how goldman sachs made tens of billions of dollars from the economic collapse of america in four...

8/14/2019 How Goldman Sachs Made Tens of Billions of Dollars From the Economic Collapse of America in Four Easy Steps

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How Goldman Sachs Made Tens

Of Billions Of Dollars From TheEconomic Collapse Of AmericaIn Four Easy Steps

Investment banking giant GoldmanSachs has become perhaps themost prominent symbol for everything that is wrong with theU.S. financial system, but most

Americans cannot even begin toexplain what they do or how theyhave made tens of billions of dollarsfrom the economic collapse of America. The truth is thatwhat Goldman Sachs did was fairlysimple, and there may not haveeven been anything "illegal" aboutit (although they are now beinginvestigated by theSEC among others).

The following is how GoldmanSachs made tens of billions of dollars from the economic collapseof America in four easy steps....

Step 1: Sell mortgage-related securities that are absolute junk to trusting clients atvastly overinflated prices.

Step 2: Bet against those same mortgage-related securities and make massive betsagainst the U.S. housing market so that your firm will make massive profits when the U.S.economy collapses.

Step 3: Have ex-Goldman executives in key positions of power in the U.S. government so

that bailout money can be funneled to entities such as AIG that Goldman has made thesebets with so that they can get paid after they win their bets.

Step 4: Collect the profits - Goldman Sachs is having their "most successful year" and willend up reporting approximately $50 billion in revenue for 2009.

So is it right for the biggest fish on Wall Street to make tens of billions of dollars bybetting that the U.S. housing market will collapse?

You see, when you are talking about a financial giant the size of Goldman Sachs, the linebetween "betting that something will happen" and "making something happen" gets blurredvery quickly.

1/17/2010 How Goldman Sachs Made Tens Of Billi…

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Not that Goldman Sachs was the only one betting against the housing market.

According to the New York Times, firms like Deutsche Bank and Morgan Stanley alsocreated mortgage-related securities and then bet that they would fail.....

Goldman was not the only firm that peddled these complex securities — known as

synthetic collateralized debt obligations, or C.D.O.’s — and then made financial

bets against them, called selling short in Wall Street parlance. Others that createdsimila r securities and then bet they would fail, according to Wall Street traders,include Deutsche Bank and Morgan Stanley, as well as smaller firms like Tricadia

Inc.

But certainly Goldman Sachs was the most prominent financial player involved in this typeof activity.

In fact, without mentioning specifics, Goldman has even admitted publicly to wrongdoing.On November 17th, 2008 Goldman Sachs CEO Lloyd Blankfein even issued a public

apology....

"We participated in things that were clearly wrong and have reason to regret."

But complicated financial transactions are something that most Americans simply do not

understand, so the public outrage towards Goldman Sachs and others has beensomewhat limited. But that does not change the very serious nature of the activities thatGoldman was involved in....

"The simultaneous selling of securities to customers and shorting them becausethey believed they were going to default is the most cynical use of credit

information that I have ever seen," Sylvain Raynes, an expert in structured finance at R& R Consulting in New York, recently told The New York Times. "When you buyprotection against an event that you have a hand in causing, you are buying fire

insurance on someone else’s house and then committing arson."

But the sad thing is that many Americans do not even understand what Goldman Sachsis. Goldman Sachs was founded in 1869 and has forged a reputation as one of the elitefinancial institutions in the entire world. They only hire "the best and the brightest" and IvyLeague graduates flock to the firm. Of the five major investment banks that dominated WallStreet before the crash, only Goldman Sachs and Morgan Stanley have survived. MerrillLynch and Bear Stearns were severely damaged by the crash and ended up beingpurchased by retail banks and Lehman Brothers ended up folding.

There are persistent rumors that Goldman played a major role in the collapse of Bear Stearns and that ex-Goldman CEO Hank Paulson could have done much more to bail outLehman Brothers, but perhaps nobody will ever know the full truth. All we do know is thatat the end of the crash several of Goldman's competitors were destroyed andGoldman found itself in a more dominant position than ever.

The truth is that Goldman is a financial shark and they do not apologize for it.

An article in Rolling Stone recently put it this way....

The first thing you need to know about Goldman Sachs is that it's everywhere. Theworld's most powerful investment bank is a great vampire squid wrapped around

the face of humanity, relentlessly jamming its blood funnel into anything that

smells like money.

So how did Goldman Sachs prosper so greatly in an environment that destroyed their competitors?

The following is an extended breakdown of just how Goldman Sachs was able to reap tens





of billions of dollars in profits from the collapse of the U.S. housing market....

Step 1: Sell mortgage-related securities that are absolute junk to trusting clients at

vastly overinflated prices.

In late 2006, Goldman Sachs made some fundamental changes in the way that they wereapproaching the U.S. housing market. According to a McClatchy report, Goldmanspokesman Michael DuVally said that the firm decided at that time to reduce its mortgagerisks by selling off subprime mortgage-related securities and by purchasing credit-defaultswaps to hedge against a serious downturn in the U.S. housing market.

The key moment came in December 2006. After "10 straight days of losses" inGoldman's mortgage business, Chief Financial Officer David Viniar called a meeting of keyGoldman personnel.

Vanity Fair described the results of that meeting this way....

After a now famous meeting in David Viniar’s office on December 14, 2006,

Goldman’s traders began to protect the firm against further declines in the market.Just as you can short the S&P 500, the traders took short positions in an index thattracked the price of mortgage-backed securities. They also either sold assets they

owned to others at losses or dramatically marked down the price on their own

books. In the aftermath of the crisis, criticism erupted that Goldman had continuedto sell mortgage-backed securities to its clients while betting against those very

securities for its own account. Clearly, in the simplest terms possible, this is true:while Goldman was never the biggest underwriter of C.D.O.’s (collateralized debt

obligations—Wall Street’s vehicle of choice for mortgage-backed securities), the

firm did remain in the top five until the summer of 2007, when the market crashedto a halt.

So Goldman Sachs proceeded to sell approxmiately $39 billion of its own mortgagesecurities in 2006 and 2007 and they sold at least $17 billion more mortgage securities for others, but they never told the buyers of those securities that Goldman was secretly bettingthat a significant drop in U.S. housing prices would send the value of those mortgage

securities plummeting.

These sales and the massive clandestine wagers placed by Goldman enabled the firm topass most of its potential losses on to others prior to the collapse of the U.S. housingmarket.

But many of the investors who got the short end of the stick were not pleased. Whenthey discovered that what Goldman had promoted as triple-A rated investments wereactually a bunch of garbage, many of them were absolutely furious.

"The Securities and Exchange Commission should be very interested in anyfinancial company that secretly decides a financial product is a loser and thengoes out and actively markets that product or very similar products to unsuspecting

customers without disclosing its true opinion," said Boston University economicsprofessor Laurence Kotlikoff . "This is fraud and should be prosecuted."

One of the victims of this fraud was the state of Mississippi....

Mississippi Attorney General Jim Hood, whose state has lost $5 million of the $6

million it invested in Goldman's subprime mortgage-backed bonds in 2006, said thestate's funds are likely to lose "hundreds of millions of dollars" on those and similar bonds.

Another one of the victims of this fraud was California's retirement system for publicemployees....





California's huge public employees' retirement system, known as CALPERS,

purchased $64.4 million in subprime mortgage-backed bonds from Goldman onMarch 1, 2007. While that represented a tiny percentage of the fund's holdings, inJuly CALPERS listed the bonds' value at $16.6 million, a drop of nearly 75 percent,

according to documents obtained through a state public records request.

So who is left holding the bag in cases such as these?

The taxpayers.

And that is just fine with Goldman Sachs. Just as long as they keep raking in huge profits.

Vanity Fair was even more blunt regarding this injustice....

"Goldman’s management team was almost flawless in its execution. But howmany people needed government help because of the things Goldman sold them?"

The truth is that a lot of people needed help because of the things Goldman sold them, butup until now Goldman has completely gotten away with it.

Step 2: Bet against those same mortgage-related securities and make massive bets

against the U.S. housing market so that your firm will make massive profits whenthe U.S. economy collapses.

Not only did Goldman sell mortgage-related securities that were absolute junk to investorsat vastly overinflated prices, they also placed massive bets that the U.S. housing marketwould absolutely collapse.

The New York Times recently described how Goldman used a new index known as theABX to make many of these bets....

A handful of investors and Wall Street traders, however, anticipated the crisis. In2006, Wall Street had introduced a new index, called the ABX, that became a wayto invest in the direction of mortgage securities. The index allowed traders to bet

on or against pools of mortgages with different risk characteristics, just as stockindexes enable traders to bet on whether the overall stock market, or technologystocks or bank stocks, will go up or down.

Goldman, among others on Wall Street, has said since the collapse that it madebig money by using the ABX to bet against the housing market. Worried about ahousing bubble, top Goldman executives decided in December 2006 to change the

firm’s overall stance on the mortgage market, from positive to negative, though itdid not disclose that publicly.

These bets would only make money for Goldman Sachs if the U.S. housing marketdeclined.

So if the biggest giant on Wall Street has a huge financial incentive to see the U.S. housingmarket fail, what do you think the odds are that they are going to do anything to support it?

Step 3: Have ex-Goldman executives in key positions of power in the U.S.government so that bailout money can be funneled to entities such as AIG thatGoldman has made these bets with so that they could get paid.

For years, Goldman Sachs has encouraged executives to serve in U.S. governmentposit ions. Now they are world famous for the amount of influence their former employeeshave over government policy.

For example, according to the New York Times, Treasury Secretary Hank Paulson (also a





former Goldman CEO) spoke with the current CEO of Goldman Sachs about two dozentimes during the week of the bailout, although Paulson says that he obtained an "ethicswaiver" before doing so.

So does an "ethics waiver" make everything okay?

But the sad thing is that is not an isolated example.

It turns out that Goldman benefited greatly from a number of decisions made by their former CEO while he was Treasury Secretary....

*Goldman greatly benefited when Paulson elected not to save rival Lehman Brothers fromcollapse. Paulson certainly stepped in to help Fannie Mae, Freddie Mac and AIG, butapparently had no problem with letting Lehman Brothers fall apart.

*Under Paulson's direction, Goldman ended up receiving bailout money (which they may or may not have needed) from the U.S. government and has since paid back much of thatmoney with interest. So why didn't Bear Stearns or Lehman Brothers get the bailout fundsthat they needed?

