Goldman Sachs – Masters of the Eurozone

Goldman Sachs Misled Congress, Duped Clients, Levin Says

~Snip~

Much of the blame for the 2008 market collapse belongs to banks that earned billions of dollars in profits creating and selling financial products that imploded along with the housing market,]according to the report.

The Levin-Coburn panel levied its harshest criticism at investment banks, in particular accusing Goldman Sachs and Deutsche Bank AG of peddling collateralized debt obligations backed by risky loans that the banks’ own traders believed were likely to lose value.

~Snip~

Full article:
http://www.bloomberg.com/news/articles/2011-04-14/goldman-sachs-misled-congress-after-duping-clients-over-cdos-levin-says

How Goldman secretly bet on the U.S. housing crash

By GREG GORDON - MCCLATCHY NEWSPAPERS - NOVEMBER 1, 2009

WASHINGTON — In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.

Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.

Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk.

Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy investigation has found that Goldman's failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws.

~Snip~

McClatchy's inquiry found that Goldman Sachs:

Bought and converted into high-yield bonds tens of thousands of mortgages from subprime lenders that became the subjects of FBI investigations into whether they'd misled borrowers or exaggerated applicants' incomes to justify making hefty loans.

Used offshore tax havens to shuffle its mortgage-backed securities to institutions worldwide, including European and Asian banks, often in secret deals run through the Cayman Islands, a British territory in the Caribbean that companies use to bypass U.S. disclosure requirements.

Has dispatched lawyers across the country to repossess homes from bankrupt or financially struggling individuals, many of whom lacked sufficient credit or income but got subprime mortgages anyway because Wall Street made it easy for them to qualify.

Was buoyed last fall by key federal bailout decisions, at least two of which involved then-Treasury Secretary Henry Paulson, a former Goldman chief executive whose staff at Treasury included several other Goldman alumni.

Read more here: http://www.mcclatchydc.com/news/politics-government/article24561376.html#storylink=cpy

The Goldman E-Mails, or How to Sell Junk

By CHRIS V. NICHOLSON APRIL 28, 2010 4:33 AM

Evidence released Tuesday by Senator Carl Levin, the Michigan Democrat in charge of the Permanent Subcommittee on Investigations, includes a series of e-mail messages sent by executives at Goldman Sachs as the bank attempted to shed mortgage-related assets in the run-up to the subprime crisis of 2007.

The e-mails appear to support one of the most important criticisms of the bank — that it served itself at the expense of its clients — and illustrate the conflicts of interest that arise when banks’ proprietary trading overlaps with customer sales.

Full article:
http://dealbook.nytimes.com/2010/04/28/the-goldman-e-mails-or-how-to-sell-junk/?_r=0

Draghi at the Central Bank

Is Goldman Sachs Poised to Takeover Europe?

by MIKE WHITNEY
CounterPunch, OCTOBER 31, 2011

Goldman Sachs is about to take over Europe, but you wouldn’t know it by reading the papers.

On Tuesday, G-Sax alum, Mario Draghi, will take the helm at the European Central Bank replacing retiring ECB president Jean-Claude Trichet. The appointment has slipped by the media virtually unnoticed even though the ECB is the most powerful institution in the EU and is likely to play a critical role in solving the debt crisis.

Draghi was formally a Managing Director at Goldman. He also served as an advisor to the Bank of Italy in 1990, chairman of the Italian Committee for Privatisations, and was an Executive Director of The World Bank from 1984 to 1990. His bio. affirms his globalist pedigree which makes him the perfect candidate to replace the curmudgeonly Trichet who failed to comply with all of Big Finance’s demands. That’s not likely to be the case with Draghi.

The new ECB chief faces the difficult task of trying to pacify Germany while implementing policies that are opposed by the German political class as well as the German people. It won’t be easy, even for a skilled diplomat like Draghi. But Draghi will move forward with his bank-centric agenda, because it may be the last chance to keep the 17-member monetary union from disintegrating.

