Being Open to the Opinions of Others Matters

Much to my surprise I was called a "leftard" this morning after questioning a photo that included the caption "socialism has a documented record of colossal failure. World history has proven that. Socialism is NOT AN OPTION in America. Capitalism is how America became a super power." These early morning discussions are probably not for me, as I would rather not do such ideological battles so early. For example: "It is an inescapable fact of life" that "all wealth comes from thrift and productivity" I was told in a discussion about the ills of socialism in praise of capitalism. I pointed out that historically the statement was patently false. The Wealth of Nations has been built on centuries of free labor and indentured servitude, and that big banks and big business have always run the government. I included the Theodore Roosevelt quote that "behind the ostensible government sits enthroned an invisible government owing no allegiance and acknowledging no responsibility to the people." I identified this "invisible government" as big business. In the praise of American capitalism and the decline of socialist states in Europe, I countered that we are presently in economic decline because of a system of capital sanctioned by the government that allows "too big to fail" and disables us from making our own toilet bowl brushes. I noted that there are no pure -isms of any sort. I pointed out that Iceland had a booming economy, clean energy initiatives, and a great educational system. Then entered Goldman Sachs. I quoted Nassim Nicholas Taleb that we "socialize debts and privatize profits." Regarding big business and small business, I made the distinction that "thrift and productivity" have been the hallmark of small business success, but not so much with big business. Government through trade policies tinker with productivity (often immorally when you consider the success of companies like Apple's production in Asia--as I type on my MacBook--sigh!), and bailout to the likes of GE to the tune of billions when thrift has long not been a hallmark of business and the engineering that once made that company great has largely been replaced with financial engineering tantamount to Wall Street gambling. There were several replies that insisted that after all of the above and more that I had not answer the "simple" question about where wealth comes from. The discussion ended for me with jingoism about freedom and capitalism, and how Beijing after embracing capitalism soars. Differences of opinions I do not oppose, but often our differences are packaged in idealism and ideology which do not move discussions forward. How do we extract ourselves in order to really hear what others are saying? I suppose humility is a big factor here. I will examine myself further.

Being the People We Have Been Waiting For

While we need to draw attention to legislation that have made investment banks and corporations such as GE and AIG like commercial banks with depositors with the protection of the government that are themselves now too big to fail, why don’t communities do something about this? Commercial banks couldn’t survive without our deposits and investment banks couldn’t subsist without our investment. Goldman Sachs, for example, is heavily invested in cities throughout the country and many throughout the globe. We have to get creative and rebuild smaller thriving communities and essentially create the likes of Black Wall Street. But this time the segregation will be by choice. (Desegregation, by the way, helped to destroy the concentrated wealth of Black Wall Street.) We need to collectively segregate our capital and pool it in ways that will directly benefit the communities where we live. We are indeed the people we have been waiting for and in this regard it has nothing or little to do with elected officials and chief executive officers.

Being a Wall Street Executive

For those sensitive to such language and graphics excuse me, but I think the message is quite clear: "You put Lloyd Blankfein in a pound-me-in-the-ass-prison for one six-month term, and all this bullshit would stop, all over Wall Street," says a former congressional aide in a Rolling Stone interview. "That's all it would take. Just once." Here is the complete article, Why Isn't Wall Street in Jail? I think it is pretty clear. Wall Street is essentially the government if you look in the case of Bill Clinton's Treasury Secretary who went to Citigroup or Goldman Sach's Hank Paulson who became Treasury Secretary under George Bush.

Being Timothy Geithner IV

Treasury Secretary Timothy Geithner says that the markets are doing incredibly well. Isn't strange that this is so when many millions of American and small businesses are doing so incredibly bad? Small businesses can't get loans to stay afloat and individuals can't get them to start a business. Wasn't the bailout to the Wall Street banks suppose to enable these things? Wall Street banks are flush with cash largely because of the money the American taxpayers lent while they sit and do nothing for us.