*Goldman greatly benefitted when Paulson organized a massive rescue of AmericanInternational Group while in constant telephone contact with Goldman CEO Blankfein.

AIG ultimately ended up using $12.9 billion taxpayer dollars to pay off every single pennythat it owed to Goldman.

But it is not just Paulson who has had significant influence in Washington.

On October 16th, Adam Storch, a Goldman Sachs vice president, was named managingexecutive of the SEC's enforcement division. What do you think the odds are that he willcrack down hard on Goldman?

In addition, former Goldman Sachs lobbyist Mark Patterson is the chief of staff for currentTreasury Secretary Timothy Geithner.

In fact, ex-Goldman employees are seemingly everywhere. According to Vanity Fair , at

one G-7 meeting an anonymous source identified at least 24 out of 32 finance officials inattendance as ex-Goldman employees.

The influence of Goldman Sachs even reaches to the White House. Goldman was BarackObama's number one campaign donor, and its employees gave $981,000 to his campaign.

If you don't think that kind of money does not buy influence then you are delusional.

Goldman used some of that powerful influence to get the U.S. government to bail out AIGso that AIG could pay off the bets that Goldman had made with them. In a recent article,Vanity Fair described part of what went down....

After the government bailout of A.I.G., in order to end the collateral calls on the

insurance giant, the New York Federal Reserve—whose chairman at the time wasformer Goldman chairman Steve Friedman—decided to purchase a slew of the

securities that A.I.G. had insured, including $14 billion of those on which Goldmanhad purchased insurance. The government—meaning taxpayers—did so at fullprice, although according to a recent Bloomberg story, there had been

negotiations with A.I.G. to do so at a 40 percent discount. Goldman says that theNew York Fed broached the topic of a discount only once. The firm’s response: aflat no. While no one will ever know what would have happened had A.I.G. gone

under, the essence of what did happen is perfectly clear. As a recent report by theOffice of the Special Inspector General for tarpput it, the decision to pay full price“effectively transferred tens of billions of dollars of cash from the Government to

A.I.G.’s counterparties.” Or to put it another way: because Goldman felt it was





owed its billions by A.I.G., the firm took it from taxpayers instead.

So what about all of the thousands of small businesses that are failing and what about themillions of Americans that are losing their jobs and homes?

Do they get bailouts?

Of course not.

But the U.S. government definitely made sure that AIG and Goldman were taken care of.

Step 4: Collect the profits - Goldman Sachs is having their "most successful year"and will end up reporting approximately $50 billion in revenue for 2009.

Goldman Sachs ranks #1 in annual net income when compared with 86 peers in theinvestment services sector. They are on course for their best year ever.

Yes, they are having a really good "crisis".

Goldman Sachs is on course to surpass $50 billion in revenue in 2009 and to pay itsemployees more than $20 billion in year-end bonuses.

20 billion just in bonuses?

That would mean that the average bonus for all Goldman employees would be over $700,000.

No wonder everyone wants to work for them.

It's good to be on the winning side.

So just how are they making so much money?

In their recent article, Vanity Fair described it this way....

But because so many of Goldman’s competitors were gone or disabled, spreads—

the difference between the price at which you sell and buy a variety of securities—were wider than they had been in years, meaning that Goldman could practicallymint money. By acting at the moment it did, with Lehman out and Merrill Lynch

down for the count, the government enabled this situation.

The other reason for Goldman’s profits is that the government has flooded thesystem with money, not just the money it used to rescue the financial system but

hundreds of billions more in stimulus, in support of the housing market, and in theFederal Reserve’s purchases of securities.

But all of this success has not come without controversy. In fact, Goldman executives arevery much aware of the growing backlash against the firm.

Senior officials at Goldman Sachs have reportedly loaded up on firearms and are nowequipped to defend themselves if there is a "populist uprising" against the bank.

In addition, Goldman Sachs employees are now not allowed to gather in groups of 12or more outside the office. The firm very much discouraged "holiday parties" as theymost definitely did not want to be seen as celebrating the downfall of the U.S. economy.

But the truth is that Goldman Sachs won because so many others lost.

In his very revealing article on Goldman Sachs in Rolling Stone, Matt Taibbidescribed how Goldman keeps making money from the bursting of these economicbubbles....





They achieve this using the same playbook over and over again. The formula isrelatively simple: Goldman positions itself in the middle of a speculative bubble,selling investments they know are crap. Then they hoover up vast sums from the

middle and lower floors of society with the aid of a crippled and corrupt state thatallows it to rewrite the rules in exchange for the relative pennies the bank throwsat political patronage. Finally, when it all goes bust, leaving millions of ordinary

citizens broke and starving, they begin the entire process over again, riding in to

rescue us all by lending us back our own money at interest, selling themselves asmen above greed, just a bunch of really smart guys keeping the wheels greased.

They've been pulling this same stunt over and over since the 1920s — and nowthey're preparing to do it again, creating what may be the biggest and mostaudacious bubble yet.

The truth is that in this latest economic collapse there were millions of losers and just a fewwinners.

Goldman Sachs was one of those winners.

So will they lose next time?

Not likely.

