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“Goldman Sachs Socialism”


In a sign that the Apocalypse may indeed be upon us, I find myself sympathetic to an article in the Nation today. It’s called “Goldman Sachs Socialism,” by William Greider.

Of ex-banker Henry Paulson’s humongous bank bailout package, Greider writes

Despite its size, the gargantuan bailout is still designed for the narrow purpose of relieving the major banks and investment houses of their grief, then hoping this restores regular order to economic life. There are lots of reasons to think it may fail. The big boys are acting, as usual, in self-interested ways since the government allows them to do so. Washington’s money might pull firms back from the brink–at least the leaders of the Wall Street Club–but that does not guarantee the banks will resume normal lending, much less capital investing. The financial guys may well hunker down, scavenge the wreckage for cheap profits and wait for the real economy to get well. Likewise, global investors–China, Japan and other major creditors–have been burned and may step back from pumping more capital in the wobbly house of US finance.

Secrecy and opacity are crucial to achieve Wall Street’s purposes. It could allow Paulson to overpay his old pals for near-worthless assets and slyly recapitalize the damaged banks while telling public and politicians the money is to save the system. To achieve this, Wall Street needs to keep control of the process whoever is elected president (the Wall Street Journal recommends John Thain, ex-chief of the New York Stock Exchange to succeed Paulson). Not everyone will be saved, of course, but high on the list of endangered nameplates is Goldman Sachs, Paulson’s old firm. The high-flying investment house looks doomed by these events. The Fed quickly agreed to convert Goldman and Morgan Stanley into banks. Think of Paulson’s solution as Goldman Sachs socialism.

Note that I don’t agree with the article 100% but Greider’s essentially correct in pointing out that the bailout is self-serving and might not even work. Given that the Nation magazine is a hotbed of socialism, it’s strange that the article adopts such a skeptical tone.

Meanwhile, the FBI has just begun investigating Lehman Brothers and other troubled financial entities to determine if they committed fraud.

Matthew Vadum

The author of Subversion Inc.: How Obama’s ACORN Red Shirts are Still Terrorizing and Ripping Off American Taxpayers (WND Books, 2011), Vadum, former senior vice president at CRC, writes and speaks widely…
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