Goldman beats expectations, so our financial overlord’s appetites have been sated with record bonuses. Looks like we won’t need to spend another trillion to keep them in the Hamptons.
And yes, I supported the TARP action, because I still figure it was better than a global financial collapse. I still reserve the right to hate these people.
slag
The Hamptons? That must be some sort of penal colony. Those poor Goldman fellows. Luckily their sticky fingers will mean less dropping of the soap.
gbear
Imagine my glee.
They Live By Night
Just remember, any attempt to reign in bonuses or to regulate financial insitutions who play fast and loose with government cash is the first step on The Road to Serfdom.
Rick Taylor
I supported TARP under Bush because something was needed to prevent collapse and under that administration I figured it was the best we could get. Under Obama, I’d hoped for better.
freelancer
So, they didn’t use TARP $ to go and rape rescue kittehs, this time?
Bootlegger
Man, those expectations must be some serious wimps to get a beat-down by a bunch of white-collar criminals.
Sorry, had to make the pun.
But seriously, how can they beat anyone’s expectations when the expectation is that you are too big to fail? Talk about a rigged game.
Violet
This. Just because TARP was better than the alternative doesn’t mean TARP was the bestest thing evah. Nor does it mean we heart Goldman and all the other jerkoffs who are laughing all the way to their private islands. We just didn’t want the entire global financial system to collapse. We needed to prop up the house of cards while we try to replace the lower level cards with a real foundation.
An overhaul of our financial regulatory system cannot come too soon.
Walker
Until the double dip comes. As Yves Smith, Ritholtz and others have been pointing out, this entire rally is a function of
* A bubble (yes, a bubble) in financial stocks with poor fundamentals
* GDP distorted by a one-time improvement in inventory levels
* A short squeeze
This rally will not last. All of the other metrics are still getting worse (only the second derivatives are getting better, not the first).
bago
I wonder if anyone has looked at how much these executives are giving to charity.
Walker
This mixture of wiki and html formatting supported by your blog is just bizarre.
Brick Oven Bill
The Global Financial Collapse is coming, and is engineered. The most likely end game scenario is an inflation death spiral. As government benefits are indexed for inflation, this creates an out-of-control feedback loop.
Inflation up = more government spending = print more = inflation up = repeat and that is that.
This historically signifies the end of a nation and a military seizure of its assets by a neighbor with a stable currency. This will not happen in our case as there is nobody with the capacity to invade us. The Chinese? No way.
Goldman’s corporate motto is ‘Long Term Greed’ and these guys, along with their Administration, must have some plan in the works. Americacorps-ACORN-La Raza? No way. They will fail. America will then turn Nationalist, a much meaner place, and become a hyper-power, largely due to our 400 years of hydrocarbons locked in oil shale.
I would stay away from New York City for a while.
Napoleon
The problem wasn’t TARP, the problem has been the lack of movement on new regulations since then, and most discerning is that it increasingly looks like the Obama Admin will pull it patented “we don’t have a single ball between us” method of failing to push for real change.
The Grand Panjandrum
As I noted in a thread yesterday we have NOTHING to worry about. Geithner’s got it all covered, bro.
Let us not forget that he was the head of the New York Reserve last year when all this started going down. One of the claims made by the Obama people to justify his nomination is that he knew all the players and understood how the game was played. Well … not so much. Geithner is either a fucking moron or just can’t put the hammer down on this bunch of criminals.
Napoleon
@Walker:
The big question is when do I get back out of stocks.
slag
And I still reserve the right to be skeptical of this entire situation. I’m not convinced that giving a bunch of miscreants a bunch of free money is a path to a sustainable economy. Just as I’m not convinced that giving a bunch of miscreants a bunch of deregulation is a path to a sustainable economy. Now I’m trying to figure out whether holding these positions makes me a libertarian or a socialist.
Napoleon
@The Grand Panjandrum:
Is there any reason we can’t choose both options?
jl
This off topic, but I figure people here might be interested.