In their recent article, Vanity Fair quoted an anonymous source in the financial industryas saying the following....

"Are they the Yankees? No, the Yankees actually lose! Goldman never loses."

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Tags: Goldman Sachs | Category: Banksters

39 comments to How Goldman Sachs Made Tens Of Billions Of

Dollars From The Economic Collapse Of America In Four Easy Steps

FrankieDecember 30th, 2009 at 9:21 pm

It appears the next bubble they are creating in conjunction with other international bankers is the “Global Warming” scam or rather the newly

named “Climate Change” since the planet is not warming up. This next scam is beingplayed with bigger fish such as the IMF and World Bank to name a few. We all will betaxed based on Co2 a basic fundamental element which is a part of every aspect of life.“Cap and Trade” which is modeled after Ken Lay’s successful ENRON will now becoming to an IRS form near you. Stay tuned.

JTDecember 31st, 2009 at 12:30 am

food, guns, goldand of course land.

Good luck to everyone who is finally opening their eyes. You still have time!

Melinda CurtisDecember 31st, 2009 at 1:47 am





Two questions: When do they give the money back?When do they go to jail?

Fausta’s Blog » Blog Archive » Today’s evening roundupDecember 31st, 2009 at 1:48 am

[...] Bad news: How Goldman Sachs Made Tens Of Billions Of Dollars From TheEconomic Collapse Of America In Four Eas [...]

Myriam KoepckeDecember 31st, 2009 at 4:01 am

Meanwhile homeowners associations have turned into mini-governmentswhose laws supercede city, state and federal law–most cities now require

new developments to be governed by them. They pass rulings that force people out of their homes into massive numbers of foreclosures so that prices in the neighborhooddrop, properties are purchased for pennies on the dollar, somebody profits not thehomeowner Who could it be? All apparently legal.

reference: “Privatopia: Homeowner Associations and the Rise of Residential Private

Government” by Professor Evan McKenzie

WalterBDecember 31st, 2009 at 9:41 am

The whole scheme very much resembles the 1980s Bush-fraud, during theIran-Contra, Cocaine-trafficking and Savings&Loan Crash years, as detailed

by ex-CIA Alexander Martin in his book ‘The Conspirators’. Only this time the fraud wasmuch bigger.We find the same ingredients: a Bush-member as president, real-estate fraud (sub-prime), the sale of worthless equities, fraudulent bankrupties and insurance fraud(whereby the ‘friendly’ insurance company is covering the risks and consequently needsto be rescued by the taxpayers). In the 80s, the actors asked themselves if the size of the fraud would possibly jeopardize the ‘real economy’ in the US. It didn’t then, but thistime they came very close.

SteveDecember 31st, 2009 at 6:18 pm

“not allowed to gather in groups of 12 or more outside the office” “havereportedly loaded up on firearms” “The firm very much discouraged “holiday

parties”

What price this greed.

WalterFDecember 31st, 2009 at 6:20 pm

This will all lead to total money meltdown. Theyre only fooling themselves,soon merchants will be throwing their gold and silver in the streets as it

becomes worthless. Typical money making senerio, Create the problem then makemoney on the solution like-WWII Hitler funded by US(Weapons manufacturing)=FederalReserve(US Soverenty lost to foriegn bankers)=Gold Standard gone=Wall StreetBailouts=Job Loss=Mortgage Crisis=911=Iraq WDM scare(Oil)= War onterror(oil)Afghanistan, there is no such thing as “War on Terror” its like saying “War on





Fear”?=Swine Flue scare(money made on vaccines). And now the tree huggers aretrying to get a piece of the pie by using the “Climate Change” bill, what a load of environmental CRAP, Cmon in 50 years the global temprature rises 1 degree!, How ismoney going to change the climate? have we been robbed blind. I wish this bubblewould pop already!

JerryJanuary 1st, 2010 at 8:53 am

It was the central banker Paul Warburg who said it best back in 1920‘The world lives in a fool’s paradise based upon fictitious wealth, rash

promises, and mad illusions,’ he said. ‘We must beware of booms based upon falseprosperity which has its roots in inflated credits and prices.’ Chernow

90 years later and we still haven’t learned anything!!!What in the world was Goldman thinking?

Cheers and a happy new year to all.

Jake

January 1st, 2010 at 11:01 am” WalterFDecember 31st, 2009 at 6:20 pm

This will all lead to total money meltdown. Theyre only fooling themselves, soonmerchants will be throwing their gold and silver in the streets as it becomes worthless.”

WHEN HAS GOLD & SILVER BEEN EVER BEEN WORTHLESS!?!??? I’ll gladly pick itup if some fool throws it outgot any Walter you care to toss? Drop a line & addressI’ll save you (& anyone else) the trouble of manually moving that heavy “worthless” pileof metal to the curb.

shawnJanuary 1st, 2010 at 1:40 pm

the thing is- with plutocracy- “like america is today”it dont last each new emperor-always

executed all of his political and-oligarchy rivalsthe rise of-absolutitarianism-is on its way

“the french revolution” “rise and fall of the roman empire”

history does repeat itself

JohnJanuary 1st, 2010 at 2:09 pm

Moral of the story get your money out of the market fast, before it crashes.

