America for sale, half price, sale won't last long

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

Amerikanen houden van rijkdom, of is het rijk en dom.
Ze houden niet van bankiers, senatoren en presidenten ;)

Groet / Cees

PS. Ben benieuwd hoe ze over een jaar of twee denken.

  February 18, 2010, 9:00 pm
The Great Goldman Sachs Fire Sale of 2008
http://opinionator.blogs.nytimes.com/2010/02/18/the-great-goldman-sachs-fire-sale-of-2008/
By WILLIAM D. COHAN

In an interview last week, President Obama said he didn’t begrudge Jamie
Dimon, the chief executive of JPMorganChase, and Lloyd Blankfein, the
head man at Goldman Sachs, their 2009 bonuses of $17 million and $9
million, respectively. He said that while $17 million was “an
extraordinary amount of money,” there are “some baseball players who are
making more than that and don’t get to the World Series either, so I’m
shocked by that as well.”

While one could argue that, metaphorically anyway, both Dimon and
Blankfein made it to the World Series in 2009 — with Blankfein, whose
firm earned $13.4 billion last year, being the M.V.P. — President Obama
went one step further in trying to publicly support Wall Street by
saying he knew both men to be “savvy businessmen,” and that “I, like
most of the American people, don’t begrudge people success or wealth.”

Obama was of course simply repeating a bedrock principle of American
capitalism that even the worst financial crisis since the Great
Depression cannot dislodge. But one wonders if the president would be a
bit more begrudging if he knew that at the height of the financial
crisis, many of Goldman Sachs’s top deal-makers — although not Blankfein
himself — moved quickly to unload their own stock in their firm. This
happened both in March 2008, after Bear Stearns collapsed, and again
that September, after the bankruptcy of Lehman Brothers and the
near-unwinding of the rest of Wall Street.

     If everything was really under control after Lehman collapsed, why
were executives dumping their stock by the bushelfull?

The whole story is contained in little-noticed public records filed with
the Securities and Exchange commission — see here and here — which make
enjoyable reading after spending the last year listening to the gang at
Goldman and other firms whine about the terms of the Tarp program and
repeatedly insist that they weren’t really in all that much trouble.
Because if these savvy Goldman guys were freaking out and selling large
chunks of stock in the dark days of 2008, that makes it a safe bet
things were plenty bad and getting worse.

Among those executives who sold chunks of Goldman stock after the Bear
Stearns debacle was Jack Levy, the co-chairman of Goldman’s mergers and
acquisitions department (disclosure: he was briefly my boss when I
worked in M.&A. at Merrill Lynch in the 1990s). On March 19, 2008, two
days after Bear’s collapse, Levy sold 30,000 Goldman shares, at $171.32
each, generating $5.14 million. Levy also “wrote” — or sold — 60,000
October 2008 calls on Goldman stock in the market to an investor, or
investors, who bet Goldman’s stock would reach $230 per share by then.
Levy pocketed the premium on the calls — and of course this was a smart
bet, since Goldman’s stock was trading around $90 a share by October 2008.

Also among the big sellers in March 2008 was E. Gerald Corrigan, a
Goldman managing director and former head of the New York Fed, who sold
15,000 shares of Goldman for $2.6 million; Jon Winkelried, Goldman’s
co-president at the time, who sold 20,000 shares for nearly $3.5 million
(he quit the firm a year later after asking it to buy an additional
$19.7 million of his illiquid investments); and Masanori Mochida, the
head of Goldman in Japan, who sold 100,000 shares for $17.6 million.

Marc Spilker, who just resigned as head of Goldman’s asset management
division, sold 11,484 shares for $2 million. David Solomon, a former
Bear banker who joined Goldman in 1999 and now is co-head of investment
banking, sold 8,072 of his Goldman shares at $175.89, generating just
more than $1.4 million in proceeds. (He seems to have had a change of
heart: On March 24, 2009, he bought 4,202 shares for $183 each, or
$767,000.)

But the real action at Goldman came after Lehman blew up and the
American taxpayers — through their proxies, Treasury Secretary Hank
Paulson, Fed Chairman Ben Bernanke and Tim Geithner, the head of the New
York Fed — decided to rescue American International Group, the global
insurer. On Sept. 17, Levy sold 50,974 Goldman shares, this time for
$119.99 each, generating $6.1 million; two days later he sold another
30,000 shares, for around another $4 million. (He also wrote more calls
betting that Goldman’s stock wouldn’t hit $210 per share by January
2009.) Also on Sept. 17, Mochida sold 500,000 shares, at $111.44,
generating $55.7 million.

