From Matt Taibbi's "The Great American Bubble Machine" in Rolling Stone Issue 1082-83.
The first thing you need to know about Goldman Sachs is that it's everywhere. 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.
Any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy. They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage.
Last week, I was standing in line at a Bank of America branch, and observed with consternation an exchange between a man trying to cash his paycheck and the bank teller. The man was latino, creating somewhat of a language barrier, but that wasn't the problem. Being fluent in Spanish, I offered my services in translating for him, and was astonished to find that the teller wished me to explain that an $8 charge was being levied against his check for the right to cash it. Now mind you, the check was written on a Bank of America account!
Vice President Joseph Biden's admission that the Obama Administration's economic recovery plan was predicated on egregiously inaccurate forecasts consigns the entire effort to failure, predicts Gerald Celente. "The plan is based upon false premises," said Celente, Director of The Trends Research Institute, referring to White House projections used to sell the stimulus package to the nation. To make their case, Washington warned that without the Obama stimulus, unemployment, then at 7.2 percent, would rise above 8 percent in 2009 and peak at 9 percent in 2010.
Laurence Fink, CEO of BlackRock appears to have guided his company through the minefields of the 2007-2008 financial collapse and emerged a well-positioned entity. In fact, on June 11, 2009, BlackRock signed a deal with Barclays that according to Bloomberg, “creates a company overseeing $2.7 trillion in assets, more than the Federal Reserve.” Also recently, BlackRock beat out PIMCO to be one of nine managers of the Treasury’s P.P.I.P. Can we attribute Fink’s achievements to stellar stewardship, pure luck, or political connections? BlackRock is so entwined with government purchases of securities, many are beginning to question conflicts of interest.
However, some conflicts of interests are less obvious: Timothy Geithner has personal relationships with a few of the BlackRock executives.
Mr. Geithner has also faced scrutiny over how well taxpayers were served by his handling of another aspect of the bailout: three no-bid contracts the New York Fed awarded to BlackRock, a money management firm, to oversee troubled assets acquired by the bank. BlackRock was well known to the Fed. Mr. Geithner socialized with Ralph L. Schlosstein, who founded the company and remains a large shareholder, and has dined at his Manhattan home. Peter R. Fisher, who was a senior official at the New York Fed until 2001, is a managing director at BlackRock. Mr. Schlosstein said that while he and Mr. Geithner spoke frequently, BlackRock’s work for the Fed never came up.
The Baltic Dry (BDI) bounced of the December 08 low of 663.0 and powered into the 38.2% Fibonacci Retracement level. This put the price above the 20, 50 and 200 day EMAs. With the Chinese commodity hoarding almost complete, commodities have started to roll over and head back into the abyss. Shipping rates must almost certainly break down. The BDI is currently sitting on the rising trendline. Watch for a break.
As the global economy continues to falter and Chinese exports plummet, there is growing concern that the stockpiling may soon come to a halt, leading to further, painful drops in commodity prices.
The so-called "green shoots" of recovery are turning brown in the scorching summer sun. In fact, the whole debate about when and how a recovery will begin is wrongly framed. On one side are the V-shapers who look back at prior recessions and conclude that the faster an economy drops, the faster it gets back on track. And because this economy fell off a cliff late last fall, they expect it to roar to life early next year. Hence the V shape. Unfortunately, V-shapers are looking back at the wrong recessions. Focus on those that started with the bursting of a giant speculative bubble and you see slow recoveries. The reason is asset values at bottom are so low that investor confidence returns only gradually.
Discussion of the 50% Retracement Rule,
potential future price levels, time studies, key dates, Fibonacci, Gann, Astro numbers, Robert Rhea's Great Depression analysis.
ANON writes
I work in the aircraft repair/parts industry in California and thought I'd let you onto something. Many vendors to the CDF (California division of forestry) air operations have outstanding bills going back to last year. My company just put all California agencies on cash or credit card only. Many others are refusing to sell to the CDF because of huge amount of unpaid and late bills. We don't even get Registered Warrants! Mish, this is scary. I know of one company that is doing repairs knowing they won't get paid just because they do not want to see fire fighting aircraft grounded! Vendors must be given payment priority if the state wants to have any police and fire protection! Meanwhile the state is still purchasing new cars! Go figure. Don't put my name on this please. Thank you for your good work.
Normally I use initials, sometimes straight up and sometimes reversing them. In this case, I do not want a witch hunt so I will not post any initials at all. Meanwhile, California burns while the California legislature fiddles. Meanwhile Furlough Fridays are in.
Last week, we discovered that the state of California will gladly pay you Tuesday for a hamburger today. With California mired in a budget crisis, largely the result of a political impasse that makes spending cuts and tax increases impossible, Controller John Chiang said the state planned to issue $3.3 billion in IOU’s in July alone. Instead of cash, those who do business with California will get slips of paper. The California morass has Democrats in Washington trembling. The reason is simple. If Obama’s health-care plan passes, then we may well end up paying for it with federal slips of paper worth less than California’s. Obama has bet everything on passing health care this year. The publicity surrounding the California debt fiasco almost assures his resounding defeat.
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