The Masters of the Universe Strike Again
I eagerly await the apologists angry that I use the word “criminality” and “Goldman” in the same sentence:
- Goldman Sachs Group Inc. managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit.No mention was made of the swap in sales documents for the securities in at least six of the 10 sales the bank arranged for Greece since the transaction, according to a review of the prospectuses by Bloomberg. The New York-based firm helped Greece raise $1 billion of off-balance-sheet funding in 2002 through the swap, which European Union regulators said they knew nothing about until recent days.
Failing to disclose the swap may have allowed Goldman, a co-lead manager on many of the sales, other underwriters and Greece to get a better price for the securities, said Bill Blain, co-head of fixed income at Matrix Corporate Capital LLP, a London-based broker and fund manager.
“The price of bonds should reflect the reality of Greece’s finances,” Blain said. “If a bank was selling them to investors on the basis of publicly available information, and they were aware that information was incorrect, then investors have been fooled.”
Maybe Europe will have the nerve to do what we don’t here in the states.
Based on the “inquiry” into Tony Blair’s war crimes taking place right now in Britain (an inquiry which has no power to sanction Blair or anyone else in any way), I’d have to say I doubt it.
February 17th, 2010 at 11:38 am
Make no mistake about it, their politicians are even more corrupt than ours. Hopefully Goldman did not have the foresight to buy off European politicians, infiltrate ex-executives into their government or otherwise worm its way into their good graces.
February 17th, 2010 at 11:42 am
Hey, at least we got Martha Stewart.
February 17th, 2010 at 11:43 am
Greatest. Criminals. Ever.
February 17th, 2010 at 11:43 am
The bankers own Europe (especially England) just as much as they do the U.S. Senate. Just buy bank stocks, it will make you feel better.
February 17th, 2010 at 11:43 am
How about we just allow Goldman Sachs (Of Shit) rewrite the GAAP to whatever the fuck they want?
February 17th, 2010 at 11:44 am
Careful Cole, Loyd might stick stamper on you.
February 17th, 2010 at 11:44 am
This is actually a whole bunch of bullshit.
http://blogs.reuters.com/felix.....ans-fault/
Sovereign bond investors are not little children, trustingly handing over their nickels to some big bad NY banker.
February 17th, 2010 at 11:45 am
The impression that I’ve gotten is that it’s more a failure of Greek’s government than anything else. While I am sure Goldman Sachs wasn’t exactly modest in trying to gin up these deals, why aren’t we looking at the political problems that allowed Greece to kick the fiscal can down the road? These types of deals, from what I can tell, aren’t all bad. If they are used responsibly, they can give companies and countries some breathing room. But if they aren’t used responsibly, they simply avoid dealing with the underlying issue, which in this case was irresponsible fiscal management by Greece.
February 17th, 2010 at 11:46 am
then investors have been fooled
This sounds so… harmless, compared to what it actually means. I’m confident that Blain didn’t mean for it to sound harmless, but man. I think I would have gone with something a little more harsh that “fooled.”
“Criminally misled” comes to mind.
February 17th, 2010 at 11:49 am
The summary is pretty simple: the world financial system is run by scumballs. In this case, a rightwing sleazeball government in Greece made a duplicitous deal with GS to put their deficits “off book” – as is the standard for RW governments – using rules specifically crafted to allow this kind of BS by the EU banking “regulators”. Then a bunch of greedy assholes purchased Greek bonds, knowing full well that the Greek government was dishonest, that the Greeks had defaulted on 200 bond issues, and that they would get higher interest rates for the risk. Now, as usual, the prospect of actually loosing money on risky investments is causing bondholders to shriek that they were deceived and that someone must bail them out.
The theory that GS is to blame for this clusterfuck of greed, self-dealing, ponzi-accounting, and whining, is not supported by the evidence.
February 17th, 2010 at 11:50 am
“Apologists” have no business being angry. Goldman Sachs is singlehandedly sabotaging the entire investment banking industry with its bullshit. As a 15-year veteran of the industry myself—at a firm that, unlike Goldman, took pains to rein in its cowboys and play by the rules—I’d like to be first in line for the blanket party.
