"What is this Goldman Sachs and why has it caused us so much grief?" is a question they must be asking in even the most remote of Greek villages, as they are throughout much of this economically troubled world. The Greek financial scandal in which Goldman Sachs stands accused of selling dubious derivatives that concealed enormous government debt has sent the Greek economy and European markets into a tailspin. But that's just part of a made-in-the-USA banking hustle that has haunted folks at home and abroad.
At the heart of the worldwide banking meltdown are those mysterious unregulated derivatives that Goldman and JPMorgan led the way in selling. But Greece's case did not involve the usual questionable mortgages packaged into derivatives with credit default swaps backing them up, but rather expected revenue on airport fees and other potential sources of the cashed-strapped government's future income.
As The New York Times headlined it: "Wall St. Helped to Mask Debt Fueling Europe's Crisis." The story described the scam succinctly: "As in the American subprime crisis and the implosion of American International Group, financial derivatives played a role in the run-up of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere. ... Critics say that such deals, because they are not recorded as loans, mislead investors and regulators about the depth of a country's liabilities."
As a result of such shenanigans back in 2001, Greece was allowed to join the European Union while running up enormous debt that went undetected. Greece's neighbors will now be forced to bail it out, much as U.S. taxpayers have done for banks as a result of the scams Goldman and other financial houses pulled off in this country. The common denominator is that the packagers of the collateralized debt securities, be they based on subprime mortgages or government airport fees, have no real interest in the integrity of the packages, for they will balance them out with credit default swaps that pay off when the assets prove toxic. And they will make their lucrative commissions coming and going, no matter what goes wrong. Even after all the trouble in Greece, Goldman President Gary D. Cohn was back in that country last November with a new derivative scam based on potential revenue from Greece's health care system.
Just as it did with mortgages in the U.S., Goldman in effect bet against the collateralized Greek debt obligations. The basic issue is the same. The thing being sold need not be understood or correctly assessed as to its value. In his recent memoir, former Goldman Chairman Hank Paulson confesses that as late as August 2006 when as the newly appointed treasury secretary he briefed George W. Bush on the impending derivatives crisis he did not even know that the packages that Goldman and others had sold were based on mortgages. "I misread the cause, and the scale, of the coming disaster," he admits, adding, "Notably absent from my presentation was any mention of problems in housing and mortgages." In recalling when an obviously perplexed President Bush asked him "How did this happen?" Paulson says in his memoir: "It was a humbling question for someone from the financial sector to be asked--after all, we were the ones responsible."
He got that right. The financial sector was and is responsible, but it still resists increased transparency and other necessary regulations over the derivatives that gamblers like Paulson themselves don't understand. As Peter Eavis writes in The Wall Street Journal: "How many more crises will it take? The Greek emergency is a reminder of how little has been done to fix large, potentially unstable parts of the financial system. ... The banking lobby is resisting efforts to overhaul the $605 trillion market for derivatives that don't trade on exchanges."
The U.S. comptroller of the currency estimates that Goldman Sachs has a derivative "credit exposure" that is a whopping 858 percent of its risk-based capital and that JPMorgan Chase is in second place at 290 percent. That statement calls into question the savvy of President Obama, who crowed just last week in defense of Goldman CEO Lloyd Blankfein and Jamie Dimon, his old Chicago buddy who heads JPMorgan Chase, "I know both those guys; they are very savvy businessmen." Tell it to the Greeks.
This just makes Brooksley Born look like she is a candidate for SAINTHOOD for standing up the EVIL that brought this country to it's knees.......
Force Investment back to main street.
And our politicians (both Dems and Repubs, folks, so let's not even go partisan) continue to look the other way.......
This is GAMBLING and the PROFITS SHOULD ALL BE TAXED at INCOME RATES plus a SURTAX FOR SPECULATION.....Too many of these jerks have PUMPED AND DUMPED and I don't mean just JIM CRAMER.....
where the 007 saved the world from those villains, they were so greedy
power hungry, lunetic,crazy modern technology genious....
i think in Goldman Sachs case,ART BECOME REALITY...
the FED and the international banks and banking families that control it have done more damage to America over time then EVER was done to Greece.
quit trying to associate regular Americans with the GREED of Multinationals who have stolen TRILLIIONS from USA.
what did they get from Greece? 300 billion?
That is, an organization that commits crimes such as extortion, loansharking, bribery, and obstruction of justice in furtherance of illegal business activities. For these large global banks, we need to come up with a better term, like "thievery banking services".
Now what about Greece's right to sue GS?
Or did GS sell these bundles before they knew (Ha Ha) the mortgage crisis was upon us.
Now GS did nothing illegal?
Now how do you win if it goes either way?
Who's on first ?
Obviously, our politicians do not represent us. They represent Aetna, Goldman Sachs, AIG, Halliburton, Exxon, and so on. Let's get a little braver and a little more focused. The politicians are set up as straw men to take the heat and distract us from the real culprits.
A march on Aetna would be a lot more effective for getting health care reform, for instance, than a march on Washington. A march on Citibank would be a lot more effective at rolling back credit card rates than hoping some lame politician will ever get around to it.
Fact is, our taxpayer money financing their welfare bonuses are being used as WMDs of financial destruction and in essence making the U.S. complicit in 'economic warfare' against Greece.
But hey, that shouldn't surprise us since we've always thought it was cute-n-funny to let these banks through the IMF/World Parasites practice this against Africa and Latin America.