Listening to Geithner, I wondered if were seeing the same reality. Perhaps his indicators point to some other reality. But when has it ever been that the markets were doing so well and the American people so poorly? Does this not support the fact that Wall Street is the other Las Vegas as Nicholas Darvas asserts in his book, Wall Street: The Other Las Vegas. John Bogle writes in in his wonderful book Enough that "there is too much speculating and not enough investing." I agree. What is for sure is that the national and global economies were saved by the bailout and stimulus. I don't think bottoming out was a viable option. But it should have been required of AIG to make concessions to their counterparties. Instead, the like of Goldman Sachs and Barclays, who failed miserably by investing in new products like credit default swaps and collateralized debt obligations, got paid big in fees before the crisis and a big bailout totaling over 20 billion in Goldman Sachs' case thereafter. Who wouldn't be flushed with cash with such opportunities?

When asked about Arianna Huffington's movement, Move Your Money, which encourages people to move their money from big Wall Street banks to small banks and credit unions, Geithner thought it was a bad idea. He was initially quite dismissive of the power which rests with the depositors. Without giving reasons why it was not a good idea Geithner quickly backpedals to offhandedly support the American people with words. But we'd like to see some action. The bailout was suppose to increase lending to small businesses. Instead, these Wall Street banks give out billion-dollar bonuses.

Geithner seems to care less about the unavailability of loans to small business and individuals seeking credit to start a business and more concerned about Wall Street banks which he did not oversee during the years he spent as the New York Fed chairman.

Being Barack Obama XIX

In his weekly address President Obama addressed the new fees that will be assessed to Wall Street banks:

"Those who oppose this fee have also had the audacity to suggest that it is somehow unfair. That's because these firms have already returned what they borrowed directly, their obligation is fulfilled. But this willfully ignores the fact that the entire industry benefited not only from the bailout, but from the assistance extended to AIG and homeowners, and from the many unprecedented emergency actions taken by the Federal Reserve, the FDIC, and others to prevent a financial collapse. And it ignores a far greater unfairness: sticking the American taxpayer with the bill."



"That is unacceptable to me, and to the American people. We're not going to let Wall Street take the money and run. We're going to pass this fee into law. And I'm going to continue to work with Congress on common-sense financial reforms to protect people and the economy from the kind of costly and painful crisis we've just been through. Because after a very tough two years, after a crisis that has caused so much havoc, if there is one lesson that we can learn, it's this: we cannot return to business as usual."

Amen! In the meantime, Move Your Money!

Being Goldman Sachs XV

Not knowing the background of Goldman Sachs Chairman and CEO, Lloyd Blankfein, not that this would make much of a difference, I couldn't help but to think of him as I watched his testimony before the Financial Crisis Inquiry Commission as a cross between a used car salesman and a circus carnival leader. His appearance was as oily and buffoon-like in his constant effort of wining over an audience as opposed to soberly answering essential questions. Mr. Blankfein seems to think that we are stupid. Maybe we are. Goldman Sachs is flushed with cash that we gave them to the tune of double digit billions for betting on bogus securities leveraged to the hilt, as the American people hurt badly.

Being on the Move

"MOVE YOUR MONEY!"

Being Goldman Sachs XII

The Financial Times, has named Goldman Sachs' CEO, Lloyd Blankfein, "Person of the Year." Here is noted bank analyst Christopher Whalen's response in a letter to the paper upon canceling his subscription:

Mr. Blankfein and his colleagues at Goldman Sachs, in my view, have done more to damage the reputations of global financial professionals than any other organization in 2009, yet you applaud them. Not only is your suggestion ridiculous and repugnant, but it illustrates to me the fact that the FT is part of the problem in global finance, not as one would hope and expect, part of the solution.

I could not agree more. It is indeed "ridiculous and repugnant." I shall discontinue my subscription also in complete agreement that the Financial Times "is a part of the problem in global finance, not as one would hope and expect, part of the solution." Goldman Sachs is currently being investigated by the federal government for dubious trading practices.

