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Decyferon

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I don't blame Sachs, I blame the whole finiacial sector that got into the situation, all the banks not just Goldman Sachs. But I also do see your arguement towards the people having worked so hard while we were out enjoying ourselves and reward for that study.

 

I just think that maybe they should try to create some better PR for themselves when so many people are still suffering from the fallout of the financial problems around the world.

 

Maybe the bonuses shouldn't be so large and they should be incorporated more into the salary because having these huge carrots dangled infront of people make them do what they can to hit targets etc, which can result in some bad trading. I am just thinking of ways to stop this problem occuring again.

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It just seems like kind of a stretch to say they had a hand in the housing collapse that spiraled into our recent financial crisis. The nature of their business ties them to just about every major corporation on the planet. The bulk of their business actually prevents a lot of investment fraud by auditing a company's investment potential and actual assets.

 

Most of the people working for Sacks that you might be able to stretch logic and say they were at fault got fired. More importantly, many others who had absolutely nothing to do with any of this got cut loose as well last year. Made a huge impact on NYC's economy and I know a couple people still looking for jobs because of it. Not to mention the guy selling Gyro's outside the buildings who had to close up shop. The lady doing someones nails that lost too much business when her customers got laid off. It isn't just here, they conduct business globally and some of the money in those so called "ridiculous bonuses" directly effect your own local economy's. I feel it's better off in a bonus than being wasted by the government on their usual bullshit.

 

There are people who have been working hard their entire lives. When you were in high school playing hide the sausage with the ho's, they were at home studying. When you were out partying and getting fucked up after graduation, they were excelling in Ivy League Schools. I could not imagine working that hard and missing out on hide the sausage and drugs, but there are people who do. Those are the kinds of people that are hard to come by as an employer. Being known for a passing out a huge end of year bonus to employee's helps get those kinds of people to work at your company. Thus making your company better off.

 

I could understand the hate if it were directed at the individual fucktards who borrowed more money than they could afford to pay back, or a predatory lending firm. If it were up to me they should be the ones paying us back. But trying to blame Sacks is like one of those dumb ass angry black dudes who fails at life and blames and hates all white people because they may be a distant relative of former slave owner who profited at one time 3 or 4 generations ago. If it wasn't for Sacks pulling a profit, we would all be worse off in the long run regardless of any perceived shortcoming you may find in that company. They take risks, make profit and employee people like any good company should. I'm glad they got bailed out and stayed in business, I'm even happier that things are going well for them now.

 

In response to that, here's an article you might want to read...

 

-----------------------------------------------------------------------

 

Inside The Great American Bubble Machine

 

Matt Taibbi on how Goldman Sachs has engineered every major market manipulation since the Great Depression

 

MATT TAIBBI

Posted Jul 02, 2009 8:38 AM

 

 

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. 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.

 

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.

 

 

Goldman's role in the sweeping global 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 shit 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.

 

 

And 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.

 

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 asshole 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.

 

 

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 cliché 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 profits.

 

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 bank-holding 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 secret.

 

 

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 of 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."

 

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.

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I got about half way into it and stopped reading and just skimmed over the rest, right after reading the first sentence I noticed the article was about as objective Rush Limbaugh speaking about a democrat. Kind of proves my point about hating just to hate.

 

No doubt as a successful business they are out to make a profit, not surprised. No doubt by they are a massive powerhouse using their size and influence as a tool. I don't think anyone who isn't an investor likes investment banking in general. What I have a hard time understanding is the people who complain about it and their alternative or solution to investment banking. There isn't one, this is still the best system regardless of it's obviose flaws. You'd feel differently if you had a great idea, a sound plan, and small company that needed investment capitol to make it big.

 

Saying this isn't a free market is ridiculous, you only need to look to the .com and tech start ups that boomed in the 90's and any other successful company who's stock went public in the last few years to realize this is still a free market.

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I got about half way into it and stopped reading and just skimmed over the rest, right after reading the first sentence I noticed the article was about as objective Rush Limbaugh speaking about a democrat. Kind of proves my point about hating just to hate.

