Matt Taibbi challenges the corrupted thought processes of a
proud Goldman cheerleader blogger named Claudia Deutsch who is a prisoner of her own willful ignorance.
Taibbi
replies to her blog entry linked above:
Claudia,
Calling up your company’s former boss, who now runs the Treasury, and getting him to funnel $14 billion in taxpayer money to you through the AIG bailout is… capitalism?
Converting to bank holding company status and getting $28 billion in FDIC backing for new bonds under the Temporary Liquidity Guarantee Program is capitalism?
Getting untold millions or billions in cheap money lent to you via the discount window at the Fed thanks to your new bank holding co. status, and having not even the congress know how much public money you got or at what price, that’s capitalism, too?
Let me ask you something. If I told you that my company could get an unlimited amount of cheap money from the government any time it wanted, would you buy shares in my company, too? Exactly how much skill does it take to make money under that scenario?
All this frantic slobbering to congratulate Goldman on the big returns they made with our money is revolting, pure peasant behavior. It’s a joke.
Claudia
replies:
Gee, Matt, what do you really think?
Yeah, I believe all those things are capitalism. Look at the contrast between Goldman and BofA. BofA lied to its shareholders every step of the way, with the government’s blessing. Goldman lied about nothing, repaid the money as soon as it could, did not take money out of shareholder pockets to line its own. Far as I’m concerned, it managed beautifully through this crisis, took advantage of opportunities that were dropped in its lap, made the right call on risks — and is now reaping the rewards. Peasants should be so lucky.
<<<Yes, let the peasants eat cake.>>>She
continues later:
..... I just genuinely believe that Goldman has acted within the system. That’s why I keep mentioning the tax code — the way they’ve figured out what is or is not legal to deduct is unfathomable to me, but I take any deductions I can. Goldman is exploiting every loophole it can, too.
I’ve stood up for General Electric in past posts also — sure, the company “manages earnings,” as it has been accused. That’s what conglomerates do — they take a writeoff for Montgomery Ward the same year they take a writeup for selling Kidder, etc. It is totally legal and, given our convoluted tax and accounting codes, moral as well.
I cannot argue with Matt’s scholarship — everything I know about Goldman’s history, I know from him. And there are some pretty ugly episodes of which I was totally unaware. But none of that persuades me that the company has not navigated professionally and legally and spectacularly through this recession/depression. I do not have any knee-jerk adulation of the rich, as many of you have accused; I just don’t have anny (sic) knee-jerk hatred of them either.
Taibbi
responds:
But… surely you must understand that the term “legally” has no meaning if it’s THEM making and selectively enforcing the laws? Just look at yesterday’s profits. Goldman wrote $28 billion in federally-backed debt last year thanks to the Temporary Liquidity Guarantee Program, which was pushed through by Paulson and Tim Geithner — who himself was a former protege of Bob Rubin, who was head of Goldman. So Goldman guys give Goldman a boatload of cheap money (guaranteed by you and me, the taxpayer), they lend it back to us at high interest, turn the profits from those transactions into massive bonuses, and you want to congratulate them for that? This is extortion and robbery, even if it is “legal.” It would be bad enough if this weren’t happening in the middle of an economic crisis, but to do this on the backs of the thousands of people losing their jobs is disgusting. It’s not economics, it’s politics — a kind of reverse socialism, where the wealth is spread upward thanks to the power of the state, which collects taxes from us by force and gives that money to people who don’t need it. How do you not understand that? Are you really that blind?
Claudia
responds:
No, Matt, not blind. I am probably guilty of being an opportunist. As I’ve said in this thread, and in many posts before, there oughta be a law. I am all for regulations that make these kinds of transactions impossible — just as I am for a tax code that doesn’t favor homeowners over renters, that doesn’t tax unemployment insurance, that doesn’t allow deductions of boondoggle trips and meals. And i would happily see my taxes go up if it made universal health care possible. But i do not pretend that I do not take every deduction available to me. And in a financial world increasingly populated by thieves — Lay, Skilling, Koslowski, Madoff, etc.,etc.,ad infinitum, ad nauseum — I stick with my admiratioin (sic) of companies that opportunitically (sic) took advantage of rules and regs that should never have been there in the first place.
