Goldman Sachs Says U.S. Economy May Be `Fairly Bad'

Goldman Sachs Says U.S. Economy May Be `Fairly Bad'

Goldman Sachs Group Inc. said the U.S. economy is likely to be “fairly bad” or “very bad” over the next six to nine months.


“We see two main scenarios,” analysts led by Jan Hatzius, the New York-based chief U.S. economist at the company, wrote in an e-mail to clients. “A fairly bad one in which the economy grows at a 1 1/2 percent to 2 percent rate through the middle of next year and the unemployment rate rises moderately to 10 percent, and a very bad one in which the economy returns to an outright recession.”

http://www.bloomberg.com/news/2010-10-06/oldman-sachs-says-u-s-economy-to-be-fairly-bad-recession-is-possible.html

Goldmangate: Goldman Sachs employees have given 69 % of their political contributions to Democrats, slightly down from 2008, when they gave 75 % to Democrats

Obama claims opponents of his so-called financial reform bill are on the side of the big banks. But in fact the big banks are on his side. The Center for Responsive Politics (CRL) reports Wall Street has given 63 percent of its political contributions this cycle to Democrats, up from 57 percent in 2008.


Goldman Sachs employees have given 69 % of their political contributions this cycle to Democrats, only slightly down from 2008, when they gave 75 % to Democrats -- including nearly a million dollars to Barack Obama and $112,400 to Senate Banking Committee Chairman Chris Dodd. Dodd is now retiring instead of facing voters because of his own involvement in a housing-related scandal, a sweetheart loan Countrywide gave him.
 
Blankfein supports financial reform legislation

http://thehill.com/blogs/on-the-money/banking-financial-institutions/94735-blankfein-supports-financial-reform-legislation

By Vicki Needham - 04/27/10 06:45 PM ET

A financial regulatory reform bill has at least one supporter outside of Congressional Democrats, Lloyd Blankfein, the head of investment bank Goldman Sachs.

"I'm generally supportive," Blankfein told the Senate Permanent Subcommittee on Investigations.

Wall Street will benefit from the bill because it will make the market safer, Blankfein said.

"The biggest beneficiary of reform is Wall Street itself," he said. "The biggest risk is risk financial institutions have with each other."

American consumers also would benefit from better regulations, he said.

Blankfein said he didn't know all the bill's details and couldn't speak to provisions that affect community and consumer banks and mortgage originators because they are "remote" to our experience.

http://thehill.com/blogs/on-the-money/banking-financial-institutions/94735-blankfein-supports-financial-reform-legislation

Wonder why they missed the financial crisis? Or Bernie Madoff's Ponzi scheme? A government report obtained by ABC News reveals that SEC employees were focused on something else: porn.

Glodal financial crisis goes on while SEC watched Porn

SEC watching porn instead of financial industry

By Husna Haq, /Correspondent / April 23, 2010

http://www.csmonitor.com/Money/2010/0423/SEC-watching-porn-instead-of-financial-industry

Just when it was beginning to repair its reputation with its high-profile case against Goldman Sachs, the Securities and Exchange Commission (SEC) suffers another major blow: Senior staffers there were surfing Internet pornography – as much as eight hours per day, in one case – when they were supposed to be policing the financial industry.

Perhaps this helps explain why the SEC didn't see the financial collapse coming. Or did nothing to stop Lehman Bros.’ questionable accounting tactics. Or Bernie Madoff’s dubious “investing” strategy."

They were busy with other things.

The information comes by way of a disturbing SEC memo to Sen. Chuck Grassley (R), who requested that the agency’s internal watchdog conduct an investigation. ABC News broke the story on its Thursday evening newscast.

The investigation found 31 serious offenders over the past two-and-a-half years, 17 of whom were senior SEC officers with salaries ranging from $100,000 to $222,000 per year.

The AP reports these highlights –

• A senior attorney at the SEC's Washington headquarters spent up to eight hours a day looking at and downloading pornography. When he ran out of hard drive space, he burned the files to CDs or DVDs, which he kept in boxes around his office. He agreed to resign, an earlier watchdog report said.

• An accountant was blocked more than 16,000 times in a month from visiting websites classified as "Sex" or "Pornography." Yet, he still managed to amass a collection of "very graphic" material on his hard drive by using Google images to bypass the SEC's internal filter, according to an earlier report from the inspector general. The accountant refused to testify in his defense and received a 14-day suspension.

• Seventeen of the employees were "at a senior level," earning salaries of up to $222,418.