This choice says a lot about the malaise in global finance. It also seems to say a lot about the "collusion" of media and big business and their desire to pull the wool over the eyes of sane people everywhere--sort of like Blankfein's words that this investment bank is "doing God's work."

The Financial Times writes that Goldman Sachs -- though recently becoming a "commerical" bank as if there are deposits in order to be federally protected by the FDIC with billions in backing -- "not only navigated the 2008 global financial crisis better than others on Wall Street but is set to make record profits, and pay up to $23BN in bonuses to its 31,700 staff."

With this kind of choice and assessment, the Financial Times could not go out of business fast enough and the results of the investment practices of Goldman Sachs could not come sooner. Let's insist that Congress do an investigation worthy of itself.

Being Wall Street

Matt Taibbi, Rolling Stone contributing editor, said that Wall Street "is one Ponzi scheme after another." A good friend who is an investment banker made this exact same point to me last week. He said the only difference in what Madoff did and what investment bankers do everyday is that Madoff was not a licensed investment banker.

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Taibbi talks about the change in Wall Street from investing, which built businesses, to gambling occurring over the last 20 years. Nicholas Darvis , Hungarian world-renowned dancer, self-taught investor and respected author, wrote How I won 2,000,000 on Wall Street (1960) and Wall Street: The Other Las Vegas (1964) thought differently.

I read How I won 2,000,000 on Wall Street and Wall Street: The Other Las Vegas years ago and it was very difficult to refute the arguments therein. The former dealt with avoiding tips by brokers and the latter with how to game a gaming system. I've gotta pick them up again.

Being Built on Debt

Andrew Ross Sorkin wrote a great piece in the New York Times, "A Financial Mirage in the Desert", where he writes that "for the last couple of years, the running joke on Wall Street was 'Dubai, Mumbai, Shanghai or goodbye.' If you were the C.E.O. of a troubled investment bank desperately looking for cash, you made a pilgrimage to one of those three cities with hat in hand. They were the places most likely to write a quick billion-dollar check; their eagerness should have also been a tip-off. Now you have to wonder about Mumbai and Shanghai, too. Are they next in line to take a fall?"

I'm wondering if debt and the service economy go hand in hand and if our new economy is all a big mirage, for where there is decreasing production what is the basis for service? What's there to service? The mirage seems not only relevant to Dubai, but to our own economy if we are not careful. It seems to me that businesses, small and large, have to largely build and people need to work in order for there to be stability in the economy. This is how our middle class was built. How these Wall Street banks are currently investing can't be the bedrock of the economy if we are going to be viable, not to mention that they will undoubtedly need a hundred billion dollar bailout out again, perhaps this time over multiple trillions.

Citigroup lent Dubai $8 billion on December 14, 2008 after being bailed out by taxpayers for $25 billion and then another infusion of $20 billion the month before. Do you think they'll need another bailout? It seems that Citgroup hasn’t learned its lesson on structuring risky derivatives even though the government (you and I) has a large stake in this bank. While Dubai is building, largely on the backs of slave labor, it seems like a capitalist city built on debt that has gone amuck. David Rubenstein, the co-founder of the private equity giant Carlyle Group pointed out in the article, "You know, they don't have any oil."

Is our economy being built on debt which is in this case a risky derivative? Investments banks hold 6 trillion in financial assets while commercial banks hold 4 trillion. (The distinction is actually murky as Wall St. banks are acting as commercial banks with backing by the FDIC although they hold no deposits.) Is an economy built largely on service a "mirage?" Is service based on debt where there is decreasing production, in essence, a risky derivative?

Being for Main Street

Robert Reich, former Secretary of Labor, made three excellent suggestions on what to do for Main Street. He contends that Wall Street has no shame. While the people bailed them out to the sum of over $700 billion, they refuse to assist Americans who are underwater on their mortgages and lend to small businesses, instead setting aside multiple billions for executives and traders. Goldman Sachs set aside $17 billion and JP Morgan Chase around $5 billion.

