And why might that be?

The New York Times contemplates the mystery of how a Goldmanite - and former governor of New Jersey - could be responsible for one of the biggest bankruptcies in U.S. history:

He was from Goldman Sachs.

That is the refrain you hear over and over again when MF Global insiders try to explain why they went along with Jon Corzine’s risky trades — the same ones that caused a crisis of confidence at the firm and, ultimately, its bankruptcy on Monday....

Being a former Goldmanite has long been considered the ultimate calling card. But, in some cases, it has proved to be a liability: A series of blunders by former senior Goldman executives raises questions about whether Goldman’s secret sauce can actually be exported. Think John Thain. Or Robert Rubin. Or J. Chris Flowers.

Let's consider the possible explanations why there is a pattern of success at Goldman Sachs and failure elsewhere:

1. There is some sort of magic in the Goldman water cooler that permits these financial wunderkinder to outperform the rest of the financial markets.

2. There is a wise old Asian janitor, seemingly ageless, living in the basement of the Goldman building whose cryptic utterings are interpreted and applied by the Goldman executives, leading to astoundingly good results.

3. Goldman leverages its oversized influence in the federal government to secure government policies that ensure it reliable profits.

I don't know about you, but my money is on number two. I picked up an East Asian Studies major in college and studied Japanese in Tokyo on the off-chance that I might have the opportunity to speak to him one day.

Everyone hates Goldman

And with very good reason. Even Paul Krugman is beginning to see the downside with "saving the financial system":

The huge bonuses Goldman will soon hand out show that financial-industry highfliers are still operating under a system of heads they win, tails other people lose. If you’re a banker, and you generate big short-term profits, you get lavishly rewarded — and you don’t have to give the money back if and when those profits turn out to have been a mirage. You have every reason, then, to steer investors into taking risks they don’t understand. And the events of the past year have skewed those incentives even more, by putting taxpayers as well as investors on the hook if things go wrong.... What’s clear is that Wall Street in general, Goldman very much included, benefited hugely from the government’s provision of a financial backstop — an assurance that it will rescue major financial players whenever things go wrong.

You can argue that such rescues are necessary if we’re to avoid a replay of the Great Depression. In fact, I agree. But the result is that the financial system’s liabilities are now backed by an implicit government guarantee.

No, the rescues were not necessary and Goldman Sachs should have been allowed to fail with all the other bankrupt banks. Max Kreiser's perspective is both more forthright and more accurate that Krugman's: "Goldman Sachs are scum. That's the bottom line. They basically have coopted the U.S. government, they have coopted the Treasury Department, the Federal Reserve functionality. They've coopted the Obama administration, Barack Obama dances to Goldman Sachs's tune."



What does Chairman Ben Bernanke of the Federal Reserve have to say about all this?

"“The public in many countries is understandably concerned by the commitment of substantial government resources to aid the financial industry when other industries receive little or no assistance. This disparate treatment, unappealing as it is, appears unavoidable. Our economic system is critically dependent on the free flow of credit, and the consequences for the broader economy of financial instability are thus powerful and quickly felt.”

It's time for the American public to tell both Bernanke and Goldman Sachs to go to Hell. The idea that the economic system somehow depends upon Goldman Sachs employees receiving millions in bonuses has got to be one of the biggest lies ever told in the history of economics. This is actually the last frantic looting of the pirates before the ship they attacked and boarded finally sinks beneath the waves. And the way out is absolutely not to build a new global system, because all that amounts to is allowing the financial pirates to board a new and bigger ship.

It's a little late for that

The empire's ruling tribe is beginning to discover that while it's one thing to take the reins of the empire from the people who built it, it's another thing to run it successfully:

Goldman is well positioned to explain what China is about and what the US and even the world should do. A columnist at the Asia Times and a former senior executive of a Hong Kong investment bank, he has traveled extensively throughout China for two decades and negotiated directly with top Chinese industry leaders. He has also written extensively on Jewish topics for a variety of scholarly and general Jewish publications. His Jewish background has been central to his approach. Goldman argues that to understand China, one has both to look at how it operates today and to examine the long-standing cultural patterns of a proud and distinct 5,000-year-old civilization.

Goldman explains that most Americans are simply wrong about China. The typical analogies whether on the left or the right are way off base. China does not have the aspirations of the Soviet Union; China does not want to militarily conquer the West, nor does it want to integrate in the existing world order. It could care less how others see the world. Nor is the Chinese economy dangerously over-leveraged. China is more stable than ever. Finally, he argues the Thucydides model — that as an emerging power China seeks to challenge the US — is not even relevant.

