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Trading Any Market

Goldman Sachs Spreads Its Wings

Companies / Banksters Dec 03, 2012 - 05:58 AM GMT

By: Andrew_McKillop

Companies

VULTURE'S CAN FLY
The newly named head of Britain's central bank, Mark Carney spent 13 years at Goldman Sachs, joining it right after he graduated from Harvard. Talk in the City has previously identified Jim O’Neill, a Goldman executive, as a likely successor to Mervyn King but many persons felt that was unlikely because of O'Neill's connection to GS. Carney worked for the broking, banking and asset management firm in London, Toronto, New York and Tokyo.


Mario Draghi, the president of the European Central Bank, was a senior Goldman Sachs partner, and Mario Monti, the Italian technocrat prime minister was formerly a key European adviser to GS.

Like British voters and taxpayers, most Italians were unaware of the GS link. Likewise, when the people of Greece saw their democratically elected prime minister George Papandreou forced out of office in November 2011, and replaced by an unelected technocrat with elite-fashionable "tax the poor and enrich the rich" neoliberal leanings, Lucas Papademos, they were mostly unaware of the bigger and darker picture. However, according to French newspaper 'Le Monde''s UK correspondent, Marc Roche writing in 2012: "Papademos was Governor of the Greek central bank between 1994 and 2002, and he apparently participated in falsifying (national economic) accounts perpetrated by Goldman Sachs in the year 2000". This was the start of the end for Greek public finances, with GS heavily involved at every further upward twist of the debt and austerity spiral which has now strangled the country and destroyed its economy for decades ahead.

 In the US, the banker-broker-speculator firm's hold on public money really became a vulture grip when George W Bush picked Henry 'Hank' Paulson, the former chief executive of GS, as his Treasury Secretary in 2006.  Late in 2008, in the last days of the Bush regime, most private citizens in the United States were still unaware of the GS link, but this did not prevent them jamming switchboards at the Capitol with calls urging a “no” vote by elected representatives to Paulson's massive $750 billion cash handout to friends, clients and partners of GS. To be sure, the representatives voted “yes” at the behest of  Henry Paulson, and rammed through the biggest bailout of Wall Street in American history.

 Henry Paulson secured Goldman’s multi-billion dollar bailouts. Showing his legendary courage, Obama replaced him with Tim Geithner who worked closely with GS throughout his time as head of the New York Federal Reserve - and in 2008-2009 made sure Goldman received more than $14 billion from one of the bigger chunks of the Paulson handout program, the $100-billion-plus government bailout of failed insurance giant AIG.

UNDERSTAND THE LINKS
Rentacrowd GS-friendly economists say Mark Carney’s time at the firm "could help" him understand links between the financial sector and the wider economy. The quickly cobbled myth continues with claims that his experience in the financial sector came at a tricky time for Canada, but in Europe, already today, the link between GS and "the wider economy" paints an atrocious picture of wilful weakening and destruction of public finances, the economy and employment.

As Europe descends into an austerity-induced economic crisis, Goldman Sachs's former and present employees and allies are managing the demise of the continent. As the British newspaper 'The Independent' and France's 'Le Monde' have many times reported this year, the Conservative technocrats currently steering, or who have already rammed through "post-crash fiscal policy" in Germany, Italy, Belgium, France, the UK, and all the the PIIGS hail from Goldman Sachs. The summit of this vulture-like grip on the economic present and future is Mario Draghi, the head of the European Central Bank itself, and former managing director of Goldman Sachs International.

Multiple reports in mainstream and specialist print media, TV documentaries, even radio programmes and interviews have however "blown the gaff" on Goldman's tinkering and fixing. In the "Papademos affair" of 2000-2001, its is now basic common knowledge that Goldman Sachs secretly helped Greece falsify its national economic accounts and hide billions of dollars through the use of complex financial instruments, notably credit default swaps.  This allowed Greece to meet the baseline requirements to enter the Eurozone. Once inside it however, the debt bubble cobbled by GS could only explode, bring about the current tragic Greek economic crisis, and further contaminate public finances right across the continent. Always looking ahead, however, like the wary vulture it is, Goldman had protected itself from the bubble by betting against Greek bonds, knowing they could only fall and speculators would stampede out. At the time, the nation's central bank was run by Papademos.

