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<nettime> RS on GS
nettime's_roving_reporter on Sun, 5 Jul 2009 10:38:24 +0200 (CEST)

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<nettime> RS on GS



     From tech stocks to high gas prices, Goldman Sachs has engineered
     every major market manipulation since the Great Depression - and
     they're about to do it again


     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. In
     fact, the history of the recent financial crisis, which doubles
     as a history of the rapid decline and fall of the suddenly
     swindled-dry American empire, reads like a Who's Who of Goldman
     Sachs graduates.

     By now, most of us know the major players. As George Bush's last
     Treasury secretary, former Goldman CEO Henry Paulson was the
     architect of the bailout, a suspiciously self-serving plan to
     funnel trillions of Your Dollars to a handful of his old friends
     on Wall Street. Robert Rubin, Bill Clinton's former Treasury
     secretary, spent 26 years at Goldman before becoming chairman of
     Citigroup - which in turn got a $300 billion taxpayer bailout
     from Paulson. There's John Thain, the rear end in a top hat chief
     of Merrill Lynch who bought an $87,000 area rug for his office as
     his company was imploding; a former Goldman banker, Thain enjoyed
     a multibillion-dollar handout from Paulson, who used billions in
     taxpayer funds to help Bank of America rescue Thain's sorry
     company. And Robert Steel, the former Goldmanite head of
     Wachovia, scored himself and his fellow executives $225 million
     in golden parachute payments as his bank was self-destructing.
     There's Joshua Bolten, Bush's chief of staff during the bailout,
     and Mark Patterson, the current Treasury chief of staff, who was
     a Goldman lobbyist just a year ago, and Ed Liddy, the former
     Goldman director whom Paulson put in charge of bailed-out
     insurance giant AIG, which forked over $13 billion to Goldman
     after Liddy came on board. The heads of the Canadian and Italian
     national banks are Goldman alums, as is the head of the World
     Bank, the head of the New York Stock Exchange, the last two heads
     of the Federal Reserve Bank of New York - which, incidentally, is
     now in charge of overseeing Goldman - not to mention ...

     But then, 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.

     The bank's unprecedented reach and power have enabled it to turn
     all of America into a giant pump-and-dump scam, manipulating
     whole economic sectors for years at a time, moving the dice game
     as this or that market collapses, and all the time gorging itself
     on the unseen costs that are breaking families everywhere - high
     gas prices, rising consumer-credit rates, half-eaten pension
     funds, mass layoffs, future taxes to pay off bailouts. All that
     money that you're losing, it's going somewhere, and in both a
     literal and a figurative sense, Goldman Sachs is where it's
     going: The bank is a huge, highly sophisticated engine for
     converting the useful, deployed wealth of society into the least
     useful, most wasteful and insoluble substance on Earth - pure
     profit for rich individuals.

     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. Finally, when it
     all goes bust, leaving millions of ordinary citizens broke and
     starving, they begin the entire process over again, riding in to
     rescue us all by lending us back our own money at interest,
     selling themselves as men above greed, just a bunch of really
     smart guys keeping the wheels greased. They've been pulling this
     same stunt over and over since the 1920s - and now they're
     preparing to do it again, creating what may be the biggest and
     most audacious bubble yet.

     If you want to understand how we got into this financial crisis,
     you have to first understand where all the money went - and in
     order to understand that, you need to understand what Goldman has
     already gotten away with. It is a history exactly five bubbles
     long - including last year's strange and seemingly inexplicable
     spike in the price of oil. There were a lot of losers in each of
     those bubbles, and in the bailout that followed. But Goldman
     wasn't one of them.


     Goldman wasn't always a too-big-to-fail Wall Street behemoth, the
     ruthless face of kill-or-be-killed capitalism on steroids - just
     almost always. The bank was actually founded in 1869 by a German
     immigrant named Marcus Goldman, who built it up with his
     son-in-law Samuel Sachs. They were pioneers in the use of
     commercial paper, which is just a fancy way of saying they made
     money lending out short-term IOUs to small-time vendors in
     downtown Manhattan.

     You can probably guess the basic plotline of Goldman's first 100
     years in business: plucky, immigrant-led investment bank beats
     the odds, pulls itself up by its bootstraps, makes shitloads of
     money. In that ancient history there's really only one episode
     that bears scrutiny now, in light of more recent events:
     Goldman's disastrous foray into the speculative mania of
     pre-crash Wall Street in the late 1920s.

     This great Hindenburg of financial history has a few features
     that might sound familiar. Back then, the main financial tool
     used to bilk investors was called an "investment trust." Similar
     to modern mutual funds, the trusts took the cash of investors
     large and small and (theoretically, at least) invested it in a
     smorgasbord of Wall Street securities, though the securities and
     amounts were often kept hidden from the public. So a regular guy
     could invest $10 or $100 in a trust and feel like he was a big
     player. Much as in the 1990s, when new vehicles like day trading
     and e-trading attracted reams of new suckers from the sticks who
     wanted to feel like big shots, investment trusts roped a new
     generation of regular-guy investors into the speculation game.

     Beginning a pattern that would repeat itself over and over again,
     Goldman got into the investment-trust game late, then jumped in
     with both feet and went hog-wild. The first effort was the
     Goldman Sachs Trading Corporation; the bank issued a million
     shares at $100 apiece, bought all those shares with its own money
     and then sold 90 percent of them to the hungry public at $104.
     The trading corporation then relentlessly bought shares in
     itself, bidding the price up further and further. Eventually it
     dumped part of its holdings and sponsored a new trust, the
     Shenandoah Corporation, issuing millions more in shares in that
     fund - which in turn sponsored yet another trust called the Blue
     Ridge Corporation. In this way, each investment trust served as a
     front for an endless investment pyramid: Goldman hiding behind
     Goldman hiding behind Goldman. Of the 7,250,000 initial shares of
     Blue Ridge, 6,250,000 were actually owned by Shenandoah - which,
     of course, was in large part owned by Goldman Trading.

     The end result (ask yourself if this sounds familiar) was a daisy
     chain of borrowed money, one exquisitely vulnerable to a decline
     in performance anywhere along the line; The basic idea isn't hard
     to follow. You take a dollar and borrow nine against it; then you
     take that $10 fund and borrow $90; then you take your $100 fund
     and, so long as the public is still lending, borrow and invest
     $900. If the last fund in the line starts to lose value, you no
     longer have the money to pay back your investors, and everyone
     gets massacred.