February 17th, 2010 at 11:50 am
Goldman has stayed involved in the marketing of these securities, recently attempting to get the Chinese to buy a lot of them in order to hold off the crisis. Even the Chinese were not falling for that one.
The WSJ is reporting that Greek officials reported to the EU in 2008 that there were no currency transactions being used to hide the deficit. Also, like every professional journalistic report I can find, there is no mention that the center-right government for the last ten years has conducted all of these frauds, which came to light as soon as a socialist government took over and started opening the books and dealing with the public honestly. No mention of this at all, ever.
February 17th, 2010 at 11:50 am
Finance Minister George Papaconstantinou speaking to the Greek parliament.
February 17th, 2010 at 11:53 am
Goldman has stayed involved in the marketing of these securities, recently attempting to get the Chinese to buy a lot of them in order to hold off the crisis. Even the Chinese were not falling for that one.
The WSJ is reporting that Greek officials reported to the EU in 2008 that there were no currency transactions being used to hide the deficit. Also, like every professional journalistic report I can find, there is no mention that the center-right government for the last ten years has conducted all of these frauds, which came to light as soon as the Pan-Hellenic Sockulist Party took over and started opening the books and dealing with the public honestly. No mention of this at all, ever.
February 17th, 2010 at 11:55 am
Whoa whoa whoa, we’re entering into Great Gay Satan (aka Matt Taibbi) territory now.
February 17th, 2010 at 11:55 am
@rootless_e:
Ever hear of “conspiracy to defraud.”
No doubt, however, that the bondholders are a bunch of greedy, corrupt babies who want to be bailed out of their own mess.
February 17th, 2010 at 11:55 am
It was interesting to see that the NYT in it’s very first article about this made sure the headline said it was all perfectly legal. They have no way of knowing that of course, but the whole point of Wall Street these days seems to be to legalize crime.
If “criminals” is too crude, how about “lying scumbag fraud artists who specialize in raping the life savings of widows and orphans?” But hey, baseball players get paid too.
February 17th, 2010 at 11:56 am
@Xenos:
Whoa, you realize what you are implying here, don’t you? Do you really mean to allege that a right-wing government in Greece didn’t act responsibly? Do you also mean to imply that our right-wing government didn’t act responsibly over the past decade?
February 17th, 2010 at 11:57 am
@rootless_e:
First, I agree with you about the bondholders. But, there is a pattern emerging where debtors sell shitty paper, banks help cover it up, bondholders buy with a wink and a nod, everything goes down the tubes and all of them ask for a bailout (on which the banks will collect a hefty consulting fee).
Though I did make $12k and counting off the whole mess.
February 17th, 2010 at 11:58 am
@gopher2b: How can anyone claim “conspiracy to defraud” of a legal transaction with a sovereign state, details of which were reported in the press? The reason bondholders got high interest rates was because of – you know – risk of default. If it had been believed that Greece was on the up and up, then its bonds would have been issued with low return.
February 17th, 2010 at 11:58 am
@rootless_e:
The link to the 2003 article is much more interesting.
This is another hidden in plain sight time bomb every just ignored when times were good.
February 17th, 2010 at 11:59 am
@gopher2b: Well,yeah. It’s almost as if the whole system was corrupt. I wouldn’t care if GS management was sent off to hard labor at Angola prison, but I am not willing to fall for a transparent attempt by bondholders and sleazeball EU “regulators” to blame this all on some Americans.
February 17th, 2010 at 12:01 pm
@rootless_e:
True, the rules set up by the EU allow for some looseness in the joints, as it were. Like a lot of systems even though you can be cyinical about how people will actually behave, it breaks down if parties take that looseness as an excuse to act with a complete lack of good faith.
There is a conspiracy of malicious and fraudulent behaviour here, not so much at the political level but in the market for sovereign debt instruments. GS has been an indispensible party for that conspiracy to succeed – without their complicity, it could not have been done. Their role is analogous to Arthur Andersen’s in the Enron scandal. The solution is the same.