 

No doubt as a successful business they are out to make a profit, not surprised. No doubt by they are a massive powerhouse using their size and influence as a tool. I don't think anyone who isn't an investor likes investment banking in general. What I have a hard time understanding is the people who complain about it and their alternative or solution to investment banking. There isn't one, this is still the best system regardless of it's obviose flaws. You'd feel differently if you had a great idea, a sound plan, and small company that needed investment capitol to make it big.

 

Saying this isn't a free market is ridiculous, you only need to look to the .com and tech start ups that boomed in the 90's and any other successful company who's stock went public in the last few years to realize this is still a free market.

 

The tone isn't very neutral but it's factual. GS knew exactly what they were doing and played it really fucking cool, and now it's just them and Morgan Stanley since Bear Stearns and Lehman Brothers went under. You know it's bad when investment banks start turning on each other...that means that the middle class is almost tapped dry.

 

And saying the .com boom was successful? You do realize that only two companies (Amazon and Yahoo) really cashed in on that deal and are still around. Everything else was just hype...maybe 1% of the companies around back then are still around, and that's optimistic. Google held out on its IPO till 2005, they were smart enough to wait for the gold rush to pass so their stock wouldn't be overinflated on speculation.

 

Here's the followup to the above story, it's even crazier when you read about what happened to Bear Stearns and Lehman-

 

http://www.rollingstone.com/politics/story/30481512/wall_streets_naked_swindle/print

 

And a free market doesn't really mean shit if no one has money to spend because a few banks are holding all the chips.

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I got about half way into it and stopped reading and just skimmed over the rest, right after reading the first sentence I noticed the article was about as objective Rush Limbaugh speaking about a democrat. Kind of proves my point about hating just to hate.

 

No doubt as a successful business they are out to make a profit, not surprised. No doubt by they are a massive powerhouse using their size and influence as a tool. I don't think anyone who isn't an investor likes investment banking in general. What I have a hard time understanding is the people who complain about it and their alternative or solution to investment banking. There isn't one

 

There are a whole bunch.

 

Saying this isn't a free market is ridiculous, you only need to look to the .com and tech start ups that boomed in the 90's and any other successful company who's stock went public in the last few years to realize this is still a free market.

 

There isn't a free market and there never has been in the West. If you want to find an actual free market go to somewhere like Mali or Nigeria.

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I'm not trying to beat anyone over the head, Mercer. I think the best thing to do is to wait and see what history says, as this is a little too recent and complex....therefore I have no expectations of the whole story being told right away.

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I wouldn't blame GS or the financial sector. In reality I believe it comes down to individuals who actually believed they could afford an $800,000 home with a $50,000 income, those who thought housing would never lose value and they could flip homes forever, and those who used their homes as an atm living lavishly on home equity lines up until their homes stopped appraising high enough for that new boat, car, vacation home etc......Whats really sad is the story about people who never speculated on housing lived conservatively within their means and are feeling the effects of this sour economy.......You can't blame the gun store for the murder down the block...Some people took the easy credit, timed the market correctly and made fortunes...others didn't, and a huge portion of us are suffering indirectly.

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mortgage lenders. which lent money based on false artificially low interest rates by the FED, insured by the feds and insulated from risks with incentives to lend by the federal regulatory apparatus.

 

the people then bought 400K loans making 20K a year with no down payment and the closing costs financed because they cant do the quick math on their common sense calculator

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I'm sure it's way more hip to hate on "the man" but I honestly don't think there was enough outrage or blame for the default douche bags.

Their stupidity/irresponsibility fucked the real estate market and economy and the idiots who borrowed to much deserve at least half of the blame.

I've been working my ass off and saving up but still can't find anything affordable here now because of these fucktards.

Not even a 1 bedroom condo.

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Blame is attributable everywhere. The people who lived beyond their means, the initial lenders who gave out credit on overvalued homes to people who were liabilities, the same people who bundled that bad credit in with good credit, the financial institutions that bought that debt and resold that debt with lack of diligence, and so on and so on all the way to the top of the heap.

 

Now when it comes to the bail outs we also encounter thousands and thousands of workers and then millions in the flow on industries who had no hand in their company's lack of fiscal and management responsibilities who would also suffer if there were no bail outs.

 

I wouldn't make an economist's arsehole, but I do know that the US is by far FAR ahead in pretty much most ways than any other country on earth. So Roosevelt and those who made similar style of bailouts here can't be all that wrong.

