Igor Yopsvoyomatsky, Editor of paranoia.com, Answers readers questions.
Dear Igor, My cellmate, Jeff Skilling, here at Waseca Federal Penitentiary, says the "so-called bailout" is a conspiracy by Goldman Sachs to rule the world. Is this paranoia or fact?
Dear Worried Lifer,
This is fact.
But first, a little background. The wealthy have been seeking to undermine the idea of Democracy since its inception. The notion that the collective action of yeomen, scribes and servants, could prevail violates the elite's equation of power:
Socrates questioned the Greek pseudo-democracy as the "rule of some one person or very few." He was accused of impiety and subversion and sentenced to death. The Greek empire was subsequently overrun by Roman barbarians.
After the assassination of Julius Caesar, the Roman Emperors systematically eviscerated the Senate and all democratic institutions. Rome was later overrun by Goths and vandals.
There ensued a period of 15 hundred years in which the world was ruled by corrupt clerics and hemophiliac, schizoid, deviant monarchs, while their vassals expropriated all the land, treasure, social and cultural capital; and doled out patronage to their groveling favorites.
At the start of the American Revolution, the anti-democratic Loyalists, most of whom were of the wealthy merchant class, fled to Canada where they have been sniping at the US ever since.
The French Revolution had a short life of bloodshed and intrigue and was quickly overrun by Royalists and Emperors-- then imploded into a series of fragmented "Republics" that had no national unity.
Southern slave owners sought to spread their feudal system across a growing nation. They were stymied by Lincoln. His elimination was guaranteed when he threatened to fully realize the equality promised in the Constitution.
During the "Gilded Age" financial capitalism made its first attempt to take over the country. Jay Gould's move to corner the silver market ended in "Black Friday" and a major financial panic.
From then on a pattern was established. Financiers would manipulate markets and bribe politicians to expand their wealth. Soon, the value created by the productive classes would be unable to support the inverted pyramid of baseless speculation. The system would collapse, impoverishing millions. After a last minute intervention (J.P. Morgan 1907, FDR 1932, RTC, 1989) a slow recovery would take place. Once again the financiers would build capital and public trust in preparation for their next coup d'etat.
Petroleum added a new arrow to the quiver of the elite. Beginning with the Teapot Dome Scandal of the '20's oil and government became linked. The Rockefellers and the Dulles brothers started a revolving door between government ( CIA, State Dept.) and the oil business.
As oil controlled foreign policy, finance sought to shape the national economy. Again, heedless speculation led to the Great Depression of 1929. FDR's New Deal was designed to change the emphasis of Government from insulating the consumers of wealth to protecting those who produced it. Social Security, which guarantees a modest pension to elderly workers, became the bete noire of the moneyed elite. On the very day of its creation a conspiracy was launched against it. The financier who climbed the heights and vanquished the beast would be celebrated in song and story...
Goldman Sachs has dispatched its double agents to fulfill what it describes as its "great tradition of public service." The list of Goldman partners who have gone into Government is long and illustrious. Beginning with partner Henry Fowler in the '60's, they have served both parties as Treasury Secretaries.
Partner Robert Rubin was Clinton's Treasury Secretary. During his tenure he managed to repeal the Glass Steagall Act passed during the Depression, which separated investment and commercial banks. This opened up hundred of billions of dollars of new business for the firm. Goldman partner Stephen Friedman was Chairman of the Council of Economic Advisers. Partner Jon Corzine is Governor of New Jersey. Partner Robert Zoellick was US Trade Representative and is now President of the World Bank...The list is endless, Worried Lifer, trust me.
With every infiltration into Government Goldman's wealth has increased. But its most daring coup came with the appointment of CEO Henry Paulson as Secretary of Treasury. During Paulson's tenure as CEO (1999-2006) Goldman acquired an $18 billion exposure to subprimes and billions more in derivatives. Goldman was in the forefront of the movement to privatize Social Security, which would have added trillions more in profit. In 2002 Goldman analysts were accused of producing biased reports to benefit corporate clients.
A teetotaling Christian Scientist college football hero, Henry Paulson was the ideal double agent. He spent his early days trying to reassure the public and the Congress that the economy was recovering while his colleagues worked feverishly to liquidate bad debts. When that didn't work he bailed out Bear Stearns. When that didn't stem the tide of failure he got Fed Chairman Bernanke to release billions to the banks. But they hoarded the newfound money and refused to lend it to failing investment houses and hedge funds.
Paulson let Lehman Brothers, Goldman's biggest competitor, go under, and thus got more business for the firm.
But when AIG started to totter he had to intervene to protect Goldman's $25 billion investment in its defunct derivatives operation. He paid $85 billion dollars for 79.9% of AIG, a bargain basement price for a trillion dollar company. I am betting that soon some investor (maybe Goldman Sachs?) will offer $100 billion for the steal of the century.
Paulson's most audacious move was yet to come. In a last ditch effort to save the fortunes of a few thousand very wealthy individuals he gave Congress a two and a half page proposal in which he asked for a blank check of $700 billion to save the banks. In a backhanded afterthought he said this might help the millions of mortgage holders as well.
He tried scare tactics. ]He tried a charm offensive. He even made the surprising tactical error of getting a discredited President into the act.
So far genius of the American system seems to have beaten him back.
But don't be fooled. The financial conspirators are regrouping.
They'll be back.
Causes Heywood Gould Supports
Leukemia and Lymphomia Association
American Cancer Society
St. Jude's Children Research Hospital