Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Should Taxpayers Continue to Subsidize Goldman Sachs's Alleged Obscenity?

Stock-Markets / Credit Crisis Bailouts Jul 07, 2010 - 11:29 AM GMT

By: Janet_Tavakoli

Stock-Markets

Best Financial Markets Analysis ArticleThe U.S.'s Financial Reform bill is over 2,000 pages. It includes exemptions and lots of opportunities to create loopholes. Behavior that caused our ongoing global financial crisis is guaranteed to continue, if we don't have swift and effective deterrents.


Broadcaster Max Keiser interviewed Luc Saucier, a Parisian lawyer to the financial community and Fulbright Scholar, on how to create a fast remedy to amoral behavior in the global financial markets.

Saucier asserts that if you are making money on Wall Street--or at a hedge fund--there is no law, except the unwritten law: Don't get caught.

Financial institutions used extensive legal resources to "technically" comply with the law. (In many cases, laws were broken, but this interview is not addressing those cases of illegal conduct.)

Saucier explains that labeling a financial institution "obscene" is an effective social deterrent. U.S. citizens have the right to own property and to make money. We also enjoy freedom of speech, up to a point. The Supreme Court stated that when "art" becomes obscene--and the court worked hard to define what is meant by "obscene"--it is no longer considered art and does not enjoy the protection of freedom of speech.

The most highly compensated players in finance are hedge fund managers earning $1 billion to $4 billion per year. Saucier says that when you see someone making money--billions of dollars a year in bonuses by exploiting the subprime crisis--then one can take the view that part of the remuneration is obscene. The same can be said for many bank CEOs, who may earn somewhat less economic compensation, but enjoy countless valuable perks.

Banks enjoy taxpayer-funded benefits including tens of billions of bailouts and ongoing funding subsidies. For example, Goldman Sachs and Morgan Stanley receive taxpayer subsidized funding by virtue of their new post-crisis ability to borrow from the Fed. Taxpayers may decide that just as we don't wish to fund obscenity posing as "art," we don't wish to subsidize "finance" that is simply obscenity.

Mr. Saucier puts it this way:

"They are committing acts of obscenity...They are morally bankrupting society...It's obscene like kiddie porn is obscene...On the financial front that's what [corrupt financiers are] guilty of."

Financial firms pay a lot to circumvent technical laws, and they are more aggressive and faster than our ability to legislate.

Max Keiser notes that if a firm is branded with an obscenity label, it would be a moral deterrent:

"In the arts, if you are labeled as obscene, your access to prime time major network is cut... It could be a huge deterrent, because then the obscenity risk...would have to be discounted in the share price. Goldman Sachs's was up to $200 and is down to $130 because of the [unstated] obscenity risk."


The discussion begins at 13:00 on this July 6, 2010 edition of The Keiser Report:

By Janet Tavakoli

web site: www.tavakolistructuredfinance.com

Janet Tavakoli is the president of Tavakoli Structured Finance, a Chicago-based firm that provides consulting to financial institutions and institutional investors. Ms. Tavakoli has more than 20 years of experience in senior investment banking positions, trading, structuring and marketing structured financial products. She is a former adjunct associate professor of derivatives at the University of Chicago's Graduate School of Business. Author of: Credit Derivatives & Synthetic Structures (1998, 2001), Collateralized Debt Obligations & Structured Finance (2003), Structured Finance & Collateralized Debt Obligations (John Wiley & Sons, September 2008). Tavakoli’s book on the causes of the global financial meltdown and how to fix it is: Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street (Wiley, 2009).

© 2010 Copyright Janet Tavakoli- All Rights Reserved
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.


© 2005-2022 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