful Theories thread for this reference to a post from Krugman’s Conscience of a Liberal blog.  Here’s what Obama said recently (yesterday?) during an interview to be published Friday:

President Barack Obama said he doesn’t “begrudge” the $17 million bonus awarded to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million issued to Goldman Sachs Group Inc. CEO Lloyd Blankfein, noting that some athletes take home more pay.

The president, speaking in an interview, said in response to a question that while $17 million is “an extraordinary amount of money” for Main Street, “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.”

“I know both those guys; they are very savvy businessmen,” Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.”

Obama sought to combat perceptions that his administration is anti-business and trumpeted the influence corporate leaders have had on his economic policies. He plans to reiterate that message when he speaks to the Business Roundtable, which represents the heads of many of the biggest U.S. companies, on Feb. 24 in Washington.

Ya know, I’m a liberal and I don’t begrudge people making money either, as long as they don’t do it by electing politicians that will get rid of the rules for them so they can speculate recklessly with other peoples’ money, get in over their heads, ruin innocent citizens’ retirement plans, jobs and livelihoods and then give some of the “bonus” money they made with taxpayer bailout funds to the “Mashie Niblick Widows and Orphans Fund” of their choice so they can look like they’re being good guys while they’re applying for a tax deduction for charitable contributions.  Now, *that’s* chutzpah!  How is it that Barack Obama admires these “savvy businessmen”?  Obama is one of them.

Some of us are seeing our industries decimated and our  friends’ careers irretrievably gone to Asia, our lives ruined by these insensitive, “What’s mine is mine; what’s yours is mine” bizspeaking, short sighted, greedy, testosterone poisoned adolescents posing as men (and it’s almost exclusively men) and Obama wants us to “cut’em a break”? Compare them to a talented ballplayer who sells his body parts to wealthy men for sport?  At least major league ballplayers are ENTERTAINING!

By the way, tea partiers, this should prove to you once and for all that Obama is NOT a socialist.

As Krugman says, “Oh. My. God.”

(Didja finally wake up and smell the sulfur, Paul?)

Another take on Obama’s Gigantic Faux Pas:

The aliens are setting the terms:

“Don’t you want to elevate your career?”