First, he will lower interest rates by .50 basis pts (from 1.5% to 1.%) at the ECB meeting on November 3 even though headline inflation in the eurozone is presently 3 percent and even though the move is bound to raise eyebrows in Berlin. Then he will announce that the ECB will step up its controversial bond buying program (already 170 billion euros) in order to push yields on soaring Italian debt below 6 percent. The Italian 10-year bond has zoomed to over 6.15 percent since the EU leaders announced their “breakthrough” agreement last Thursday. That means that bondholders do not believe the deal will solve the crisis. Draghi will act quickly to address the situation despite German opposition. Italy has 1.9 trillion euros in debt, 200 billion of which will come-due next year. Rising yields pose an existential threat for the faltering country.

In exchange for ECB support, Draghi will demand that Prime Minister Silvio Berlusconi (Bunga-bunga) push through unpopular reforms that target the unions and pensions. Italy will also be required to privatize more of its public assets and services. At the same time, the bank bailouts will continue mainly through easing new capital requirements and by underwriting bank debt so banks can issue bonds that are guaranteed by the ECB. Here’s the scoop from Bloomberg:

“European banks, which need to refinance more than $1 trillion of debt next year, may struggle to fund themselves until policy makers follow through on a pledge to guarantee their bond sales.

European Union leaders promised this week to “urgently” look at ways to guarantee bank debt in a bid to thaw funding markets frozen by the sovereign debt crisis. Lenders have found it hard to sell bonds for the past two years and have increasingly turned to the European Central Bank for unlimited short-term emergency financing…

In the U.S., the Temporary Liquidity Guarantee Program allowed banks to issue bonds with backing from the FDIC for as long as three years…

European governments including France, Spain, the U.K. and Germany guaranteed some bonds issued by their banks to reassure investors after the collapse of Lehman Brothers Holdings Inc. in September 2008. In May 2010, the EU ended the program when it said banks that relied on the pledges would face a review of their long-term viability.” (“European Bank Debt-Guarantee Proposals May Struggle to Thaw Funding Market”, Bloomberg)

Guarantees on bank debt is a direct subsidy to big finance, which is why we think that a former G-Sax exec. will support the policy.

Draghi is no fool, he knows that the German plan that was announced last week is more of the same “extend and pretend”. It has no chance of ending the crisis. Regardless of the stock market’s (positive) reaction, borrowing costs are still rising, the credit markets are in turmoil, and the clock is ticking. It’s now or never. Either the ECB takes the initiative and acts as lender of last resort or the eurozone is toast.

CONTINUED...

http://www.counterpunch.org/2011/10/31/is-goldman-sachs-poised-to-takeover-europe/

Because something tells us the reason why Mario Draghi personally blocked Bloomberg's FOIA into the circumstances surrounding Goldman's structuring, and hiding, of Greek debt that allowed not only Goldman to receive a substantial fee on the transaction, but permitted Greece to enter the Eurozone when it should never have been allowed there in the first place, is that the person who oversaw and personally endorsed the perpetuation of the Greek lie is none other than Goldman's Vice Chairman and Managing Director at Goldman Sachs International from 2002 to 2005. The man who is also now in charge of the ECB.

http://www.zerohedge.com/news/2015-07-06/who-biggest-winner-greek-tragedy

The Rich Get Richer

by MIKE WHITNEY
CounterPunch, May 6, 2015

EXCERPT...

More borrowing, more risk taking, more financial instability. And it’s all the Fed’s doing. If rates were neutral, then prices would normalize and CEOs would not be engaged in this reckless game of Russian roulette. Instead, it’s caution to the wind; just keep piling on the debt until the whole market comes crashing down in a heap like it did six years ago. And that’s the trajectory we’re on today, in fact, according to TrimTabs Investment Research, February saw buybacks in the amount of $104 billion, ” the largest monthly figure since these flows were first tracked 20 years ago. ”

So things are getting worse not better. Bottom line: The Fed has led the country to the cliff-edge once again where the slightest uptick in interest rates is going to send the economy into freefall.

But why? Why does the Fed keep steering the country from one financial catastrophe to the next?

That’s a question that economists Atif Mian and Amir Sufi answer persuasively with one small chart. Check it out:

“Here is the distribution of financial asset holdings across the wealth distribution. This is from the 2010 Survey of Consumer Finances:



The top 20% of the wealth distribution holds over 85% of the financial assets in the economy. So it is clear that the direct income from capital goes to the wealthiest American households.” (Capital Ownership and Inequality, House of Debt)

CONTINUED...

http://www.counterpunch.org/2015/05/06/the-rich-get-richer/

Goldman blasted for conflicts of interest

By Ben Rooney, staff reporterApril 14, 2011: 9:40 AM ET

~Snip

A Senate panel issued a scathing report Wednesday that describes Goldman Sachs as a "case study" of the recklessness and greed on Wall Street that set off the 2008 financial crisis.