Rep. Darrell Issa (R) of California, called the scandal “nothing short of disturbing that high-ranking officials within the SEC were spending more time looking at pornography than taking action to help stave off the events that brought our nation’s economy to the brink of collapse.”

But, as the Washington Post reports, it’s not the first time government workers have been caught accessing pornography on the job. Employees at the National Science Foundation, the National Park Service, and even a chief judge of the US 9th Circuit Court of Appeals have been caught looking at pornography or posting sexually explicit content on personal websites.

http://www.csmonitor.com/Money/2010/0423/SEC-watching-porn-instead-of-financial-industry

Goldman's White House connections raise eyebrows

WASHINGTON — While Goldman Sachs' lawyers negotiated with the Securities and Exchange Commission over potentially explosive civil fraud charges, Goldman's chief executive visited the White House at least four times.

Read more: http://www.mcclatchydc.com/2010/04/21/92637/goldmans-connections-to-white.html#ixzz0lv4chbKS

White House logs show that Chief Executive Lloyd Blankfein traveled to Washington for at least two events with President Barack Obama, whose 2008 presidential campaign received $994,795 in donations from Goldman's employees and their relatives. He also met twice with Obama's top economic adviser, Larry Summers.

No evidence has surfaced to suggest that Blankfein or any other Goldman executive raised the SEC case with the president or his aides. SEC Chairwoman Mary Schapiro said in a statement Wednesday that the SEC doesn't coordinate enforcement actions with the White House or other political bodies.

Meanwhile, however, Goldman is retaining former Obama White House counsel Gregory Craig as a member of its legal team. In addition, when he worked as an investment banker in Chicago a decade ago, White House Chief of Staff Rahm Emanuel advised one client who also retained Goldman as an adviser on the same $8.2 billion deal.

Goldman's connections to the White House and the Obama administration are raising eyebrows at a time when Washington and Wall Street are dueling over how to overhaul regulation of the financial world.

Read more: http://www.mcclatchydc.com/2010/04/21/92637/goldmans-connections-to-white.html#ixzz0lv4chbKS

Goldmangate?

GOP seeks SEC records on Goldman

Read more: http://www.politico.com/news/stories/0410/36097.html#ixzz0ljawpunI

Rep. Darrell Issa, the top Republican on the House Oversight committee, is demanding a slew of documents from the Securities and Exchange Commission, asserting that the timing of civil charges against Goldman Sachs raises “serious questions about the commission’s independence and impartiality.”

Issa’s letter, addressed to SEC Chairwoman Mary Schapiro and signed by eight other House Republicans, asks whether the commission had any contact about the case, prior to its public release, with White House aides, Democratic Party committee officials, or members of Congress or their staff.

“[W]e are concerned that politics have unduly influenced the decision and timing of the commission’s controversial enforcement action against Goldman,” Issa writes.

Issa implied that the timing was a bit too convenient, saying President Barack Obama’s push on Wall Street reform “neatly coincided with the commission’s announcement of the suit.”

Read more: http://www.politico.com/news/stories/0410/36097.html#ixzz0ljagSXS7

Key details about AIG's bailout were suppressed by the Federal Reserve Bank of New York

Treasury Secretary Timothy Geithner is once again in the spot light about his role in the massive bailout of failed insurer American International Group Inc. The House Oversight Committee is responding to news that key details about AIG's bailout were suppressed by the Federal Reserve Bank of New York while Geithner was its president.

Geithner made head lines previously when it was discover that the man with the silver foot up his arse had failed to pay his federal income taxes while working at the federal reserve. Critics at the time questions his credibility as the nations number one tax collector ,when he seemed to have so inexplicably failed to pay his own taxes.

The public was lead to believe the left wing anti business Geithner was the "man for the job" , "the job" meaning bailing out failed financial firms for your friends and not running the treasury for the benefit of the Amercian people.

Recent discovered emails seem to imply a cover up by the New York FED and a growing chorus of lawmakers says Geithner must explain his involvement in deals that diverted billions from AIG's bailout to Goldman Sachs and other big banks. The New York Fed claims the the FED and Treasury say Geithner was not made aware of the e-mails that pushed for more secrecy.

Jon Corzine: the man,the myth and the Goldman Sachs Years

Many of my readers have asked me to look into Jon Corzines days at Goldman and this is what I found:

In 1975, Jon Corzine moved to New Jersey, having taken a job as a securities trader at Goldman Sachs in New York. By 1980 he became a partner at Goldman. Jon Corzine rose rapidly through the ranks, to become chairman and CEO in 1994.