Anything Goldman touches turns to easy meat for itself - and carrion for its victims. The GS grip runs right across the "finance and asset space", as shown by its almost certain role in pushing Nymex and world oil prices to an ultimate peak of $147 a barrel in 2008.

In a lengthy detailed piece published by 'Forbes' in April 2009, Christopher Helman and Liz Moyer report how GS set up, organized and executed the oil trading fiasco that bankrupted its own client, the pipeline giant Semgroup, and fattened the GS vulture by anything from $250 to $500 million. More important perhaps, this article published by 'Forbes' provides estimates on the extent to which, at the right moment during the planned bankrupting of its client, Semgroup, GS "goosed" oil prices. The finance and trading sector consensus estimate was that GS pushed up oil by around $35 a barrel above anything able to be justified by fundamentals, when "oil skyrocketed" in Summer 2008. Relative to Saddam Hussein, Iran's mollahs, Saudi Wahabites or the Kremlin clique this is epic oil price gouging!

KICK IT WHEN ITS DOWN
GS operates as a vulture on steroids, never shrinking from first crippling its victim, before gutting it. This Alpha Male Vulture operating style could be compared with legendary always-winning cycle champion Lance Armstrong. Only years after his always-wins did we find out why: he was just another cheat, just another druggy. Questions such as why US and European national finances are so bad, and get worse, are not only able to be answered by the two letters "GS" but its alumni and partners, sufficiently remunerated, can be said to have operated a global coup d’etat in the world of finance.

GS, provenly in the case of Greece and the other PIIGS, certainly in the US, and in a huge range of other countries stretching from the UK and Australia to Japan and South Korea has levered itself so close to financial power that in some key areas, at certain key times it is the power. In particular this concerns the Goldman favorite of austerity for most people, and fat profits for itself and its friends.

 Why the working and increasingly unemployed people of Greece, Portugal, Spain, Italy, Ireland and a long list of other countries suffer under austerity, sacrifice their pensions, earn lower wages and pay higher taxes is that spinning out the debt circus to a multi-decade-long web of poverty for most, but riches for GS and its "agents and servants", is the only goal of the vulture firm.

By an almost supreme irony however, showing the vulture has sickened itself with its sole diet of carrion, the Goldman Sachs strategy of sucking the last remaining wealth out of any firm or any nation it can weaken is to recoup its well-hidden, but real and constant losses the firm made before the 2008 Crash. With little surprise, the US was the first target of the new, or post-crash strategy of GS. The subprime rout and the reason why thousands of homeowners in the United States turned to suicide, domestic violence, and even murder when faced with foreclosure - because there was no question of using the Roosevelt method of re-writing and issuing new mortgages - was that GS and its allied "players", and its agents and servants needed a lot of cash, very fast, to cover their own losses.

According to many GS-watchers, despite its vast success in seeking financial carrion and greedily quaffing its body fluids, the firm faces difficult times ahead. Its year-long attempts in 2012, to push oil prices to $125 for WTI and $130 for Brent, the meat of repeated "Investor Advice" from the firm, did not happen. It has now (in Ocotber) published its climb down on this subject, but this is only a tiny facet of Goldman Sachs' Born Loser plays on financial and resource assets. GS only has a straight run on bent and winding playfields, where it can trick and cripple its victims, and gut them. On a level playing field, GS is a Born Loser.

The great moment is coming: soon the vulture can be kicked when it is down. It will have landed on its last carrion for the last time. Happy birdwatching!

By Andrew McKillop

Contact: xtran9@gmail.com

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2012 Copyright Andrew McKillop - 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 advisor.

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