Keith Richards, Cockroaches, and the Firm of Goldman Sachs
In today's New York Times, we see the headline:
Goldman to Raise Capital, With $5 Billion From Buffett
And in the accompanying story written by Ben White, we can read the following:
The billionaire Warren E. Buffett will invest $5 billion in the investment bank Goldman Sachs, as part of the bank's efforts to raise $7.5 billion in fresh capital, a Goldman spokesman, Lucas Van Praag, said Tuesday. In return, Berkshire Hathaway, the conglomerate run by Mr. Buffett, will receive perpetual preferred shares in Goldman, Mr. Praag said. The preferred stock will pay a 10 percent dividend.
So here's how a real bailout works: Goldman Sachs needs money, Warren Buffet gives them money. In return, Warren Buffet gets stock that pays a ten percent dividend.
Now, for comparison, here's the shell game version. Keep your eye on the pea.
(1) Goldman Sachs gives Hank Paulson seven hundred million dollars (that's seven zero zero comma zero zero zero comma zero zero zero) in salary and bonuses.
(2) Goldman Sachs lends Hank Paulson to the Treasury (now that he can afford to be a public servant).
(3) As the Secretary of the Treasury, Paulson insists that we give Goldman Sachs a lot of money, in exchange for a lot of crap. (If not, we all die.)
(4) Except it's not Hank Paulson's money, it's ours.
(5) If the crap turns out to be crap, we're stuck with it. (And by the way: if it's not crap, why are they so desperate to unload it?)
(6) In four months, Paulson returns to Goldman Sachs.
(7) Paulson receives salary and bonuses from the money we just gave to Paulson to give to Goldman Sachs to give to Paulson.
(8) It's our money. Or was. But we don't get preferred shares. We don't get a ten percent dividend. We don't even get a free copy of The Warren Buffet Way: Second Edition (Paperback). We get crap.
In essence: when Goldman Sachs needs money, and the guy lending the money is rich, they give him something for it. When Goldman Sachs needs money, and the guy lending the money is us, they don't.
Why should they, unless they have to? And the way it stands now, they don't have to.
It's been said that when the dust clears from WWIII, the only things left standing will be Keith Richards, cockroaches, and the investment bank of Goldman Sachs. Having lived long enough to see the Stones, my old New York kitchen, and the events of the past week, I wish I could disagree.
Update - Warren Buffet today tells CNBC he wholeheartedly supports the bailout plan. So: our money goes (for free) to prop up a company he just invested $5,000,000,000 in. Why in God's good earth wouldn't he support it?
Update (2) - And then there's this, from Bloomberg.com (h/t mogamboguru):
Paulson Debt Plan May Benefit Mostly Goldman, Morgan (Update2)By Jody Shenn
Sept. 22 (Bloomberg) -- Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid, according to Bank of America Corp.
``Its benefits, in its current form, will be largely limited to investment banks and other banks that have aggressively written down the value of their holdings and have already recognized the attendant capital impairment,'' Jeffrey Rosenberg, Bank of America's head of credit strategy research, wrote in a report dated yesterday, without identifying particular banks.
The guy from BofA is too polite to "identify... particular banks." But Bloomberg.com isn't; and you don't have to be, either!
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This is a great article, and I betcha the same thing is going to happen with Dick Cheney.
Halliburton got all these billions of dollars (once again - OUR dollars) spent for this war,
and then at the end of the year Cheney goes back to Halliburton and scoops up all the money
that he himself directed to the company.
Are we Americans just plain dumb ?
That we can be so easily bamboozled by con men - again - and again - and again - and again.
When voting time comes around, keep in mind that it is our Congress and our Senate that keeps
allowing this evil to happen. . . . it is time now for a whole new batch of legislators.
Remember where all those rush votes?? The Iraq war?? Homeland Security?? Yeah I do too. Enough. Our Congress need to wait and think on this so called bailout.
I really don't care where and how much Warren gave them I am still not for the bail out.
i'm ok with it, if we get the same terms, or better for every nickel loaned
If you oppose this bill, take time out to contact your senator and representative now.
http://www
Goldman Sachs not only gets Paulson, but they already short-selled the bad mortgages before the fall last year, much to the amazement of the rest of the industry who got slammed. Now, GS wants us to foot the bill to protect their butts. See this bog - "Goldman Sachs holds the toxic bag" - http://www
Take the $7B, and hire the Stones, U2, and the last two Beatles to do a We Are The World fund raiser.
Commission a song by Bob Geldoff and Stevie Wonder. Download the song as a ringtone for a buck.
