Friday, January 30, 2009

The Goldman Sachs "secret handshake"


Oh no! Another Goldman Sachs article. Yes FNT (Future News Today) devotees I'm afraid so. [See related posts at the bottom of this article for my previous GS exposés.]

My antennas first started twitching when Timothy Geithner was first nominated for the position of Secretary of Treasury. Those of you who have read my previous posts may remember Tim as the former President of the New York Fed, and also as a member of the Group of Thirty (G-30). I wrote an article that detailed the power of the New York Fed, and noted that the Chairman of the Board, Stephen Friedman, is a GS capo. I failed to mention in that article the name of the President of the NY Fed, but by now everyone is familiar with Mr. Geithner. I made the point that the NY Fed was effectively under the control of the GS gangstas.

As if to prove my point, no sooner does Tiny Tim [Notice the resemblance? I wonder if he can play "Tiptoe through the Tulips" on the ukelele?] become Treas-Sec of the US than he appoints a GS insider to be his Chief of Staff. This might have gone unnoticed outside Washington circles except that the person in question, Mark Patterson, was not just any GS lackey. No, he was a high-profile lobbyist for GS. Which led to questions about the Obama pledge to reduce the influence of lobbyists in his administration. Not to worry because Tim has got this one covered.

Geithner issued rules Tuesday to restrict lobbyists from contacting Treasury about bailout issues.
But Tim, can you explain how that will apply to Msgr Patterson?
Mark Patterson will serve as Geithner's chief of staff at Treasury, which oversees the government's $700 billion financial bailout program. Goldman Sachs received $10 billion of that money.
Will he be required to restrict himself from contacting himself? It's all a little too Zen for me. My head is spinning.

Meanwhile, back at the New York Fed...
Federal Reserve's Board of Governors on Tuesday reappointed Stephen Friedman, chairman of private equity firm Stone Point Capital, as chairman of the New York Fed's board of directors.
[...]
Both Friedman and Hughes served on the search committee that chose William Dudley to be New York Fed president, succeeding Timothy Geithner, who left to become Treasury secretary.
Friedman you recall is the former co-chairman of GS. And what about this new guy William Dudley? Will he bring a breath of fresh air to the dank corridors of the NY Fed? 'fraid not.
For two years Dudley was a top lieutenant to former New York Fed chief Timothy Geithner, who was sworn in yesterday as U.S. Treasury secretary. Now, the central bank is relying on Dudley’s frontline crisis experience, financial expertise and capacity for long hours to guide the Fed’s biggest district bank and coordinate policies toward Wall Street firms including his former employer, Goldman Sachs Group Inc.
Gee, what a surprise. The "search committee" found another GS lackey to fill this powerful position. I guess the search was severely restricted to those with strong GS affiliations.
Goldman Sachs, where Dudley worked for more than two decades and in 1995 became head U.S. economist, has long contributed top policy makers. Henry Paulson and Robert Rubin both headed the bank before becoming Treasury secretaries. Bank of Italy Governor Mario Draghi and Bank of Canada Governor Mark Carney are former managing directors of Goldman. Other notable alumni are Neel Kashkari, Paulson’s director of the Troubled Asset Relief Program, and Josh Bolten, who served as White House chief of staff under President George W. Bush.
So Paulson and Rubin were both NY Fed Presidents before becoming Treasury secretaries. And both coincidentally were formerly CEO's of Goldman Sachs. People, this is a criminal conspiracy by GS to control the economic policy of the United States! And everyone in Washington is just winking and nodding, and then looking the other way.

Oh and GS was the biggest contributor to Obama's campaign.
Bundled together, by Sept. 28, 2008, the latest figures available, Goldman Sachs members or their families contributed $739,521 to Obama, making the firm [the] number one source of donors to the Obama campaign, according to the Center for Responsive Politics.
That's cheap. For less than $1 million, you can buy a President. And in return you get billions of dollars in bailout money. That's a great return on an investment! Here's what Bloomberg had to say about the TARP program in an article titled "Paulson Debt Plan May Benefit Mostly Goldman, Morgan".
Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid, according to Bank of America Corp.

"Its benefits, in its current form, will be largely limited to investment banks and other banks that have aggressively written down the value of their holdings and have already recognized the attendant capital impairment,'' Jeffrey Rosenberg, Bank of America's head of credit strategy research, wrote in a report dated yesterday, without identifying particular banks.
Do you still wonder why I keep coming back to the topic of Goldman Sachs? The NY Times calls them "The Guys From ‘Government Sachs’". That's cute - "Government Sachs". I prefer "Gangstas Sachs". It conveys a more appropriate meaning, don't you think? I recommend you read the entire NYT article yourself and come to your own conclusions. At times it comes to the defense of GS while at other times it points out the potential conflicts of interest. I just want to highlight this one excerpt from the article.
A person familiar with Mr. Geithner’s thinking who was not authorized to speak publicly said that there was “no secret handshake” between the New York Fed and Goldman, describing such speculation as a conspiracy theory.
Compare that with a quote from a totally different article about GS from the Toronto Globe and Mail.
Of course, this cloistered culture, populated as it is by power and wealth, has roused its share of suspicion among outsiders, who view the firm as a kind of secret society – just do a Google search on “Goldman Sachs and conspiracy.”