     In a chapter from The Great Crash, 1929 titled "In Goldman Sachs
     We Trust," the famed economist John Kenneth Galbraith held up the
     Blue Ridge and Shenandoah trusts as classic examples of the
     insanity of leverage-based investment. The trusts, he wrote, were
     a major cause of the market's historic crash; in today's dollars,
     the losses the bank suffered totaled $475 billion. "It is
     difficult not to marvel at the imagination which was implicit in
     this gargantuan insanity," Galbraith observed, sounding like
     Keith Olbermann in an ascot. "If there must be madness, something
     may be said for having it on a heroic scale."

     Fast-Forward about 65 years. Goldman not only survived the crash
     that wiped out so many of the investors it duped, it went on to
     become the chief underwriter to the country's wealthiest and most
     powerful corporations. Thanks to Sidney Weinberg, who rose from
     the rank of janitor's assistant to head the firm, Goldman became
     the pioneer of the initial public offering, one of the principal
     and most lucrative means by which companies raise money. During
     the 1970s and 1980s, Goldman may not have been the planet-eating
     Death Star of political influence it is today, but it was a
     top-drawer firm that had a reputation for attracting the very
     smartest talent on the Street.

     It also, oddly enough, had a reputation for relatively solid
     ethics and a patient approach to investment that shunned the fast
     buck; its executives were trained to adopt the firm's mantra,
     "long-term greedy." One former Goldman banker who left the firm
     in the early Nineties recalls seeing his superiors give up a very
     profitable deal on the grounds that it was a long-term loser. "We
     gave back money to 'grownup' corporate clients who had made bad
     deals with us," he says. "Everything we did was legal and fair -
     but 'long-term greedy' said we didn't want to make such a profit
     at the clients' collective expense that we spoiled the

     But then, something happened. It's hard to say what it was
     exactly; it might have been the fact that Goldman's co-chairman
     in the early Nineties, Robert Rubin, followed Bill Clinton to the
     White House, where he directed the National Economic Council and
     eventually became Treasury secretary. While the American media
     fell in love with the story line of a pair of baby-boomer,
     Sixties-child, Fleetwood Mac yuppies nesting in the White House,
     it also nursed an undisguised crush on Rubin, who was hyped as
     without a doubt the smartest person ever to walk the face of the
     Earth, with Newton, Einstein, Mozart and Kant running far behind.

     Rubin was the prototypical Goldman banker. He was probably born
     in a $4,000 suit, he had a face that seemed permanently frozen
     just short of an apology for being so much smarter than you, and
     he exuded a Spock-like, emotion-neutral exterior; the only human
     feeling you could imagine him experiencing was a nightmare about
     being forced to fly coach. It became almost a national cliche
     that whatever Rubin thought was best for the economy - a
     phenomenon that reached its apex in 1999, when Rubin appeared on
     the cover of Time with his Treasury deputy, Larry Summers, and
     Fed chief Alan Greenspan under the headline THE COMMITTEE TO SAVE
     THE WORLD. And "what Rubin thought," mostly, was that the
     American economy, and in particular the financial markets, were
     over-regulated and needed to be set free. During his tenure at
     Treasury, the Clinton White House made a series of moves that
     would have drastic consequences for the global economy -
     beginning with Rubin's complete and total failure to regulate his
     old firm during its first mad dash for obscene short-term

     The basic scam in the Internet Age is pretty easy even for the
     financially illiterate to grasp. Companies that weren't much more
     than pot-fueled ideas scrawled on napkins by up-too-late
     bong-smokers were taken public via IPOs, hyped in the media and
     sold to the public for megamillions. It was as if banks like
     Goldman were wrapping ribbons around watermelons, tossing them
     out 50-story windows and opening the phones for bids. In this
     game you were a winner only if you took your money out before the
     melon hit the pavement.

     It sounds obvious now, but what the average investor didn't know
     at the time was that the banks had changed the rules of the game,
     making the deals look better than they actually were. They did
     this by setting up what was, in reality, a two-tiered investment
     system - one for the insiders who knew the real numbers, and
     another for the lay investor who was invited to chase soaring
     prices the banks themselves knew were irrational. While Goldman's
     later pattern would be to capitalize on changes in the regulatory
     environment, its key innovation in the Internet years was to
     abandon its own industry's standards of quality control.

     "Since the Depression, there were strict underwriting guidelines
     that Wall Street adhered to when taking a company public," says
     one prominent hedge-fund manager. "The company had to be in
     business for a minimum of five years, and it had to show
     profitability for three consecutive years. But Wall Street took
     these guidelines and threw them in the trash." Goldman completed
     the snow job by pumping up the sham stocks: "Their analysts were
     out there saying Bullshit.com is worth $100 a share."

     The problem was, nobody told investors that the rules had
     changed. "Everyone on the inside knew," the manager says. "Bob
     Rubin sure as hell knew what the underwriting standards were.
     They'd been intact since the 1930s."

     Jay Ritter, a professor of finance at the University of Florida
     who specializes in IPOs, says banks like Goldman knew full well
     that many of the public offerings they were touting would never
     make a dime. "In the early Eighties, the major underwriters
     insisted on three years of profitability. Then it was one year,
     then it was a quarter. By the time of the Internet bubble, they
     were not even requiring profitability in the foreseeable future."

     Goldman has denied that it changed its underwriting standards
     during the Internet years, but its own statistics belie the
     claim. Just as it did with the investment trust in the 1920s,
     Goldman started slow and finished crazy in the Internet years.
     After it took a little-known company with weak financials called
     Yahoo! public in 1996, once the tech boom had already begun,
     Goldman quickly became the IPO king of the Internet era. Of the
     24 companies it took public in 1997, a third were losing money at
     the time of the IPO. In 1999, at the height of the boom, it took
     47 companies public, including stillborns like Webvan and eToys,
     investment offerings that were in many ways the modern
     equivalents of Blue Ridge and Shenandoah. The following year, it
     underwrote 18 companies in the first four months, 14 of which
     were money losers at the time. As a leading underwriter of
     Internet stocks during the boom, Goldman provided profits far
     more volatile than those of its competitors: In 1999, the average
     Goldman IPO leapt 281 percent above its offering price, compared
     to the Wall Street average of 181 percent.