Perry ups the ante in the investigation of the Willingham execution. I guess this is his idea of a senible response (for a GOP primary) to Hutchison’s wisdom on the matter.
Defending Himself, Perry Attacks Executed Man as “Monster”
Zachary Roth | October 15, 2009, 11:03AM
tpmmuckraker.talkingpointsmemo.com/2009/10/defending_himself_perry_attacks_executed_man_as_mo.php?re…
This story is on the Talkingpointsmemo front page if the link doesn’t work.
Bullsmith
TARP was the taxpayers bailing out the gambling-addicted banks in order to save the global financial (read “credit”) system. So when do the banks pay back? When do they get forced into a financial version of gambler’s rehab? When do they get banned from casinos? Also, shouldn’t a good chunk of those profits be taxed?
Also, how about some jail sentences for those who committed fraud on the public? How was rating worthless paper AAA not even a firing offense? Jesus Goddamn Christ this pisses me off.
Lev
You know, a lot of people are angry about this sort of stuff. You’d think that politically inclined folks would be able to get a lot of mileage out of reducing the power of financial entities over us. Hell, it was good enough to get Teddy Roosevelt on a mountain in South Dakota.
And yet they don’t. I mean, seriously, bankers are the new kiddie porn purveyors to most folks, and that anger just isn’t being channeled in any way. I think it benefits the Republicans because fear and anger are their things, but it only helps them so much. Shit, if Obama were to directly address what was making people so angry, he’d be getting 70% approval ratings. Obama’s pretty good as far as politicians go, but he’s no FDR. Yet.
matt
I remember something about the amount of TARP money being just an arbitrary figure that someone made up because it sounded like a big number. Did that turn out to be true or false?
The Grand Panjandrum
@Napoleon: Nope. He’s also living proof that the financial industry is essentially a pyramid scheme legalized by the Congress.
Zifnab
Seconded.
Better the devil you know, I guess.
John Sears
@JlThat’s just.. wow. Unbelievable.
I literally don’t believe it. All Perry had to do, in arch-conservative Texas, to cover up even the murder of an innocent man in their deathhouse, was to claim plausible deniability and throw up his hands. “Oops. No way I could have known. The jury convicted him. I was just doing my job.”
Some variation of that. Instead his massive vanity leads him to this.
I’m not sure I’ve ever hated anyone as much as I hate Perry at this moment.
gbear
NPR ran a story yesterday about Goldman’s extraordinary access to Tim Geithner, based on an AP report.
I realize that both AP or NPR will run with conservative memes in a heartbeat, but the level of cozyness reported in these stories made me think that Geithner should resign.
Anyone up to speed on this?
Chris c.
I think its creating a false dichotomy to put TARP on one side and a global financial collapse on the other. There were/are a million different and innovative things we can do but because we have a perverse view of economic liberty and ethical flaws as large as the Grand Canyon the only plan anyone has come up with is to throw government money around like candy and assume the market will fix itself*
*through taxpayer capital
Elie
BOB :
“America will be a much meaner place”
It is already
burnspbesq
I don’t expect Matt Taibbi to say anything about this, but this little nugget from Goldman’s Q3 earnings release caught my eye.
What’s not clear to me is why Treasury didn’t exercise the warrant and put the Goldman stock it obtained upon exercise into the Social Security Trust Fund. Would be nice to have some real assets behind our retirement savings.
John S.
Is this the nefarious liberal triumvirate counterpart to Halliburton-NRA-Teabaggers?
burnspbesq
@gbear:
Assuming that what you’re describing is a problem, shitcanning Geithner is not a solution. Do you think that if Lloyd Blankfein or Dave Viniar were to call Rahm or Larry Summers, or whoever Geithner’s successor might be if you succeeded in getting him shitcanned. they would get shunted off to a junior aide? Goldman has access. It has always had access. It always will have access. To paraphrase LBJ, would you rather have Goldman inside the tent pissing out, or outside the tent pissing in?