Have Scorsese film the event, and sell DVDs for $30 a pop.
Problem solved!
I LIKE it! Send this plan to Obama.....
Lovin' it! Cripes, it would take less than $7M; put another coupla mill into busting up single-owner media outlets, get real tamper-proof voting machines (we would have been Bush-free today!); nationalize US gas and oil, brain-trust investment in energy alternatives to create jobs, insist on statutory national health insurance, and we'd be singing all the way to the bank. Stones are the greatest rock and roll band EVER!
Bush wants $700 Billion for a newly created US Sovereign Weath Fund. Then we can be like the Chinese.
How can you create a "wealth" fund with borrowed money?? The SWF's in Dubai, etc are built on our Petro-dollars.
Brilliant indeed. Why all the 7's? Isn't there another number they could use? Seven here, seven there, all with varying numbers of zeros behind them. Hmmmm.....
Brilliant.
It all sounds like a bandaid to stave off a depression before the election. Forget Wall Street. Take the trillion and use it to create green technology jobs that will benefit the economy in the long run.
That is the best way to use that money.
"...when the dust clears from WWIII, the only things left standing will be Keith Richards, cockroaches, and the investment bank of Goldman Sachs."
Classic, all the way around.
Question is, do we want to solve this financial mess or do we want to do what Paulson & Co. are suggesting and pass the problems onto our children, who won't be able to punish the crooks? I'll take recession now, if that is all it takes to avoid the pain for my kids.
Oh dear! Oh deary dear dear!
Even the abridged Republican Platform is thicker than three pages-typed, set and BOUND!
Paulson looked really flustered yesterday-was stuttering and stammering and uming and ering all over the place--EVERY TIME SOMEONE ASKED HIM A DIRECT QUESTION.
According to Wall Street pundits 'we' will either lose $2 Billion or gain $2 Billion. This is WHY Obama's been yelling about "EQUITY" since day ONE! IF 'we' stand to lose $2 Billion on this 'deal'-then 'we'd damn well better have it conducted in a 100% GLASS HOUSE!
So-what's it gonna be?
CHANGE or MORE OF THE SAME??
Obama/Biden '08
Fool me once - shame on you.
Fool me twice - shame on me.
He would lick his lips, roll his eyes and say, "huge market","complex securities", as he kept trying to mystify everyone into thinking only he knows what is best.
He and Bernanke both sounded guilty. I bet they wouldn't take a polygraph test.
If we had term limits for both houses of congress and/or rules that make lobbying and pac contributions illegal, this wouldn't happen to this degree. If we seperated our financial institutions into long term home lenders, short term commercial lenders, loan sharks and the three cannot commingle this wouldn't happen to this degree. If the wall street ceo's want higher risk/returns, they can start their own firms and set up shop as a loan shark. They can loan to high risk borrowers etc.
All of this happened because everybody was allowed/deregulated to do anything they wanted in the name of profits. That's like having your quarterback play every position on the field. Doesn't make good sense if you want a healthy quarterbac
I also think the $700 billion would be better spent for public works projects (there's going to be many more ceo's diggin' ditches), some for health care, and the rest to extend unemployment benefits. (yes-even to the corrupt ceo's that put us here).
the folks at the UN are furious about this . and someone agrees with you...Eliz
"It would be far better to invest in the education of children, she told a luncheon gathering, than to use a bunch of fancy financial engineering to bail out Wall Street and other global financial centers. “Believe me,” she said, “it will be much cheaper.”
http://www
EVERYBODY"S P*ssed at Bush er al
And THIS is going to be EVEN BETTER:
from ROLL CALL
White House Dispatches Team to Push Economic Bill
September 23, 2008, 10:42 a.m.
By Keith Koffler
Roll Call Staff
http://www
Quote: "Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough. "
So - Fratto aggrees to the fact that, this 700 Billion-Bailout is NOT a hastily cobbled-together bailout, to stem an unforseeable and, otherwise unstoppable tide of woes for the financial markets - but a long prepared, concerted and thoughtfully executed Bush-admin
Do you NOW understand, why Paulson and Bernanke are in such a haste, actually?
And do you unterstand NOW, why they want all participants see freed from further supervision or, judicial revision?
This is getting better by the day.
Not surprising, given their track record with 9/11.
They also want to push the bailout because when it hits (a week or so before the election), the stock market will pulse with the life that only taxpayer money can give (i.e. free money) and it will make the repubs look like hero's and they'll do the McCain-John Wayne bit ad naseum. And all of the idiots out there will buy into it...
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