To assist Main Street, Reich proposes the following:

Congress and the Obama administration should give homeowners the right to go to a bankruptcy judge and have their mortgages modified.

And while they're at it, resurrect the Glass-Steagall Act that used to separate investment from commercial banking, so Wall Street can't continue to use other people's money to gamble.

Finally, before Goldman hands out $17 billion in bonuses, claw back the $13 billion Goldman took from AIG and the rest of us and add it to the pool of money going for mortgage relief.

I would also like to see a real program that targets lending for small businesses during this crisis. Goldman has set "up a crudely conceived $500 million PR program to help Main Street." But a "PR program" is hardly one that will be most beneficial to small businesses, although I'm sure likely recipients would not turn it down. Small businesses are really hurting.

Might Reich's proposal work better in relief for Main Street?

Being Goldman Sachs X

In response to Lloyd C. Blankfein, Chairman and CEO of Goldman Sachs, that he was doing "God's work," Andy Stern says two words, "get real." Mr. Stern breaks it down very simply in a post on the Huffington Post:

The reality is, Goldman Sachs continues to profit off the home foreclosure of families who are struggling to make ends meet.

The reality is, Lloyd Blankfein and his fellow executives continue rewarding themselves for their bad behavior - paying out $16.7 billion in compensation and bonuses in the first nine months of 2009 alone.

The reality is, Wall Street firms like Goldman Sachs continue to engage in the same risky behaviors the drove us to financial collapse.

So, when Lloyd Blankfein issues his press release saying Goldman Sachs has suddenly seen the light - they're suddenly making a commitment to small businesses with a $500 million donation over the next five years - my response is simple: get real.

Do read the entire article. It's worth it. The question remains what are we going to do about it? I am a big proponent of clawbacks.

Being Goldman Sachs IX

"A blue ribbon commission with subpoena powers should be established."

Hank Greenberg, the former chairman and CEO of AIG, made this comment in a panel discussion on C-Span, "Government Aid to Private Industry." The eye-opener was that AIG had worked out a discount of 40% with its counterparties before the bailout. As a private company, AIG was doing exactly what it needed to do to stay viable, to stay in business. Otherwise, it would have had to file for bankruptcy. Some were allowed to fail others weren't. I wonder why?

When the bailout occurred AIG's counterparties received 100 percent. I do not think that it was an accident that Henry Paulson, the former chairman and CEO of Goldman Sachs was the Treasury Secretary when the bailout occurred. Goldman Sachs received not only $10 billion dollars from the government but an additional $12.9 billion, but not before eliminating its competition, Bear Stearns and Lehmann Brothers. Under Paulson, these two investments banks were allowed to fail.

I agree with Hank Greenberg completely that a commission with subpoena powers should be established" and that if it is determined that there is wrongdoing that these should be help responsible for their actions. Below are a list of AIG counterparties that received 100 percent instead of the 40 percent discount that AIG had negotiated. The New York Times listed the banks that received bailout fund via AIG. $38.8 billion went to US banks, $50.2 billion went to foreign banks, $12.0 billion went to municipal bonds and $84.0 billion is still unaccounted for.

Here is the list of banks that received TARP funds via AIG:

$12.9B Goldman Sachs
$12.0B Bank of America/Merrill Lynch
$5.2B Bank of America
$6.8B Merrill Lynch
$11.9B Societe Generale
$11.8B Deutsche Bank
$8.5B Barclays
$5.0B UBS
$4.9B BNP Paribas
$3.5B HSBC Bank
$3.3B Calyon
$2.3B Citigroup
$2.2B Dresdner Kleinwort
$1.6B JPMorgan/Morgman Stanley
$0.4B JPMorgan
$1.2B Morgan Stanley
$1.5B Wachovia
$1.5B ING
$1.1B Bank of Montreal
$1.0B Deutsche Zentral-Genossenschaftsbank
$0.8B Rabobank
$0.7B Royal Bank of Scotland
$0.7B DZ Bank
$0.5B KFW
$0.3B Banco Santander
$0.4B Dresdner Bank AG
$0.4B Credit Suisse
$0.2B Citidel