Instead, Goldman argues that the Chinese are an ancient imperial civilization who expect to rule under a mandate from heaven and have the confidence to do so. Moreover, as in the past, they prefer soft power that gives them maximum control to a military showdown that might bring chaos. For the Chinese, the ends justify the means.

Currently, China is implementing a concerted plan to control key industries and information to ensure world domination. As Goldman shows, it is working: most of the world has adopted the Huawei technology for 5G and Chinese signal encryption will soon eclipse that of the US. Soon the world will be totally reliant on Chinese technology and will knowingly or unknowingly share its data with the Chinese government. No Chinese Edward Snowden is likely to survive to warn us. With such power, China will dictate the terms of trade and interaction. Already the basic outlines of the existing China-US trade deal signal China’s dominance: the US buys Chinese technology and other manufactured goods and China buys meat and other agricultural goods from the US. These are the terms imperial powers dictate to their colonies.

Goldman outlines a plan for the US to maintain its world position. He insists that the US absolutely cannot leave it to the private sector. It must develop a government policy to massively support R&D at the industry and university levels. Measures will require huge investments and an overhaul of the American education system to drastically improve educational levels, and most of all, to quadruple the number of American graduates in the sciences and technology. Without these two steps, we will be under China’s yoke within the decade.

The amusing thing about this is that Spengler - as Goldman was known for years before he went public - was completely wrong about China and its intentions for years. This sudden and very belated concern for the US maintaining its world position is the result of the failure of the post-imperial collapse jump-to-China plan.

As I pointed out several years ago, the judeochristians' assumption of their intellectual superiority was fundamentally based on their being a low-trust, high-performance group amidst a high-trust, high-performance population. Now that they are running into conflict with their first conflict with a low-trust, high-performance group since the Maccabean wars, they are discovering that they are at a significant disadvantage.

I expect the Judeo-Sinese conflict to go pretty much the same way the Judeo-Roman wars did. And the article raises the obvious question: to precisely whom does the author mean when he writes "we will be under China's yoke within the decade"?

Romney = President Goldman Sachs 2.0

The usual suspects have their sticky little fingers all over the supposed alternative to Obama too:

When Bain Capital sought to raise money in 1989 for a fast-growing office-supply company named Staples, Mitt Romney, Bain’s founder, called upon a trusted business partner: Goldman Sachs, whose bankers led the company’s initial public offering. When Mr. Romney became governor of Massachusetts, his blind trust gave Goldman much of his wealth to manage, a fortune now estimated to be as much as $250 million.

And as Mr. Romney mounts his second bid for the presidency, Goldman is coming through again: Its employees have contributed at least $367,000 to his campaign, making the firm Mr. Romney’s largest single source of campaign money through the end of September. No other company is so closely intertwined with Mr. Romney’s public and private lives except Bain itself.

I know I am shocked, SHOCKED, to learn that there is gambling taking place in the Washington establishment. It will be interesting to hear how all of the Romney Republicans who rightly deride Barack Obama as President Goldman Sachs will respond to the news that their favored candidate is owned by precisely the same corporation.

And it's not as if Newt Gingrich is any better, being a Freddie Mac tool. You can complain about Ron Paul's shortcomings, real and perceived, all you like. But the fact of the matter is that if you don't support him, you are supporting more of the exactly the same thing that Obama is presently providing.

One could, of course, argue with the numbering system. There is a reasonable case to be made that George W. Bush was actually President Goldman Sachs 1.0, courtesy of his Secretary of the Treasury, Henry Paulson.

The whores rush to defend Goldman

William D. Cohan leaps to defend the Vampire Squid. And surprise, surprise, he also owns Goldman stock:

Goldman also was not above working with a client like Paulson to structure a security — for a fee — that Paulson could then short. Would those European banks not have bought Abacus if they had known that Paulson had helped select what went inside it? Possibly. But no one forced them to buy Abacus. And if the housing market had soared for a few more years, and Paulson and Goldman had lost billions instead of making billions, would the S.E.C. have filed a lawsuit against Abacus’s investors?

These might not be the most popular questions to be asking right now, but until we get the answers we can’t assume Goldman’s guilt.

There are no words sufficiently contemptuous to describe this insufferable little [expletive deleted] and his pathetic attempt to play defense attorney on the Vampire Squid's behalf. How dare he try to exonerate Goldman by claiming the market could have gone against them! Because we all know very well what happened when the market DID go against them... they were bailed out by the federal government. Not only were they bailed out, but they were permitted to magically transform their legal corporate identity so that they could be bailed out!

It's at times like these that one can understand the initial popularity of the French revolutionary excesses. One knows better than to think any good would come of it, and even so, one would almost find oneself ready to welcome La Terreur so long as the insufferable bankers with their interminable self-justifications are sent to the guillotines.

Cohan conveniently omits that no one forces little old ladies to invest in financial scams either, and yet the petty con men who scammed them are still prosecuted for fraud.

The EU doubles down

It's not a huge surprise. They have never had any respect for democracy anyhow:

The European Central Bank has tightened liquidity conditions for the Greek banking system following the landslide victory for the Leftist government in Sunday’s referendum.

The central bank continued its freeze on emergency liquidity assistance (ELA) after Germany issued a humiliating ultimatum to Greece, warning that the country would be cast adrift and left to go bankrupt unless it agreed to much deeper concessions than anything offered so far.

Sigmar Gabriel, the German vice-chancellor, said the landslide rejection of EU austerity demands in the Greek referendum changed nothing, demanding that the Left-wing Syriza government must accept further belt-tightening without any prospect of debt relief if it wishes to remain in the eurozone.

“The final bankruptcy now appears imminent,” he said. The Greek leaders have been told that they have a deadline of Tuesday afternoon to come up with far-reaching proposals.

And before any morons pop up and start blathering about "those lazy Greeks should pay their debts", understand that it is mathematically impossible for them to do so. Not difficult, not hard, impossible. It is never going to happen. And note that the IMF, which has been continuing to loan them money, has known this since 2011.

Keep in mind that the USA was actually more indebted than Greece until just a few years ago. The difference is that the USA can always print more credit dollars. The Greeks cannot, not until they get rid of the Euro and go back to the drachma. The core problem is not that the Greeks were profligate, although they were, but that they chose to join the EU and the Euro.

Don't forget that wherever there are large sums of money involved, there is always quite a bit going on behind the scenes:

"the European Central Bank said it can’t release files showing how Greece may have used derivatives to hide its borrowings because disclosure could still inflame the crisis threatening the future of the single currency."

Considering the crisis of the (not so) single currency is very much "inflamed" right now as it is about to be proven it was never "irreversible", perhaps it is time for at least one aspiring, true journalist, unafraid of disturbing the status quo of wealthy oligarchs and central planners, to at least bring some closure to the Greek people as they are swept out of the Eurozone which has so greatly benefited the very same Goldman Sachs whose former lackey is currently deciding the immediate fate of over €100 billion in Greek savings.

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.

Mario Draghi.

Most favored bankstas

It's probably easier to make a case for shutting down Goldman Sachs as a threat to national security than bailing them out again:

The collective message of all 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." ...

And here's the real punch line. After playing an intimate role in four historic bubble catastrophes, after helping $5 trillion in wealth disappear from the NASDAQ, after pawning off thousands of toxic mortgages on pensioners and cities, after helping to drive the price of gas up to $4 a gallon and to push 100 million people around the world into hunger, after securing tens of billions of taxpayer dollars through a series of bailouts overseen by its former CEO, what did Goldman Sachs give back to the people of the United States in 2008?

Fourteen million dollars.

This is a remarkable tale of parasitical bankers living up to and exceeding every nasty stereotype of evil bankers. If I worked for Goldman Sachs, I'd be retiring before the end of the year and moving very far away from New York City. Once the depression hits in full force next year, a lot of Americans are going to be very, very unhappy. And thanks to Henry Paulson, they'll have a pretty good idea of who is at least somewhat responsible for their dire straits.

Optimistic

It would appear that Spengler, for one, has been listening to the Learned Elders of Wye. His article makes it appear as if the precious golden geese who have healed America with prosperity are in the early stages of preparing to take flight once more. David Goldman has what strikes me as a remarkably optimistic article on how much the Chinese like and admire the Jews because they have so much in common.

There is no greater compliment to any culture than to be admired by Chinese, who with some justification regard their civilization as the world’s most ancient and, in the long run, most successful. The high regard that the Chinese have for Jews should be a source of pride to the latter. In fact, it is very pleasant indeed for a Jew to spend time in China. The sad history of Jew-hatred has left scars on every European nation, but it is entirely absent in the world’s largest country. On the contrary, to the extent that Chinese people know something of the Jews, their response to us is instinctively sympathetic.

“I am always surprised by the expressions of affection that the Chinese show for the Jews. Both cultures, the Chinese emphasize, share respect for family, learning and, yes, money,” wrote the journalist Clarissa Sebag-Montefiore last year. ‘”Most Chinese will think Jews are smart, clever or good at making money, and that they have achieved a great deal,’ Professor Xu Xin, director of the Institute of Jewish Studies at Nanjing University (one of over half a dozen centers in China dedicated to studying Judaism) told me last week,” she wrote. “This logic — that the Jews are admired for their success despite their small numbers and historical oppression — has also led to a burgeoning industry of self-help books that use Jewish culture and the Talmud to preach business tips.”

Family, learning, respect for tradition, business acumen: these are Jewish traits that the Chinese also consider to be their virtues. All this is true as far as it goes. One might also mention that China never has had reason to view the Jews as competitors for legitimacy.

Christianity began as a Jewish sect and has vacillated between the claim that is has superseded Judaism and the view that it is a daughter religion that should honor its parent. Islam claims that Jews and Christians falsified the revelations given to them and that their scriptures are a perversion of God’s true message, which Mohammed restored to its original integrity. But by no stretch of the imagination could China view the Jews as a threat to the legitimacy of its civilization.

The Chinese, in short, have no reasons to dislike or fear the Jews, and a number of reasons to admire them simply because Jews display traits that Chinese admire among themselves.

Now, it's possible that Goldman is correct. I'm an East Asian Studies major, I'm not Chinese. Perhaps the Chinese will welcome the Jewish people with more or less open arms the way the American people did following the large-scale Jewish retreat from the European continent. On the other hand, there is also the possibility that the Chinese will look at the historical track record of the Jewish people, see what they have done to the United States of America during the post-WWII period, and view them as a parasitical threat.

Perhaps Goldman doesn't view the financial rape of the USA or the fact that China is sitting on $1.304 trillion in U.S. Treasury bonds that could be rendered worthless overnight as a reason for the Chinese to dislike or fear the Jews, but I am a little less sanguine on the prospect. I also think Goldman underestimates the ruthlessness of the Chinese in matters tribal and nepotistic.

The survival strategy that worked so well in the Middle Ages, where the Jews would be expelled from a country, then quietly return until they were banished once more, doesn't seem likely to work quite as well in an age of global communication. Hitler's complaints about the Jews sounded entirely mad to Americans. They sound mad, and manufactured, even today. But in the event of the sort of economic catastrophe and political breakdown that so concerns the Elders of Wye, I tend to suspect the Chinese will take the accusations of President Dwayne Elizondo Mountain Dew Herbert Camacho a little more seriously.

Especially considering that the Chinese would like nothing better than to see a US political breakdown that would free them to claim the regional supremacy and world leadership they believe to be their civilizational birthright. I agree with Goldman that China does not view the Jews as a threat to the legitimacy of its civilization; my understanding is that the Chinese already view them as a rival.

Will the God-Emperor cuck on trade?

Tyler Durden suspects the globalist faction is winning in an ideological trade battle being waged inside the Trump administration:

Earlier this week, when we discussed Peter Navarro's jarring op-ed in the WSJ in which he alleged that the persistent US trade deficit "would put US national security in jeopardy", we said that "a better question than what is Navarro's purpose by writing it, is why he is writing it, and does his use of a public forum like the WSJ mean that there is friction between him and Trump camp, especially since in recent weeks it appears that a core pillar of Trump's trade policies, namely the border adjustability, appear to no longer be on the docket of actionable items."

As it turns out, that was precisely the correct question, because as the FT reports, "a civil war has broken out within the White House over trade, leading to what one official called "a fiery meeting" in the Oval Office pitting economic nationalists close to Donald Trump against pro-trade moderates from Wall Street."

More notably, the person at the center of this "civil war" is none other than Navarro, who as we expected is now said to be losing influence, and as a result he resorted to using the WSJ as a means to appeal directly to the general public. It may have been a prudent gamble: the WSJ op-ed may have helped Navarro salvage some of his credibility with Trump, according to the FT:

The officials and people dealing with the White House said Mr Navarro appeared to be losing influence in recent weeks. But during the recent Oval Office fight, Mr Trump appeared to side with the economic nationalists, one official said.

Facing off the "hardline group" of Navarro, and other "nationalists" such as Steve Bannon, is a a "faction" led by former Goldman COO Gary Cohn, a career globalist, who leads Mr Trump’s National Economic Council.

But what is just as important, is that if the FT is right, then allegations that Trump has "sold out" to his Goldman advisors may be premature: in fact, if anything, Trump appears to be playing off one camp, the "nationalists", against its polar opposite, the "Goldman globalists":

The battle over trade is emblematic of a broader fight on economic policy within the Trump’s administration. It comes ahead of a visit to Washington next week by Ms Merkel, the German chancellor, and amid preparations for a meeting of G20 finance ministers in Germany next week at which allies’ concerns over protectionism are likely to be high on the agenda.

While the White House was non-committal, providing the FT with the following brief statement:

“Gary Cohn and Peter Navarro are both valued members of the president’s economic team. They are working together to enact the president's economic agenda, protect American workers and grow American businesses.”

... the "globalists" led by Cohn and others "have seized on Mr Navarro’s public comments — and widespread criticism by economists of his stand on trade deficits and other matters — to try and sideline him."

That has led to discussions over moving Mr Navarro and the new National Trade Council he leads out of the White House and to the Commerce Department, headed by another Wall Street veteran, Wilbur Ross.

And, if the FT is correct, it appears that the Goldman-led faction is winning.

Can you spot the potential flaw in Durden's reasoning. There is an alternative explanation. Isn't it at least possible that the Financial Times is spinning things in Cohn's favor for precisely the same reason it claims Navarro published his Wall Street Journal op/ed? It's not as if the FT isn't openly on the side of the globalists and free traders, after all.

And what are two things we know SJWs always do? They lie and they project. Aside from academia, what field is more SJW-converged than the media? I would not consider the FT to be either a reliable or an impartial source in this matter. You'd think people would have learned by now. Don't ever count the God-Emperor out until he is actually, confirmably, undeniably, out.

Where is the depression?

Occasionally economically ignorant critics attempt to nip at my ankles by making reference to the apparent absence of the global economic contraction that I believe is happening and predicted would start to become widely recognized by the end of 2010. But the failure of the Great Depression 2.0 to be recognized in the conventional macroeconomic statistics yet doesn't bother me in the slightest, because the map is not the territory. And, as I demonstrate in the chapter entitled "No One Knows Anything", those statistics cannot be trusted in the least. Keep in mind that the National Association of Realtors is having to revise its numbers to account for the 3.1 million home sales that were reported by its statistical model in 2009 and 2010 but cannot be found in any real-world recording process; a similar correction to GDP would indicate a 30 percent decline from $14,870 billion to $10,306 billion. It's interesting to see how this is roughly in line with the confidential Goldman Sachs report cited by the Market Ticker.

What have I been saying? That the only thing keeping us from recognizing a full-on economic depression was government deficit spending? Spending that, at present levels, cannot possibly continue.

Worse, there's no way out of the box. Raise taxes and you subtract directly from private spending. Refuse to raise taxes and you are forced to continue to borrow. Extrapolate out the $1.7 trillion from calendar 2010 and removing that would result in a decrease of twenty-eight times Goldman's estimate, or some fifty percent of GDP.

Were you sitting down when you read that? Did you have an incontinent moment? If you didn't then you don't believe Goldman's confidential report. If you do believe it you now know what's going to happen. Not might, will.

One way or another, the artificial support to GDP that is embedded in our insane deficit spending will stop. It mathematically must stop. And when it does stop, if you believe Goldman's analysis, even if we only cut deficit spending in half GDP will fall by 25%. If we eliminate it? GDP is halved.

And there, my dear critics, is precisely where your missing depression is. I don't mind admitting that the Fed has been able to keep the situation strung together with string and chewing gum longer than I thought they could, but it doesn't matter if they manage to keep it up for another five years. The end result will still be the same. Although it's not quite correct to say that it doesn't matter, as the longer they manage to postpone the inevitable, the more painful it is going to be.

Socionomics told us 10 years ago that there we were going to be seeing a huge increase in violent political upheaval around the world. That's exactly what we're seeing now across the Middle East, but don't think that it is going to end there. Once the desperation spending stops, it's going to spread across the East and West as well. We're not talking cannibalism in the streets, but we're also not talking about a stroll in the park either. But just so we're clear, I expect at least one more round of stimulus, and probably two, before the Keynesians throw in the towel. This indicates that Republicans will eventually cave on the debt ceiling; given their strong rhetoric there will have to be some sort of crisis that will excuse the abandonment of their position.

The cross of Goldman

The Republicans are determined to crucify themselves upon it:

Rep. Darrell Issa, the top Republican on the House Oversight committee, is demanding a slew of documents from the Securities and Exchange Commission, asserting that the timing of civil charges against Goldman Sachs raises “serious questions about the commission’s independence and impartiality.”