As CEO, Jon Corzine has been credited with engineering the transformation of Goldman Sachs from a private partnership to a public company. Smoothing out the volatility of Goldman’s earnings and producing a “kinder and gentler” company . Corzine had worked for nearly two years to transform the legendary partnership into a public company. Fighting significant resistance from many of the skeptical partners. Finally he succeeded in secret ballot,
However, Corzine was not universally popular as CEO, and was forced out in 1999

With the IPO approved Corzine took his family on a vacation. While he was away, three members of Goldman’s five-member executive committee, led by, Hank Paulson (the man he appointed ), staged a palace coup, stripping him of his CEO title and his power. The initial public offering (IPO) of Goldman went forward with out a hitch ,the stock created a huge windfall for the partners, including Corzine and made him a very wealthy man.

Mounting evidence has come to light that during Corzine's reign the firm may have manipulated the market and inflated stock prices through a controversial practice know as “laddering”,which was investigated by the SEC .Mr. Corzine is also considered by many the “architect” of ENRON. And the Center of the ENRON scandal and the Wall Street practices that led to the NASDAQ meltdown at the beginning of this decade

The two big issues that occurred on Corzines watch were the perceived facilitation of the ENRON debacle and the IPO bubble machine using a hybrid of “pump and dump” called“laddering” .


ENRON

In 1993, Goldman Sachs “invented” a security called MIPS that offered ENRON Corp. and other companies an irresistible combination. It was designed in such a way that it could be called debt or equity, as needed. It resembled a loan, so that interest payments could be deducted from taxable income. For shareholders and rating agencies, who look askance at over leveraged companies, it resembled equity.

Officials at the Clinton Treasury Department, were skeptical of the so-called Monthly Income Preferred Shares, or MIPS. To them the MIPS looked like a charade ,a way for companies to hide the size of their debt while cutting their federal tax bill. CEO Corzine lobbied the treasury and eventually, the regulators acquiesced and Goldman and MIPS were off to the races. It has been alleged that Corzine’s used his lobbying activities, during that time , “benefitted him personally as an executive at Goldman Sachs.” It is claimed that Hybrid preferred shares helped mask the huge debt burden carried by companies like ENRON.
Goldman creates a new type of “Pump and Dump” called laddering.

According to Nicholas Maier, who was syndicate manager of the Wall Street firm Cramer & Co. from 1996 to 1998, Goldman Sachs routinely forced him to buy stocks at inflated prices if he wanted to purchase shares of an initial public offering (IPO). “Goldman, from what I witnessed, they were the worst perpetrator,” Maier said. “They totally fueled the [market] bubble. And it’s specifically that kind of behavior that has caused the market crash.

Maier told the SEC that Goldman Sachs would offer him shares of a new company’s IPO at the initial, low price of $20 per share only if he agreed to purchase “aftermarket” shares of the same company at $100 each. In turn, he would unload the shares of the higher-priced stock on small investors. Maier said. “Goldman created the convincing appearance of a winner, and the trick worked so well that many speculators were seduced into participating in this gold rush. The general public had no idea that these stocks were actually brought into the world at unnaturally high levels through illegal manipulation.”

In August 2000, the SEC issued a warning against aftermarket sales, also known as “laddering.” While Jon Corzine said ,“I’ve never even heard the term ‘laddering’ before”.Maier said it happened on Corzine’s watch. “For Corzine not to know of a common practice being utilized to generate and manipulate stock prices would be surprising,” Mr. Maier said. “He was obviously there during this time.

Trading profits are just too good

For some time Goldman Sachs has been accused by Wall Street insiders of employing sophisticated high speed computer programs to siphon of illegitimate profits from the New York Stock Exchange under the radar of regulators. Recently a former Goldman computer programer was arrested for allegedly stealing software codes used in the firms electronic trading operations .Federal prosecutors claim the codes were used to”manipulate the market in unfair ways”.

Government Sachs

Goldman has also been accused by many of taking advantage of so many X Goldman employees working in high level government positions. These allegations can also be traced back to the Corzine days ,more recently however the focus has been on alleged favoritism during the Wall Street and banking bailout as well as the TARP funding. Its hard to imagine with so many high profile former executives that Goldman hasn’t received preferential treatment and information exchanges.

This is not to claim that Jon Corzine was directly involved or that there is some vast Goldman conspiracy at work but the fact of the matter is that he was there in there in the thick of it and that if you know anything about Wall Street you know that investment banks are one organization were the people at the top are directly involved in the most intimate details of day to day operations of their firms.