EFJanuary 1st, 2010 at 2:32 pm

So, Goldman continued to promote mortgage-backed securities while itprivately bet, and believed, that they would decline in value. Deception

appears to be central to its business model.





Weigh this against recent reports that, among all those predicting treasury y ields for 2010, Goldman’s predictions are the lowest. Assuming this is a deception, we canexpect substantial increases in treasury yields this year. That means a much higher interest bill for the US to pay. Of course, that burden will eventually fall on us, thetaxpayers.

BelleJanuary 1st, 2010 at 6:35 pm

This is a very good summary of what was clearly a crime against us.Bankers committ ing fraud. Insurers committing fraud. Brokers committing

fraud. The Fed, SEC and rest of the alphabet turning a blind eye. Television telling usthat no one could have seen it coming, and excusing it all as the normal course of events.

Through it all, the Department of Justice, whether under Holder or Gonzales isconspicuously missing in action. We do indeed have a class above the law, and theyhave brought the equivalent of an economic 9-11 against us.

Michael FoggJanuary 1st, 2010 at 7:01 pm

They are going to create a single currency — a global currency — toreplace the Yankee Dollar. Then they will have a central world bank to

control the issuing of the new currenc. All the individual currencies will have a fixedexchanged rate with the new global currency and then gradually they will be phasedout.Next they will do away with paper and coins as money. The controllers of the worldbank will make all transactions between banks in individual countrieres electronic. Evencheques will disappear. Then we will have a cashless society.People will be able to by or sell electronically, like topping up a mobile phone withcredit, or like paying bills from a mobile phone’s credit.

It will bring about the universal acceptance of the electronic buying and selling. If youare a criminal, they will be able to freeze your criminal assets. If they don’t like youdiscriminating against their laws they can lock you out of the world of buying andselling. They can have total control over you. They can build up a history of all your financial transactions.

In the Apocalypse it says, concerning the end times and the coming of the Antichrist;“No one will be able to buy or sell unless he has the mark of the beast on the hand or on the forehead.”

Carl HermanJanuary 1st, 2010 at 7:38 pm

This article is awesome. Who are you guys? I work with Ellen Brown,Stephen Zarlenga, Dennis Kucinich and others for political reform of

banking. Our first best-bet is state-owned banks, and we’re also ready for nationalmonetary reform. Contact me if you’d like to understand what we’re up to and consider working in synergy with us.

dogismythJanuary 1st, 2010 at 10:22 pm





hahaha.you forgot the one more powerful than GoldmanJP Morgan.They are in the background for a reason. The real perpetrator is always in

the background. All the primary dealers to the federal reserve are evil, corrupt and donot care one iota about the general public. Someday someone will go ballistic on them,and many will applaud loudly or turn their backs on them. They have de-evolved thehuman race through their exotic financial dealings, and their secret ties with the gov,and the backlash to the taxpayer. It makes me sick that these people can get awaywith “fixing” things in their favor. Do not do any business we these primary dealers.THEY ARE BEHIND ALL THE CORRUPTION HERE AND ABROAD. DO NOT USE

THEIR BANKS, CREDIT CARDS OR HAVE ANY FINANCIAL DEALINGS.YOU PEOPLE WANT TO STOP THEM, THEN TAKE AWAY THEIR FOODMONEY.You can stop them if you want. But the fact of the matter is that the more wealthy arethe ones that have money in these organizations because they know these bankster gangsters will do anything to win in the capital markets.including criminal activities.Americans are more complicit to these crimes than the actual criminal. They silentlycondone this crap day after day. Oh well, I have enjoyed my life. Its up to the younger generation to get this under controlif they want to. I could care less at this point.

List of the Primary Government Securities Dealers Reporting to the GovernmentSecurities Dealers Statistics Unit of the Federal Reserve Bank of New York

BNP Paribas Securities Corp.Banc of America Securities LLCBarclays Capital Inc.Cantor Fitzgerald & Co.Citigroup Global Markets Inc.Credit Suisse Securities (USA) LLCDaiwa Securities America Inc.Deutsche Bank Securities Inc.Goldman, Sachs & Co.HSBC Securities (USA) Inc.Jefferies & Company, Inc.J. P. Morgan Securities Inc.

Mizuho Securities USA Inc.Morgan Stanley & Co. IncorporatedNomura Securities International, Inc.RBC Capital Markets CorporationRBS Securities Inc.UBS Securities LLC.

DeborahJanuary 1st, 2010 at 10:22 pm

This is the part where I say,”DAMN, I’m glad they service my 401K. Wewere practically guranteed a couple of years ago, that we would not lose

money on our 401k, and they would be successful. I guess they knew what they weretalking about.

WalterFJanuary 1st, 2010 at 11:40 pm

Jake, Throwing Gold in the streets was a figure of speech, sorry for theconfusion, I dont wish to impose religion on anyone but if your a believer

then The Book of Relevations chapter 18 vs 17,18,19 would make sense to you. Itspeaks of the global economic collapse which is about happen. I believe it will happenby 2011. There are just too many signs out there pointing to this. The math proves that





were at a point of no recovery, something major news networks will never admit. WallStreet will be shocked at the sudden destruction just like it happened over night 1929.