Comrade Dread
That’s assuming that a global financial collapse was impending. Or that it won’t happen anyway.
I’m increasingly of the opinion that we should all stock up on MRE’s, do nothing, and let the crap hit the fan.
wilfred
Better safe than sorry makes sense if they really are the only two options. Nothing else was discussed, nothing else was offered as a possibility.
Textbook dilemma politics. Oh, and the rich really did get richer and poor really did get poorer.
kay
“Goldman also disclosed how much it had set aside for its annual bonus pool. It said that it had earmarked $5.35 billion in compensation and benefits, an increase of 84 percent from the year earlier period, putting it on course for a record payout to its executives by the end of 2009.”
84% increase.
I don’t know if it was smart to bail them out. I think you probably have to look at the results of a decision, rather than what worse things could have happened but didn’t.
Looking at results here, the most powerful players lost nothing, and in fact gained, and the least powerful who had no control over events were hurt, badly.
That’s a poor result, really on every level. I think people could live with this if executives in finance had sacrificed something, and ordinary people took a hit too, even if the results were inequitable as apportioned by their respective responsibility for creating the problem.
That’s the result I expected. I knew it wasn’t going to be “fair”, but I assumed the people most responsible would suffer some consequences. That didn’t happen. These individuals gambled big, lost, sacrificed nothing, and actually gained. It’s just wrong. Whatever the thinking was that led to this result, we went badly astray somewhere.
Napoleon
@burnspbesq:
Because they almost certainly cut a sweet heart deal instead,
TenguPhule
As soon as we gave them the TARP money, we should have had the bastards shot.
Then explained to the successors the one strike rule.
Walker
@Napoleon:
I sold out at Dow 12k and have never gotten back in. This market is too dangerous for a retail investor.
kay
@wilfred:
It might have been interesting to see what would have happened had they been forced to save themselves.
They’re the ones who reject “plain vanilla” ideas. I’m sure they’re really creative when they’re staring into an abyss.
They might have cobbled together something private, given their alleged expertise in all things financial and mutual interest in saving their own asses, and the house at the Hamptons. Maybe we should have let the sweat for 6 months. Like everyone else has been doing, since they imploded their own sector.
wilfred
It’s the rebirth of Gilded Age poli-capitalism. Substitute banks for railroads and you’ve got a perfect fit. See Jack Beatty’s Age of Betrayal: The Triumph of Money in America, 1865-1900.
wilfred
@kay:
Chicken Little politics ruled the day. The bank failure was WMD in Iraq, nuclear imminence, Red Channels, THEY LIVE!, the Four Horsemen, the Domino Theory and every other WE ARE ALL GONNA DIE wallet biopsies rolled into one giant Hooverizing of whatever’s left of the American Dream.
But there was no collapse, so it’s ok, yeah.
liberal
@Napoleon:
Calling tops and bottoms is pretty hard. I’ve been mulling over the same thing. As with Walker, I haven’t been that invested in the stock market, though for me it was far earlier—never really got back in after I was lucky enough to get out near the top of the dot.com bubble. (Thank you, Dean Baker.)
liberal
@TenguPhule:
I can haz lampposts?
liberal
@Violet:
There were multiple alternatives, and there’s hardly any proof that the way the banks and their stock and (most importantly) bondholders were bailed out was the best one.
liberal
@Rick Taylor:
As I’ve said many times, Obama’s ADA rating suggested he wasn’t all that liberal a Democrat. So much of Obama’s behavior I don’t find surprising.
IIRC, the FIRE sector is one of the ones which is the least biased against the Dems. Based on that, what’s transpired is hardly surprising.
Even Barney Frank, who certainly has “liberal” bona fides, is a pawn of the sector.