     How did Goldman achieve such extraordinary results? One answer is
     that they used a practice called "laddering," which is just a
     fancy way of saying they manipulated the share price of new
     offerings. Here's how it works: Say you're Goldman Sachs, and
     Bullshit.com comes to you and asks you to take their company
     public. You agree on the usual terms: You'll price the stock,
     determine how many shares should be released and take the
     Bullshit.com CEO on a "road show" to schmooze investors, all in
     exchange for a substantial fee (typically six to seven percent of
     the amount raised). You then promise your best clients the right
     to buy big chunks of the IPO at the low offering price - let's
     say Bullshit.com's starting share price is $15 - in exchange for
     a promise that they will buy more shares later on the open
     market. That seemingly simple demand gives you inside knowledge
     of the IPO's future, knowledge that wasn't disclosed to the
     day-trader schmucks who only had the prospectus to go by: You
     know that certain of your clients who bought X amount of shares
     at $15 are also going to buy Y more shares at $20 or $25,
     virtually guaranteeing that the price is going to go to $25 and
     beyond. In this way, Goldman could artificially jack up the new
     company's price, which of course was to the bank's benefit - a
     six percent fee of a $500 million IPO is serious money.

     Goldman was repeatedly sued by shareholders for engaging in
     laddering in a variety of Internet IPOs, including Webvan and
     NetZero. The deceptive practices also caught the attention of
     Nichol as Maier, the syndicate manager of Cramer & Co., the hedge
     fund run at the time by the now-famous chattering television rear
     end in a top hat Jim Cramer, himself a Goldman alum. Maier told
     the SEC that while working for Cramer between 1996 and 1998, he
     was repeatedly forced to engage in laddering practices during IPO
     deals with Goldman.

     "Goldman, from what I witnessed, they were the worst
     perpetrator," Maier said. "They totally fueled the bubble. And
     it's specifically that kind of behavior that has caused the
     market crash. They built these stocks upon an illegal foundation
     - manipulated up - and ultimately, it really was the small person
       who ended up buying in." In 2005, Goldman agreed to pay $40
     million for its laddering violations - a puny penalty relative to
     the enormous profits it made. (Goldman, which has denied
     wrongdoing in all of the cases it has settled, refused to respond
     to questions for this story.)

     Another practice Goldman engaged in during the Internet boom was
     "spinning," better known as bribery. Here the investment bank
     would offer the executives of the newly public company shares at
     extra-low prices, in exchange for future underwriting business.
     Banks that engaged in spinning would then undervalue the initial
     offering price - ensuring that those "hot" opening price shares
     it had handed out to insiders would be more likely to rise
     quickly, supplying bigger first-day rewards for the chosen few.
     So instead of Bullshit.com opening at $20, the bank would
     approach the Bullshit.com CEO and offer him a million shares of
     his own company at $18 in exchange for future business -
     effectively robbing all of Bullshit's new shareholders by
     diverting cash that should have gone to the company's bottom line
     into the private bank account of the company's CEO.

     In one case, Goldman allegedly gave a multimillion-dollar special
     offering to eBay CEO Meg Whitman, who later joined Goldman's
     board, in exchange for future i-banking business. According to a
     report by the House Financial Services Committee in 2002, Goldman
     gave special stock offerings to executives in 21 companies that
     it took public, including Yahoo! co-founder Jerry Yang and two of
     the great slithering villains of the financial-scandal age -
     Tyco's Dennis Kozlowski and Enron's Ken Lay. Goldman angrily
     denounced the report as "an egregious distortion of the facts" -
     shortly before paying $110 million to settle an investigation
     into spinning and other manipulations launched by New York state
     regulators. "The spinning of hot IPO shares was not a harmless
     corporate perk," then-attorney general Eliot Spitzer said at the
     time. "Instead, it was an integral part of a fraudulent scheme to
     win new investment-banking business."

     Such practices conspired to turn the Internet bubble into one of
     the greatest financial disasters in world history: Some $5
     trillion of wealth was wiped out on the NASDAQ alone. But the
     real problem wasn't the money that was lost by shareholders, it
     was the money gained by investment bankers, who received hefty
     bonuses for tampering with the market. Instead of teaching Wall
     Street a lesson that bubbles always deflate, the Internet years
     demonstrated to bankers that in the age of freely flowing capital
     and publicly owned financial companies, bubbles are incredibly
     easy to inflate, and individual bonuses are actually bigger when
     the mania and the irrationality are greater.


     Nowhere was this truer than at Goldman. Between 1999 and 2002,
     the firm paid out $28.5 billion in compensation and benefits - an
     average of roughly $350,000 a year per employee. Those numbers
     are important because the key legacy of the Internet boom is that
     the economy is now driven in large part by the pursuit of the
     enormous salaries and bonuses that such bubbles make possible.
     Goldman's mantra of "long-term greedy" vanished into thin air as
     the game became about getting your check before the melon hit the

     The market was no longer a rationally managed place to grow real,
     profitable businesses: It was a huge ocean of Someone Else's
     Money where bankers hauled in vast sums through whatever means
     necessary and tried to convert that money into bonuses and
     payouts as quickly as possible. If you laddered and spun 50
     Internet IPOs that went bust within a year, so what? By the time
     the Securities and Exchange Commission got around to fining your
     firm $110 million, the yacht you bought with your IPO bonuses was
     already six years old. Besides, you were probably out of Goldman
     by then, running the U.S. Treasury or maybe the state of New
     Jersey. (One of the truly comic moments in the history of
     America's recent financial collapse came when Gov. Jon Corzine of
     New Jersey, who ran Goldman from 1994 to 1999 and left with $320
     million in IPO-fattened stock, insisted in 2002 that "I've never
     even heard the term 'laddering' before.")

     For a bank that paid out $7 billion a year in salaries, $110
     million fines issued half a decade late were something far less
     than a deterrent - they were a joke. Once the Internet bubble
     burst, Goldman had no incentive to reassess its new,
     profit-driven strategy; it just searched around for another
     bubble to inflate. As it turns out, it had one ready, thanks in
     large part to Rubin.