At this time, too, some of the savviest of Goldman’s savvy executives
sold stock, including Milton Berlinski, a longtime keeper of the Goldman
flame, who sold 100,000 shares on Sept. 17, generating $10.3 million,
and 75,000 shares the next day. Another big seller was Richard Friedman,
who runs Goldman’s merchant banking, or principal investment, business.
He sold 120,500 shares for around $12.3 million on Sept. 17, another
25,000 shares the next day for around $2.5 million, and 100,000 shares
the day after for $13.8 million. In sum, Friedman — whose job made him
Goldman’s ultimate long-term investor — sold around $29 million of his
Goldman shares in the panic following the collapse of Lehman.

No doubt all of this fearful selling by these experienced bankers and
traders could be viewed as clever, especially as Goldman’s stock
shriveled to around $49 per share in November 2008, and they all likely
have so much of it anyway. But now that Goldman’s stock has recovered
smartly to around $155 per share and the firm is making money hand over
fist, selling stock during those scary days in 2008 doesn’t look nearly
as smart. Prudent, yes, but savvy, not so much.

All of which makes President Obama’s statement about Blankfein’s savvy
all the more poignant. As Goldman’s chairman, any selling on his part
during the depths of the financial crisis would have been viewed very
negatively by the market — of course, had the market known in real time
about these other executives dumping their shares, that would not have
been such a great sign either. And after Goldman cut a deal with Warren
Buffett to invest $5 billion in the firm on Sept. 24, 2008, Blankfein
and the other top executives were largely prevented from selling stock
anyway for three years.

In the end, though, things have worked out just fine for Blankfein,
despite his paltry $9 million bonus: His 3.3 million Goldman shares are
now worth more than $500 million.


15.  Marie Burns Fort Myers, Florida February 19th, 2010 8:07 am
“I, like most of the American people, don’t begrudge people success or
wealth.” -- Barack Obama

I guess we can all agree with that. Except, most of the rest of us would
not speak this way about men (& they're mostly all men) whose "success
or wealth" came at the expense of the world economy. We would not speak
that way about men who gamed the system so that middle-class taxpayers
had to pay for their multi-million-dollar bonuses. We would not speak
that way about bankers who made millions (or billions) ruining the
economy of Greece, then hiding it from E.U. officials so they threatened
the economy of all of Europe. We would not speak that way about bankers
who charge exorbitant fees to depositors & credit card holders so they
can live in luxury. We would not speak that way about the country's 400
wealthiest people who pay only 16.6% (2007 figure) of their income in
taxes, a rate about HALF that paid by many salaried middle-class Americans.

Sorry, Mr. President, I begrudge every one of those guys. I think
they're despicable. I think you & the Congress who enable them are
immoral & unpatriotic. I am furious at your' pretense of wanting to
"rein in the banks" at the same time you & Congress are instructing
staff to write wimpy little regs to suit the banks. And I think your
bimonthly speeches saying something derogatory about "fat cats"
constitute the most duplicitous, phony, insulting-to-the-listener
double-speak to come out of a Democrat's mouth since Bill Clinton said
"I never had sexual relations with that woman."

Other than that, Mr. President, we're in 100 percent agreement.

The Constant Weader at www.RealityChex.com
  Recommend  Recommended by 83 Readers

9. MEH Ashland, OR February 19th, 2010 8:07 am
I understand that "most Americans" don't begrudge great wealth with the
mistaken conviction that somehow they will one day enjoy it, a hope that
defies the law of probability. Just like the educational mantra, "You
can be anything you want to be" that is sold to the young with little
critical examination of what exactly it takes to be what you want to be,
"Don't tax the wealthy because one day you may be rich" is meant to keep
us adults quiet in the face of the looting of our corporations, the
profits of which should benefit stocks holders, and the decimation of
the public treasury, the assets of which should benefit us citizens.
Absent significant financial reform, oversight of corporations,
progressive taxation of higher incomes, and the like, we are doomed to
continue to watch the concentration of great wealth in the hands of the
few while the mass of our people scramble for the crumbs. At least
nowadays we know more about the source of the smell even though this
Congress seems both unwilling and powerless to eliminate it.
  Recommend  Recommended by 74 Readers

21. Chris Peoria, AZ February 19th, 2010 8:13 am
Those guys are very savvy. What else would you call controlling our
government and media so you can privatize the profits and socialize the
losses while simultaneously conning the public that you represent free
markets, free press and democracy? I'd say it's genius!
  Recommend  Recommended by 66 Readers

7. Slavisa Austin TX February 19th, 2010 8:07 am
It is outrageous that Goldman has been left in business, when it should
be bankrupt since AIG could not pay them enough cash to cover losses on
their securities. There is no society benefit to leave Goldman in
business so they can go their parasitic ways. Goldman is still using
cheap federal funds at 0.5% interest to amplify their profits and that
has nothing to do with their supposed financial savvy.

