This is a great article discussing the racket at Goldman Sachs. A must read. http://zerohedge.blogspot.com/2009/06/goldman-sachs-engineering-every-major.html
One of the main remaining ways for large banks to make loads of money is through these bubbles. They aren't going to make it with only loans paying 7 to 10% a year. Any bank or credit union can do that.
"And here's the real punch line. After playing an intimate role in four historic bubble catastrophes, after helping $5T in wealth disappear from the NASDAQ, after pawning off thousands of toxic mortgages on pensioners and cities, after helping to drive the price of gas up to $4/gallone and to push 100MM people around the world into hunger, after securing tens of billions of taxypayer $s through a series of bailouts overseen by its former CEO, what did GS give back to the people of the United States in 2008? FOURTEEN MILLION DOLLARS. That is what the firm paid in taxes in 2008, an effective tax rate of exactly one, read it, one percent. The bank paid out $10B in compensation and benefits that same year and made a profit of more than $2B -- yet it paid the Treasury less than a third of what it forked over to CEO Lloyd Blankfein, who made $42.9MM last year. How is that possible? According to Goldman's annual report, the low taxes are due in large part to changes in the bank's "geographic earnings mix." In other words, the bank moved its money around so that most of its earnings took place in foreign countries with low tax rates. Thanks to our completely fucked corporate tax systems, companies like GS can ship their aid of a new set of alumni occupying key gov't jobs." Unreal. WOW.
Thanks. I'm going out now to see if i can buy a copy of "rolling Stone", July. What i'm baffled by is how the IRS code can allow current deduction of expenses related to income not currently taxable, especially if those taxes can be deferred indefinitely. As for example taxes on income shifted to offshore entities! THAT is a loophole that must be closed (assuming the article is correct.) The guys at GS have somehow managed to eclipse Madoff by many orders of magnitude in their level of skulduggery and harm inflicted. In the final analysis, if we can't beat these guys, we may have no choice but to join them.
.................................................. One way to review the effects of GS is to remove GS from the current/past equation....and thus try to determine prices without them....and then again with them.... This would be a very tall order..... ie example oil.....What was the total cash flow to all classes of oil instruments from GS during the last 4 years.... Then examine cash flows with corresponding prices....and what % was attributable to physical oil usage.... Any average economist could handily do this.... Thus the next question.... Why has this aspect of oil prices not been examined in this manner by policy makers ? ....................................................... Then move to each asset class such as mortgages....and examine the impacts of GS participation.... .................................................... The headwinds are clear....those in a position to do so such as Fisher...Fed Reserve TX....refuses to examine oil price data in this manner ....and one has to think ....why is this....? ...................................................... So these types of participants make sure their participation is legal per se..... And just who is left really to call them out ? .................................................................. At this point what is direly needed are big numbers....big evaluations .....to be put back on the books.... This can best be done by equity....not debt valuations.... ............................................................... Moving forward this means an all out international paved and unencumbered securities highway.... No government should be able to tax any securities in any way....as this will represent those enterprises whereby financial efficiency should be a guarded at all costs requirement.... As Volcker has positioned it....there should be banks....totally separated from the securities market....They serve two distinctly different purposes ....and it is of paramount importance that they operate in a fairer globalized manner....with common sense regulations.... Regulations regarding size....are important ....and with this simple parameter.... would easily tame the likes of a GS.... As one already knows....the list just gets longer and longer.... ................................................................................... A proper worldwide direct access exchange based on BATS....and for the US or any other smart country ....a 10/5 C tax only....would generate growth and prosperity....
Maybe the moral of the story is invest in GS. They clearly know how to work the loopholes and bubbles better than anyone else. That might be all that matters.
............................................................................ What is interesting is this.... Most small countries are run by a handful of monopolies....usually with some form of corrupted govt. directives.... The US is no different....How many GS's can there be to begin with ? Which brings into question the reasoning behind anti trust and fair competition laws....which deem themselves to be exercises in futility.... Most govt. systems are not really democratic by "lobbyist" design.... ............................................................................ So the question becomes is the US better off with or without a GS ? And if it's not GS....another GS type will emerge because of the system....? ............................................................................. The bottom line is ....one has to keep adapting to whatever the circumstances as no system will ever be ideal....however one needs to be careful about the system itself.... The US has become fascist because of GS types.... .................................................................................. Nothing says it cannot get better however.... ...................................................................... A new worldwide unencumbered universal securities exchange needs to be on every computer.... This highway should not be taxed in any form by any country as declared by international law with unlimited access by any person.... There should be common sense regulations....particularly regarding size....and fact based Wiki style information.... ......................................................................... Also there should be no other taxes than simple consumption taxes....not to exceed 15% in total.... Why ? Taxes are passed on into all prices.... ................................................................ The lobbyist based two party system must be replaced by township govt. .....and govt. takes and structures need to be dramatically downscaled....