     Goldman's role in the sweeping disaster that was the housing
     bubble is not hard to trace. Here again, the basic trick was a
     decline in underwriting standards, although in this case the
     standards weren't in IPOs but in mortgages. By now almost
     everyone knows that for decades mortgage dealers insisted that
     home buyers be able to produce a down payment of 10 percent or
     more, show a steady income and good credit rating, and possess a
     real first and last name. Then, at the dawn of the new
     millennium, they suddenly threw all that poo poo out the window
     and started writing mortgages on the backs of napkins to cocktail
     waitresses and ex-cons carrying five bucks and a Snickers bar.

     None of that would have been possible without investment bankers
     like Goldman, who created vehicles to package those lovely
     mortgages and sell them en masse to unsuspecting insurance
     companies and pension funds. This created a mass market for toxic
     debt that would never have existed before; in the old days, no
     bank would have wanted to keep some addict ex-con's mortgage on
     its books, knowing how likely it was to fail. You can't write
     these mortgages, in other words, unless you can sell them to
     someone who doesn't know what they are.

     Goldman used two methods to hide the mess they were selling.
     First, they bundled hundreds of different mortgages into
     instruments called Collateralized Debt Obligations. Then they
     sold investors on the idea that, because a bunch of those
     mortgages would turn out to be OK, there was no reason to worry
     so much about the lovely ones: The CDO, as a whole, was sound.
     Thus, junk-rated mortgages were turned into AAA-rated
     investments. Second, to hedge its own bets, Goldman got companies
     like AIG to provide insurance - known as credit-default swaps -
     on the CDOs. The swaps were essentially a racetrack bet between
     AIG and Goldman: Goldman is betting the ex-cons will default, AIG
     is betting they won't.

     There was only one problem with the deals: All of the wheeling
     and dealing represented exactly the kind of dangerous speculation
     that federal regulators are supposed to rein in. Derivatives like
     CDOs and credit swaps had already caused a series of serious
     financial calamities: Procter & Gamble and Gibson Greetings both
     lost fortunes, and Orange County, California, was forced to
     default in 1994. A report that year by the Government
     Accountability Office recommended that such financial instruments
     be tightly regulated - and in 1998, the head of the Commodity
     Futures Trading Commission, a woman named Brooksley Born, agreed.
     That May, she circulated a letter to business leaders and the
     Clinton administration suggesting that banks be required to
     provide greater disclosure in derivatives trades, and maintain
     reserves to cushion against losses.

     More regulation wasn't exactly what Goldman had in mind. "The
     banks go crazy - they want it stopped," says Michael Greenberger,
     who worked for Born as director of trading and markets at the
     CFTC and is now a law professor at the University of Maryland.
     "Greenspan, Summers, Rubin and [SEC chief Arthur] Levitt want it

     Clinton's reigning economic foursome - "especially Rubin,"
     according to Greenberger - called Born in for a meeting and
     pleaded their case. She refused to back down, however, and
     continued to push for more regulation of the derivatives. Then,
     in June 1998, Rubin went public to denounce her move, eventually
     recommending that Congress strip the CFTC of its regulatory
     authority. In 2000, on its last day in session, Congress passed
     the now-notorious Commodity Futures Modernization Act, which had
     been inserted into an 1l,000-page spending bill at the last
     minute, with almost no debate on the floor of the Senate. Banks
     were now free to trade default swaps with impunity.

     But the story didn't end there. AIG, a major purveyor of default
     swaps, approached the New York State Insurance Department in 2000
     and asked whether default swaps would be regulated as insurance.
     At the time, the office was run by one Neil Levin, a former
     Goldman vice president, who decided against regulating the swaps.
     Now freed to underwrite as many housing-based securities and buy
     as much credit-default protection as it wanted, Goldman went
     berserk with lending lust. By the peak of the housing boom in
     2006, Goldman was underwriting $76.5 billion worth of
     mortgage-backed securities - a third of which were subprime -
     much of it to institutional investors like pensions and insurance
     companies. And in these massive issues of real estate were vast
     swamps of crap.

     Take one $494 million issue that year, GSAMP Trust 2006-S3. Many
     of the mortgages belonged to second-mortgage borrowers, and the
     average equity they had in their homes was 0.71 percent.
     Moreover, 58 percent of the loans included little or no
     documentation - no names of the borrowers, no addresses of the
     homes, just zip codes. Yet both of the major ratings agencies,
     Moody's and Standard & Poor's, rated 93 percent of the issue as
     investment grade. Moody's projected that less than 10 percent of
     the loans would default. In reality, 18 percent of the mortgages
     were in default within 18 months.

     Not that Goldman was personally at any risk. The bank might be
     taking all these hideous, completely irresponsible mortgages from
     beneath-gangster-status firms like Countrywide and selling them
     off to municipalities and pensioners - old people, for God's sake
     - pretending the whole time that it wasn't grade-D horseshit. But
       even as it was doing so, it was taking short positions in the
     same market, in essence betting against the same crap it was
     selling. Even worse, Goldman bragged about it in public. "The
     mortgage sector continues to be challenged," David Viniar, the
     bank's chief financial officer, boasted in 2007. "As a result, we
     took significant markdowns on our long inventory positions ....
     However, our risk bias in that market was to be short, and that
     net short position was profitable." In other words, the mortgages
     it was selling were for chumps. The real money was in betting
     against those same mortgages.

     "That's how audacious these assholes are," says one hedge-fund
     manager. "At least with other banks, you could say that they were
     just dumb - they believed what they were selling, and it blew
     them up. Goldman knew what it was doing." I ask the manager how
     it could be that selling something to customers that you're
     actually betting against - particularly when you know more about
     the weaknesses of those products than the customer - doesn't
     amount to securities fraud.

     "It's exactly securities fraud," he says. "It's the heart of
     securities fraud."

     Eventually, lots of aggrieved investors agreed. In a virtual
     repeat of the Internet IPO craze, Goldman was hit with a wave of
     lawsuits after the collapse of the housing bubble, many of which
     accused the bank of withholding pertinent information about the
     quality of the mortgages it issued. New York state regulators are
     suing Goldman and 25 other underwriters for selling bundles of
     crappy Countrywide mortgages to city and state pension funds,
     which lost as much as $100 million in the investments.
     Massachusetts also investigated Goldman for similar misdeeds,
     acting on behalf of 714 mortgage holders who got stuck ho1ding
     predatory loans. But once again, Goldman got off virtually
     scot-free, staving off prosecution by agreeing to pay a paltry
     $60 million - about what the bank's CDO division made in a day
     and a half during the real estate boom.