(Waiting for Burns… )
February 17th, 2010 at 12:02 pm
@gopher2b:
You can’t cheat an honest man, but that should not make cheating permissible.
February 17th, 2010 at 12:06 pm
geg6 takes shots at the inquiry into Tony Blair’s conduct of the war, but since we are in the country that insists on looking forward, not backward, who are we to talk?
At the least, the inquiry has helped to assure that Blair’s political career is over. His backers were talking about pushing him for high EU office, and that’s over.
February 17th, 2010 at 12:07 pm
@Cat: Yup. And now the bondholders are shocked, shocked, I say and the EU regulators are appalled!
One thing people keep forgetting is how much of AIG’s exposure was on “regulatory arbitrage” to EU banks.
February 17th, 2010 at 12:08 pm
@Ash can
Bullshit, IB is essentially a criminal enterprise now, GS is just the most successful of the bunch.
February 17th, 2010 at 12:08 pm
February 17th, 2010 at 12:09 pm
@rootless_e:
This is the key quote from that story. I disagree with the author completely. If a bank knows they are being used for an illegal purpose, and allows itself to be used, it’s just as liable (and/or guilty) as the debtor. It’s the ostrich defense and its a non-starter.
February 17th, 2010 at 12:10 pm
@Brian J: This is where I start to agree with Krugman – integrating Greece into the EU was a mistake. If the Sockulists had been in charge they probably would have started cooking the books too, as the alternatives (failure of the Olympic games, for one) would have been unacceptable.
February 17th, 2010 at 12:10 pm
Basically, we need to seize Goldman’s assets and redistribute them. Until this happens you aren’t going to have any of the bankers’ attention.
February 17th, 2010 at 12:11 pm
@rootless_e:
Are you saying that they didn’t know what was going to happen, or that what they did wasn’t illegal? Those are entirely different things.
Look, we have this free market/regulated market debate every day here in the US. If the free market guys want to be taken even slightly seriously then they need to hold the banks accountable when they do these things. That’s the whole fucking point – that somehow they know better.
February 17th, 2010 at 12:12 pm
Being Greek (Nick is short of Nicholas Kakliamanis), I have some insight into this.
Goldman was basically asked by Greece’s previous (right wing) government to help the country hide the extent of it’s deficit for fears of not only electoral fallout domestically, but how it would hurt Greece within the EU and their (vain) attempts at blocking Turkish accession.
Goldman, never turning down business being a company and all, gladly helped, but warned that they wouldn’t be able to hide it forever.
Greece was recently replaced with a Socialist government, who is gladly pinning the blame on Goldman to keep the masses from turning on them, as they never really said a peep about the deficit during their minority…not that they should as Papandreou is doing everything he can to help the country rebound, but he has on eye on the political situation in the United States (he was born in Minnesota) and sees how quickly the Americans turned on the Democrats and wants to remain on offense, which is smart of him. Anyone who can read Greek should check out the Greek newspapers (if you can read Greek and live in Astoria, Queens, Tarpon Springs, Florida, Campbell, Ohio or Allenwood, New Jersey), some of the headlines against Goldman and capitalism in general are intense.
Basically, my point is, this is more Kostas Karamanlis’ fault than Goldman…Goldman was just doing what it does.
February 17th, 2010 at 12:14 pm
@gopher2b: It was not illegal. Look at the Risk magazine story: it was being reported that EU rules allowed member states to disguise finances with derivatives.
February 17th, 2010 at 12:17 pm
Can I just say too that this just illustrates the central problem to this entire mess. The people who run things (Geitner [and Paulson before him], Bernanke, Goldman Sachs, Blackstone, and now unfortunately Obama) cannot imagine a world where there is no Goldman Sachs. The syllogism is (1) the world economy cannot function without Goldman Sachs, (2) Goldman Sachs doesn’t do illegal or unnecessary things, (3) everything Goldman Sachs does must be legal and necessary. I don’t see this paradigm changing anytime soon so we will continue to have these messes anytime there is serious volatility.