Current and former Goldmanites dismiss the notion that the spread of former executives to positions of influence is a Machiavellian plot to further enrich the company. There are no secret handshakes, they insist; no covert collaboration to extend the firm's reach.
They keep telling us that there is "no conspiracy" and "no secret handshake", while there obviously is a conspiracy. This makes me wonder whether there is also a "secret handshake". A quick Google search came up with this quote from a 2007 article in the International Herald Tribune.
"There is no mystery, or secret handshake," said Stephen Friedman a former co-chairman and now a Goldman director. "We did a lot of work to build a culture here in the 1980s and now people are playing on the balls of their feet. We just have a damn good talent pool."
[That's the same Stephen Friedman who was just reappointed the Chairman of the Board of the NY Fed.]

Are you starting to get the same creepy feeling that I am that there really is a "secret handshake"? Why else would they repeatedly bring it up only to deny it. Is the upper echelon of GS like a secret Skull and Bones Society? What other strange rituals do they practice besides the "secret handshake"? Are they like the modern day Masons? Maybe they are all Scientology members? Man, these people creep me out!

[And yes, I did repeat some quotes from my previous articles. Deal with it!]

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4 comments:

Sally said...

Frank, Do you have a comment to Mr Obama's directive below - I know this story is still in its infancy, because AP has just reported it as a "breaking news" event:

"Obama caps executive pay tied to bailout money"

http://news.yahoo.com/s/ap/20090204/ap_on_go_pr_wh/bailout_executive_pay

Frank Hope said...

Hi Sally,

You've probably noticed that I've stopped posting. I guess I got tired of being right about things that I'd rather not be right about. The Israeli destruction of Gaza; the bailout; the rise of China at the expense of America.

I certainly think that there should be a reduction in CEO pay. It's funny how the automobile union workers are forced to take a pay before the auto makers can get a bailout, but the Wall St. stockbrokers were never asked to take a pay cut as a condition of bailing out the banks.

From what I read about Obama's proposal, it will have no effect on Goldman Sachs unless they ask for additional funds. So I'm not impressed. I think this is a symbolic act with no teeth. The latest bailout plan seems to be more of the same - the taxpayers will foot the bill while the shareholders will get a free ride.

One thing that China does right is to punish severely the people responsible for "white collar crimes". In the case of the melamine scandal there were some people who were executed. In the case of embezzlement there have been people put in prison for life. While I don't advocate execution, there should be substantial prison sentences and fines for corporate misconduct. Rather than simply cutting back their pay, many of these executives should be sent to jail.

Frank Hope

Sally said...

Hello Frank,

Thanks for responding to my question, and you answer reflects the same conclusion I came to.

Well, I'm sorry to see your blog coming to an end. I shall miss it, but your reasoning is completely understandable.

Kind regards, Sally

Frank Hope said...

Hi Sally,

I'll fire up the blog again if I see things that I think I can add some insight into. Right now things are following a pretty predictable path. I think if you read my old posts you can easily see my predictions and I don't know what else I can add to it.

Economically, Obama is following Bush policy which will eventually result in inflation. This is a transfer of wealth from the working people through taxes to the ruling elite through bailouts.

In the Middle East Obama will continue supporting Israel to the detriment of American interests.

Domestically there are definitely some improvements over Bush, but I don't think this should be reason for rejoicing. It just shows how low our standards have become after Bush. We still have the Dept. of "Homeland Security". The pace at which we lose our rights will slow, but continue. There might even be a cataclysmic economic emergency which could lead to a national emergency being declared. Although this seems slightly less likely than under Bush.

I view the current economic crisis as a shift of power from the US to China as I described in my article titled The International Banker's China Syndrome. China has taken on the role of the IMF. If they are expected to bailout the US, then they will impose conditions just like the IMF does on third world countries. In fact I think they already have. The Fannie Mae and Freddie Mac bailouts were, in my opinion, mainly because China was a big shareholder in those institutions. I also believe that US corporations are funneling funds to Chinese affiliates so they will be out of reach of the US taxpayer. I don't have any real proof, but I just find it hard to believe that the International Bankers that run JPMorgan Chase and Bank of America are not benefiting from this crisis.

Your friend,
Frank