[Infowarrior] - OT: Five reasons we hate Goldman Sachs

[Richard Forno]

November 19, 2009, 1:28 PM ET

GS a short? And five reasons we hate Goldman Sachs
Cody Willard

http://blogs.marketwatch.com/cody/2009/11/19/gs-a-short-and-five-reasons-we-hate-goldman-sachs/tab/print/
Here are five reasons why we want Goldman Sachs destroyed and buried  
so we can dance on its grave and why these crony apologists are wrong  
when they say that the “populist outrage at Goldman Sachs is misplaced”.

1. The AIG bailout was a covert bailout of Goldman and we want our  
money back. Every dime of it. Goldman had been placing a bunch of bets  
against real estate derivatives at a casino called AIG. Goldman  
started to realize that AIG didn’t have enough money to pay all the  
bets they’d taken, so sucked some $6 billion out of AIG in the weeks  
before AIG went belly up (a cash drain which indeed helped caused AIG  
to go belly up). But Goldman still had $13 billion in profitable bets  
that they’d placed at the AIG casino and without the cash they were  
due from those bets, Goldman would be insolvent and be forced into  
bankruptcy. So Goldman called up the chairman at the NY Fed, one  
Stephen Friedman, and asked for welfare help. Stephen used to run  
Goldman before he decided to move over and run the NY Fed arm of  
Goldman — I mean, the NY Fed arm of the Federal Reserve (which come to  
think of it, is owned by Goldman and the other banks that it bailed  
out with your taxpayer money). Stephen promptly went out and bought  
tens of thousands of shares of Goldman Sachs stock to supplement the  
millions he already owned of it, and then had the NY Fed cover all the  
bets at the AIG casino in full with taxpayer money.

Yup, Goldman’s former chairman used his power despite all those  
obvious conflicts of interest, and funneled a full $13 billion of  
taxpayer money to Goldman Sachs via the bailout of AIG.

We want every dime of the AIG counterparty bailout back. We could buy  
2.6 million Americans $5000 worth of insurance with the amount of  
money that Goldman got from AIG from the taxpayer.

2. Goldman became a “financial holding company” after it became a  
“bank holding company”after it realized it was going to be insolvent  
even after it got Stephen Friedman to write them a $13 billion check  
from AIG funded with taxpayer money. Goldman had to lobby for special  
exemptions and all kinds of favoritism in order to get such a petition  
passed by all the bureaucracies who are supposed to be doing all kinds  
of due diligence in order to make us citizens believe that either of  
the “holding company” status means anything other than the fact that  
the “holding company” gets access to cheap welfare loans from the Fed  
and guarantees against losses for the holding company which mean that  
the taxpayer is always left holding the bag.

Okay, and here’s where we really get outraged by this “financial  
holding company” status crap. See, since Goldman’s got that status  
(and since it’s also “too big to fail” of course) it can go out and  
gamble tens of billions of dollars on currencies, commodities, bonds,  
Treasuries, stocks, derivatives, private equity, venture capital and  
anything else they want to gamble on — and if they make money, they  
keep the profits and payout bonuses, but if they, heaven forbid,  
actually lose money on that levered gambling addiction they have…well,  
that taxpayer is going to eat the losses.

Goldman is guaranteed privatized gains and socialized losses. We want  
that stopped now and we want every dime of profit they’ve made  
gambling this year applied against the government deficit.

3. We know for a fact that Goldman’s executives get to talk to and  
even advise the Treasury and the Fed on how the Treasury and the Fed  
should be buying and selling in the Treasuries market, in the  
derivatives markets, in the overnights markets, in the CDO markets and  
so on. Does anybody reading this article actually believe that Goldman  
doesn’t use all that information to place those bets that are  
resulting in all those record trading profits for Goldman this year?  
Come on. And not only are they screwing other private investors with  
such front-running,but it’s usually you and me the taxpayers on the  
other side of these trades this year.

We want Goldman execs to have absolutely no private access to  
government officials. Given all the obvious and repeated conflicts of  
interest in such interactions with taxpayer funds and policies on the  
line, let’s require Goldman and the Treasury/Fed to conduct all  
interactions completely in the public via webcam, conference calls, or  
even Op Eds. But no more calls or private meetings between Goldman  
dudes and government dudes.

4. Goldman was packaging and selling toxic derivatives for hundreds of  
billions of dollars to investors around the world, telling those  
investors that such derivatives were safe and smart bets. At the same  
time, Goldman was out at the AIG casino not just hedging their own  
exposure to the derivatives while they were packaging them, but  
Goldman was actually betting against those very products. They were  
literally selling products they were so confident would fail that they  
bet tens of billions of dollars of their own money at AIG against  
those products they were telling investors were safe.

We want some perpwalks for this obvious fraud.

5. Goldman propaganda is insulting to anybody paying any attention.

- Goldman says: “We didn’t want or need TARP money.” Lie! They were so  
desperate for capital at that point, they took $10 billion in TARP  
funds and needed ANOTHER $5 billion in funds from Warren Buffett.  
Buffett put the screws on Goldman with onerous, expensive terms on  
that loan, and Goldman was so desperate they took it anyway.

- Goldman says: “We already paid back the taxpayer.” Uh, like I said  
above, you’re still gambling with my money keeping the profits since  
you got lucky and front ran the taxpayer in a bull market for the last  
six months and we still want every dime of the AIG bailout back too.  
Goldman and the taxpayer ain’t even close to square.

- Goldman says: “We were just smart and have done nothing wrong.” Oh,  
wait Lloyd Blankfein, the CEO, finally admitted that the company  
“participated in things that were clearly wrong.” Like I said, let’s  
prosecute those clear wrongdoings!

- Goldman says: “We were hedged against any AIG losses even without  
the taxpayer.” Lie — those AIG bets would have been a $13 billion  
write off that Goldman would have been fighting for in a legal  
bankruptcy if Stephen Friedman, former Goldman chairman, hadn’t  
orchestrated a complete bailout for Goldman via AIG when Stephen was  
buying Goldman stock behind the scenes while running the NY Fed.  
That’s part of why everybody said it was a “credit crisis” at the time  
— nobody had the money to cover all the bets and the counter bets and  
the hedges at places like Goldman.

–

Goldman begged for and got tons of help from the taxpayer, and even if  
you weren’t against the Wall Street bailouts like I was from day one,  
you’re probably livid at Goldman’s arrogance and greed and denials.

Hey Goldman, if nothing else, how about a little gratitude for us  
saving your butt when you needed it.

The rage against Goldman isn’t just populist. The rage against Goldman  
isn’t just popular. The rage against Goldman is right.

And unfortuntely, the only thing you and I can do about it is to vote  
out every single incumbent who empowered Goldman and its ilk with all  
their bailouts, stimulus and other wealth redistribution policies.

I’d also look to short Goldman on strength now that the stock has  
finally dipped about 10% from its highs. I’m not sure what else this  
company can do to jack up its profits in the near term even as it  
destroys its brand for the future. I’d look at slowly but surely  
building a Goldman short position. Maybe even some long-dated put  
options — say something at the $200 strike range out in 2011 or so.  
You’d pay a little premium once again, but you’d expose less capital  
and limit your losses by using the put instead of outright shorting  
the stock.

Regardless of Goldman as a trade or an investment — but for the sake  
of our society:

You tell me — would America be better off without Goldman Sachs?

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