Showing posts with label Goldman Sachs. Show all posts
Showing posts with label Goldman Sachs. Show all posts

Tuesday, July 23, 2013

Let The Free Market Sort It Out

This is what happens when you let the free market sort itself out.

This industrial dance has been choreographed by Goldman to exploit pricing regulations set up by an overseas commodities exchange, an investigation by The New York Times has found. The back-and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman, which owns the warehouses and charges rent to store the metal. It also increases prices paid by manufacturers and consumers across the country.

But wait, though, pricing regulations set up by an overseas commodities exchange?

The inflated aluminum pricing is just one way that Wall Street is flexing its financial muscle and capitalizing on loosened federal regulations to sway a variety of commodities markets, according to financial records, regulatory documents and interviews with people involved in the activities.

Ah, that explains it.

Now this is happening which never would have if Mitt Romney had won the election.

Monday, November 08, 2010

Saving Capitalism

Beginning when in the middle of FDR's first term, strict regulation and oversight of the financial sector of this country began. For nearly five decades, as a result of these policies, our nation's economy suffered no serious financial crises.

But then an era of deregulation began and financial crises have now become a cyclical thing. We have seen several over the last three decades and will continue to see them even with the new financial reform bill passed by the Democrats in Congress and President Obama. Certainly the bill is a start but it's nowhere close to the barriers we need to break the deadly interconnectivity between the various financial institutions in this country. The massive tide of greed and OCD we have in our culture towards money will be an Everest like mountain to conquer.

Adding insult to injury is the fact that deans and professors of our country's most respected economics schools (Harvard, Columbia, Yale) are all whores for the private financial sector--filling up the minds of students with drivel about the benefits of a truly free and unregulated market. The amount of money that these men make from the likes of AIG and Goldman Sachs in sitting on their boards is in direct conflict with their duty, as educators, to be impartial and unbiased when assessing economic trends.

These professors, along with their partners in crime (literally) on Wall Street, have set up a narrative which essentially paints the Democrats, and their leader President Obama, as being socialists who want to redistribute wealth and destroy free market capitalism. Ironic, because it was these same people who begged the United States government to be bailed out of their mess created by blind greed and compulsion. But this is a small irony compared to one very massive and titanic fact.

President Obama saved capitalism.

In a recent piece in the New York Times, Timothy Egan successfully argues that this is exactly what happened.

Suppose you had $100,000 to invest on the day Barack Obama was inaugurated....As of election day, Nov. 2, 2010, your $100,000 was worth about $177,000 if invested strictly in the NASDAQ average for the entirety of the Obama administration, and $148,000 if bet on the Standard & Poors 500 major companies. This works out to returns of 77 percent and 48 percent.

Not bad, hmmm? Imagine investing that money in January of 2007 and seeing the result on Election Day 2008. The drop would give even the strongest heart great pains.

Of course, markets aren't entirely a measure of what drives our economy, as Egan points out. So let's take a look at the banks and the auto industry--the "two motors that drive our economy."

The banking system was resuscitated by $700 billion in bailouts started by Bush (a fact unknown by a majority of Americans), and finished by Obama, with help from the Federal Reserve. It worked. The government is expected to break even on a risky bet to stabilize the global free market system. Had Obama followed the populist instincts of many in his party, the underpinnings of big capitalism could have collapsed. He did this without nationalizing banks, as other Democrats had urged.

These are indisputable facts. What is also not up for debate in how thankless the banks are. They know that they were part of the problem but don't want to admit to it. Nor do they want to admit that this small form of socialism saved their asses.

Saving the American auto industry, which has been a huge drag on Obama’s political capital, is a monumental achievement that few appreciate, unless you live in Michigan. After getting their taxpayer lifeline from Obama, both General Motors and Chrysler are now making money by making cars. New plants are even scheduled to open. More than 1 million jobs would have disappeared had the domestic auto sector been liquidated.

Also, completely indisputable facts although I'm sure many who are highly emotional and sensitive about the government will try.

“An apology is due Barack Obama,” wrote The Economist, which had opposed the $86 billion auto bailout. As for Government Motors: after emerging from bankruptcy, it will go public with a new stock offering in just a few weeks, and the United States government, with its 60 percent share of common stock, stands to make a profit. Yes, an industry was saved, and the government will probably make money on the deal — one of Obama’s signature economic successes.

Interest rates are at record lows. Corporate profits are lighting up boardrooms; it is one of the best years for earnings in a decade.

Profits indeed. Corporations are borrowing at record low rates but they aren't hiring. That's where the problem lies. Why is this? Well, greed is the overriding factor. The real reason, though, is they are seeing how long they can hold out on jobs and hopefully force the federal government to ease the new (and paltry) regulations. They want to see if they can get away with it and the latest election proves that they just might. The champions of deregulation have won again...even though that is the EXACT reason why things got so fucked up in the first place.

Really? Huh. I thought the Democrats were destroying capitalism and redistributing wealth. In reality, nothing could be further from the truth.

Profits have surged 62 percent from the start of 2009 to mid-2010, according to the Commerce Department. That is faster than any other year and a half in the Fabulous ’50s, the Go-Go ’60s or the booms under Presidents Ronald Reagan and Bill Clinton

Under another president, especially a Republican president, the data on corporate profits would be envied. George W. Bush, who dedicated a good deal of his presidency to tax cuts aimed at boosting business profits, probably would have loved such results. It took Bush nearly four years to post the gains that Obama has managed in less than half the time.

To answer the first question, yes, he does deserve the credit. The more accurate question is why isn't he getting it? The answer, thankfully, is simple.

His opponents don't like him, they hate being wrong, their chief goal is to win the argument regardless of facts, and they want him to fail. In other words, their frustration, which extends to many more emotional issues than just this list (more on that later), propels them to very narrow minded thinking. This tunnel vision is the guide to their pathological ideology.

Obama is wrong. No. Matter. What.

Egan carries this idea further.

All of the above is good for capitalism, and should end any serious-minded discussion about Obama the socialist. But more than anything, the fact that the president took on the structural flaws of a broken free enterprise system instead of focusing on things that the average voter could understand explains why his party was routed on Tuesday. Obama got on the wrong side of voter anxiety in a decade of diminished fortunes.

The three signature accomplishments of his first two years — a health care law that will make life easier for millions of people, financial reform that attempts to level the playing field with Wall Street, and the $814 billion stimulus package — have all been recast as big government blunders, rejected by the emerging majority.

But each of them, in its way, should strengthen the system. The health law will hold costs down, while giving millions the chance at getting care, according to the nonpartisan Congressional Budget Office. Financial reform seeks to prevent the kind of meltdown that caused the global economic collapse. And the stimulus, though it drastically raised the deficit, saved about 3 million jobs, again according to the CBO. It also gave a majority of taxpayers a one-time cut — even if 90 percent of Americans don’t know that, either.

I disagree with him on the financial reform package in light of the evidence presented in Inside Job. But the fact remains that the president took all of the actions that he did to save capitalism-just as FDR did with even more stringent regulations.

And, even though no one has noticed yet, he has accomplished that goal.

They will whine a fierce storm, the manipulators of great wealth. A war on business, they will claim. Not even close. Obama saved them, and the biggest cost was to him.