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Nassim Nicholas Taleb Headshot

Goldman Sachs Counts on Society's Implicit Stop-Loss Order

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Goldman Sachs executives have decided to return the TARP money the company received, thinking they can be free and engage in their own risk-taking without involving taxpayers. Hence, they can pay themselves bonuses galore with their "private" money. Given the fungibility of funds and taxpayer support, this is a masquerade. So long as Goldman Sachs may need us again in the future, whatever bonus they are paying today is a bonus that may be covered by the taxpayer tomorrow. They need to vow to never accept taxpayer money and never take advantage of society's implicit stop-loss order if they want to continue paying themselves the way they did in the past. Otherwise, it should be made clear that every penny they pay their hotshots now is liable to be clawed back at the next round of bailouts.

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