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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, August 14, 2011

The Banality of Goldman Sachs

Sometimes we need to look at what the financial system has become. It seems that what was once considered corrupt, illegal, unethical and immoral in business practices (to be eschewed) is now commonplace and acceptable as part of the capitalistic system.

It is now acceptable to participate in practices that were once thought of as unfair. It is now normal to become conspicuously wealthy by defrauding the unwary investor by means of mortgage-backed securities that were fraudulently labelled safe.

It is an organized and acceptable practice to bet on the failure of mortgage-backed securities: Goldman Sachs made money through fees then made even more money by betting against those same securities. It is now considered normal every-day behavior to treat greed as a routine way to accumulate wealth.

It is all right for small acts of corruption to go unpunished when a very large number of people practice them. Not one executive of GS has been criminally prosecuted for its unethical practices. It is now okay to prey upon others in order to transmit wealth from the many to the few at the top.

Bailouts of banks are now considered commonplace and a good way to forgive the debts of banks but it is less likely that foreclosed homeowners will ever have their debts forgiven. It has become normal business practice for Goldman Sacks to set aside $3.4 billion for taking care of future lawsuits. What appears trivial to Goldman Sachs is devastating to those seeking redress from the effects of GS power and wealth.

Short selling is a normal way to conduct financial business even when it destroys the very same banks practicing it! We are now participating in a new normal where Goldman Sachs's survival as a bank is more important than the individuals that suffered great losses because of GS frauds, frauds that have been laid out in this blog.

No wonder there is no confidence in the banks as Rober Lenzner's article describes it below:

The Battered Investment Class Has No Confidence in Markets, Companies, Banks, Governments
By Robert Lenzner - Forbes

Over the past ten years investors have been battered by the dotcom bubble(off over 50%), 9/11 (off over 25%), the credit crisis bubble(off 50%), the crash of commodities(down 25%) and now the government debt downgrade together with a dire European sovereign debt crisis(down 20-25%). Nor have we ever gotten back to the all-time peak of the Dow Jones industrial average of 1410, set in October, 2007. It’s no surprise that investors are fleeing equity mutual funds and shoved $50 billion of their savings in money market funds yielding zero laast week. Zero is once again again preferable to losing money.

Just last week trading volume doubled to 13 billion shares daily as volatility was King; down 634.76 on Monday; up 429.92 on Tuesday; down 519.83 on Wednesday and up 422 on Thursday. This kind of record trading volume plus volatility can only have been the result of extraordinary high frequency trading by computer and the quant hedge funds, going in and out of Apple and IBM and big bank shares dozens of times a day.

. . . .

Every day there is another government investigation or law suit against Goldman Sachs, Citigroup, Bank of America, or JP Morgan. Every day there are unconfirmed rumors about giant international banks in Europe like Societe Generale. Fear runs rampant, causing the ban on selling short bank shares in Europe. Margins have been raised on the speculation in gold. The panic is so powerful that investors are pushing up Treasury bond prices as they rush into the safe confines of Uncle Sam–the gentleman who just had his credit rating lowered.

And there seems no therapy or cure for this intense post traumatic stress syndrome to finance capitalism. You better pray there’s no hard landing coming for China.

Read the article here


Anonymous said...

We need clean leadership then we'll get the confidence back!

Aug 14, 2011

Gov Rick Perry knowingly lied and told Texas families that he had the
power to force their 11 year old girls to take a vaccine that was
killing people in the test trials. Perry was Merck’s ace in the
hole,now he will be their man in the White House if they have their

Anonymous said...

Lord Myners calls for inquiry on 'black box' trading
Lord Myners has called on the Government to launch a focused inquiry into so-called "black box" computerised trading in the wake of extreme volatility in the UK's biggest companies.

Anonymous said...

Maybe its the average guy with no guarantees that has no confidence???

Faltering Rhode Island City Tests Vows to Pensioners

When the small, beleaguered city of Central Falls, R.I., filed for bankruptcy this month, it sought to cut the pension checks it has been sending its retired police officers, firefighters and other workers by as much as half. All the city promises now is that its retirees, many of whom do not get Social Security, will not have their benefits cut to less than $10,000 a year.

But investors who bought the city’s bonds could do much better: Rhode Island recently passed a law intended to make sure that they would be paid in full, even in bankruptcy.

Retirees are wondering how the city can cut what they believed was a guaranteed benefit. “We put our time in, we put our money in,” said Walter Trembley, 74, a retired Central Falls police officer. “And the city, through their callousness and everything else, just blew it. They were supposed to put money in and they didn’t.”

Cities and local governments make lots of promises: to their citizens, workers, vendors and investors. But when the money starts to run out, as it has in Central Falls, some promises prove more binding than others. Bond lawyers have known for decades that it is possible, at least in theory, to put bondholders ahead of pensioners, but no one wanted to try it and risk a backlash on Election Day. Now the poor, taxed-out city of Central Falls is mounting a test case, which other struggling governments may follow if it succeeds.

Anonymous said...

Lord Myners calls for inquiry on 'black box' trading
Lord Myners has called on the Government to launch a focused inquiry into so-called "black box" computerised trading in the wake of extreme volatility in the UK's biggest companies.

The former City minister said that high-frequency trading also known as black box trading had been a "contributing factor" in the harsh swings which have led to more than £300bn being wiped off the value of British shares since the beginning of July.

He wants both the Treasury and the Financial Services Authority (FSA), the City regulator, to investigate thoroughly the phenomenon and the impact it has.

High-frequency trading (HFT), which accounts for as much as 50pc of trading in London, has been blamed for exacerbating intra-day swings and putting ordinary investors at a disadvantage due to the speed with which such trades are placed in the market.

Anonymous said...

Imagine that...a loss of confidence??????

Monday, 8 August 2011
The largest heist in history continues

Rather than writing a commentary upon the current events on the financial markets, why not re-read the analysis that is nearly three years old: "The largest heist in history". In particular:

"Governments became the ultimate customers of pyramid purveyors with the hope that when they offer their custom it would somehow stop the giant pyramid scheme from collapsing. This is extremely naive and very dangerous. The incredibly fast growth to infinity of pyramid schemes, which is only accelerating, will ensure that the government will not stand a chance to sustain it, unless this massive pyramid scheme is brought to a halt and liquidated. But there is no sign of governments contemplating doing that yet.

Anonymous said...

The Media Admits To Ignoring Ron Paul

Why? Because if "the unelectable one" were to become president, the financial kleptocratic, oligarchic status quo, which just so happens is the big legacy media's biggest advertising base, would be wiped out overnight. Next up: big media becomes very small media. The clip below from CNN explains it all.

Anonymous said...

Still Report #24: Secret Fed Loans

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