I doubt it was worth the Great Depression that would have followed, but I really wish sometimes they would have let them all fail back in fall ‘08 and all the bankers would be living in Central Park right now.
February 17th, 2010 at 12:18 pm
@Martin: I’m saying I have zero sympathy for the bondholders or the EU regulators. A just solution to this would be cancellation of the debt and a warning to people not to buy bonds from irresponsible right wing governments.
To me, the whole sovereign bonds market is a scam.
February 17th, 2010 at 12:19 pm
@Xenos: The Socialists were in charge for part of the problem period, from about 2001 until 2004. The Socialists were governing the country in the run up to the Athens Olympics.
And I’m not one who speaks ill of socialists, considering I consider myself a member of PASOK and my grandfather served in the Vouli ton Ellinon as a member of Andreas Papandreou’s government.
February 17th, 2010 at 12:20 pm
@Xenos:
Wait, there’s more ...
Always follow the money.
Meanwhile, both in the UK and the US banks are defying citizens and governments who provided bailout money by frolicking in vast pools of bonus money:
Don’t you just love how the banks are quaking in fear over US and UK attempts to get them to reduce excessive executive pay and to provide transparency over their various high-risk financial deals?
February 17th, 2010 at 12:21 pm
@gopher2b:
You know why that is? Because the world cannot function without Goldman Sachs and you basically admitted that lol.
February 17th, 2010 at 12:22 pm
There are more important things to do than blaming Goldman Sachs for all the financial ills in the world.
February 17th, 2010 at 12:24 pm
@Amok92: Now you’re just being silly.
February 17th, 2010 at 12:24 pm
BOMB IRAN!
February 17th, 2010 at 12:25 pm
@gopher2b: This is what gets me: the EU is attempting to find a way to blame someone, anyone, for what it is trying to do which is to rescue irresponsible bond investors (including the biggest and most powerful banks in Europe) on the backs of Greek workers. So we’re treated to this ridiculous spectacle of EU regulators winking at GS and Barclays and Deutsches Bank and indignantly insisting that they are incensed that gambling has been going on in the casino.
February 17th, 2010 at 12:25 pm
Last summer, I read Street Fighters by Kate Kelley, detailing the last 72 hours of Bear Stearns.
http://www.amazon.com/Street-F.....1591842735
What struck me about it was the casino floor atmosphere of the speed of these transactions and the ludicrous expectation that multi-billion dollar decisions could be made in timespans lasting for mere hours under the pretense that all the facts were being meticulously analyzed.
The reality of it is that these are some lazy fuckers who gamble the fortunes of other people according to whims and gut feelings. There is no real analyis – it is all about who you know and who you blow, along with the illusion of trust.
February 17th, 2010 at 12:25 pm
@rootless_e:
Without reading the actual law, I’m skeptical its legal to use derivatives with the intent to hide the financial state of the debtor. I imagine the law says you can use derivatives and somewhere else it explains how the accounting should look. I strongly doubt you are allowed to manipulate the guidelines with the INTENT to defraud.
If it is otherwise, so be it.
February 17th, 2010 at 12:26 pm
@Nick:
Wow you’re dumb.
February 17th, 2010 at 12:27 pm
@Xenos:
The Chinese might not have fallen for it but some economists believe that the Chinese are inflating a huge real estate bubble. I see Chinese bankers executed in the future when it busts. They will not be treated like the US banksters.
February 17th, 2010 at 12:28 pm
@Nick: Nick – If the Karamanlis government had refused to use the derivatives, resulting in a default a few years ago and the sort of austerity measures now being considered, how would the public have reacted?
I probably tend to indulge my anti-capitalist and anti-neocon obsessions too readily on this issue. My wife blames the Greeks, every last one of them, for preferring comfortable fictions over painful reality. And she is about as hardcore a Papandreou-bot as you will ever find.
February 17th, 2010 at 12:29 pm
@gopher2b:
Very insightful, thanks. care to elaborate?
February 17th, 2010 at 12:30 pm
@Nick:
Oh please. That’s like suggesting the crack dealer’s hands are clean when his clients start shooting up convenience stores for spare cash.