The real problem here is that the benefits of this crap are very concentrated, and the costs are very diffuse. As has been remarked for some time now (not sure who really pushed this, maybe Mancur Olsen or the public choice people), it’s a real uphill slog under those conditions.
Dean Wormer
@liberal:
Not in the West Village, darling…
Jim in Chicago
Wouldn’t it have been more efficient and less of a “moral hazzard” to spread the $700 billion to all the homeowners in America? That would have pumped the money back into the economy much faster and would have allowed people to keep up payments on their mortgages, thereby saving the value of the underlying assets.
kay
@wilfred:
I didn’t know enough about it to question it intelligently. Not only that, I’ll defend my right to not know how this sector operates. I don’t work in finance. I’m not taking a tutorial in high finance every time the Masters of the Universe screw up, which is every six years.
if it happens again (and it will, they learned nothing and they could give a shit about the broader economy, as long as the bonuses are rolling in) I say let them fail.
I’d rather deal with the effects of an economic meltdown that let these creeps hold us all hostage, while rewarding themselves for such incredibly poor decisions.
Third Eye Open
@Comrade Dread: I always wondered what it would be like if the entire country dropped acid at the same time…
kay
“We are very focused on what is going on in the world,” he said. “We are focused on the economic climate. We are focused on what is going on with other people.”
I love that last part. It made me laugh. Who are these “other people”, and what exactly, is “going on” with them? Oh, he means people losing their jobs and houses. Them. That.
He means everyone who is not an executive at Goldman, right?
That’s a lot of people. “Focus” might be the wrong word.
Stew
I’m so smart but don’t make a lot of money. I do great things or know people who do them, and they don’t seem to have a lot of stuff. The people with lots of stuff often seem to be very bad. And nothing is changing–we’ve got Barack H/W Bush in charge now. But as long as I can express rancor, I’ll be fine. And there are animals too.
bago
Someone needs to go all Stewie on Wall Street.
liberal
@Jim in Chicago:
Not sure about efficiency…how much of the tangled “new finance” mess assumed increasing values?
Moral hazzard: it would certainly be a great moral hazzard, just with less wealthy recipients. It would set a precedent that the government will always backstop asset depreciation/losses. A terrible idea. When I suggested that Uncle Sam should’ve told the bondholders of all these insolvent banks to eat it (by forcing haircuts and equity conversions) in some comment section, some whiner complained that would hurt his 401(k), which had already taken a beating, and that the his company provided no other retirement investment alternatives. Too damn bad; in this country, you’re not even guaranteed a goddamn job, let alone a well-managed retirement fund. But this silly sense of entitlement would only be encouraged by the bailout you suggest.
And it would be terribly unjust. Not only were there a handful of people who deliberately sat out the boom because they saw the bubble coming, but there are lots of people who rent. Why give $0.7T to homeowners? Not to mention that many of them had put very little equity into their homes. You might as well just print the money and hand it to everyone. (Which is perhaps what we’re going to end up doing; some people suggest the only way to get out of this much debt overhang is to inflate it away, unfortunately.)
And for the values themselves: just because more people would be current on their mortgages due to the largesse you suggest doesn’t mean the value would stay the same upon resale.
Elie
kay:
I agree with you and believe that this presents the thorniest unresolved issue in the Obama Presidency.
This.cannot.stand.
I do not know how and when this can be addressed, but it MUST be.
You know that I am a big supporter of O’s administration. But we will part ways on this if after the midterm we do not have some heavy laws on the books and some punishment started for select miscreants.
I realize (or accepted), that this might have to be delayed initially, but we cannot abide the cognitive dissonance of having these people who destroyed so many lives and blackenned the strategic wellbeing of this nation, go without any consequence. They must be punished but more than anything, we must change the laws and the the regulations
liberal
@Dean Wormer:
LOL!
bedtimeforbonzo
“Wouldn’t it have been more efficient and less of a ‘moral hazzard’ to spread the $700 billion to all the homeowners in America? That would have pumped the money back into the economy much faster and would have allowed people to keep up payments on their mortgages, thereby saving the value of the underlying assets.”
