Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19
The Unknown Tech Stock Transforming The Internet - 10th Sep 19
More Wall Street Propaganda - 10th Sep 19
Stock Market Price Structure Still Suggests We Are Within Volatile Rotation - 9th Sep 19
Stock Market Still Treading Water - 9th Sep 19
Buying Pullbacks in Silver & Gold - 9th Sep 19
Government Spending - The High Price of a "Free Lunch" - 9th Sep 19
Don't Worry About a Recession - 9th Sep 19
Large Drop in Stocks, Big Rally in Gold and Silver - 9th Sep 19

Market Oracle FREE Newsletter

The No1 Tech Stock for 2019

Goldman Repayment of TARP Risks U.S. Governments Ability to Regulate Economy

Politics / Market Regulation Apr 20, 2009 - 06:55 AM GMT

By: Pravda

Politics

Best Financial Markets Analysis ArticleAmericans who even bother to examine the vanishing Twenty Dollar bills in their wallets are usually pretty clueless about the crusty old guy looking back at them. Few bother to wonder who he was or what he did to get his mug shot there. ‘Some President from back in the olden day’ is usually about the extent of the musing, if any.


These days, most Americans are too busy putting food on the table and trying to hold onto their homes to care about such things. Folks are too worried about money to worry much about the money itself, if you take the meaning. The guy on the Twenty is just way below the radar screen right now. But truth be told, his name was Andrew Jackson and he was the 7th President of the United States . He certainly didn’t get his picture on the currency because he was a nice guy.

In real life, he was every bit as crusty and cantankerous as his portrait suggests. If anything, he was worse, maybe even a little psychopathic. He killed a lot of Indians, especially in Florida and stole their land. But he also defeated the British in the famous battle of New Orleans . That won him the White House, the first General since Washington to make it there. Once there, he completely redefined the office. U nlike previous Presidents, Jackson didn’t bother cajoling Congress over policy-making but used the veto pen and his party leadership to rule. His enemies called him King Andrew and whined about a creeping military dictatorship (especially when he threatened to hang them as traitors). But in reality, he owed his power to popularity with American voters (he was affectionately known as Old Hickory). He’s credited with being a founder of the Democratic Party and of real democracy in America.

As President, Jackson is probably best know for destroying the Bank of the United States, a private company in name, but in reality a Government-sponsored monopoly. When Jackson appeared hostile toward it, the Bank threw all its power against him. “That Bank” Jackson fumed to his favorite laky (and successor) Martin Van Buren, "is trying to kill me, but I will kill it!" Jackson, in vetoing the Bank’s re-charter bill, claimed it conferred undue economic privilege on shareholders and accused the Executives of meddling in politics. Old Hickory ’s veto message waxed poetic.

“In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society-the farmers, mechanics, and laborers-who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government.”

It might apply today, but Jackson was writing in the summer of 1832 and the issue before the Country was far more important than simply renewing a Bank Charter or granting special favors to a few rich men. The issue was power. Did the Bank control the Government or did the Government control the Bank? In the end, Congress didn’t have the votes required to override the veto and Jackson won out. The President, not the Bank carried the day. A lot of people still don’t agree, but maybe, on the whole, and in some ironic way, Old Hickory deserves his face on the currency.

Now fast-forward about a hundred seventy five years later to another American Bank called Goldman Sachs, or simply Goldman for short. Founded back in 1869 by a Jewish immigrant, the company went public only about 10 years ago. It trades on the New York Stock Exchange under the symbol GS. As of this writing, it has almost a trillion dollars in cash and no less than three former Treasury Secretaries were once Goldman CEOs, including Robert Rubin and our old friend Henry Paulson.

It was the mercurial Paulson, if you recall, who in the final days of the Bush Administration, presided over the decision to allow Lehman Brothers, a Goldman competitor, to go belly up, and to bail out American International Group (AIG). Starting with $85 billion from the Federal Reserve, taxpayers have pumped over $170 billion into the giant insurance company. The bailout was crucial to Goldman since it permitted AIG to pay off over $12 billion in debt that it owed to the Bank. But the Government’s “gifts” didn’t’ stop there. As the Bush Administration left office, Secretary Paulson approved another $10 billion capital injection into Goldman from the U.S. Treasury's Troubled Asset Relief Program (TARP). Just last Monday, scarcely 90 days later, David Viniar, the Chief Financial Officer of Goldman, announced that the company would like to return all the TARP money.

Since it earned profits of nearly $2 billion in the first quarter of 2009 alone, it turns out that the company didn’t really need the money after all. And in that event, Goldman simply couldn’t live with the strings that came attached to it, especially those nasty compensation restrictions. And Goldman Executives imagine even worse limitations to come, as rising public outcry forces Obama to imposed even tougher rules limiting pay and bonuses at companies receiving taxpayer dollars. That must have especially rankled since Goldman was the second largest donor to the Obama campaign. In fact, Obama recently suggested that Executive compensation at TARP recipients might soon be limited to a paltry $500,000 a year, adding that lower compensation is a crucial element of restoring taxpayer trust.

Unfortunately for Goldman Executives (who earn logs more than half a million a year) the American Recovery and Reinvestment Act, which was approved in February, blocks recipients of bailout money from simply paying it back as they please. The law wisely requires the Treasury to negotiate with regulators before it approves any repayment. Experts worried that untimely repayments could jeopardize the entire financial system by spooking investors at other firms, such as Bank of America and Citigroup, which may be unable to repay the funds. Worse still, repayment could be seen as a negatively photo tactic move, fresh evidence that Wall Street still prefers the shadows, presaging a return of bad habits. That would undermine, perhaps fatally, any renewal of investor confidence, the real rate-limiting factor for any meaningful recovery.

Goldman is easily the most powerful Bank on Wall Street with tentacles reaching deeply into the highest corridors of Washington’s halls of power. What will President Obama do? Goldman’s repayment of TARP money now risks not just recovery, but the Government’s ability to regulate the economy. Goldman Executives, both publically and privately, threaten that if they don’t get their way, financial things may go badly and they’ll be very sure that come November, voters know whom to blame. As in 1832, it’s really not about the $10 billion. It’s about power, ingratitude and insatiable greed. The stakes are nothing less than the fate of democracy. Now where’s a crusty old psychopathic General when you need one?

Dominick L. Auci, Ph.D.
Escondido, California

Pravda.ru

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Pravda Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules