The Goldman factor - still increasing - outcome increasingly negative

Bush Signs Bailout After House Passage

President Bush signed the $700 billion bailout bill, after the House voted 263-171 to pass the revised version of the legislation that was backed by the Senate.

What are this two gentlemen so happy about - that their thoughtless actions screw the world into a depression?. Their sense of reality must have evaded their brains years ago or are they part of a conspiracy? In a conspiracy angle, they do almost the ideal things to wreck the financial system.

Another Goldman was hired to the Treasury - this realy strikes me as in principle breaking all rules for a Treasury hiring policy. Even more so since the clear bottom line is total failure and incompetence. Common sense does make one wonder why they hire people who created the disease to put them into control of healing the disease???

Exceprt from Bloomberg:

Ed Forst, the former Goldman Sachs Group Inc. executive Paulson hired to head the transition team, started work last week and is charged with helping establish the new Office of Financial Stability.

and here the most conflicting part which cries foul as loud as possible

Banks won't be allowed to sell assets to the Treasury for more than what they paid, unless they purchased the assets from another bank already in bankruptcy or conservatorship. Congress instructed the Treasury to issue conflict-of-interest guidelines, so banks don't take unfair advantage of the new program.

The red-marked part makes no sense for the taxpayer at all. It means a bank can buy from a failing bank at firesale prices and resell it to Mr. Paulson on a much higher price (hold to maturity price). Remember my assumption that Goldman made a secondary offering and raised $13 bil. 2 weeks ago with the idea as a funding pool for the fortunes which can now be made on back of taxpayers? They can pick up Lehman assets for a few cents and resell it at humungeous profits.

Excerpt from Bloomberg:

U.S. Recession to Be `Significantly Deeper,' Goldman Sachs Says

By Lester Pimentel

Oct. 3 (Bloomberg) -- Goldman Sachs Group Inc. said the U.S. economy will enter a recession ``significantly deeper'' than previously forecast, prompting the Federal Reserve to cut interest rates by at least 1 percentage point.

The U.S.'s gross domestic product will decline in each of the next two quarters, with unemployment reaching 8 percent by the end of 2009, New York-based Goldman said in a research note.

This $700 bil. program is actually already a $1.5 trillion factor the biggest single economic aid program in history. That the put in a $150 bil. tax present and that they praised themselves for the $160 bil. economy stimulus package is pathetic in comparison. As a matter of fact, with a depression, the probability of 75% this money will be blown out of the window. Even if 50 cents were recoverd at the end - which is highly unlikely since the distressed tranches will be bought and their current price at 10 cents reflects pretty much the outcome the carry cost - that means the cost it will have by borrowing the money for 10 years will eat off the value left anyway. Very likely even to create a negative effect, since you may end up paying interest for something worthless. 4% interest over 10 years adds up to roughly 50%, hence if 50 cents are left the effect is 0 (zero) or all $700 bil. gone. Let's remember that is the effect for 10 years later and 50% value of assets has been recovered but that's a simplified observation. In principle, the survivors should have produced cash flows but my assumption is more a realistic approach, which includes cash flows and takes for granted that evrything ends up in firesale prices since we are facing the worst part of all mortgages issued here.

Bush is the worst president for many benchmarks - he doubled US debt, in the 8 years of his reign, stock markets have dropped considerably. The principle democratic rights have been dimished as never before. To be completely fair, the process was started by Bill Clinton with Greenspan, who made the biggest step in liberalizing banking regulation and softening the Glass Steagall Act. As a matter of fact, we should anyway not concentrate on the people officially in charge, they just execute what the people with real power ask them to do. One of the central figures is Greenspan though, read the following excerpts carefully and think about it for a moment yourself.

http://en.wikipedia.org/wiki/Trilateral_Commission

The Trilateral Commission is a private organization, established to foster closer cooperation between America, Europe and Japan. It was founded in July 1973, at the initiative of David Rockefeller; who was Chairman of the Council on Foreign Relations at that time. The Trilateral Commission is widely seen as a counterpart to the Council on Foreign Relations.^[1] He pushed the idea of including Japan at the Bilderberg meetings he was attending but was rebuffed. Along with Zbigniew Brzezinski and a few other people, including individuals from the Brookings Institution, Council on Foreign Relations and the Ford Foundation, he convened initial meetings out of which grew the Trilateral organization.

Other founding members included Alan Greenspan and Paul Volcker, both eventually heads of the Federal Reserve system.

The organization has come under much scrutiny and criticism by political activists and academics working in the social and political sciences. The Commission has found its way into a number of conspiracy theories, especially when it became known that President Jimmy Carter appointed 26 former Commission members to senior positions in his Administration. Later it was revealed that Carter himself was a former Trilateral member. In the 1980 election, it was revealed that Carter and his two major opponents, John B. Anderson and George H. W. Bush, were also members, and the Commission became a campaign issue. Ronald Reagan supporters noted that he was not a Trilateral member, but after he was chosen as Republican nominee he chose Bush as his running mate; as president, he appointed a few Trilateral members to Cabinet positions and held a reception for the Commission in the White House in 1984. The John Birch Society believes that the Trilateral Commission is dedicated to the formation of one world government.^[4] In 1980, Holly Sklar released a book titled Trilateralism: the Trilateral Commission and Elite Planning for World Management.

Since many of the members were businesspeople or bankers, actions that they took or encouraged that helped the banking industry have been noted. Jeremiah Novak, writing in the July 1977 issue of Atlantic, said that after international oil prices rose when Nixon set price controls on American domestic oil, many developing countries were required to borrow from banks to buy oil: "The Trilaterists' emphasis on international economics is not entirely disinterested, for the oil crisis forced many developing nations, with doubtful repayment abilities, to borrow excessively. All told, private multinational banks, particularly Rockefeller's Chase Manhattan, have loaned nearly $52 billion to developing countries. An overhauled International Monetary Fund (IMF) would provide another source of credit for these nations, and would take the big private banks off the hook. This proposal is the cornerstone of the Trilateral plan."^[5]