As one of those hurting homeowners, I kept pushing this idea.
Not feasible, I kept hearing.
All I know is Wall Street’s lobbying interests far outweigh the average homeowner’s. And money means access in Washington.
I thought things would change under Democratic “rule”. But come to find out a respected senator like Chris Dodd has ties to Wall Street as strong as any Republican.
And Obama’s very administration is too tied in to Wall Street. Apparently, it is not uncommon for Geithner to check in with the Goldman CEO several times DAILY. That’s access.
When all you are getting is the point of view of Wall Street CEOs, how in hell are you supposed to relate to financially-strapped homeowners?
I’d like to see the Nobel Peace Prize winner give a prominent position to government watchdog Elizabeth Warren, who has spoken eloquently about the death of the middle class.
I’m tired of hearing President Obama pay lip service to hurting homeowners struggling to save their piece of the American dream.
noncarborundum
@They Live By Night: Rein in bonuses. Sorry; pet peeve.
Brachiator
Who says there’s no such thing as trickle down?
blogs.moneycentral.msn.com/topstocks/archive/2009/10/14/aig-kitchen-worker-gets-7-700-retention-pay.…
burnspbesq
I guess this is a start. Journey of a thousand miles etc.
my.earthlink.net/article/top?guid=20091015/4ad6ac50_3422_13346200910151214315949
Are there really 69 members on the House Financial Services Committee? How apt.
gypsy howell
“Your money or your financial system?” I say next time we call their bluff. Actually, that was my position last time too. The whole thing had the stench of “mushroom clouds” all over it, right from the get-go.
I don’t believe for a minute that we had to shovel $800 billion or whatever it ended up being to those greedy monsters. We’d have been better off divvying it up and mailing a check to every US citizen, if in fact we needed to do anything at all.
I don’t buy it.
Too bad I had to pay for it anyway.
They Live By Night
@noncarborundum:
D’oh! I can’t believe I did that. How embarrassing. Thanks for catching that, even if it resulted in a public shaming.
kay
@Elie:
I’m not sure there’s a real recognition of what people have lost. Where I live, in the rural rust belt, people in their late 40’s and 50’s who are unemployed are experiencing something like despair. They believe they will not recoup their losses in what remains of their working lives, and that is probably true. They pulled out retirement savings to live on. They lost 20% of what they were told their house was worth, those who kept their house. They lost jobs and health insurance and ran up medical bills. They’re in a hole. They’re not going to be able to send kids to college, something a lot of them had planned on helping with.
This idea that they’re going to bounce back is probably misguided.
There’s a bright spot for me, and I apologize if this sounds a little bitter. They know now. They know what the finance sector is all about, and they see it as purely predatory. Not part of some mutually beneficial “system”, or a “level playing field”. I think if we’re going to have an adversarial relationship with our finance structure, where they take and take and take and see no responsibility to contribute or mitigate damages, okay. As long as we’re clear on that. Let’s stop pretending this is a mutually beneficial partnership. It isn’t.
kay
@Elie:
Have we done anything to remove federal regulators who were so clearly captured by the financial and lending industries?
I don’t see any point in writing new regulation if no one intends to enforce any of it.
Are all of our regulatory agencies captured? I mean, it sure as hell looks like they are to me. At some level, we’re talking about individuals who made decisions, or, not, here. Has anyone determined why none of them acted?
Can we throw this to state regulatory agencies? Until we manage to establish a functioning federal regulatory structure?
Elie
kay:
But do they really “know now”?
I wish that I felt confident of that.
My fear is that they will just cast about for someone to blame first and we’ll have to go through the usual fire drill of picking on the immigrants, black people, libruls, socialists, fluoride in drinking water and vaccination…
I would welcome the simple mirror shining who they are and who they have become and rejecting the falsehoods that got all of us here. I just don’t think that most of them are there yet and threading the needle to keep this country together while everyone goes through the stages of grief: denial, anger, bargaining , etc.