Issa’s letter, addressed to SEC Chairwoman Mary Schapiro and signed by eight other House Republicans, asks whether the commission had any contact about the case, prior to its public release, with White House aides, Democratic Party committee officials, or members of Congress or their staff.

“[W]e are concerned that politics have unduly influenced the decision and timing of the commission’s controversial enforcement action against Goldman,” Issa writes.

Beautiful! Simply beautiful! The Republicans are so astoundingly stupid, so uncompromisingly idiotic, that they are actually going to take on the SEC in defense of Goldman Sachs! Apparently they learned absolutely nothing from giving away the presidency in return for the banking bailout, now they're threatening to get Obama re-elected on behalf of the Vampire Squid... who gave more money to Obama and the Democrats in 2008 anyhow.

No wonder they're called the stupid party.

By the banks, for the banks, of the banks

This little news item tends to demonstrate why looking to the monetary authorities to lead the economy out of the hole created by the financial institutions doesn't make a whole lot of sense:

Stephen Friedman, the chairman of the Federal Reserve Bank of New York, abruptly resigned on Thursday, days after questions arose about his ties to Goldman Sachs. Mr. Friedman was chairman of the New York Fed at the same time he was a member of Goldman’s board. He also had a substantial stake in the firm as the Fed was crafting a solution to keep Wall Street banks afloat.

Meanwhile, another Goldman capo was running the U.S. Treasury until recently. And Larry Summers, Obama's economics advisor, collected 135,000 from Goldman for a one-day visit.

Recession proof

Or maybe not. Remember how I pointed out that there was going to be a crash this year? Now consider what Goldman Sachs was saying at the end of December:

Just months after almost everyone on Wall Street worried that a recession was just around the corner, Goldman Sachs said a downturn is unlikely over the next several years.

In fact, the firm’s economists stopped just short of saying that the U.S. economy is recession-proof.

An analysis Goldman conducted of the current potential risks to growth show that they are mostly muted. The report found that the pillars of the “Great Moderation” that began in the 1980s — low levels of volatility marked by sustainable growth and muted inflation, interrupted only by the financial crisis more than a decade ago — are still standing.

Investors could be excused for getting a little nervous over such calls, as optimism also was heavy in late 2007, just as the economy was about to enter the worst of the financial crisis.

So much for those "mostly muted" risks to growth.

Legalized fraud

Overturning centuries of English Common Law, false representation is now legal in the United States.

Goldman Sachs Group Inc. (GS) won dismissal of a suit over $450 million in residential mortgage-backed securities, with a New York judge saying that the firms that bought the bonds should have done more research beforehand.

State Supreme Court Justice Charles Ramos dismissed the claims against Goldman Sachs today, saying the investors only reviewed data presented in offering documents for the securities and never asked to review files for the underlying loans.

“The true nature of the risk being assumed could, admittedly, have been ascertained from reviewing these loan files and plaintiffs never asked for them,” Ramos wrote.

In other words, it's perfectly legal to present someone with a fraudulent document claiming to be selling them a pig in the poke, because if they don't actually look in the sack to see that there is a dead rat, and not a live pig in there, it's their own fault. This is another sign of the continued collapse of the rule of law in the USA.

Congratulations, Justice Ramos. You may have just destroyed the securitization market. Who in their right minds will ever purchase a loan security again? If you were going to review each and every loan and ascertain the risks involved, you would already be a mortgage bank.

Fortunately for Goldman Sachs, there should be enough con artists out there for the apex con artist to continue preying upon. But what sane and honest individual would ever choose to do business with them in light of their behavior here? And can you imagine if this standard were applied across the board? No one would ever dare to buy something in a box or order anything off the Internet ever again.

Goldman Sachs opposes UK independence

In related news, Rapey McRaperson announced that he is opposed to women carrying handguns and pepper spray, saying that it would be a "loss/loss scenario":

Kevin Daly, part of the investment bank’s economic team, has concluded that a British departure from the EU would result in a “loss/loss scenario” in which both the UK and the rest of the bloc would be damaged.

But in a note to investors, Mr Daly added that Goldman does not expect an in/out referendum because the Tories first need to win an outright majority and, the bank reckons, “at this stage, this doesn’t appear likely”.

Mr Daly said a UK exit would “come with a significant economic cost to the UK” because it is “highly integrated” with the EU. The economist noted that trade with the other 26 members of the EU accounts for 16pc of UK GDP.

