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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Thursday, August 5, 2010

How Goldman Sachs Starves Children

In a followup to yesterday's post "How Goldman Sachs Destroyed the World", The Automatic Earth discusses another aspect of Goldman's and the rest of the banking mafia's immoral speculation on commodities:


It’s very hard, when you work at a too-big-to-fail institution, not to make a profit. When you have access to discount window money at an interest rate of 0.25%, money which you can -electronically- carry across the street to purchase US Treasuries that pay, say, 2.75%, you are set for a 1000% profit margin (even "only" 500% is not that shabby either). You try losing money that way; it ain't easy.

Of course, behind the scenes plays another government policy: the same banks that are handed all this money and profit for free don't have to fess up to their losses either. The free dough is handed to a group of financials that are nothing but the proverbial walking dead. If they were obliged to clean up their balance sheets with the inclusion of all the securities and other paper that hasn't been worth more than pennies on the dollar for several years now, they'd no longer be able to raise nearly enough capital on the open market to continue their dead man's walk, let alone heal.


Last year, Goldman Sachs earned $5 billion in profits with commodities alone. Other major players include the Bank of America, Citigroup, Deutsche Bank, Morgan Stanley and J.P. Morgan. They are no longer merely offering classic funds, but are now trading in financial instruments that function similarly to the subprime mortgage loans on the now-collapsed US real estate market. With these instruments, known as collateralized commodities obligations, or CCOs, profits are based on market prices. The higher the trading prices of wheat, rice and soybeans, the bigger the profits

[..] ... only about 2 percent of commodities futures now end with a real exchange of goods, the FAO concluded in a June study. "As a result, these deals attract investors who are not interested in the commodity itself, but merely in speculative profit," the FAO concludes morosely. The finding is all the more remarkable given the widespread political and social outrage aimed at food speculators just two years ago.


You see, I am not using phrases like 'starving children' and 'destroying the world' as trash-talk nor do I use them lightly. There are real world consequences for the speculation manias (see Galbraith's "A Short History of Financial Euphoria") Goldman and others are engaged in. They really do hurt people...badly. It's a shame the scum in Washington and a complacent citizenry are silent on these issues. 

Apparently, we're too busy snooping into Lindsay Lohan's life to be bothered with little things like right and wrong.

Continuing on...
Needless to say, if you’re speculating on food commodities like wheat, whether it be through Commodity ETF's or elsewhere, and you fancy yourself to be a Capitalist of Chaos, what's not to like about failed crops and rising price uncertainties? You can corner markets, the way cocoa honcho Anthony Ward has, you can sell derivative instruments to pension- and market fund managers chasing yield without sufficient savvy, and at the end of the day, you can be filthy rich. Just don’t feel too bad about the hungry, starving and dying, or about those who see their pensions and other savings vanish. Hey, if you didn't do it, someone else would, right?

The biggest irony in all of it, of course, remains that the biggest players in these ultimate dog eat dog Darwinian capitalist schemes use US and EU taxpayer money to play the games. They wouldn't be here anymore, sitting at their crap tables, if you wouldn't have handed them the money to play their ultimate to-the-death fighting games with. If nothing else, it seems to be a fitting end to yet another economic system doomed by a lack of morals.

Read the rest here


Anonymous said...

Boy that bailout really helped...

Food Stamp Usage Hits 18 Sequential Record High At 40.8 Million

"The number of Americans who are receiving food stamps rose to a record 40.8 million in May as the jobless rate hovered near a 27-year high, the government reported yesterday. Recipients of Supplemental Nutrition Assistance Program subsidies for food purchases jumped 19 percent from a year earlier and increased 0.9 percent from April, the US Department of Agriculture said in a statement on its website. Participation has set records for 18 straight months. An average of 40.5 million people, more than an eighth of the population, will get food stamps each month in the year that began Oct. 1, according to White House estimates. The figure is projected to rise to 43.3 million in 2011."

Anonymous said...

Taibbi knows the deal....

Wall Street's Big Win
Finance reform won't stop the high-risk gambling that wrecked the economy - and Republicans aren't the only ones to blame

Cue the credits: the era of financial thuggery is officially over. Three hellish years of panic, all done and gone – the mass bankruptcies, midnight bailouts, shotgun mergers of dying megabanks, high-stakes SEC investigations, all capped by a legislative orgy in which industry lobbyists hurled more than $600 million at Congress. It all supposedly came to an end one Wednesday morning a few weeks back, when President Obama, flanked by hundreds of party flacks and congressional bigwigs, stepped up to the lectern at an extravagant ceremony to sign into law his sweeping new bill to clean up Wall Street.

But Dodd-Frank was neither an FDR-style, paradigm-shifting reform, nor a historic assault on free enterprise. What it was, ultimately, was a cop-out, a Band-Aid on a severed artery. If it marks the end of anything at all, it represents the end of the best opportunity we had to do something real about the criminal hijacking of America's financial-services industry. During the yearlong legislative battle that forged this bill, Congress took a long, hard look at the shape of the modern American economy – and then decided that it didn't have the stones to wipe out our country's one ­dependably thriving profit center: theft.

All of this is great, but taken together, these reforms fail to address even a tenth of the real problem. Worse: They fail to even define what the real problem is. Over a long year of feverish lobbying and brutally intense backroom negotiations, a group of D.C. insiders fought over a single question: Just how much of the truth about the financial crisis should we share with the public? Do we admit that control over the economy in the past dec­ade was ceded to a small group of rapacious criminals who to this day are engaged in a mind-­numbing campaign of theft on a global scale? Or do we pretend that, minus a few bumps in the road that have mostly been smoothed out, the clean-hands capitalism of Adam Smith still rules the day in America? In other words, do people need to know the real version, in all its majestic whorebotchery, or can we get away with some bullshit cover story?

In passing Dodd-Frank, they went with the cover story.

RobertM said...

Thanks for the link Anon.... it's inside the post now.

Anonymous said...

Pretty soon they'll own funeral parlors...who knows maybe they already do?...they'll securitize our whole life cycle...

Stripper Finds Degree Profitable for Goldman Wasn't Worth It

Like many investors, Goldman, owner of 38 percent of the Art Institute’s parent, Education Management Corp., was drawn to for-profit colleges by their rapid growth and soaring stock prices, reports Bloomberg Businessweek in its Aug. 9 issue. Now Goldman, which recently agreed to pay $550 million to settle U.S. civil-fraud charges related to the subprime mortgage meltdown, is invested in an industry under attack from Congress, the Obama Administration and dissatisfied students.
Proposed Crackdown

A proposed government crackdown may have a disproportionate effect on EDMC. The U.S. Department of Education may restrict taxpayer-funded grants and loans to for-profit colleges like EDMC that offer $50,000 associate’s and $100,000 bachelor’s degrees in such low-paying fields as cooking, art and design.

Until recently the education business looked like a bonanza for Goldman. Pittsburgh-based EDMC, the second-largest U.S. chain of for-profit colleges after Apollo Group Inc.’s University of Phoenix, has 136,000 students -- more than three times as many as the University of Michigan. Its annual revenue doubled over the last five years, to $2.4 billion. Goldman and two other firms bought EDMC in 2006 and took it public in 2009. Along the way they shared at least $70 million in advisory, management and other fees, according to securities filings. Goldman also became EDMC’s biggest stockholder

Anonymous said...

The coincidences never cease to amaze....

Married to the Clinton Mob

concerning famous people, I wasn’t going to write about the marriage of Chelsea Clinton to a Goldman Sachs alum and budding hedge-fund hustler with the resources to buy a $4 million loft so soon after graduating from Stanford. Hopefully Marc Mezvinsky won’t follow in the footsteps of his financier father, “Fast-Talkin’ Eddie,” as they called him back in Iowa, a former Democratic House member who just completed a five-year federal sentence for dozens of fraud felonies.

Anonymous said...

Now this guy, rest his soul, knew the can you deny one word of what he says with a straight face!

Anonymous said...

George meet Ralph....

New York's $16 Billion Gift to Wall Street Banksters
The Spectulator's Rebate


You can’t make up the following realities in New York State! Note the following series of events driven by the preposterous plutocrats and see if you get steamed.

Greed, power, reckless speculation and theft of other peoples’ money by Wall Streeters collapsed the U.S. economy into a deep recession that started in 2007-08.

These super-rich Wall Street banksters looted and drained trillions of worker pensions and mutual fund savings while nationwide eight million jobs were lost.

Panicked that their overweening avarice was pushing their companies over the cliff, the banksters rushed to Washington, terrified members of Congress with the help of ex-Goldman Sachs CEO turned Treasury Secretary Henry Paulson and propelled the Bush White House into a series of massive taxpayer bailouts and guarantees amounting to trillions of dollars during the last quarter of 2006.

Anonymous said...

Perception dominates, reality dispersed?

It's a mystery to me how they got away with their fraud..




[OTE67] On the Edge with Max Keiser and Danny Schechter

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