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AOD, I have a question for you, what makes you think humans are capable of large scale rational action?

 

 

A lot of the ideals you speak of are under the assumption that people, given full information and ability to act freely, will do what is best for them. This is shown, scientifically, to not be the standard.

 

Humans are pretty stupid. We don't show good decision making patterns, we typically are not too altruistic, we are bad at handling large scale variables, and we aren't very good at making decisions in groups.

 

What makes you think that markets based on free human interaction would stabilize and bring themselves about?

 

That's what I keep trying to tell him

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I'm sure it's way more hip to hate on "the man" but I honestly don't think there was enough outrage or blame for the default douche bags.

Their stupidity/irresponsibility fucked the real estate market and economy and the idiots who borrowed to much deserve at least half of the blame.

I've been working my ass off and saving up but still can't find anything affordable here now because of these fucktards.

Not even a 1 bedroom condo.

 

 

Default douche bags. Interesting. I'd like to see you pass up on an offer to buy a home for your family when you thought otherwise due to your financial status you were unable to. Than all of a sudden the bubble has grown and look. We are doing so well that we can now allow people who normally couldn't afford a house to take a chance and buy one. You wouldn't jump at this offer? Even if at the time it seemed as if you couldn't? :rolleyes:

 

It was set up by the FED to allow this to happen. And it did on a pretty massive scale. I feel more inclined to blame the people that were actually put in place to make sure and to regulate so that this wouldn't happen. Not the people within the market that are just going with the rules that are set for them, above them.

 

What a bunch of fucktards. Trying to make an investment and to improve the lives of their families.

 

____________

 

Better education for everyone here would help improve the "stupidity" problem that we have. Wait we need to kill all the terrorist's first. So let's put education on the back burner. Greattt.

 

I actually have faith in the Human race. Unlike most "pragmatic's" that tend to think we are the actual problem.

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Whoa, hang on a minute.

 

No no no. Just because a sales man calls you on the phone and offers you the world doesn't mean that you are hereby absolved from all responsibility of reckless actions. It's your money, it's your risk and it's your decision in the end. When you invest you take the risk. If you choose to listen to a snake oil salesman you are the fool. He is the arsehole but you are still the fool. The responsibility if a bad investment lay with the investor. A free market allows for those who can sweet talk a fool into parting with their money. Buyer beware, bro.[/color]

 

It was set up by the FED to allow this to happen. And it did on a pretty massive scale. I feel more inclined to blame the people that were actually put in place to make sure and to regulate so that this wouldn't happen. Not the people within the market that are just going with the rules that are set for them, above them. I agree that the REGULATORS, those who constrain a market from pure market practice, are partly to blame, but just because the rules are lax doesn't mean all those who make foolish decisions are free from blame. There are smart moves in the jungle and there are dumb moves. Many people who should have acted adversely to risk didn't, that's their fault, no one forced them.

 

What a bunch of fucktards. Trying to make an investment and to improve the lives of their families. There are smart investments and dumb investments. You cannot invest risk free, that's why it is an INVESTMENT. Just because your aim is true doesn't mean your decision is wise.

____________

 

Better education for everyone here would help improve the "stupidity" problem that we have. Wait we need to kill all the terrorist's first. So let's put education on the back burner. Greattt.

 

I actually have faith in the Human race. Unlike most "pragmatic's" that tend to think we are the actual problem.

 

Ok, that last part is way over my head, so I will just let it go.

 

Dude, you can't just blame the system. The system gives us a lot of freedom to make our own decisions. You make a decision you have to be responsible for it. If you make a bad decision you can't blame the people who gave you the freedom to make that decision when it goes bad.

 

No one forced the small guy to spend their money, that was their decision.

 

If you disagree with that then I'd like to introduce you to a Nigerian Prince friend of mine.....

 

 

Get what I'm saying?

 

 

.

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You know what?

 

The argument that you are making is for big government and regulation of commercial transactions. It's like you are saying that people are too stupid to manage themselves so the government should regulate our financial decisions to save us from our own stupidity.

 

That's the end product of what you're saying here.

 

.