Goldman set up a series of bunk deals designed to raid the Greek Treasury in exchange for the government’s right wing politicos to cook the books and “balance” the budget. It’s money laundering plan and simple. Suggesting that Goldman is somehow innocent just because it was the laundry mat and not the guy doing the laundry is criminally naive.
February 17th, 2010 at 12:30 pm
@gopher2b: Well, the details of the transaction were published in 2003. That article references a public “fierce debate in late 2001” about Piga’s paper. If it was illegal, then the EU regulators really suck.
February 17th, 2010 at 12:32 pm
@Nick:
Not really worth my time but you can start by looking up syllogism.
February 17th, 2010 at 12:33 pm
@Xenos:
His government would have almost certainly fallen and Socialists would have taken power, which is what happened anyway, and it would’ve sent shockwaves through Europe that might have prevented the whole financial crisis, so I’m not forgiving Karamanlis or Goldman in that regard, but what Goldman did wasn’t criminal, just unethical…a corporation did something unethical to make a profit? Colour me surprised.
February 17th, 2010 at 12:35 pm
@Xenos: Hey, as an American i cannot imagine what it’s like when a right wing government creates artificial prosperity for the middle and upper class by maxing out the credit card and putting expenditures “off books”. Boy that’s unthinkable. And even more unthinkable that voters would fall for this kind of crap. If that ever happened in the USA, it would be dismaying.
February 17th, 2010 at 12:36 pm
[...] J'attends avec impatience les apologistes en colère que je utiliser le mot «criminalité» et «Goldman» dans la même phrase: – Goldman Sachs Group Inc géré 15 milliards de dollars de ventes d'obligations pour la Grèce après avoir organisé un swap de devises qui ont permis au gouvernement de masquer l'ampleur de son déficit. Aucune mention n'a été faite du swap dans les documents de vente [. . . ] URL article original: http://www.balloon-juice.com/2.....ike-again/ [...]
February 17th, 2010 at 12:37 pm
That was exactly what it said: liabilities that come from derivatives weren’t to be considered liabilities that affect the overall debt number.
February 17th, 2010 at 12:38 pm
@gopher2b: oh come on. your argument is silly and using $4 words doesn’t help.The sillyness is due to mistaking systematic corruption for individual criminality. In a world debt system where Zambians starve so that bond speculators can get their blood money, what GS did for Greece is nothing.
February 17th, 2010 at 12:38 pm
@rootless_e: In Greek usage the term Xenos (‘stranger’) is used to refer to the American guy who gets married to the nice Greek girl leading to decades of awkwardness and inappropriate entanglements. My background is not Greek, but Anglo-preppy, with a father who quit Morgan Stanley in the 60s in order to get out of what was already a pretty dishonest business. I was raised on many dinner table conversations about banks, the devil, supper time, and the need for long spoons.
February 17th, 2010 at 12:43 pm
@ rootless-e
So now Goldman’s not a bad actor because people are starving in Zambia? is there any length you won’t go to to avoid admitting that what Goldman does is defraud people? Sure it’s legal, they provide all the staff to regulate themselves. Yes the Greeks are responsible, but again Goldman is providing a fraudulent and destructive service that is, perhaps, perfectly legal. So fucking what, it’s still clearly criminal. Torturing people has been made legal. Gassing Gypsies was legal in a certain place we all know about.
Perhaps rather than looking at all the reasons Goldman should be left alone to destroy more lives in more countries, we should admit it’s part of the problem. In fact it is emblematic of the problem. The value they claim to create, it turns out, is very often actually just a lie hiding the value they actually destroyed.
February 17th, 2010 at 12:45 pm
@Nick:
I think you’re more right than wrong. Even if you claim that Goldman was doing something wrong, either in the ethical sense or the legal sense, which is not clear, it does take two to tango. From what I understand, derivatives aren’t all bad. They can be used responsibly, just as they can be used irresponsibly. The fact that the Greek government used them to mask fiscal mismanagement isn’t really Goldman’s fault. Was it likely that Goldman knew Greece wasn’t going to change anything? Perhaps, but that doesn’t necessarily mean they perpetrated a fraud. It’s different from, say, predatory lending, because the Greek government seems to have known what it was doing.