     The effects of the housing bubble are well known - it led more or
     less directly to the collapse of Bear Stearns, Lehman Brothers
     and AIG, whose toxic portfolio of credit swaps was in significant
     part composed of the insurance that banks like Goldman bought
     against their own housing portfolios. In fact, at least $13
     billion of the taxpayer money given to AIG in the bailout
     ultimately went to Goldman, meaning that the bank made out on the
     housing bubble twice: It hosed the investors who bought their
     horseshit CDOs by betting against its own crappy product, then it
     turned around and hosed the taxpayer by making him payoff those
     same bets.

     And once again, while the world was crashing down all around the
     bank, Goldman made sure it was doing just fine in the
     compensation department. In 2006, the firm's payroll jumped to
     $16.5 billion - an average of $622,000 per employee. As a Goldman
     spokesman explained, "We work very hard here."

     But the best was yet to come. While the collapse of the housing
     bubble sent most of the financial world fleeing for the exits, or
     to jail, Goldman boldly doubled down - and almost single-handedly
     created yet another bubble, one the world still barely knows the
     firm had anything to do with.

     BUBBLE #4 - $4 A GALLON
     By the beginning of 2008, the financial world was in turmoil.
     Wall Street had spent the past two and a half decades producing
     one scandal after another, which didn't leave much to sell that
     wasn't tainted. The terms junk bond, IPO, subprime mortgage and
     other once-hot financial fare were now firmly associated in the
     public's mind with scams; the terms credit swaps and CDOs were
     about to join them. The credit markets were in crisis, and the
     mantra that had sustained the fantasy economy throughout the Bush
     years - the notion that housing prices never go down - was now a
     fully exploded myth, leaving the Street clamoring for a new
     bullshit paradigm to sling.

     Where to go? With the public reluctant to put money in anything
     that felt like a paper investment, the Street quietly moved the
     casino to the physical-commodities market - stuff you could
     touch: corn, coffee, cocoa, wheat and, above all, energy
     commodities, especially oil. In conjunction with a decline in the
     dollar, the credit crunch and the housing crash caused a "flight
     to commodities." Oil futures in particular skyrocketed, as the
     price of a single barrel went from around $60 in the middle of
     2007 to a high of $147 in the summer of 2008.

     That summer, as the presidential campaign heated up, the accepted
     explanation for why gasoline had hit $4.11 a gallon was that
     there was a problem with the world oil supply. In a classic
     example of how Republicans and Democrats respond to crises by
     engaging in fierce exchanges of moronic irrelevancies, John
     McCain insisted that ending the moratorium on offshore drilling
     would be "very helpful in the short term," while Barack Obama in
     typical liberal-arts yuppie style argued that federal investment
     in hybrid cars was the way out.


     But it was all a lie. While the global supply of oil will
     eventually dry up, the short-term flow has actually been
     increasing. In the six months before prices spiked, according to
     the U.S. Energy Information Administration, the world oil supply
     rose from 85.24 million barrels a day to 85.72 million. Over the
     same period, world oil demand dropped from 86.82 million barrels
     a day to 86.07 million. Not only was the short-term supply of oil
     rising, the demand for it was falling - which, in classic
     economic terms, should have brought prices at the pump down.

     So what caused the huge spike in oil prices? Take a wild guess.
     Obviously Goldman had help - there were other players in the
     physical-commodities market - but the root cause had almost
     everything to do with the behavior of a few powerful actors
     determined to turn the once-solid market into a speculative
     casino. Goldman did it by persuading pension funds and other
     large institutional investors to invest in oil futures - agreeing
     to buy oil at a certain price on a fixed date. The push
     transformed oil from a physical commodity, rigidly subject to
     supply and demand, into something to bet on, like a stock.
     Between 2003 and 2008, the amount of speculative money in
     commodities grew from $13 billion to $317 billion, an increase of
     2,300 percent. By 2008, a barrel of oil was traded 27 times, on
     average, before it was actually delivered and consumed.

     As is so often the case, there had been a Depression-era law in
     place designed specifically to prevent this sort of thing. The
     commodities market was designed in large part to help farmers: A
     grower concerned about future price drops could enter into a
     contract to sell his corn at a certain price for delivery later
     on, which made him worry less about building up stores of his
     crop. When no one was buying corn, the farmer could sell to a
     middleman known as a "traditional speculator," who would store
     the grain and sell it later, when demand returned. That way,
     someone was always there to buy from the farmer, even when the
     market temporarily had no need for his crops.

     In 1936, however, Congress recognized that there should never be
     more speculators in the market than real producers and consumers.
     If that happened, prices would be affected by something other
     than supply and demand, and price manipulations would ensue. A
     new law empowered the Commodity Futures Trading Commission - the
     very same body that would later try and fail to regulate credit
     swaps - to place limits on speculative trades in commodities. As
     a result of the CFTC's oversight, peace and harmony reigned in
     the commodities markets for more than 50 years.

     All that changed in 1991 when, unbeknownst to almost everyone in
     the world, a Goldman-owned commodities-trading subsidiary called
     J. Aron wrote to the CFTC and made an unusual argument. Farmers
     with big stores of corn, Goldman argued, weren't the only ones
     who needed to hedge their risk against future price drops - Wall
     Street dealers who made big bets on oil prices also needed to
     hedge their risk, because, well, they stood to lose a lot too.

     This was complete and utter crap - the 1936 law, remember, was
     specifically designed to maintain distinctions between people who
     were buying and selling real tangible stuff and people who were
     trading in paper alone. But the CFTC, amazingly, bought Goldman's
     argument. It issued the bank a free pass, called the "Bona Fide
     Hedging" exemption, allowing Goldman's subsidiary to call itself
     a physical hedger and escape virtually all limits placed on
     speculators. In the years that followed, the commission would
     quietly issue 14 similar exemptions to other companies.