~Snip~

Goldman paid a record $550 million fine to the Securities and Exchange Commission in July to settle charges it misled investors in the 2007 sale of a collateralized debt obligation, or CDO, known as Abacus.

Full article:
http://money.cnn.com/2011/04/13/news/economy/goldman_sachs_senate_report/

What Is John Paulson doing in Greece?

By Kevin Connor
Co-founder, LittleSis.org; Co-founder, Public Accountability Initiative - Posted: 04/17/2010 5:12 am EDT

~Snip~

Considering this, hedge fund king John Paulson's role in Greece deserves far more scrutiny. I wrote about this last week, pointing out that they shared the same vulture flight pattern in Greece, but at the time did not realize that Paulson and Goldman actually partnered in executing massive and profitable bets against the subprime market. Are they doing the same with Greece?

News of Paulson's fund taking large positions against Greek debt has barely risen above rumor in the English-language press, despite this article in a Greek daily, which says that Paulson is "orchestrating the pressure on Greek government bonds and the Euro," and reports that Paulson has a team of 20-30 traders focused on Greece.
~Snip~

Since Paulson was in the room with Goldman (and several other banks) when these CDOs were first conceived, it would seem that the fund had an unfair edge over the investors that would lose their shirt buying the securities. Zuckerman notes that Deutsche Bank suffered losses because it couldn't find takers; that famous taker, AIG, may have been Goldman's convenient solution.

These parallels raise obvious questions: was Paulson also in the room with Goldman before it tried to sell Greece on a new way to hide its debt this past November? As a hedge fund client of Goldman's, did Paulson have special information about Greece's true debt situation? Are Goldman and Paulson partnering, once again, to profit from the downfall of an entire country/continent?

Full article:
http://www.huffingtonpost.com/kevin-connor/what-is-john-paulson-doin_b_463084.html

This hedge fund manager just lost millions on Greece and Puerto Rico

by Stephen Gandel
Forbes, JUNE 29, 2015

One of the biggest losers in the Greek and Puerto Rican debt crises is hedge fund billionaire John Paulson.

Talk about a horrible way to start the week.

A number of hedge funds that were already bracing for losses on Greek debt also found out late Sunday night that they would likely have to swallow big losses on investments in Puerto Rico as well.

One of the biggest losers appears to be John Paulson. After the Greek government, his Paulson Special Situation Fund is the second-biggest shareholder of Piraeus Bank, which is one of the largest financial firms in Greece. Piraeus holds nearly a third of all Greek deposits. Over the weekend, the Greek government closed banks in Greece in order to prevent their collapse. Panicked depositors had already pulled roughly a billion euros out of them.

Paulson’s fund said it owned 6.6% of Piraeus at the end of the first quarter, which was the last time the fund filed its holdings. Greece also closed its stock market Monday, so shares aren’t trading. But as of Friday, the bank’s stock price, which had fallen 56% this year, was $0.40. It would certainly be lower today. Paulson could lose as much as $161 million on the investment.

There there’s Athens Water. Paulson put $137 million into the utility just a year ago, hoping to cash in on the fact that the monopoly was going private. That didn’t happen. And now Athens Water is having trouble collecting its bills from the government, which is out of cash. Paulson has already lost about $75 million on the investment, and he could lose much of the rest. Two years ago, Greece’s finance minister Yanis Varoufakis wrote a blog post criticizing Paulson’s investment in Greek banks.

Paulson has also been one of the biggest financial backers of Puerto Rico. Last year, he called the U.S. territory the Singapore of the Caribbean. In March 2014, Paulson’s fund was one of a number of hedge funds that bought into a $3.5 billion bond offering by the Puerto Rican government. Paulson reportedly bought $120 million of the bonds, according to the Wall Street Journal.

CONTINUED...

http://fortune.com/2015/06/29/john-paulson-greece-puerto-rico-hedge-funds/