February 17th, 2010 at 12:48 pm
@Bullsmith: I’m not defending GS, I’m deriding the naivete of people who fasten on to GS as the devil, as if Deutsches Bank was any better. The situation is simple: The RW Greek government used a well known loophole to cook the books with the help of GS and now the bondholders are looking for someone to blame for the risk that they knowingly accepted.
February 17th, 2010 at 12:51 pm
I don’t suppose someone could just fucking ban derivatives? They seem to be at the heart of most of this bullshit.
February 17th, 2010 at 12:54 pm
Short break for those needing a good defuse via a vicarious rant. If nothing else, the phrase Wanker Banker is a grand one. Click Here
February 17th, 2010 at 12:56 pm
@rootless_e:
Except the government let Lehman and Bear Sterns fail and saved Goldman. Why the distinction?
As to your point above, you can have both systematic corruption and individual criminality. They are not mutually exclusive.
February 17th, 2010 at 12:58 pm
Look, John. The Ravens have gone from alleged killers to actual killers.
February 17th, 2010 at 1:03 pm
@gopher2b: Why? Why did they save Citibank and Wells Fargo and let WaMu collapse? Part of the reason is political power and part is that GS bet on the right side of the mortgage meltdown and Lehman did not. GS was better managed than Lehman and deserved to live more than Lehman.
February 17th, 2010 at 1:04 pm
Here’s a killer paragraph in the 2003 article
By gosh, it’s our old friends the ratings agencies again! Horrible how GS pulled the wool over their eyes!
February 17th, 2010 at 1:11 pm
Beheadings?
February 17th, 2010 at 1:21 pm
Law & Order: SVU had an episode where the guest star, Andrew Navin (Sayyid on Lost) played a detective who was like a forensic accountant investigating financial crimes. He had a great riff about how his perps were just as big of sociopaths as SVU’s, only his perps ruined more lives and never got punished.
February 17th, 2010 at 1:21 pm
There used to be a legal doctrine where certain contracts could not be enforced in a court as they were void due to excessive risk being in violation of sound public policy. There were some very
Only one ‘o them librul activist judges would make a ruling like that, though, and obviously, we’ve moved beyond that to a more enlightened judicial environment of strict construction and deferential restraint.
Here is a nice example of that older body of law:
http://chestofbooks.com/busine.....olicy.html
February 17th, 2010 at 1:24 pm
It’s been a while, but I bet the peasants can remember very quickly how to hang, draw, and quarter someone.
February 17th, 2010 at 1:24 pm
That’s kind of like the housing securities bust. One the one hand, the guy making all the NINJA loans and packaging them into CDOs is a crook. On the other hand, the state pension manager buying CDOs of 1,000 NINJA loans is an idiot.
February 17th, 2010 at 1:24 pm
@michael
Heh. It’s funny how they used to expect people to abide by basic morality in business.
February 17th, 2010 at 1:27 pm
OH SHIT THE FRENCH ARE HERE
February 17th, 2010 at 1:29 pm
I have no idea what this means. By the way, if I like Bot flies, does that make me a Bot-bot?
February 17th, 2010 at 1:33 pm
@Comrade Dread: when was that?
February 17th, 2010 at 1:36 pm
@Erik Vanderhoff:
This is so true. I remember when Enron went under. An employee who lost everything, including his health coverage, was profiled by local media. He had cancer and as a result of losing his insurance (I don’t think you can COBRA if the company no longer exists) he lost his health care too. He’d already lost the majority of his savings and retirement in the crash. Essentially Enron’s crash was his death sentence.
I always thought that Ken Lay, et al were essentially murderers. Their weapon of choice wasn’t a gun but they sure hurt a lot more people than if they’d pulled the trigger on one bullet.
February 17th, 2010 at 1:37 pm
@rootless_e:
If by better managed, you mean: It was able to place its former CEO as the Secretary of the Treasury, than yeah, it was better managed. Oh, and also, Wells Fargo and Citibank are banks, not investment banks. So there’s that little distinction.