REV 18: 17,18,1917 For in one hour so great riches is come to nought. And every shipmaster, and all thecompany in ships, and sailors, and as many as trade by sea, stood afar off,18 And cried when they saw the smoke of her burning, saying, What city is like untothis great city!19 And they cast dust on their heads, and cried, weeping and wailing, saying, Alas,alas, that great city, wherein were made rich all that had ships in the sea by reason of her costliness! for in one hour is she made desolate.

No rest for bloggers - New Year's News Roundup | The LonelyConservativeJanuary 2nd, 2010 at 1:01 am

[...] actions of the statists. You can add to the list in the comment section. I think theway Goldman Sachs made billions should be on the list, as should the way Wall Streetand the banks manage to keep turning a profit. [...]

MartyJanuary 2nd, 2010 at 12:45 pm

Criminals who dress nicely and hold positions of authority reside both in thehalls of Congress and Industry. Masquerading as honorable people these

criminals steal, kill and destroy for power and profit. They rejoice in their profits now butin the end their rejoicing will be turned into mourning as The Judge of all rewards themall for all their filthy deeds.

RoseJanuary 2nd, 2010 at 4:32 pm

Will we ever quit blaming big business for making money. This is whatbusiness do make money if they found a loop hole in the law contact your

elected officials and campaign to get the laws amended. Quit whining if you weremaking the money you would not be writing this garbage or reading it.

WalterFJanuary 2nd, 2010 at 5:45 pm

Inflation in the middle of a recession? Why does the media say we arecontinuing to recover when they see oil prices go up i.e. $75.00 a barrel?

When you see unemployment skyrocketing and prices going up, that not a good sign.

In the recession of 2001 oil was $25.00 a barrel.

http://www.youtube.com/watch?v=p1LuW5auXYI&feature=related

MarkedJanuary 2nd, 2010 at 7:26 pm

So how will people avoid the mark and pay for goods and serrvices?

How Goldman Sachs Made Tens Of Billions From The Economic





Collapse Of America In Four Easy StepsJanuary 2nd, 2010 at 8:14 pm

[...] Source: The Economic Collapse [...]

RaineyJanuary 3rd, 2010 at 8:04 am

Wasn’t it Lenin who said, ‘capitalists will sell us the rope we hang them

with.’ In the case of Goldman and financialization of the entire US economycourtesy of various movers and shakers .. goes back to the time of Nixon really whenhe took us off gold cause the world was beating on our door claiming gold rather thandollars. BUT I digress, trying to fight the Vietnam War AND paying for LBJ’s elaborate‘war on poverty’ helped push the US system over the edge leading to double digitinflation and the powers that be making policy particularly under Carter. Deregulationdidn’t begin under Reagan..in fact it went into high gear under Carter. One of the worstlaws ever was passed in 1979, The Monetary Deregulation Actall bets were off. Wewent from a pretty well balanced economy to one based on bubbles, corruption,cronyism, a horrific version of ‘free trade,’ the end of engineering America, actuallymaking ’stuff’ to sell to ourselves and the world, as foreign owners were allowed to buyout American companies, often run them into the ground while selling off lucrative parts.

We saw Paul Volcker tell the world in 79 that the American standard of living wouldhave to decrease so the rest of the world could increase. BOY did he every accomplishthat deal. Now we have multibillion dollar trade deficit, a country that went from aproducer saver nation to a maxed out, worn out, two jobs for two people, taxed andpaying fees up the eye balls, regulated to death, while small and medium companiesstruggle with high taxes and over regulations .. and the BIG boys get off scot free incahoots with BIG government. Goldman’s crony capitalism should come as no surprise,as profit became the ONLY value ahead of country or countrymen. The chickens willcome home to roost..sooner or later Goldman and their minions in government, on K-Street will pay the price of betrayal of the nation-state called America, ethicalcapitalism, in fact the chickens are already coming home to roost..in China. A smallChinese company just refused to pay up $80million or some such to Goldman’s

subsidiary in China..and the Chinese govt. is backing them up. Henry Paulson wasknown in most circles as China’s best representative in the US. You could add mostpoliticians to that list from BOTH parties and their husbands, wives or close associates.American’s wages and salaries have been stagnant since 1979, from the time Volcker stated the desired policy of the powers that be..Americans became credit junkies causethat is HOW their standard of living, based on debt, rose at all. Goldman and JPMorgan, the central banks, AIG, Bank of America, Morgan Stanley, all the rest gave uscasino economy and then bet against it and us. BUT the politicians who benefitedObama received nearly a million dollars from Goldman employees, and since 1989Christopher Dodd, chairman of the Senate Banking, received $43 million. Barney Frank,chairman of the House Financial Services Committee, got $7.8 million. The world andthe US system changed decades ago, and not for the better. The powers that be that

created the system didn’t give us free market capitalism, they gave us corporate statefascism as BIG govt. and BIG banks or commercial interests shacked up and screwedus. It will come crashing down, and that maybe why Goldman execs are advised tocarry firearms and not gather in groups of 12 or more. Thing is those in the US congressand senate should be just as worriedthey were in a position to stop the rape andpillage of the US economic and political system but a bunch of souless unethicalsharks who thought they could get away with what is arguably the biggest destructionof the US system in our history.

Paul BlakeJanuary 3rd, 2010 at 4:13 pm





“WALL STREET CONTROLS AMERICA”, “I’m shocked” as Claude Rainesput it in “Casablanca”..