We DO have the means to change the quality of how we live and for what we live for…sadly despite all the chest thumping from the religious types, I see very little of inner peace stuff evolving….
I feel the sadness and despair. It is palpable and saps our energy for the fight ahead. We must fight that…
I am involved in local County Council races and good candidates are being run over by fast talking fakes put up by the developers and other special interests. At risk are years of work to slow the degradation of our water and other natural resources. The knuckle heads don’t even want to stop putting gasoline from the wave runner two stroke engines in the lake supplying their freaking drinking water! Same folks dont want their kids vaccinated because its a government conspiracy to give them autism…
As you can tell, this is not a good day
Elie
kay @ 60
I am sure that we have not cleaned house…
But is the will to do that here yet? Are people aware of what that takes and the muscle necessary in our governmental and legislative institutions?
Our media, which could be an excellent adjunct to this process, is as captive as the regulators!
We need this from the grass roots up — and the push for it is still not strong enough in my opinion. People are angry but the focus on what to do about it is not yet being organized…
We have to fundamentally change who we are and what we value. So far I see little evidence of it. I think that the meanness and irritability that we see escalating signals that many know its coming and are scared…but the full push is still a little off in time…
Brachiator
@kay:
This might be a workable idea. Some of the past Republican-sponsored laws either severely restricted or prevented the states from applying state regulation to the activities of the financial industry.
I am really disappointed that neither the Obama Administration nor the Democratic Congress seem to have any practical ideas for stronger regulations. They get hung up on stuff like limiting executive pay.
bjacques
@burnspbesq /29
Goldman Sachs took a huge dump inside the tent and used up all the toilet paper.
kay
@Elie:
I think they do know. I listen to them and I feel as if there’s been a sea change. There was something of an agreement here, prior to this.
The deal was the consumer borrowed, and tried to comply with the terms of the loan, partly because there are sanctions attached to defaulting, but also (in no small measure) because they felt an obligation to make good on a debt.
That is GONE.
People I think of as completely old-fashioned about debt and obligations talk like radicals. I see why they’re rebelling, too. The rules don’t seem to apply to the people at the top. Some sort of societal bargain has been violated. I know that sounds dramatic, but I have people coming in who are writing land contracts with each other, seller to buyer rather than taking a mortgage. They can get a mortgage. They just don’t want a bank holding the paper, and collecting interest. They’re creating a booming little lending collective in this county, between each other.
Rural people have always been fond of seller to buyer deals, so land contracts are not unusual, but there are a LOT of people going this route. They’ve just completely cut the lender out of the transaction. I’m cheering them on, incidentally.
Elie
kay:
Yay!
That makes me feel so good!
I havent heard that around these parts, but then I am not necessarily in a position to know…
I think that our soon to be Nov local election will reveal a lot about where we are here locally. It is very scary but it would be wonderful if my fears could be proved wrong…to me its a choice between simplistic selfishness and understanding that we have to figure out balanced solutions to complex issues. We have development after development partially completed and now with empty homes pushed by the developers who helped get us into this mess…I am hoping that people are wise to this..
I’ll keep you posted on how it goes but love hearing about your experience with your locals
kay
@Elie:
You’ll like this, then. Tonight is the county Democratic dinner. I get the speaker. Last year I met this union steward who has, essentially, a half hour FINE rant on all of these issues. I heard him when I agreed to, um, MEET (means: “drink a lot”) with the sheet metal workers, who, incidentally, are the most fun canvassers of any union. They finished their election day canvass at 11 AM and immediately started celebrating.
I didn’t ask him last year. I thought he was too angry.
He’s the speaker tonight. I badgered him until he agreed. I think we need a collective rant. It’s been a hard year.
Chuck Butcher
I hated those rapists before TARP, during TARP, and after TARP all the while supporting it.