February 17th, 2010 at 1:41 pm
@gopher2b: GS also hedged its bets
http://www.mcclatchydc.com/227/story/77791.html
Obviously it helped having Paulson there, but Lehman ate its own bullshit and GS did not. Lehman did not have any functioning risk management at all. GS did. If GS had been a deeply fucked financially as Lehman, even Paulson could not have saved them.
February 17th, 2010 at 1:46 pm
I don’t think any contract was ever voided on the grounds of excessive financial risk. Public policy voids things like racist contracts, not swap agreements.
February 17th, 2010 at 1:56 pm
@rootless_e:
Do you think if AIG went under, GS would have survived? I honestly don’t know and never looked at the numbers but it would have been close. (I have to be careful about what I say even if its anonymous but I doubt someone with a lot of cash infuses GS with capital unless he/she knows AIG’s commitments were going to be honored by the government.)
February 17th, 2010 at 1:59 pm
@gopher2b: I’m not sure. If you look at the IGs report GS collapsing was the least of the possible consequences. GS claims they had AIG hedged – although they could be lying, but surely some European big banks would have sunk.
an interesting side note on this Greek deal: GS, being cautious, immediately bought insurance for the deal from a German bank.
I’d be shocked if this swap was not a consideration for German “regulators” who are now complaining hypocritically about the irresponsible Greeks and criminal Americans. god knows, the careful and sober Germans in Depfa would never engage in reckless casino stuff. (ahem)
http://www.irishtimes.com/news.....71708.html
February 17th, 2010 at 2:30 pm
Strike the Goldman HQ with a drone launched Hellfire?
February 17th, 2010 at 2:32 pm
my comments are in moderation. But look up the DEPFA bailout. The whole story gets more and more funny the more you look at it. A bunch of thieves yelling at each other about who took the money.
February 17th, 2010 at 2:43 pm
@Punchy:
Papandreou is the Prime Minister of Greece, so like Obama-bot, Papandreou-bot…eh…nevermind I killed it.
I think you’re only a Bot-Bot if you like plants…cause Botany, get it?
I’ll leave now.
February 17th, 2010 at 2:48 pm
@Erik Vanderhoff:
You mean Naveen Andrews?
February 17th, 2010 at 2:50 pm
Saying GS is to blame for the Greek government doing something stupid is similar to blaming the Iraq invasion of Kuwait on April Glaspie ( remember her?) because she did not SUFFICIENTLY FORCEFULLY, tell Saddam that invading Kuwait was a bad thing he should not do.
There are levels of guilt for the enabler, whether it is the local crack dealer selling to 12 year olds, to GS to April Glaspie
vis a vis the Kuwait invasion.
My first thought is that GS is like April Glaspie on this continuum, but given the zealousness with which GS likely goes after business, I am leaning more towards the crack dealer side.
February 17th, 2010 at 3:00 pm
@gopher2b:
In retrospect, we should have let them all fail. They used the bailouts not to re-establish capital markets but to protect their own financial positions and their own bonuses. On top of this, they are still using the risky practices which caused the financial meltdown the first time around.
Ah, no. But interesting comparison.
February 17th, 2010 at 3:10 pm
I wonder if it is widely known in Greece that the German government now probably owns the Depfa CDS obligation to GS for the deal with Greece. So in trying to force Greeks to pay up, Germany is protecting its own hidden financial exposure.
February 17th, 2010 at 3:14 pm
@Brachiator: It’s remarkable how few people have looked at Barofsky’s table of AIG exposure. It’s not at all clear to me even now that pulling the plug on AIG would have been a risk worth taking. Should the US government have allowed Eastern European national banks to collapse?
February 17th, 2010 at 3:17 pm
@rootless_e:
Odd. Looking at US and British banks, it seems abundantly clear that they have pulled back on lending, but have continued risky practices, made deals that benefited officers and shareholders, and paid bountiful bonuses. Meanwhile, the underlying business landscape in the US is still weak, smaller banks have failed – requiring FDIC rescue, and the US government is more on the hook as the ultimate backstop for spiraling public and private debt.