The "blue-ribbon commission" Henry Greenberg suggests will hopefully get to the bottom of this. Although I must admit to wondering about the impact of work currently being done by the Congressional Oversight Panel charged with figuring out exactly what happened to the TARP funds. I have yet to hear what happened to the $84 billion still unaccounted for.

Being Productive

In an interview with the Financial Times, Lloyd C. Blankfein, the CEO and Chairman of Goldman Sachs in an effort to explain their multiple billion dollar bonuses said:

I often hear references to higher compensation at Goldman. What people fail to mention is that net income generated per head is a multiple of our peer average. The people of Goldman Sachs are among the most productive in the world.

How is this so when Goldman Sachs had to be bailed out to the tune of mulitple billions and hedged through AIG for additional billions, not to mention that Goldman Sachs doesn't produce anything?

As an investment bank Goldman Sachs employees are largely paper shufflers, essentially debt traders. Debt is about all it produces and that not very well since it need billions in bailout.

By the way, the point above about the "peer average" makes it right, eh? It's not that the industry itself needs reform or that the average is out of wack as Goldman Sachs has far fewer employees as pointed out in the Financial Times article.

Wall Street banks executives are so far removed from reality.

Being Goldman Sachs IX

Goldman Sachs executives are sounding more and more like televangelists who say things like "We are doing the work of the ministry. 'Give and it shall be given unto you.' By giving to this telecast you will receive a blessing in due season."

Isn't it funny that giving to televangelists is immediate while receiving for givers is delayed? Often times those who receive rarely give to the givers. Televangelists have done well in this regard, investing in their personal wealth. Many churches have become businesses and use Wall Street as a model. Wall Street executives are now taking their lead from televangelists.

A few weeks ago Brian Griffiths, a Goldman Sachs international adviser, said "We have to tolerate the inequality as a way to achieving greater prosperity and opportunity for all...'To whom much is given much is required.'" Now, Times Online reports that Goldman Sachs' Chairman and CEO, Lloyd C. Blankfein, said that he was doing "God's work." Oh, really? Methinks they're all prosyletizing Pharisees.

Here are the words of Jesus Christ:

"Woe to you, teachers of the law and Pharisees, you hypocrites! You travel over land and sea to win a single convert, and when he becomes one, you make him twice as much a son of hell as you are."

--Matthew 23:15

Many televangelists proselytize all over the world converting people to Christianity but have made them by far worse then they were. (When people convert they are usually looking for a better way of existing.) The new converts follow the bad pracitices of ministers under the guise of Christianity, perverting the message of Jesus.

Goldman Sachs invests all over the world using the beauty of a free market democratic system. But the market needs ethics. Through their practices they have indebted the world, perhaps making some by far worse than they were in the long run. The same kind of practices are then perpetuated by the debtors under the guise of a free market system, even if democracy isn't embraced. Inextricably bound to the highest form of democracy are justice and fairness.

All progression is not necessarily progress and all deliverance is not necessarily salvation.

(By the way, the Times Online article above is a must read. It looks at all sides fairly and is very enlightening.)

Being Goldman Sachs VIII

Goldman Sachs got the same amount of doses of the Swine Flu vaccine that Lenox Hill Hospital got while pregnant mothers and school children went without. Seth Meyers and Amy Poehler "really" tell it like it is during their segment "Really?!?" on SNL. It's right on and very funny!