JackieGJanuary 3rd, 2010 at 8:58 pm

Its relatively easy to screw up the likes of Goldman Sachs.It can be done one a unique individual basis.

Just offer to pay the bank your mortgage loan is with.Just seek the banks assurance they will do a direct and immediate exchange for payment of the original instrument of indebtedness in its original unadulterated form.The bank is put in a spot known as between a rock and a hard spot.The bank will refuse to accept your payment.The bank will then turn to Goldman Sachs and demand reimbursement for their loss.You get to keep your home with no one to make payments to.

Voir DireJanuary 4th, 2010 at 2:33 am

Thank you, blogmeister, for an extraordinary analysis/blog. I applaud you,Sir, as you are a patriot extraordinaire.

The gloves continue to come off by those in the lamestream media (every aspect of theentire Western media resides in the hands of these same genetic kinsmen who’ve usedtheir monetary machinations/manipulations to buy/control it ALL) who’ve had anauseating bellyful of the blatant theft by these timeless Vampires. Modern-daymuckrakers, who’ve quite possibly single-handedly restored respectability to theprofession of objective journalism, are keeping a vigilant eye on our federal Leviathanand the dual-agent parasites infesting it. Do see the McClatchy paper’s outstandingseries on Goldman’s epic fleecing:

How Goldman secretly bet on the U.S. housing crash

http://www.mcclatchydc.com/100/story/77791.html

For the feds, some Wall Street firms are too big — to punish

http://www.mcclatchydc.com/227/story/80277.html?storylink=omni_popular

Why haven’t any Wall Street tycoons been sent to the slammer?

http://www.mcclatchydc.com/336/story/75720.html

How Moody’s sold its ratings – and sold out investors

http://www.mcclatchydc.com/staff/kevin_hall/story/77244.html

Why did Goldman stop scrutinizing loans it bought?

http://www.mcclatchydc.com/homepage/story/77788.html

Goldman Takes on a New Role – Taking People’s Homes

http://www.mcclatchydc.com/homepage/story/77841.html

For more damning indictments from the McClatchy stories, you can find those andother nuggets from the first link I posted including:

Story | Goldman takes on new role: taking away people’s homesStory | Goldman left foreign investors holding the subprime bagStory | Why did blue-chip Goldman take a walk on subprime’s wild side?Story | Why did Goldman stop scrutinizing loans it bought?Story | Mortgage crisis shows why financial regulation is needed





Story | How Moody’s sold its ratings – and sold out investorsGraphic | Goldman’s revolving door with governmentVideo | Goldman Sachs’ secret betsVideo | One couple stands up to Goldman SachsVideo | McClatchy’s Goldman Sachs probeVideo | Goldman’s changing role in subprime mortgagesOn the Web | State-by-state data on troubled mortgagesOn the Web | See our complete Goldman report

Wide Awake & Fooled No More,

S.

RandyJanuary 4th, 2010 at 3:14 pm

This is silly , the real problem is that people aren’t calling an ace an ace, aspade a spade. Goldman is not a *bona fide* investment bank anymore.

Investment banks specialize in underwriting securities vis-a-vis M&As. In fact, as apercentage of their total revenue, investment banking (IB) has been on a decline sincethe early 00s. And even after the collapse of Bear Stearns and Lehman, the IB revenue

didn’t immediately spike up in Goldman’s coffers as one would expect. What Goldmanis is a hedge fund which can take any position (short or long) it wants on any security,bond, currency &/o derivative, futures. The problem is that the hedge fund half commands 80+% of its revenue and thus, influences the IB research half to talk-up-the-markets. And in general, a leveraged hedge fund can make a fortune especially withinside information on market tops and bottoms.

How Goldman Sachs Made Tens of Billions of Dollars From EconomicCollapse : Kevin Trudeau ShowJanuary 4th, 2010 at 5:21 pm

[...] To continue reading this report, click here. [...]

ianJanuary 4th, 2010 at 7:37 pm

Oh, just bottom line it. Goldman BOUGHT THE GOVERNMENT and thenacted accordingly. It was the most profitable investment available.

And it worked. Current policy is proof.

Dave Lowe

January 4th, 2010 at 11:52 pm

Let’s keep it simple. When you boil it all down, Fiat Money and FractionalReserve banking are at the root of all this.

Mesohony4uJanuary 5th, 2010 at 4:35 am

I agree with much of this argument. The recent financial collapse involvedmany parties: subprime borrowers, lenders, securitizers, servicers, credit

rating agencies, investors, and governments.





When investment banks like Goldman Sachs market financial securities like creditbased securities and derivatives they should be required to provide accurate andcomprehensive information to their investor clients. However, investor clients mustexercise responsibility using proper research, analysis, and judgement when makinginvestment decisions.

If the investment bank “short sells” the very same securities it markets to investor clients and benefits from the decline their value, then such outcomes involvequestionable ethical behavior. Short selling is not unethical market behavior andassumes high risk for the short seller because if the price of the short sold productincreases, then the short seller incurs the loss. If the risks of such investment productswere not properly disclosed to investor clients; the investment bank benefits from thedecline in their value; and the investment bank knew such products had risks that couldcause harm to the investor clients then such activities could demonstrate fraud,deception, or misrepresentation depending on opinion and law.