He dismissed those who argue that Britain could negotiate a trade deal with the EU once it had left. “Given the size and importance of the UK economy, it is unlikely that the UK could negotiate the same access to the EU single market that Switzerland and Norway have achieved,” he said.

Goldman isn't even trying to make sense of its pro-EU position here.  Britain not only sends billions of pounds into the Brussels sinkhole every year, but has nonsensical and tremendously wasteful regulatory regimes imposed upon it, to say nothing of millions of unwanted economic migrants.  And when has being bigger and more important ever made it HARDER for a nation to pursue what it wants in negotiation?

The Tea Party - Occupy Wall Street alliance

That would be a worthwhile third party:

Open Letter from a Marine Tea Partier to All Occupiers
Posted on 12/12/2011

First of all, I’m surprised you’re reading this. Thanks to the corrupt media, many of you might be clueless to the fact we share quite a bit of commonground.

Let me clarify: By “Tea Party,” I am in no way referring to the hijacked movement we know and love today. By “Tea Party,” I don’t mean Iran warmongers, bailout lovers, the “extreme right,” and people who think what happens in your bedroom affects them in any way. No, what I mean is the Tea Party as it started in 2007 as opposition to Bush policies.

The media loves to paint a picture of OWS vs. TP, “right” vs. “left,” etc. It’s an old tactic called divide and conquer. If we fight amongst ourselves, no one looks at the true criminals at work in society....

The system we live under is a corporatist model rapidly deteriorating into a fascist police state. The reason I added “Marine” to the heading of this letter was to (hopefully) attract active duty servicemembers, veterans, and law enforcement. We took an oath to the Constitution in order to join. The oath clearly gives us not only the option, but the responsibility to disobey ALL illegal orders. The police attacking peaceful protesters in the streets are in direct violation of that oath. If you are attacking peaceful people you are already on the wrong side of history.

Remember, focus on commonground. Just don’t look to government to be our saviors. Our politicians (yes, including our President) are bought and paid for by corporations and the mega banks. In fact, Obama’s biggest campaign donor is Goldman Sachs. His Treasury Secretary worked at Goldman Sachs himself. Why do you think some Europeans call us the United States of Goldman Sachs?

Semper Fi and Semper Occupare. Because nothing would terrify the establishment more than a united Occupy Tea Party movement.

- Cpl. Stephen Mark Allen, USMC

Speaking of wholly owned

Goldman Sachs conquers Europe:

As Greece, Italy and the European Central Bank appointed new leaders in the midst of the worsening Euro crisis, observers rushed to find something that might link the cost-cutting crusaders. And it seems the scrutinisers have found a connection in the form of Goldman Sachs. The new president of the European Central Bank, Mario Draghi, Italy’s new prime minister, Mario Monti, and the new Greek prime minister Lucas Papademos all reportedly have the US investment bank as a common denominator.

And Monti has just set the whispers going by refusing to appoint a single elected official to his new cabinet. So, Italy now has an unelected leader buttressed by an unelected consigliere. Fortunately, Goldman has no such undue influence in the United States... wait a minute.

Where the money went

Even with permission from the relevant regulator, fraud is still fraud. This is why no government bailout should EVER be permitted:

Goldman Sachs sent $4.3 billion in federal tax money to 32 entities, including many overseas banks, hedge funds and pensions, according to information made public Friday night. Goldman Sachs disclosed the list of companies to the Senate Finance Committee after a threat of subpoena from Sen. Chuck Grassley, R-Ia.

Imagine that. Goldman should be closed down immediately and its executives investigated, and if necessary, prosecuted for fraud, theft, and any other crimes that apply here.

Goldman Sachs: destroyer of economies

The Vampire Squid is draining the global economy, one nation after another:

Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country's already bloated deficit.

Is anyone going to be surprised when the next time there are reports that a bank has been involved in some suicidally destructive financial shenanigans that have its victimpartner on the verge of bankruptcy, it will turn out to be Goldman again?