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Default douche bags. Interesting. I'd like to see you pass up on an offer to buy a home for your family when you thought otherwise due to your financial status you were unable to. Than all of a sudden the bubble has grown and look. We are doing so well that we can now allow people who normally couldn't afford a house to take a chance and buy one. You wouldn't jump at this offer? Even if at the time it seemed as if you couldn't? :rolleyes:

 

So, an excuse for someone trying to get over finacailly that screwed the rest of us is OK if it's not an "Evil Corporation".

Your statement basically proves my point.

 

BTW, I didn't buy a house even though I could have so to answer your second question, no.

 

They took risks, they failed, just like "the man" everyone else got screwed.

You think that mortgage broker wasn't trying to do right by his family?

You think that major lender wasn't trying to improve their standings?

Whats the difference, the working class isn't responsible for any of this shit?

 

 

It was set up by the FED to allow this to happen. And it did on a pretty massive scale. I feel more inclined to blame the people that were actually put in place to make sure and to regulate so that this wouldn't happen. Not the people within the market that are just going with the rules that are set for them, above them.

 

What a bunch of fucktards. Trying to make an investment and to improve the lives of their families.

 

____________

 

Better education for everyone here would help improve the "stupidity" problem that we have. Wait we need to kill all the terrorist's first. So let's put education on the back burner. Greattt. ;;;;I

 

I actually have faith in the Human race. Unlike mpragmatic'stic's" that tend to think we are the actual problem.

 

 

Well if the shoe fits, why not extend this blind faith to more than just the middle and lower class then?

I just can't take classism seriously from any angle, nor will I make excuses for people in the same boat as me that made very poor decisions.

Being rich or successful doesn't make you evil, nor does being poor or middle class, neither deserves special excuses for fucking us over though.

 

I find it condescending that someone would look at a hard working regular person like myself and feel the need to excuse me from basic responsibility.

Like I'm some kind of little child that couldn't possibly know any better and therefore shouldn't be blamed for my actions.

If you're a dumb ass who thought "wow I could own this home all of a sudden, buy, buy, buy!" and didn't read into it a little than yes, you fucked up to.

 

By this standard you put forth if I were to do shit that cost the rest of us money it's cool.

Why not just go out and rack up them credit cards without intending to pay or buy a home I can't possibly pay for?

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Ughhh Alan Greenspan (FED) did boost the money supply after 9/11 which in turn lowered interest rates in an effort to prevent an economic downfall due to fear after the attack, and it is common thought that this is when the bubble started,so sure you can blame him...But from what i understand as far as making lending standards a joke goes you don't have to look much further than your democratic congressmen who pushed the idea that everyone should have the right to own a home, and pressured banks to lend to people who under traditional lending practices would not qualify. Traditional meaning at least 10% down if not 20% and the home your buying valued at about 3 times your yearly income(not 100% sure on this guys) so if you make 50k you could buy a house around 150k. So as lending practices weakened more and more people started qualifying and buying so naturally prices went up, then people started speculating buying more than they could afford on easy credit pushing prices even higher. When their teaser rate 0-2% interest rate expired and the market rate kicked in mortgage payments for the default douches increased. Those in over their heads defaulted, those speculating defaulted, equity lines started to vanish , and now you have strategic defaults. Strategic default is basically walking away from a bad investment, so even though you can still afford your mortgage payment it doesn't make much sense to when you can buy your neighbors house which is exactly like yours for much less than you owe on yours.

3 years ago it was almost shameful to tell people i rented, cause every motherfucker with a pulse was buying a house. Now all these douche bags that over looked common sense in order to "improve" their living standards lost ,so because it happened to so many people were supposed to have sympathy? Sorry dude fuck that. I've seen too many people who didnt take risks by getting involved in buying a house they couldnt afford suffer due to all this bullshit...

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I'm sure it's way more hip to hate on "the man" but I honestly don't think there was enough outrage or blame for the default douche bags.

Their stupidity/irresponsibility fucked the real estate market and economy and the idiots who borrowed to much deserve at least half of the blame.

 

In the 70's and 80's our required Economics classes taught us that paying more than 1/5 your monthly income towards rent/mortgage was untennable and a horrible financial move. This was based on one person's earnings, YOURS. Your spouse may leave, or die... it's up to YOU. Back then banks would turn down mortgage applications based on joint finances, same reasons. People didn't even TRY to buy a house without 20% down and NOT just to dodge the mortgage insurance costs. Up until the 90's there was one way you got your ducks in a row and bought a house. That's not to say that mortgage law wasn't still complex but it was fairly straight forward. Banks advised, mostly, on the highest wage earner, NO combined incomes, no unicorns or rainbows. Everybody back then worried about possible default. (I know, not exactly true but I'm trying to cut the treacle and make a pojnt).

