Keith Richards, Cockroaches, and the Firm of Goldman Sachs

Now, for comparison, here's the shell game version. Keep your eye on the pea.

(1) Goldman Sachs gives Hank Paulson seven hundred million dollars (that's seven zero zero comma zero zero zero comma zero zero zero) in salary and bonuses.

(2) Goldman Sachs lends Hank Paulson to the Treasury (now that he can afford to be a public servant).

(3) As the Secretary of the Treasury, Paulson insists that we give Goldman Sachs a lot of money, in exchange for a lot of crap. (If not, we all die.)

(4) Except it's not Hank Paulson's money, it's ours.

(5) If the crap turns out to be crap, we're stuck with it. (And by the way: if it's not crap, why are they so desperate to unload it?)

(6) In four months, Paulson returns to Goldman Sachs.

(7) Paulson receives salary and bonuses from the money we just gave to Paulson to give to Goldman Sachs to give to Paulson.

( It's our money. Or was. But we don't get preferred shares. We don't get a ten percent dividend. We don't even get a free copy of The Warren Buffet Way: Second Edition (Paperback). We get crap.

In essence: when Goldman Sachs needs money, and the guy lending the money is rich, they give him something for it. When Goldman Sachs needs money, and the guy lending the money is us, they don't.

http://www.huffingtonpost.com/howard-a-rodman/keith-richards-cockroache_b_128760.html

Wary of Risk, Bankers Sold Shaky Mortgage Debt

By JENNY ANDERSON and VIKAS BAJAJ
Published: December 6, 2007
As the subprime loan crisis deepens, Wall Street firms are increasingly coming under scrutiny for their role in selling risky mortgage-related securities to investors.



In any case, the bankers argue, buyers of such securities — institutional investors like pension funds, banks and hedge funds — are sophisticated and understand the risks.

glad they didn't privatize social security.

http://www.nytimes.com/2007/12/06/business/06hedge.html?pagewanted=1

In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

http://www.forbes.com/home/2008/09/23/bailout-paulson-congress-biz-beltway-cx_jz_bw_0923bailout.html