‘The Big Takeover“, by Matt Taibbi (Rolling Stone April 2, 2009 issue) states: The global economic crisis isn’t about money – it’s about power. How Wall Street insiders are using the bailout to stage a revolution. . .”
Previously I mused about the ginormous power grab that seemed to be happening between Goldman Sachs and, I dunno, pick a politician, say Mr. Cheney: Goldman Sachs- Cheney – Paulson: A conspiracy theory.
I was extremely proud to have been ridiculed by no less than the New York Times: New York Times Sez Neurological Correlates Sustains Crazy Goldman Sachs Conspiracy Theory.
(That was a big day for us at TNCB (The Neurological Correlates Blog, such a catchy title for a blog, c’est vrai). Not only did the NYT spell this blog’s name correctly and provide a link, but now, when someone mocks and ridicules our opinion, we can truthfully say, “We’ve been mocked and ridiculed by better people than you!” and metaphorically stomp out in a righteous huff. So merci NYT, very big day here at the now world reknown TNCB.)
And, with 20/20 hindsight, you could just see how removing the net capital requirements led to off-track betting at AIG, in this delusional world.
And now, Rolling Stone has an article that actually provides factual support (vraiment!) for an even more outré iteration than our version: The power grab was not even about oil! Just power for powers sake! The entire industrialized world financial system set up for the satisfaction of a pathologically narcissistic need to have the world revolve around people who know how to do accounting!
That’s the kind of armchair conclusory psychoanalysis we like here at TNCB! If you see a sociopath, call ‘em on it! You go, Mr. Taibbi.
The entire article got me by the throat and yanked me in. I don’t know who Mr. Tabbi is or where he’s been, but everything he said is consistent with my own experiences in dealing with the ginormous financial powers post-2000.
The really fascinating fact I thought was that AIG’s London branch chief, Mr. Cassano, was fruit off the poisonous Milken tree.
People who worked at the infamous Drexel Beverly Hills are very likeable. But surely they knew. And that’s the secret of sociopathy: they are likeable. More normal than normal. I wish some real smart for real social psychologist neuroscientist would do brain scans of that group. They would make the gold standard neuroprofile of a smooth white collar criminal.
Here are some selective quotations (read the entire article for context, and RS, please don’t sue me for over quoting):
- AIG is what happens when short, bald managers of otherwise boring financial bureaucracies start seeing Brad Pitt in the mirror.
- Cassano, a pudgy, balding Brooklyn College grad with beady eyes and way too much forehead, cut his teeth in the Eighties working for Mike Milken, the granddaddy of modern Wall Street debt alchemists. Milken, who pioneered the creative use of junk bonds, relied on messianic genius and a whole array of insider schemes to evade detection while wreaking financial disaster. Cassano, by contrast, was just a greedy little turd with a knack for selective accounting who ran his scam right out in the open, thanks to Washington’s deregulation of the Wall Street casino. “It’s all about the regulatory environment,” says a government source involved with the AIG bailout. “These guys look for holes in the system, for ways they can do trades without government interference. Whatever is unregulated, all the action is going to pile into that.”
- Unlike traditional insurance, Cassano was offering investors an opportunity to bet that someone else’s house would burn down, or take out a term life policy on the guy with AIDS down the street. It was no different from gambling, the Wall Street version of a bunch of frat brothers betting on Jay Feely to make a field goal.
- In the biggest joke of all, Cassano’s wheeling and dealing was regulated by the Office of Thrift Supervision, an agency that would prove to be defiantly uninterested in keeping watch over his operations. How a behemoth like AIG came to be regulated by the little-known and relatively small OTS is yet another triumph of the deregulatory instinct.
- The bonuses are a nice comic touch highlighting one of the more outrageous tangents of the bailout age, namely the fact that, even with the planet in flames, some members of the Wall Street class can’t even get used to the tragedy of having to fly coach. . . [Swivelchair note: I would disagree with this. I think bonuses are code for "les petites extortionettes" where taxpayers paid for the mess-up and now have to pay for the re-do.]
- Once the capital requirements were gone, those top five banks went hog-wild, jumping ass-first into the then-raging housing bubble. One of those was Bear Stearns, which used its freedom to drown itself in bad mortgage loans. In the short period between the 2004 change and Bear’s collapse, the firm’s debt-to-equity ratio soared from 12-1 to an insane 33-1. Another culprit was Goldman Sachs, which also had the good fortune, around then, to see its CEO, a bald-headed Frankensteinian goon named Hank Paulson (who received an estimated $200 million tax deferral by joining the government), ascend to Treasury secretary.
- Freed from all capital restraints, sitting pretty with its man running the Treasury, Goldman jumped into the housing craze just like everyone else on Wall Street. Although it famously scored an $11 billion coup in 2007 when one of its trading units smartly shorted the housing market, the move didn’t tell the whole story. In truth, Goldman still had a huge exposure come that fateful summer of 2008 — to none other than Joe Cassano.
Comments