     Now Goldman and other banks were free to drive more investors
     into the commodities markets, enabling speculators to place
     increasingly big bets. That 1991 letter from Goldman more or less
     directly led to the oil bubble in 2008, when the number of
     speculators in the market - driven there by fear of the falling
     dollar and the housing crash - finally overwhelmed the real
     physical suppliers and consumers. By 2008, at least three
     quarters of the activity on the commodity exchanges was
     speculative, according to a congressional staffer who studied the
     numbers - and that's likely a conservative estimate. By the
     middle of last summer, despite rising supply and a drop in
     demand, we were paying $4 a gallon every time we pulled up to the

     What is even more amazing is that the letter to Goldman, along
     with most of the other trading exemptions, was handed out more or
     less in secret. "I was the head of the division of trading and
     markets, and Brooksley Born was the chair of the CFTC," says
     Greenberger, "and neither of us knew this letter was out there."
     In fact, the letters only came to light by accident. Last year, a
     staffer for the House Energy and Commerce Committee just happened
     to be at a briefing when officials from the CFTC made an offhand
     reference to the exemptions.

     "1 had been invited to a briefing the commission was holding on
     energy," the staffer recounts. "And suddenly in the middle of it,
     they start saying, 'Yeah, we've been issuing these letters for
     years now.' I raised my hand and said, 'Really? You issued a
     letter? Can I see it?' And they were like, 'Duh, duh.' So we went
     back and forth, and finally they said, 'We have to clear it with
     Goldman Sachs.' I'm like, 'What do you mean, you
     have to clear it with Goldman Sachs?'"

     The CFTC cited a rule that prohibited it from releasing any
     information about a company's current position in the market. But
     the staffer's request was about a letter that had been issued 17
     years earlier. It no longer had anything to do with Goldman's
     current position. What's more, Section 7 of the 1936 commodities
     law gives Congress the right to any information it wants from the
     commission. Still, in a classic example of how complete Goldman's
     capture of government is, the CFTC waited until it got clearance
     from the bank before it turned the letter over.

     Armed with the semi-secret government exemption, Goldman had
     become the chief designer of a giant commodities betting parlor.
     Its Goldman Sachs Commodities Index - which tracks the prices of
     24 major commodities but is overwhelmingly weighted toward oil -
     became the place where pension funds and insurance companies and
     other institutional investors could make massive long-term bets
     on commodity prices. Which was all well and good, except for a
     couple of things. One was that index speculators are mostly "long
     only" bettors, who seldom if ever take short positions - meaning
     they only bet on prices to rise. While this kind of behavior is
     good for a stock market, it's terrible for commodities, because
     it continually forces prices upward. "If index speculators took
     short positions as well as long ones, you'd see them pushing
     prices both up and down," says Michael Masters, a hedge-fund
     manager who has helped expose the role of investment banks in the
     manipulation of oil prices. "But they only push prices in one
     direction: up."

     Complicating matters even further was the fact that Goldman
     itself was cheerleading with all its might for an increase in oil
     prices. In the beginning of 2008, Arjun Murti, a Goldman analyst,
     hailed as an "oracle of oil" by The New York Times, predicted a
     "super spike" in oil prices, forecasting a rise to $200 a barrel.
     At the time Goldman was heavily invested in oil through its
     commodities-trading subsidiary, J. Aron; it also owned a stake in
     a major oil refinery in Kansas, where it warehoused the crude it
     bought and sold. Even though the supply of oil was keeping pace
     with demand, Murti continually warned of disruptions to the world
     oil supply, going so far as to broadcast the fact that he owned
     two hybrid cars. High prices, the bank insisted, were somehow the
     fault of the piggish American consumer; in 2005, Goldman analysts
     insisted that we wouldn't know when oil prices would fall until
     we knew "when American consumers will stop buying gas-guzzling
     sport utility vehicles and instead seek fuel-efficient

     But it wasn't the consumption of real oil that was driving up
     prices - it was the trade in paper oil. By the summer of2008, in
     fact, commodities speculators had bought and stockpiled enough
     oil futures to fill 1.1 billion barrels of crude, which meant
     that speculators owned more future oil on paper than there was
     real, physical oil stored in all of the country's commercial
     storage tanks and the Strategic Petroleum Reserve combined. It
     was a repeat of both the Internet craze and the housing bubble,
     when Wall Street jacked up present-day profits by selling suckers
     shares of a fictional fantasy future of endlessly rising prices.

     In what was by now a painfully familiar pattern, the
     oil-commodities melon hit the pavement hard in the summer of
     2008, causing a massive loss of wealth; crude prices plunged from
     $147 to $33. Once again the big losers were ordinary people. The
     pensioners whose funds invested in this crap got massacred:
     CalPERS, the California Public Employees' Retirement System, had
     $1.1 billion in commodities when the crash came. And the damage
     didn't just come from oil. Soaring food prices driven by the
     commodities bubble led to catastrophes across the planet, forcing
     an estimated 100 million people into hunger and sparking food
     riots throughout the Third World.

     Now oil prices are rising again: They shot up 20 percent in the
     month of May and have nearly doubled so far this year. Once
     again, the problem is not supply or demand. "The highest supply
     of oil in the last 20 years is now," says Rep. Bart Stupak, a
     Democrat from Michigan who serves on the House energy committee.
     "Demand is at a 10-year low. And yet prices are up."

     Asked why politicians continue to harp on things like drilling or
     hybrid cars, when supply and demand have nothing to do with the
     high prices, Stupak shakes his head. "I think they just don't
     understand the problem very well," he says. "You can't explain it
     in 30 seconds, so politicians ignore it."

     After the oil bubble collapsed last fall, there was no new bubble
     to keep things humming - this time, the money seems to be really
     gone, like worldwide-depression gone. So the financial safari has
     moved elsewhere, and the big game in the hunt has become the only
     remaining pool of dumb, unguarded capital left to feed upon:
     taxpayer money. Here, in the biggest bailout in history, is where
     Goldman Sachs really started to flex its muscle.

     It began in September of last year, when then-Treasury secretary
     Paulson made a momentous series of decisions. Although he had
     already engineered a rescue of Bear Stearns a few months before
     and helped bail out quasi-private lenders Fannie Mae and Freddie
     Mac, Paulson elected to let Lehman Brothers - one of Goldman's
     last real competitors - collapse without intervention.
     ("Goldman's superhero status was left intact," says market
     analyst Eric Salzman, "and an investment-banking competitor,
     Lehman, goes away.") The very next day, Paulson greenlighted a
     massive, $85 billion bailout of AIG, which promptly turned around
     and repaid $13 billion it owed to Goldman. Thanks to the rescue
     effort, the bank ended up getting paid in full for its bad bets:
     By contrast, retired auto workers awaiting the Chrysler bailout
     will be lucky to receive 50 cents for every dollar they are owed.

     Immediately after the AIG bailout, Paulson announced his federal
     bailout for the financial industry, a $700 billion plan called
     the Troubled Asset Relief Program, and put a heretofore unknown
     35-year-old Goldman banker named Neel Kashkari in charge of
     administering the funds. In order to qualify for bailout monies,
     Goldman announced that it would convert from an investment bank
     to a bankholding company, a move that allows it access not only
     to $10 billion in TARP funds, but to a whole galaxy of less
     conspicuous, publicly backed funding - most notably, lending from
     the discount window of the Federal Reserve. By the end of March,
     the Fed will have lent or guaranteed at least $8.7 trillion under
     a series of new bailout programs - and thanks to an obscure law
     allowing the Fed to block most congressional audits, both the
     amounts and the recipients of the monies remain almost entirely

     Converting to a bank-holding company has other benefits as well:
     Goldman's primary supervisor is now the New York Fed, whose
     chairman at the time of its announcement was Stephen Friedman, a
     former co-chairman of Goldman Sachs. Friedman was technically in
     violation of Federal Reserve policy by remaining on the board of
     Goldman even as he was supposedly regulating the bank; in order
     to rectify the problem, he applied for, and got, a
     conflict-of-interest waiver from the government. Friedman was
     also supposed to divest himself of his Goldman stock after
     Goldman became a bank-holding company, but thanks to the waiver,
     he was allowed to go out and buy 52,000 additional shares in his
     old bank, leaving him $3 million richer. Friedman stepped down in
     May, but the man now in charge of supervising Goldman - New York
     Fed president William Dudley - is yet another former Goldmanite.

     The collective message of all this - the AIG bailout, the swift
     approval for its bank-holding conversion, the TARP funds - is
     that when it comes to Goldman Sachs, there isn't a free market at
     all. The government might let other players on the market die,
     but it simply will not allow Goldman to fail under any
     circumstances. Its edge in the market has suddenly become an open
     declaration of supreme privilege. "In the past it was an implicit
     advantage," says Simon Johnson, an economics professor at MIT and
     former official at the International Monetary Fund, who compares
     the bailout to the crony capitalism he has seen in Third World
     countries. "Now it's more of an explicit advantage."

     Once the bailouts were in place, Goldman went right back to
     business as usual, dreaming up impossibly convoluted schemes to
     pick the American carcass clean of its loose capital. One of its
     first moves in the post-bailout era was to quietly push forward
     the calendar it uses to report its earnings, essentially wiping
     December 2008 - with its $1.3 billion in pretax losses - off the
     books. At the same time, the bank announced a highly suspicious
     $1.8 billion profit for the first quarter of 2009 - which
     apparently included a large chunk of money funneled to it by
     taxpayers via the AIG bailout. "They cooked those first-quarter
     results six ways from Sunday," says one hedge-fund manager. "They
     hid the losses in the orphan month and called the bailout money

     Two more numbers stand out from that stunning first-quarter
     turnaround. The bank paid out an astonishing $4.7 billion in
     bonuses and compensation in the first three months of this year,
     an 18 percent increase over the first quarter of 2008. It also
     raised $5 billion by issuing new shares almost immediately after
     releasing its first-quarter results. Taken together, the numbers
     show that Goldman essentially borrowed a $5 billion salary payout
     for its executives in the middle of the global economic crisis it
     helped cause, using half-baked accounting to reel in investors,
     just months after receiving billions in a taxpayer bailout.

     Even more amazing, Goldman did it all right before the government
     announced the results of its new "stress test" for banks seeking
     to repay TARP money - suggesting that Goldman knew exactly what
     was coming. The government was trying to carefully orchestrate
     the repayments in an effort to prevent further trouble at banks
     that couldn't pay back the money right away. But Goldman blew off
     those concerns, brazenly flaunting its insider status. "They
     seemed to know everything that they needed to do before the
     stress test came out, unlike everyone else, who had to wait until
     after," says Michael Hecht, a managing director of JMP
     Securities. "The government came out and said, 'To pay back TARP,
     you have to issue debt of at least five years that is not insured
     by FDIC - which Goldman Sachs had already done, a week or two

     And here's the real punch line. After playing an intimate role in
     four historic bubble catastrophes, after helping $5 trillion in
     wealth disappear from the NASDAQ, after pawning off thousands of
     toxic mortgages on pensioners and cities, after helping to drive
     the price of gas up to $4 a gallon and to push 100 million people
     around the world into hunger, after securing tens of billions of
     taxpayer dollars through a series of bailouts overseen by its
     former CEO, what did Goldman Sachs give back to the people of the
     United States in 2008?

     Fourteen million dollars.

     That is what the firm paid in taxes in 2008, an effective tax
     rate of exactly one, read it, one percent. The bank paid out $10
     billion in compensation and benefits that same year and made a
     profit of more than $2 billion - yet it paid the Treasury less
     than a third of what it forked over to CEO Lloyd Blankfein, who
     made $42.9 million last year.

     How is this possible? According to Goldman's annual report, the
     low taxes are due in large part to changes in the bank's
     "geographic earnings mix." In other words, the bank moved its
     money around so that most of its earnings took place in foreign
     countries with low tax rates. Thanks to our completely hosed
     corporate tax system, companies like Goldman can ship their
     revenues offshore and defer taxes on those revenues indefinitely,
     even while they claim deductions upfront on that same untaxed
     income. This is why any corporation with an at least occasionally
     sober accountant can usually find a way to zero out its taxes. A
     GAO report, in fact, found that between 1998 and 2005, roughly
     two-thirds of all corporations operating in the U.S. paid no
     taxes at all.

     This should be a pitchfork-level outrage - but somehow, when
     Goldman released its post-bailout tax profile, hardly anyone said
     a word. One of the few to remark on the obscenity was Rep. Lloyd
     Doggett, a Democrat from Texas who serves on the House Ways and
     Means Committee. "With the right hand out begging for bailout
     money," he said, "the left is hiding it offshore."

     Fast-Forward to today. It's early June in Washington, D.C. Barack
     Obama, a popular young politician whose leading private campaign
     donor was an investment bank called Goldman Sachs - its employees
     paid some $981,000 to his campaign - sits in the White House.
     Having seamlessly navigated the political minefield of the
     bailout era, Goldman is once again back to its old business,
     scouting out loopholes in a new government-created market with
     the aid of a new set of alumni occupying key government jobs.