 

Here come the 90's, zero down, cash back! Sure it's a consumer's wet dream but do you think consumers had anything to do with the policy implementation? C'mon, really? In the 80's they'd have laughed you out of the bank. In the 90's everyone decided it was the other guy's risk and just signed on the line... that's not even good business at the five and dime, that's just the drugs talking. In the 2k's it's all about pointing fingers and that obviously doesn't help.

 

My opinion, this comes back to the bankers who should have known better (and probably did). The banks told themselves they'd be able to collect from a majority of these idiots when THESE PEOPLE WERE IDIOTS. Not only idiots, but idiots with misleading info from the lending institutions. Further, that misleading lending info got piped right back into the lending institutions themselves and perpetuated another generation of irresponsible lending. I mean CHRIST! Anyone who looked at the mortgage abandonment rate in Riverside, CA in 1995 should have been able to predict the bubble and the iminent burst but... The little guy thought 'fuck it, the banks will have to pay' while the banks thought 'fuck it, the little guy is gonna have to pay'. Net result: WE ALL PAY! That little guy and that bank combined to yank about $50 a month out of ALL of our wallets. This is before the bubble burst. I only look to the government now that I realize all their talk about 'oversight' and 'regulation' was a huge pile of horseshit. Nobody got looked at, nobody was sanctioned, it was a giant clusterfuck and the government overlooked it, deregulated it, fucked us all. The safety net was never there.

 

That's how this all ends up on the government's doorstep. Really it was the banks.

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Very true. If there wasn't some facilitation via deregulation or lenders relaxing their standards on what was an acceptable risk, none of these subprime mortgages would have gone through.

 

What happened was that the lenders and the people backing the lenders saw that there was a lot of potential profit in playing the market off of these loans and commodities futures. However, as any gambler will tell you there's no such thing as a sure thing, and once things started going south it snowballed into the crash that they knew was inevitable...but by that time they had cashed out so they stood to lose nothing on the deal.

 

Goldman Sachs was one of the biggest high rollers at the table, and they were in position to clean up on both sides of the deal if they played the game a certain way...and play it they did. Do I hold them directly accountable? It really depends...it's one of those things where they should have anticipated the worst case scenario but for whatever reason (greed? hubris?) they chose to look the other way.

 

But as some people will point out, they're in business to make money, and you have to break a few eggs to make an omelet.

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The banks lost out in a big way due to write downs of assets and capital. The houses were massively over-valued so when they took possession of them after the borrowers defaulted they realised that what they thought was worth $500k was only worth $300k. Most banks around the world didn't win in this deal. My friends working for RBS have all lost their jobs, other guys I know that are getting transfered around are being asked if they have friends they can stay with instead of being put up in hotels, etc. There's still a lot of hurt being felt out there. Which is what I kind of think you are saying but that this is where the problem lay. I'm not sure it's really that simple, TBH. Yo may blame the Fed as they kept interest rates low to avoid the post 9/11 crash. You may blame the borrowers that thought that working at the local 7/11 checkouts was a good enough income for a $400k loan. You may blame the initial lenders for not giving a shit that their mark was at extreme risk of defaulting. Yo may blame the valuers that told Ma and PA Normal that their house was worth $600k and that their equity in that house could be working much better for them elsewhere (in another over-valued house)..., and you can blame Ma and Pa for being so easily sucked in. You can blame the secondary debt purchasers for buying bad debt and also believing the inflated asset values...., etc. Or you can just blame the govt for not treating us like idiot children that cannot be trusted not to FUCK IT ALL UP and regulating our behaviour.

 

Get my drift?

 

Once again, I believe that everyone from the borrower to the regulators deserve varying amounts of blame for what happened. Everyone bought in to it to some degree or another, that makes them also liable for blame in my books. The real pricks were the initial lenders that sold off the debt, made their money and got out without suffering.

