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The five bubbles the article says Goldman was central to creating are the Wall Street stock bubble in the 1920s, which led to the Great Depression; the tech-stock bubble of the late 1990s, which ended in the 2001 recession; the housing bubble of the past decade, which resulted in the current economic crisis; the oil price run-up last summer, when oil shot up to $140 a barrel, likely helping tilt the entire world into recession; and what Taibbi describes as "rigging the bailout," when Goldman
Originally posted by RedGolem
reply to post by ModernAcademia
I am not to sure where the auditors come in to this.
It is about the way the finance giant can manipulate the market, and by way of having the right people in the places of power, they can profit from it.
Originally posted by angst18
The auditors come into it in a huge way actually. Did you know, for instance, that the banking and investment firms can choose their auditors out of a pool? I listened recently to an NPR program (I think it was This American Life) on which a reporter found that most of the lending institutions that failed were all audited by the same company and that this company was known for it's loose oversight.
The article, which is not yet officially available online, adds one more bubble to the list: the "global warming bubble," or specifically, the proposed cap-and-trade legislation that would allow companies to trade pollution credits on an open market.
Taibbi's argument suggests the Wall Street bank may well want to turn climate change policy into yet another Wall Street casino game.
Because emissions caps will continually be reduced, Taibbi argues, pollution credits will constantly be growing in value, and Goldman Sachs wants in on the ground floor.
Taibbi writes: "The plan is (1) to get in on the ground floor of paradigm-shifting legislation, (2) make sure that they're the profit-making slice of that paradigm and (3) make sure the slice is -- a big slice. Goldman started pushing hard for cap-and-trade long ago, but things really ramped up last year when the firm spent $3.5 million to lobby climate issues."
The same Wall Street players that upended the economy are clamoring to open up a massive market to swap, chop, and bundle carbon derivatives. Sound familiar?
In an especially audacious move, the industry also argued that cap and trade should allow the very same types of unregulated instruments that helped spread risk throughout the financial system like a cancer, contributing to the economic meltdown. In particular, it lobbied for "over the counter" carbon derivatives—deals conducted directly between two parties with no one monitoring the risk. (Perhaps the most notorious form of OTC derivative is the credit default swap, which crippled AIG when it issued too many high-risk swaps while lacking the money to cover them.)
The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet.
the new game in town, the next bubble, is in carbon credits — a booming trillion- dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an "environmental plan," called cap-and-trade. The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance