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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

Sunday, November 7, 2010

Goldman Sachs as "Grifter"

We should be grateful for journalists like Matt Taibbi who sought out the causes of the financial meltdown and reported his findings so that everyone could understand what happened.

'Griftopia': The Financial Crisis Easily Explained
by NPR Staff

November 6, 2010

In 2008, Rolling Stone contributing editor Matt Taibbi was hanging around with the rest of the press corps after one of John McCain's campaign speeches.

The Arizona senator and presidential candidate had railed about skyrocketing gas prices. "He was going into his whole drill-baby-drill routine," Taibbi recalls. "The press corps were all joking about it afterward."

As if the current price spike was a result of America's failure to drill in Gulf of Mexico, they laughed. "Do we actually know what's causing the spike in gas prices?" Taibbi asked. Silence followed. "Nobody knew the answer," he says. "I didn't know the answer."

"It occurred to me, here we are covering an exploding economy — and none of us have any idea about what actually caused any of it."

Since then, Taibbi's columns have been a destination for those trying to understand what happened in the aftermath of the financial meltdown. His new book, Griftopia: Bubble Machines, Vampire Squids and the Long Con That Is Breaking America, tries to make the subject even clearer in the colorful language Taibbi's readers know well.

"All these big institutional investors essentially got sold oregano when they thought they were buying weed," Taibbi tells NPR's Guy Raz.

Meet The 'Vampire Squid' Of The Financial Crisis

"What the mortgage bubble was all about was big banks like Goldman Sachs taking big bundles of subprime mortgages that were lent out largely to low-income, highly risky borrowers," Taibbi says, "and applying this kind of magic-pixie-dust math to these bundles of securities and slapping AAA ratings on them."

This wasn't the worst of it, of course. While Goldman Sachs was selling these bundles, "they turned around and placed massive bets against the mortgage market knowing that it was going to collapse."

"They took suckers like AIG, and they placed massive bets that this stuff was going to fail, and AIG stupidly took the bet and that’s what ended up blowing them up," Taibbi says.

In Taibbi narrative, Goldman Sachs often plays the villain's role. "They had an extraordinary amount of political influence that was over and above the other banks," he says. "No other bank has the same record as Goldman Sachs does in terms of taking former executives and placing them in high-ranking positions in the government."

Or, as Taibbi put it in one of his early columns, "The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."

Matt Taibbi
Robin Holland
Matt Taibbi blogs for, and is the author of several books, including The Great Derangement: A Terrifying True Story of War, Politics & Religion at the Twilight of the American Empire.

A Financial Journalist For The Rest Of Us

Taibbi took a lot of heat for that column, particularly from financial journalists. He admits it was a difficult time.

"I was a complete neophyte in this world," he says. "When we started working on these pieces, I was starting almost from square one."

"I was worried that conceptually I had something wrong, that a person who worked in this business would read it and say, 'This guy doesn’t know what he's talking about at all.'"

And that was exactly some of the criticism Taibbi received early on. But part of that conflict was cultural, from a realm of journalism that tends to reject outsiders, Taibbi says.

"It's a very closed, incestuous community," he says. "I think they very purposely don't cover Wall Street for people outside of Wall Street."

That's OK, Taibbi says, because financial professionals need expert reporting. Financial journalists are supposed to write for people who are in the business. But, "unless you do it for a living, you're not going to be able to penetrate most of these articles."

"There needed to be somebody who does it for the rest of us."

Hear Matt Taibbi being interviewed here

Read the article and an excerpt from Matt's book here


JR said...

Read about the results of the transfer of wealth from the many to the few at

Joyce said...

Here's more information about wealth transfer from the many to the few, some of whom are banks like Goldman Sachs:


Excerpts below are from the above document called "Scary New Wage Data" by David Cay Johnston -

Only 150.9 million Americans reported any wage income in 2009. That put us below 2005, when 151.6 million Americans reported wages, and only slightly ahead of 2004, when 149.4 million Americans held at least one paying job.

For those who did find work in 2009, the average wage slipped to $39,269, down $243 or 0.6 percent, compared with the previous year in 2009 dollars.

The median wage declined by the same ratio, down $159 to $26,261, meaning half of all workers made $505 a week or less. Significantly, the 2009 median wage was $37 less than in 2000.

To give this some perspective, from 1992 to 2000 the number of people earning any wages grew by 21 million, but nine years later just 2.8 million more people had any work.

These wage data, based on the Medicare flat tax on all compensation, tell us only about the number of people who earned wages and how much. They tell us nothing about whether these individuals were underemployed, had to work more than one job, earned fringe benefits, or were employed at a level commensurate with their abilities.

But they do give us a stunning picture of what’s happening at the very top of the compensation ladder in America.

The number of Americans making $50 million or more, the top income category in the data, fell from 131 in 2008 to 74 last year. But that’s only part of the story.

The average wage in this top category increased from $91.2 million in 2008 to an astonishing $518.8 million in 2009. That’s nearly $10 million in weekly pay!

You read that right. In the Great Recession year of 2009 (officially just the first half of the year), the average pay of the very highest-income Americans was more than five times their average wages and bonuses in 2008. And even though their numbers shrank by 43 percent, this group’s total compensation was 3.2 times larger in 2009 than in 2008, accounting for 0.6 percent of all pay. These 74 people made as much as the 19 million lowest-paid people in America, who constitute one in every eight workers.
. . . .

JR said...

Another article called "Scary New Wage Data" by David Cay Johnston - on the same topic of wealth distribution from the ordinary working person to the wealthy, some of whom are Goldman Sachs guys:

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