White House Ties To Wall Street Doom Economic Plan

Stiglitz Says Ties to Wall Street Doom Bank Rescue $Update1$

http://www.bloomberg.com/apps/news?pid=email_en&sid=aq2ZVAasmSkc

The Real Scandal

Taxpayer Funded GS Profits
Posted By Barry Ritholtz On April 13, 2009 (7:20 am) In Bailouts, Legal, Markets, Taxes and Policy

Note: By coincidence, this post was written in International Waters a few miles off the coast of Grand Turks and Caicos. If Gold man Sachs wants to sue anyone over this, send your process server to the wreck of the B-29 bomber, off the north coast, approximately 80 feet below sea level . . .

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Karl Denninger notes that a nasty rumor is circulating about Goldman Sachs amongst observers of the Street. Allegedly, GS is about to report their second-best quarter in history, +$12 billion or so…

In this era of finacial disasters, credit crisis, and recession, how is that possible?

Easy. You — and your grandkids — are the ones who paid for it:

“The fact that they (like so many others) are being paid by the taxpayer through AIG’s “conduit” for losses that didn’t (yet) happen at 100 cents on the dollar might be the basic math.

And further (and potentially much worse) there is the repeated statement by Goldman executives that they were “fully hedged” against a potential counterparty default by AIG. One wonders - was that “hedge” to be short the equity on AIG itself, perhaps?

Why is this important?

Because if that’s how Goldman hedged they got paid twice and the taxpayer literally got robbed. Someone in Congress needs to look into this now; there are already rumblings of investigation. Those rumblings need to get a lot louder and turn into subpoenas, not “polite inquiries.”

If in fact Goldman (or anyone else) was “hedged” against a possible credit loss from their CDS with AIG and they were able to collect on that hedge (no matter what it was) those payments through AIG need to be clawed back immediately as nobody is entitled to be paid twice for the same risk and reap what amounts to a windfall profit by quite literally engineering a multi-billion dollar transfer of funds from the Taxpayer to the firm!”

Makes you wonder if having a Treasury Secretary who was a former CEO of Goldman Sachs had anything to do with this.

Indeed, not only was Hank Paulson Goldie’s boy, but he was the same gentleman who so vociferously lobbied the SEC to allow the 5 largest iBanks to drop the net capital rule and leverage up 40 to 1.

So not only did he help set up the disaster, but he then oversaw the greatest transfer of wealth in the planets history — several trillion dollars from taxpayers to the management and shareholders of inept, incompetant, wildly irresponsible companies.

This is theft on the sort of grand scale thta calls for the population to revolt. Perhaps the French peasants were right; Time to bring the guillotine for executing nobles and bankers. . .

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Source:
Goldman (and other banks’) “Hedges”
Karl Denninger
April 12. 2009
http://market-ticker.denninger.net/authors/2-Karl-Denninger

Article taken from The Big Picture - http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2009/04/taxpayer-funded-gs-profits/

Same as it ever was.