 

I met one at a party about 4 months ago and he spent all his profits on cocaine and was now running through Asia getting by on shitty kitchen sink drugs escaping the people in the US who wanted to break his legs. Gave me a small feeling that justice had been served in this case at least.

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There's no question that the responsibility needs to be shared. I'm not letting the people who took the loans off the hook by any means...it was clearly too good to be true and you'd think people would know better in spite of what the "professionals" told them.

 

But some people- usually those with poor impulse control- are going to try for the brass ring when it's sitting right there in front of them, and they tend to justify it after the shit hits the fan by saying things like "Everyone else was doing it" and "I was told it was a sure thing." Well, like my dad says- "If you want a guarantee, buy a washing machine."

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My point was that most of the people I know that work at Goldman Saks are on point and not blood sucking vampires.

Also if you're going to be pointing fingers, making accusations and judging people why not be fair or more honest about it.

Everyone who defaulted is basically just as bad as every corporation that failed or got bailed out.

 

It's easy to put an evil face on a large corporation and say they are evil and fucked up on purpose or were just stupid.

Not so easy when there are real faces, of people you might be able to relate to, when your finger is pointing at them saying the same thing.

Do I think everyone who defaulted is evil or retarded? No. Of course not, shit happens.

I do think a good number of them should have either known better or just tanked on purpose when what they owed cost more than the house though.

Hopefully it's a lesson learned and won't repeat itself until a generation of lenders and borrowers as dumb as we are comes back around in the distant future.

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I have no doubts that you know some good people that work for GS...but I'm guessing they're not shot callers.

 

Yes, there's plenty of blame to go around but the greater amount should still fall upon the investment banks. They knew damn well that what they were doing was incredibly risky and to compound that they were doing it with other people's money.

 

Also, this isn't just about subprime mortgages, it's also about commodities speculation and the leveraging of the derivatives market....and obviously the last two can't be blamed on dumb home buyers.

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The people who defaulted and bought homes they couldn't afford:

 

knew damn well that what they were doing was incredibly risky and to compound that they were doing it with other people's money.

 

 

One of my close friends I no longer hang out with because he married a pretentious gold digger wife is a VP at Sacls.

Another close friend who got laid off was an art director over there. This thread kind of struck a nerve when people bitched about the bonuses.

She copped a huge bonus right before getting laid off and also right after buying a new condo.

If it wasn't for that so called ridiculous bonus she'd be fucked and would have defaulted herself.

 

When I first moved here to NYC I pretty much only hung out with my now ex wife's yuppie Asian friends.

You'd be surprised how down to earth many of the GS Execs. are, not every investment banker fits the stereotype.

Granted there are many douches in any company but for the most part they were cool to me being blue collar myself.

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You know what?

 

The argument that you are making is for big government and regulation of commercial transactions. It's like you are saying that people are too stupid to manage themselves so the government should regulate our financial decisions to save us from our own stupidity.

 

That's the end product of what you're saying here.

 

.

 

No that is how you are misinterpreting what I am trying to say. I'd like to introduce you to my friend...reading comprehension.

 

Clearly though on this massive scale it is beyond a group of people just making bad financial decisions. If you disagree that's fine. Everyone is entitled to their own opinion.

 

The last part? What I am talking about educating people. Specifically lower class people who normally wouldn't receive that education. So you know they could make clearer more thoughtful decisions. Are you arguing that this would further hurt the problem? I highly doubt that at all.

 

Just like to add. My last statement in my previous post about pragmatics had nothing to do with what I said in that post in the beginning regarding GS and this whole financial mess. That is why the post was seperated. So any sort of attachment that I do not have faith in working class people (which is exactly what I am) is completely detached from what I was trying to say. Basically the opposite.

 

I also think it's funny how you are basically judging GS's buisness based off a few people you knew who worked for the company.

 

Great.

 

Also thank you Shai great points.

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Goldman Sachs are cunts.

 

A relative of someone I work with was telling her family that the very next day after the first ever big bail out, three guys came into the swanky Manhattan restaurant where she worked. Not only was it super fuckin' expensive but they ordered some of their best bottles at $1,300 a pop. She checked with them to make sure they knew the price tag on the drinks. They ordered more... the result was a $3K lunch which they put on their Goldman-fuckin-Sachs corporate credit card.

 

Fuckin top notch cunts right there...

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