Commercial lending is still pitifully weak, and more problems in real estate and credit card debt are looming on the horizon. Meanwhile some of the banks which cried hardest for the bailouts are booking profits and paying back the US (no interest) and resisting any efforts to get their co-operation.
So the banks exploited governments to their benefit, as is to be expected. Had we let them fail, other individuals and institutions would have come forward to fill the breach, or the governments would have been able to wrest more concessions in return for assistance.
Interesting non-sequitur.
February 17th, 2010 at 3:59 pm
@John Cole—Here’s a link to an article in this week’s NY Observer about Goldman’s chief apologist. Big surprise. He’s not very good at it:
http://www.observer.com/2010/w.....-pr-prince
February 17th, 2010 at 4:01 pm
I smell money laundering- break out the RICO act boys, looks like GS is back on the menu!
February 17th, 2010 at 4:30 pm
@Brachiator: not a non sequitor at all. AIG cds were sold to french and brit and german banks that are rumored to have sent them along with crap further east. if AIG had pulled the plug on SG, would that have collapsed bank of hungary? Beats me.
Of course, if the Obama administration had been in power at the time, the government would have forced joint action on EU, but Paulson/Bush?!!
February 17th, 2010 at 4:33 pm
@rootless_e:
You might just as well have asked about the financial meltdowns in Iceland, Ireland and Spain.
The financial mess was a global problem. The US and the UK had a similar approach, which in part may have been a matter of necessity with respect to GS since their branch in the City of London was behind much of the riskier practices. But either way, both Bush and Obama and their treasury secretaries got played by the banks.
February 17th, 2010 at 5:09 pm
@Xenos:
Nice to know I’m needed around here.
If a desire to see some evidence of actual crimes before labeling someone or something criminal makes me an apologist, then I will glady plead guilty to being an apologist and eagerly await whatever is coming to me. I’m kinda funny that way – two law degrees and 29 years in practice has a tendency to instill certain habits of mind when thinking about legal issues.
February 17th, 2010 at 5:28 pm
@rootless_e:
Well, whaddaya know.
I am nostalgic for the time when our genial host believed that the rating agencies were The Most Evilest Bastards on Earth.
February 17th, 2010 at 5:39 pm
You are right that this is not, at its core, a matter of criminal law. And that is perhaps why it is such problem. The legislative and regulatory systems can become captured by powerful parties, and then the legal system is perverted and made a mockery.
Politics, morality, and ethics create the context in which legal issues are defined. To forget this is to fall victim to a brittle formalism which leads to terribly successful legal careers that are essentially meaningless and a terrible waste.
Either that or the Jesuits brainwashed me too well.
February 17th, 2010 at 5:52 pm
@Xenos:
You were doing great until you got to “brittle formalism.” To which I would reply that it is an essential element of the rule of law that actors, whether natural or legal persons, be able to judge with some degree of certainty whether conduct is permitted or proscribed before they engage in it. If there is not reasonable warning that conduct is proscribed, then you can’t punish someone for engaging in that conduct.
Pushing the envelope, playing in gray areas, exploiting differences in legal systems in different countries … those may all be activities that we would like to discourage to some greater or lesser degree, but if we are really serious in our devotion to the rule of law, we have to accept that the loophole-closers are always going to be one step behind the loophole-exploiters.
And when there a huge pots of money to be made exploiting loopholes, well … that’s the price that we inevitably pay for having a government of laws, not men.
And BTW, there are worse ways to go through life than brainwashed by the J-boys.
February 17th, 2010 at 6:53 pm
There are a good many supporters on either side regarding IFRS convergence. However, the ramifications are cause for concern, especially whenever the S.E.C. speaks and thousands of companies are impacted.
I do actually enjoy frequenting your blog and appreciate the insights, although I must admit that some things we don’t agree on.
Do you consider US GAAP to IFRS convergence something you plan on discussing in greater detail via a comparison?
March 3rd, 2010 at 10:02 am