…by Meg White
The place Meg puts the stuff she wrote
How Goldman Sachs Turns Real Conflict of Interest into Fake Conspiracy as the Rumpelstiltskin of Wall Street
Categories: Commentary, Economy

by Meg White

“To-day do I bake, to-morrow I brew,
The day after that the queen’s child comes in;
And oh! I am glad that nobody knew
That the name I am called is Rumpelstiltskin!”

— “Rumpelstiltskin” from Household Tales from the Grimm Brothers

All this time I thought it was the Illuminati or Exxon Mobil running the world. Turns out it’s really just Goldman Sachs.

Financial publications and blogs are rife with derisive references to those crazy “Goldman Sachs conspiracy theorists” these days. Usually, Jon Stewart uses his post at The Daily Show desk to mock the paranoid sector of society. Not this time, to the dismay of financial journalists. Watch his take on the tangle of Goldman Sachs and the government:

The Daily Show With Jon Stewart M – Th 11p / 10c
Clusterfu#@k to the Poor House – Goldman Sachs’ Connections
Daily Show
Full Episodes
Economic Crisis Political Humor

If you’re interested in a more detailed look at the Goldman Sachs web, Portfolio magazine manages to point out nearly every conflict of interest, while at the same time calling anyone a nutcase who might see the chain as linked.

Many point to Goldman’s impeccable pedigree as the reason so many of its board members and CEOs go onto government work from that high perch. David Viniar, Goldman’s CFO, sniffled in a New York Times article yesterday that he felt those who write articles about “Government Sachs” should be ashamed, and that he thought public service should be encouraged, not berated.

Government work should be praised, indeed. But so too should conflicts of interest be pointed out, and not dismissed as the ravings of the jealous and mad.

Way back in October 2008, one editor at The New York Times was laughing his head off at the idea that Goldman Sachs was “pulling strings in the market meltdown and bailout. And afterward, we can all have Kool-Aid!”

This week, that same paper of record published an op-ed by William D. Cohan, a contributing editor at Fortune and author of House of Cards: A Tale of Hubris and Wretched Excess on Wall Street. Cohan basically affirmed what the paper wouldn’t even entertain as an idea last year. At the same time, of course, he still managed to poke fun at those crazy conspiracy theorists (emphasis mine):

How can one ignore, the conspiracy-minded say, the crucial role that Henry Paulson, who followed Mr. Rubin to the top at both Goldman and Treasury, played in the decisions to shutter Bear Stearns, to force Lehman Brothers to file for bankruptcy and to insist that Bank of America buy Merrill Lynch at an inflated price? David Viniar, Goldman’s chief financial officer, acknowledged in a conference call yesterday the important role the changed competitive landscape had on Goldman’s unexpected first-quarter profit of $1.8 billion: “Many of our traditional competitors have retreated from the marketplace, either due to financial distress, mergers or shift in strategic priorities.”

But he was largely mum on American International Group, which, Goldman’s critics insist, is the canvas upon which the bank and its alumni have painted their great masterpiece of self-interest. A few days after Mr. Paulson refused to save Lehman Brothers last September — at a cost of a mere $45 billion or so — he came to AIG’s rescue, to the tune of $170 billion and rising. Then he decided to install Edward Liddy — a former Goldman Sachs board member — as AIG’s chief executive. Goldman has since received some $13 billion in cash, collateral and other payouts from AIG — that is, from taxpayers.

Why kill Lehman and save AIG? The theory, we now know, was that the government felt it needed to save the firms, including Goldman Sachs, that had insured many of their risky ventures through the insurer. Indeed, had Mr. Paulson decided not to save AIG, its counterparties would have suffered serious losses. Lehman’s creditors will be lucky to get back pennies on the dollar.

Cohan concludes that “the real reason Goldman has cleaned up this year [is] the huge misfortunes of its major competitors.”

Cohan is not the only reputable writer tracing the edges of this story. London’s Independent details how Goldman has insinuated itself into just about every country in the world. Bloomberg called Goldman out as one of the main beneficiaries of the bailout plan way back in September 2008. Howard Rodman quips at Huffington Post that “when the dust clears from WWIII, the only things left standing will be Keith Richards, cockroaches and the investment bank of Goldman Sachs.”

Goldman officials just shrug their shoulders and say “Who, me? Why, that’s just crazy!” and the mainstream media just nods. But it seems the mega-bank is flustered by at least one online “conspiracy theorist.”

Goldman’s reaction to a financial consultant’s observations on the company’s connections is revealing. Instead of dismissing Mike Morgan’s Web site, GoldmanSachs666.com as laughable conspiracy, the bank sent him a cease and desist letter within a week of his first posting.

The Telegraph reports that Goldman hired a lawyer to pursue Morgan on the grounds that the site violates intellectual property rights and could be construed to be associated with the bank. Goldman makes that argument in spite of the fact that each page on GoldmanSachs666.com contains this disclaimer in the header:

This website has NOT been approved by Goldman Sachs, nor does this website have any affiliation with Goldman Sachs. This website was designed to provide information about Goldman Sachs direct from the public, and NOT from Goldman Sachs’s marketing and public relations departments. You may find the official Goldman Sachs website at http://www.goldmansachs.com.

Morgan filed a lawsuit against Goldman to protect his site, a redesign of which he says will be launched by the end of next week.

“We haven’t heard a peep from Goldman Sachs since we filed our case. They won’t respond,” Morgan said in response to a question posed by BuzzFlash via conference call. “But that’s Goldman Sachs.”

Yet the snickering from mainstream financial journalists continues to the present moment, with writers rolling their eyes over “theories about Goldman Sachs running a shadow government.”

I wouldn’t be surprised if someone left a similar comment on this story. But the truth is, there is no dramatic conspiracy here, because it’s all out in the open.

Due to the nature of the corporatist society we live in today, it was a given that some private entity (and probably a bank) would profit from the financial crisis. Why not Goldman Sachs? That’s just the vagaries of modern capitalism.

The New York Times revealed yesterday that the AIG “CEO” newly installed by former Treasury Secretary Henry Paulson has something in his back pocket to make up for his $1 a year salary. That’s right, Edward Liddy has a $3 million stake in Goldman Sachs.

One financial blogger said the news “will delight and pique the Goldman Sachs conspiracy theorists out there, for better or worse.” This was just after the writer noted the huge conflict of interest caused by Liddy’s Goldman investments.

Still, are we surprised at this? Liddy “earned” these investments fair and square when he was on the board at Goldman. Aren’t conspiracy theories supposed to be shocking and hard to believe?

The bottom line is as long as these facts are relegated to the conspiracy bin, teabaggers and other malcontents will be free to rail against imaginary socialism, foreclosure prevention plans, and other clearly demarcated social pariahs as the bane of their collective existence.

Much like the poor miller’s daughter in the Grimm Brothers’ fairy tale Rumpelstiltskin, we don’t care to know the name of our tormentor until he comes for our firstborn child. Until then, may they continue to turn straw into gold with impunity.


Originally published at BuzzFlash.com.

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