American financial system reminds of one famous elaborate garden
surrounding Mughal palace in India that I saw on TV. Water flows in
channels from well with no pumps whatsoever and collects in pools and
ponds, but it is all regulated by elaborate and imperceptible system of
grades and slants. The money in USA financial system sloshes around in
channels seemingly according to market forces and we all just dip our
toes in those money flows, but than magically collects in giant pools
like Goldman and JP Morgan thanks to barely visible regulatory slants
that have been years in making and are vigorously protected by their
political allies. It is mockery of free market and really form of a
sophisticated crony capitalism.
  Recommend  Recommended by 62 Readers

17. A.L. Hern Los Angeles, CA February 19th, 2010 8:13 am
I don't see how Goldman executives' selling of their firm's stock while
being privy to the particulars of Goldman's parlous decline cannot be
viewed by the SEC and Justice Department as insider trading.
This isn't just a matter of its being morally questionable, but ILLEGAL.
  Recommend  Recommended by 58 Readers

16. George O'Conner Paris February 19th, 2010 8:07 am
The big difference between baseball players is that the heads of Goldman
Sachs and the rest didn't just do good, but actually caused real harm to
so many people. If a baseball player played badly while being over paid,
some fans are pissed but no one was really harmed. These executives
though almost caused a complete collapse of our economic system, and
we're still not out of it. They caused the firing and current
unemployment of millions. Giving them any kind of bonuses can be, and
is, seen by many as an endorsement of their actions. This is why people
feel so uncomfortable about these bonuses and it is wrong of Obama to
ignore it. If he wants to defend them that's fine, but he should better
explain why. Money creates strange things. An interesting discussion on
is money a necessary evil: http://www.pandalous.com...
  Recommend  Recommended by 48 Readers

14. timoor San Francisco February 19th, 2010 8:07 am
Can it be true that Goldman Sachs paid only 11 million dollars in 2009
income tax - less than 1% of income? After TARP/AIG and getting 1.25
billion for their new HQ in zero interest "liberty" bonds? This is
beyond favoritism. No wonder people are so ticked at the Obama
Administration.
  Recommend  Recommended by 47 Readers

1. wickerpark611 Chicago February 19th, 2010 8:07 am
This is ridiculous. They had margin calls in their other accounts they
had to pay for. Everyone was hemorrhaging cash.
  Recommend  Recommended by 42 Readers

2. Mike Strike Boston February 19th, 2010 8:07 am
William's piece graphically demonstrates just how dishonest Obama is
when in comes to his attitude to his masters the looters of the universe.

That Obama should make such patently untrue statements about the looters
is a measure of his willingness to serve as their obsequious apologist
and a further indication of how dedicated he is to serving the looters'
interests.
  Recommend  Recommended by 38 Readers

19. Andrew NY February 19th, 2010 8:13 am
I still do not understand, what did Goldman invent or manufacture that
is evidence of how smart it is. The are merely paper changers. They are
not talented enough to play professional sports, win an oscar, get
olympic gold, become supreme court justice, operate on your brain and
even if they were, those salaries would still be grotesque.
  Recommend  Recommended by 34 Readers

20. WQChin NYC February 19th, 2010 8:13 am
Those executives knew that the financial crisis was about to happen, so
they started to dump their Goldman stocks. They should be prosecuted, if
found guilty, jailed as white collar criminals. The Obama administration
is soft on Wall Street criminal. Instead of bailing them out, heads on
Wall Street should roll. This is indicative of the power of money over
our politicians. No wonder the Tea Partiers are in a rage to get rid of
both major political parties.
  Recommend  Recommended by 31 Readers

13. timoor San Francisco February 19th, 2010 8:07 am
According to this article:
http://www.bloomberg.com...
Goldman Sachs paid income tax at a 1% rate for 2008 (11 million dollars)

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