However, the U.S. federal government performed the most insidious actions during thisfinancial crisis. By providing a myriad of assistances including direct payments,borrowing privileges, and guarantees using public funds, the financial institutions likeGoldman Sachs enormously benefited though they were largely responsible for exacerbating if not creating this financial crisis. When economic conditions werefavorable, they assumed greater and even excessive risks to maximize profits and

compensation for themselves. But when economic conditions became less favorable,they recieved incredible assistance from the government using public funds whenresponsible economic actors did not cause or propogate such crisis and did not recievethe same level of assistance and therefore suffered.

Furthermore, such assis tance creates at least two additional problems for theeconomy. Since the federal government assistance to financial institutions involvedborrowed funds, these funds will require higher level repayment due to interest costs.Though Goldman Sachs and some financial institutions repaid financial assistance tothe federal government, others did not or most likely will not including AIG, GMAC, GM,Fannie Mae, Freddie Mac, etc. Such losses will be compensated for by the taxpayer resulting in social or foregone loss/cost.

Some argue that if the government did not intervene to save such entities then thefinancial and economic system would be worse, but they provide no evidence to supportsuch an argument. It is true, however, many individuals lost their jobs and businessesfailed. If the financial system’s actors failed then they would be in the same condition asthose individuals and businesses. The U.S. economy suffered through more difficulthardship in the Great Depression Era 1929-1940 but still managed to proceed andbecome the most successful economy in the world. This economic recession mostlikely would not have become as severe as the Great Depression assuming very lowinterest rates to stimulate increased investment and spending and bank depositinsurance to prevent acute withdrawal of funds resulting in financial collapse. The USrecession in 1929-1930 became the Great Depression because of inadequateassurance of banking system deposits and improper monetary policies. In addition, thisrecession will not be as severe as the Great Depression because of the general higher standard of living in 2000s and beyond compared to the 1930s.

The second problem is in the future. By providing failed economic actors withassistance, they develop a sense of entitlement, arrogance, denial, and riskier behaviors. Financial institutions like Goldman Sachs will most probably not learn fromtheir mistakes that led to this financial crisis and will continue to assume greater risksin the future requiring unfortunate and sympathetic actors in government to provideassistance to prevent their failure. This should not be tolerated or supported by thepublic in general because it rewards failure and productive successful economies shouldreward those who create and add value and do not undermine or destroy it.





To help prevent such a crisis from reocurrence, better risk controls must be formulatedand implemented by the financial system and regulators including but not exclusivelythe following:

1. Separate investment banks from commercial banks to prevent the aggregation of riskthat increases the risk of systemic failure. Investment banks should not be subject tothe following suggested regulations (see below 2 and 3) because they assume greater risks and do not maintain deposits like commercial banks. In addition, if investmentbanks do fail, they will not recieve any financial assistance from the public through anygovernment entity.2. Maintain or increase capital requirements for commercial banks to 10 percent. Thisprovides some limitation on the amount of borrowed capital to reduce credit risk in thefinancial system but is not such a difficult requirement resulting in less lending.3. Significantly increase FDIC insurance premiums for commercial banks based on thelevel of risk in the assets of a bank(s)to provide sufficient funds to indemnify individualswho lose funds in failed banks. This action also prevents large acute withdrawals of funds from the financial system and reduce the amount of risks banks assume inlending and investing.4. Create and monitor exchange(s) for derivatives and require 100 percent margin or collateral for the trading participants to eliminate or at least significantly reducecounterparty/default risk in the financial system.5. Withdraw and recover as much public assistance provided to the financial system assoon as possible.

PETER SJanuary 5th, 2010 at 10:43 pm

Why investigate Goldman Sachs at all? The insurance they took outrightfully belongs to the victims who bought their products. I think they did

the decent thing in insuring themselves. They just need to be reminded that insuringyourself when you don’t stand to make a loss is a corrupt use of insurance.

Richard BJanuary 5th, 2010 at 11:24 pm

What do you mean “TENS OF BILLIONS” ?

Goldman was also provided with status as a Trading Bank. Under”Fiat Banking Rules”this provision allowed them to lend out (to themselves ?) and charge interest on TENTIMES THE AMOUNT OF THEIR CASH HOLDINGS – A MAGNITUDE OF TEN. Thishas resulted in potentially hundreds of billions of dollars of potential ‘future gains’.Unless it is your intent to purposely mislead your readers, I think you need to give morethought to your your numbers.

taxeeJanuary 11th, 2010 at 2:45 pm

If we return to taxing extravagant income extravagantly we make itunprofitable to steal. Tax evasion is punishable by hard time. That is how

you stop the mafia and pay off the debt.

JohnJanuary 12th, 2010 at 2:29 pm

Rose is your typical dolt that votes against their best interests. Rose





doesn’t understand how powerful the GS forces are and just how muchdestruction they cause in the name of free market profits. Go back to sleep Rose. Don’tattempt to keep up with the pack.

theonlyidiotintheroomJanuary 13th, 2010 at 1:37 am

Problem-reaction-solution..Perfect!!


how goldman sachs made tens of billions of dollars from the economic collapse of america in four...

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