Taibbi then
writes:
I’m going to try this one more time, since you still apparently don’t get what any of us are talking about. I’m going to make it simple, so you understand.
Using your tax analogy, it’s one thing if you tax advantage of existing tax rules, max out on your deductions, and pay few taxes in a way that’s smarter than the next guy.
It’s another thing if you WRITE the tax rules to benefit yourself in particular, and pay less than the next guy not because you’re smarter than him, but because the next guy does not happen to have his former partner running the U.S. Treasury.
This isn’t about one set of actors playing by the rules better than another. This is about one set of actors creating the rules to benefit them, while we all suck eggs. I suppose if you’re a pure social Darwinist and you believe in the law of the jungle, that might makes right and God bless them if they can get away with it, then this makes sense. But otherwise what you’re saying is insanity. It certainly is not capitalism, what you’re describing. Will you at least concede that? Do you understand that without government help, Goldman would have gone out of business last September?
Claudia's support network member 'roeigigi'
chimes in:
I must say that most of you guys that have commented on Claudia’s a blog are obviously NOT GS shareholders!!! Otherwise you’d be singing a different tone. GS’s management and employee’s disserve (sic) every penny of the bonus that they receive while navigating through the worse economic environment in decades. Yes, they did receive government money which was returned plus interest. Unlike AIG that continues to receive money with absolutely no intention of returning a dime.
Talent should be rewarded handsomely especially if you can thrive while others are falling apart. Capitalism rewards those they take risk while managing expectation and absolutely no company does it better than Goldman Sachs! Like it or not Wall Street is based on greed and some gambling, in 2007 while Merrill was buying MBS (mortgage backed securities) Goldman was shorting them…… I don’t need to remind any of you how that turned out.
May the talent and Goldman continue to thrive and flourish and may they make me and many more shareholders extremely happy for “MANY MANY MANY MORE YEARS!!!!!!”
<<<USA! USA! USA! 4 More Years! 4 More Years! USA! USA! USA! USA!>>>To which Taibbi
responds:
Roe–
You’re joking, right? You must be. The AIG line is simply unbelievable.
Goldman received at least $13 billion of the money we taxpayers gave to AIG. Thanks to government intervention they got paid 100 cents on the dollar for the money AIG owed it — compare that to how much the GM creditors got in that bankruptcy. Without govt. intervention, Goldman would have sunk with AIG; instead, it gets $13 billion in capital from you and me.
They furthermore got $5.9 billion from AIG just as it was proceeding to bankruptcy, but that’s another story. Then former Goldman chief Hank Paulson, as Treasury Secretary, installed a former Goldman banker, Ed Liddy, as head of AIG, to ensure that Goldman got paid off.
And that’s just a small slice of the subsidy. When Goldman converted to bank holding company status last year, that made it eligible for $28 billion in FDIC backing for new debt — which means Goldman got a massive haul of virtually free money to play with thanks to you and me. They then took this cheap state-aided money and went back out on the market with it and made massive profits. How many times do I have to repeat this? It’s unbelievable.
FURTHERMORE, Goldman when it converted to bank holding company status became eligible for a whole galaxy of new lending programs at the Fed, including the TALF, and we have no idea how much money they got there. They also now had access to the Fed’s discount window, and we don’t how much they got there, either.
The TARP money they paid back is just a small slice of the state aid they got and continued to get in the last year. The FDIC backing is worth a mint all by itself. You might as well hook up a taxpayer-funded ATM right in front of 85 Broad.
How do you now understand that? And what exactly is the appeal in cheering on some bank that is robbing your tax money? What is wrong with you people?
Claudia
retorts:
Taibbi
responds:
I don’t know how you read that Krugman article and saw corroboration of anything you said. It condemns wholesale the bank’s behavior and explicitly says at the bottom that Goldman’s big profits are bad news for everyone except Goldman. Whereas your article congratulates them for doing so well and wishes them success in doing it more and more. Just FYI.
Matt Taibbi has a lot more patience with these idiots than I can stomach.
People who proudly wear their ignorance like a crown disgust me. And we've been showered with some notables lately.
The hounds are tracking Goldman Sachs.
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