     Gone are Hank Paulson and Neel Kashkari; in their place are
     Treasury chief of staff Mark Patterson and CFTC chief Gary
     Gensler, both former Goldmanites. (Gensler was the firm's co-head
     of finance) And instead of credit derivatives or oil futures or
     mortgage-backed CDOs, the new game in town, the next bubble, is
     in carbon credits - a booming trillion-dollar market that barely
     even exists yet, but will if the Democratic Party that it gave
     $4,452,585 to in the last election manages to push into existence
     a groundbreaking new commodities bubble, disguised as an
     "environmental plan," called cap-and-trade.

     The new carbon-credit market is a virtual repeat of the
     commodities-market casino that's been kind to Goldman, except it
     has one delicious new wrinkle: If the plan goes forward as
     expected, the rise in prices will be government-mandated. Goldman
     won't even have to rig the game. It will be rigged in advance.

     Here's how it works: If the bill passes; there will be limits for
     coal plants, utilities, natural-gas distributors and numerous
     other industries on the amount of carbon emissions (a.k.a.
     greenhouse gases) they can produce per year. If the companies go
     over their allotment, they will be able to buy "allocations" or
     credits from other companies that have managed to produce fewer
     emissions. President Obama conservatively estimates that about
     $646 billions worth of carbon credits will be auctioned in the
     first seven years; one of his top economic aides speculates that
     the real number might be twice or even three times that amount.

     The feature of this plan that has special appeal to speculators
     is that the "cap" on carbon will be continually lowered by the
     government, which means that carbon credits will become more and
     more scarce with each passing year. Which means that this is a
     brand-new commodities market where the main commodity to be
     traded is guaranteed to rise in price over time. The volume of
     this new market will be upwards of a trillion dollars annually;
     for comparison's sake, the annual combined revenues of an
     electricity suppliers in the U.S. total $320 billion.

     Goldman wants this bill. The plan is (1) to get in on the ground
     floor of paradigm-shifting legislation, (2) make sure that
     they're the profit-making slice of that paradigm and (3) make
     sure the slice is a big slice. Goldman started pushing hard for
     cap-and-trade long ago, but things really ramped up last year
     when the firm spent $3.5 million to lobby climate issues. (One of
     their lobbyists at the time was none other than Patterson, now
     Treasury chief of staff.) Back in 2005, when Hank Paulson was
     chief of Goldman, he personally helped author the bank's
     environmental policy, a document that contains some surprising
     elements for a firm that in all other areas has been consistently
     opposed to any sort of government regulation. Paulson's report
     argued that "voluntary action alone cannot solve the
     climate-change problem." A few years later, the bank's carbon
     chief, Ken Newcombe, insisted that cap-and-trade alone won't be
     enough to fix the climate problem and called for further public
     investments in research and development. Which is convenient,
     considering that 'Goldman made early investments in wind power
     (it bought a subsidiary called Horizon Wind Energy), renewable
     diesel (it is an investor in a firm called Changing World
     Technologies) and solar power (it partnered with BP Solar),
     exactly the kind of deals that will prosper if the government
     forces energy producers to use cleaner energy. As Paulson said at
     the time, "We're not making those investments to lose money."

     The bank owns a 10 percent stake in the Chicago Climate Exchange,
     where the carbon credits will be traded. Moreover, Goldman owns a
     minority stake in Blue Source LLC, a Utah-based firm that sells
     carbon credits of the type that will be in great demand if the
     bill passes. Nobel Prize winner Al Gore, who is intimately
     involved with the planning of cap-and-trade, started up a company
     called Generation Investment Management with three former bigwigs
     from Goldman Sachs Asset Management, David Blood, Mark Ferguson
     and Peter Harris. Their business? Investing in carbon offsets.
     There's also a $500 million Green Growth Fund set up by a
     Goldmanite to invest in green-tech ... the list goes on and on.
     Goldman is ahead of the headlines again, just waiting for someone
     to make it rain in the right spot. Will this market be bigger
     than the energy-futures market?

     "Oh, it'll dwarf it," says a former staffer on the House energy

     Well, you might say, who cares? If cap-and-trade succeeds, won't
     we all be saved from the catastrophe of global warming? Maybe -
     but cap-and-trade, as envisioned by Goldman, is really just a
     carbon tax structured so that private interests collect the
     revenues. Instead of simply imposing a fixed government levy on
     carbon pollution and forcing unclean energy producers to pay for
     the mess they make, cap-and trade will allow a small tribe of
     greedy-as-hell Wall Street swine to turn yet another commodities
     market into a private tax-collection scheme. This is worse than
     the bailout: It allows the bank to seize taxpayer money before
     it's even collected.

     "If it's going to be a tax, I would prefer that Washington set
     the tax and collect it," says Michael Masters, the hedge fund
     director who spoke out against oil-futures speculation. "But
     we're saying that Wall Street can set the tax, and Wall Street
     can collect the tax. That's the last thing in the world I want.
     It's just asinine."

     Cap-and-trade is going to happen. Or, if it doesn't, something
     like it will. The moral is the same as for all the other bubbles
     that Goldman helped create, from 1929 to 2009. In almost every
     case, the very same bank that behaved recklessly for years,
     weighing down the system with toxic loans and predatory debt, and
     accomplishing nothing but massive bonuses for a few bosses, has
     been rewarded with mountains of virtually free money and
     government guarantees - while the actual victims in this mess,
     ordinary taxpayers, are the ones paying for it.

     It's not always easy to accept the reality of what we now
     routinely allow these people to get away with; there's a kind of
     collective denial that kicks in when a country goes through what
     America has gone through lately, when a people lose as much
     prestige and status as we have in the past few years. You can't
     really register the fact that you're no longer a citizen of a
     thriving first-world democracy, that you're no longer above
     getting robbed in broad daylight, because like an amputee, you
     can still sort of feel things that are no longer there.

     But this is it. This is the world we live in now. And in this
     world, some of us have to play by the rules, while others get a
     note from the principal excusing them from homework till the end
     of time, plus 10 billion free dollars in a paper bag to buy
     lunch. It's a gangster state, running on gangster economics, and
     even prices can't be trusted anymore; there are hidden taxes in
     every buck you pay. And maybe we can't stop it, but we should at
     least know where it's all going.

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