July 16, 2009
Refresh your memory; reboot your brain — remember the name “Government Motors” and how it has been exploited over the past three months or so, and still being used extensively today? That’s the name many Wall Streeter’s (mainly Wall Street’s news media) gave General Motors after the Obama administration bailed them out. The term has been used so much by those who favor Wall Street over the rest of America that it will most likely take decades before people will quite using it, and a century before it will be forgotten. But did you ever hear the term “Government Sachs”? Maybe, but probably not. But that name was given to Goldman Sachs by other banks and competitors after then Treasury Secretary Henry Paulson, with the blessings of the Bush White House, rush to bail out Goldman Sachs ahead of all others. So why didn’t we hear as much about “Government Sachs” as we did “Government Motors”?
There are two reasons the name “Government Sachs” wasn’t publically exploited the way “Government Motors” has been. First, bailing out General Motors meant saving hundreds of thousands of blue collar and other common peoples jobs, so that effort had to be sold as one of the worst ideas ever. (Why waste taxpayer money on them when it could be going to a good cause like Wall Street.) Bailing out Goldman Sachs was saving a few thousand millionaires and billionaires, and that effort shall not be tainted.
The vast majority of those exploiting the name “Government Motors” are the same ones who dared not exploit the name “Government Sachs”, but the same ones who ruthlessly ridiculed and chastised those who do. The reason is they think the elite on Wall Street should be the only ones saved, even though Wall Street was solely responsible for the disaster.
The second reason the name “Government Sachs” was rarely heard is suggested by Robert Scheer (and several others) in his article for “The Nation” — Goldman Sachs was and still is “the real government” at this time and for the past 15 years. And it is their admires, the news media, that controlled what is and is not exploited on a grand scale. As I pointed out in this post, Republican Representative Darrell Issa, speaking to CNBC, said “you talk to Wall Street, you represent Wall Street, you care about Wall Street”. Truer words have never been spoken. But they are not the only ones who wouldn’t/won’t talk about the name “Government Sachs”. Fox News certainly isn’t. And not even MSNBC, CNN or any of the network news folks will mention it. Therefore, few in the public are familiar with it.
Robert Scheer in his article yesterday called “‘Government Sachs’ Strikes Gold… Again” points out several interesting facts. In his first paragraph he says what no Wall Street supporter will admit: of the first ever $1 trillion federal deficit, bailing out Wall Street and the economy (caused by Wall Street) accounts for most of the deficit. From there he addresses Goldman Sachs’ recently reported profits. He says the reason they are doing so well is “because that was the plan, as devised by Bush Treasury Secretary Henry Paulson, a former CEO of Goldman Sachs”. He also says the reason Lehman Brothers was allowed to fail is because they were Goldman’s competitor.
Not reported by the main stream media, especially the Wall Street media, is something no one thinks about. Goldman Sachs was paid $12.9 billion from the $180 billion that AIG received in taxpayer money. Money Goldman Sachs would not have got had AIG not been bailed out. That’s $12.9 billions Goldman does not “owe” the government, therefore the government will never get that back. A vast sum of what AIG got from taxpayers went to pay many other banks, and you can be assured that will never be repaid either.
From Scheer’s article, the following is some of the ways Goldman is able to post such profits as they did this week.
Not paying back $12.9 billion of taxpayer money
Still selling suspect derivatives
Issuing high-interest debt to state governments (a growth inudstry) using bailout money
Scheer asked why did we have to loan Goldman Sachs money for free and let them loan to states at a very high interest rate when the federal government could have loaned them money directly. Good question.
As Scheer points out, another ex-Goldman Sachs treasury secretary is responsible for doing away with the Glass-Steagall Act of 1933. Robert Rubin, as then Treasury Secretary, convinced President Bill Clinton to sign the Gramm-Leach-Bliley Act of 1999 which repealed the Glass-Steagall Act. As a result, “Goldman Sachs recorded a 265 percent growth in its balance sheet” over the following eight years.
Of great interest to me (and should be to you) is the last full paragraph in Scheer’s article. “One of those stars [ex-Goldman Sachs men who ended up in government financial positions] was Stephen Friedman (hyperlinked), another former head of Goldman. Friedman was both a director of the company [Goldman Sachs] and chairman of the New York Federal Reserve Bank when he helped work out the details of the Wall Street bailout. The president of the NY Fed at the time, Timothy Geithner, now secretary of the treasury, requested a conflict-of-interest waiver that allowed Friedman to buy more Goldman Sachs stock, and Friedman ended up with 98,600 shares. At market close on Tuesday (July 14, 2008) that was worth $14,756,476”. [all bold added]. No conflict of interest “insider” trading going on there, was there?
In David Brooks Op-Ed column on July 1, 2008, Brooks was pointing to those big donors of campaign money and how they seem to favor Barack Obama over John McCain (Brooks is a registered Republican). Goldman Sachs was one of the big donors. Of interest here is Brooks’ closing paragraph: “Over the past few years, people from Goldman Sachs have assumed control over large parts of the federal government. Over the next few they might just take over the whole darn thing”.