Being Goldman Sachs VII

The Huffington Post reports that Goldman Sachs is back to doing the exact same thing that nearly brought the global economy to a stretching halt and required the American taxpayers to be on the hook of over $700 billion of TARP which was originally suppose to rescue the tumbling housing market and get banks to begin lending again, none of which has happened. But Goldman Sachs is back to business as usual:

On three out of every five days this year, Wall Street's leading firm has made at least $100 million trading stocks and bonds, and creating and entering into derivatives contracts.

Out of 194 trading days through the end of September, Goldman Sachs earned at least $100 million from its trading division on 116 of them. The firm lost money from its trading activities on just one day during the three-month period ending in September, federal regulatory filings show. It made at least $50 million on four out of every five trading days.

The documents show just how much of a trading firm Goldman Sachs has become since the financial crisis mushroomed in September 2008. The firm generated about $4.5 billion in pre-tax earnings off trading and investments during the third quarter, compared to a $761 million loss in the same period last year.

So, do you think there will be another near collapse and Americans will lose their retirements and be asked to bailout these Wall Street banks again to the tune of multiple trillions this time? They are now bigger than before and are much too big too fail, so says the wisdom of Wall Street and Congress. Yeah, I once believed what I was being told too.

Goldman Sachs and the other top Wall Street banks just gobbled up smaller banks and resumed their same risky derivative practices. What are we going to do? Goldman Sachs has not repaid all of the money owed to us, not to mention that Congress and the Fed did not invest wisely on our behalf like any astute investor would. We got virtually nothing for our investment while Goldman Sachs and the rest rack in billions for themselves.

Being Michael Bloomberg

New York City has mayoral term limits. Mayor Bloomberg (I-NYC) served his two four-year terms. (He had been a Republican, but it is believed that he could not have won the first term in this overwhelming Democratic city.) Being a powerful billionaire, he orchestrated a change to city law that enabled him to run a third four-year term. After all, he alone could guide NYC through this rough economic crisis. The court agreed. Mayor Bloomberg spent over $100 million of his own money against his Democratic challenger, William Thompson Jr., winning the race by a narrow margin of only 5 percentage points.

Of course, Mayor Bloomberg probably doesn't care about the percentage points; he seems to care more about power. A win is a win is a win. But is it not arrogant of him to think that New York City needs him more than any other, especially when the geniuses of Wall Street nearly brought the country and indeed the world to the brink of financial collapse? Grant it, I don't know of the job Mayor Bloomberg is doing in NYC. I am not among his constituients. But I would have probably not voted for him strictly on principle. I'm utterly turned off by anyone who uses their money and influence to change laws for their personal benefit.

With over $100 million spent on a campaign, not by the donations of the people that exercise their choice, but by a supposed politician's will to power, is this the best form of democracy?

Being CIT

CIT, the 101 year-old company which lends largely to small businesses, filed for bankruptcy today. In spite of the bailout of $2.3 billion from the federal government, CIT became insolvent. It looks like our billions would have been better spent in small banks and credit unions. Perhaps this would have better jumpstart and sustain the economy. I wonder with this bankruptcy how much of the billions went toward bonuses and what will happen to the infusion of government capital. Did the government secure our $2.3 billion investment?

Being a Gift II

George Soros, billionaire investor, agrees that the American taxpayers should be furious with Wall Street. Soros said in an interview with the Financial Times that the bonuses were "gifts" from the government:

"Those earnings are not the achievement of risk-takers. These are gifts, hidden gifts, from the government, so I don't think that those monies should be used to pay bonuses," the paper quoted him as saying in its Saturday edition. "There's a resentment which I think is justified."

Soros acknowledged what many have known for some time: The government should not be insuring the likes of Goldman Sachs which is essentially a hedge fund and should not be guaranteed by the government, i.e., taxpayers. "Talented" bankers who took such risks would be on their own as they should be:

"That would push the risk-takers who are good at taking risks out of Goldman Sachs into hedge funds, where they actually belong, because hedge funds take risks with their own capital, not with deposits and not with government guarantees."

Thank you, Mr. Soros!