2010: economic predictions

"We are seeing early evidence of that recovery: Real gross domestic product (GDP) in the United States rose an estimated 3-1/2 percent at an annual rate in the third quarter, following four consecutive quarters of decline. Most forecasters anticipate another moderate gain in the fourth quarter.... My own view is that the recent pickup reflects more than purely temporary factors and that continued growth next year is likely.... As the recovery becomes established, however, payrolls should begin to grow again, at a pace that increases over time."
- Ben Bernanke, November 16, 2009

"Nobel Prize-winning economist Paul Krugman said he sees about a one-third chance the U.S. economy will slide into a recession during the second half of the year as fiscal and monetary stimulus fade. 'It is not a low probability event, 30 to 40 percent chance,' Krugman said today in an interview in Atlanta, where he was attending an economics conference. Survey of Economists Krugman’s forecast is more pessimistic than the median estimate of 58 economists surveyed by Bloomberg News in early December, which called for a 2.6 percent expansion this year following a 2.5 percent contraction in 2009.
- Paul Krugman, January 4, 2009

"I think the U.S. will avoid a double dip recession, and 2010 GDP growth will be in the 2% to 3% range."
- Calculated Risk, January 1, 2010

"Based on my reading, here is what I conclude the consensus views are as we head into 2010: Muted recovery, but positive growth, for sure! No risk of a ‘double dip’.... So here we are with a glorious opportunity to reintroduce Bob Farrell’s Rule 8: “When all forecasts and experts agree, something else is going to happen.”
- David Rosenberg, December 17, 2009

"Yun predicted that home prices will rise by 4 percent, while home resales, which are expected to reach 5 million this year, will surpass that level in 2010, hitting 5.7 million. Average mortgage rates will average roughly 5.7 percent, he said."
Lawrence Yun, National Association of Realtors, November 13, 2009

"The U.S. economy next year will turn in its best performance since 2004 as spending perks up and companies increase investment and hiring, says Dean Maki, the most-accurate forecaster in a Bloomberg News survey. The world’s largest economy will expand 3.5 percent in 2010, according to Maki, the chief U.S. economist at Barclays Capital Inc. in New York."
- Dean Maki, Barclays Capital, December 28, 2009

"Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. in New York, who was No. 1 among forecasters of GDP during the 12 months through June 2009. Hatzius, 41, estimates the economy will expand 2.4 percent in 2010.... Hatzius and the economists at Goldman Sachs project the unemployment rate will average 10.3 percent next year, compared with a median estimate of 10 percent for 58 responses in this month’s survey.
-Jan Hatzius, Goldman Sachs, December 28, 2009

"Neal Soss, 60, chief economist at Credit Suisse in New York projects the economy will grow 3.3 percent next year."
- Neal Soss, Credit Suisse, December 28, 2009

"John Lonski, 58, chief economist at Moody’s Capital Markets Group in New York, was No. 3. He sees a 2.7 percent expansion."
- John Lonski, Moody's Capital Markets Group, December 28, 2009

"Robert MacIntosh, chief economist at Boston-based Eaton Vance Management forecasting growth of 3.5 percent, and that the jobless rate will average 9.5 percent."
- Robert Macintosh, Eaton Vance Management, December 28, 2009

"Roubini sees a greater chance of a U-shaped economic recovery in developed economies, with a 20 percent to 25 percent chance of a double-dip."
- Nouriel Roubini, October 11, 2009

Here are seven predictions concerning economic-related events I expect to see by December 31, 2010:

1. The BLS will report U-3 unemployment to be in excess of 11 percent. The actual number of unemployed workers will be much higher.
2. The BEA will report real GDP to be less than 12,973 in billions of chained 2005 dollars.  A "double-dip recession" will be the official description, but rumors of a "second great depression" will be increasingly heard as the evidence mounts that a single large scale economic event is taking place.
3. The Federal budget deficit for 2010 will exceed the projected $1.17 trillion.
4. More than 200 banks will be seized by the FDIC. Their deposits will represent more than two percent of all U.S. bank deposits.  (Specific calculation: 305 banks and 5.2% of total deposits.)
5. Commercial bank loans and leases (TOTLL) will fall below $6.3 trillion.
6. All sectors credit market debt outstanding, which is published in the Fed's quarterly Z1 Flow of Funds Accounts, will fall below $52 trillion.  This will mostly be the result of continued deleveraging by the financial sector, and to a lesser extent, the housing sector, which between them will decline by more than $1 trillion.
7. The national median existing-home price will not rise 4% from $172,600 to $179,500 as predicted by NAR's lead economist Lawrence Yun, but will fall below 165k instead.  And if there is the sort of crash that is implied by the preparations for SuperTARP, existing home prices will collapse below $140k.

I also expect an increase in Sitemeter-recorded visits to the blog to increase from 1,942,640 in 2009, (161,887 per month) to 2,250,000, primarily as a result of an increased interest in economic matters. The 1.9 million visits, (3,115,071 page views), was up 19.6% from the visits 1,566,254 in 2008. I still find it astonishing that so many people continue to be interested in my various thoughts and opinions, but thank you for stopping by and please feel free to do so throughout the year.