THE
From tech stocks to high gas prices, Goldman Sachs has engineered everymajor marketmanipulation since the GreatDepression -- and they're about to do it again -~&~- By MATT TAIBBI fiE FIRST THING YOU NEED TO KNOW group - which in turn got a $300 billion taxpayer bailout from about Goldman Sachs is that it's every Paulson. There's John Thain, the asshole chiefofMerrill Lynch where. The world's most powerful in who boughtan $87,000 area rugfoT his office as his company was vestment bank is a great vampire squid imploding; a former GoIdm"n banker, Thain enjoyed a multi wrapped around the face of humanity, billion-dollar handout from Paulwn, who used billions in tax relentlessly jammingits bloodfunnel into payerfunds to help Bank ofAmericarescueThain'ssorrycompa anything that smells li~e money. In fact, ny. And Robert Steel, the former Goldmanitehead ofWachovia, the history of the re~~:!t financial crisis, scored himselfandhis fellow executives $225 million in golden which doubles as a history of the rapid parachute payments as his bank was self-destructing. There's decline and fall ofthe suddenly swindled-dryAmerican empire, Joshua Bolten, Bush's chiefofstaffduringthe bailout, and Mark reads like a Who's Who ofGoldman Sachs graduates. Patterson, the current Treasury chief ofstaff, who was a Gold By now, most ofus knowtbe major players. As George Bush's man lobbyistjusta year ago, and Ed Liddy, the former Goldman lastTreasurysecretary, former Goldman CEO Henry Paulsonwas director whom Paulson put in charge of bailed-out insurance the architectofthebailout, a suspiciouslyself·servingplanto fun giantAIG, wbich forked over $13 billion to Goldman afterLiddy nel trillions ofYour Dollars to a. handful ofbis old friends onWan came on board. The heads ofthe Canadian and Italian national Street. Robert Rubin, Bill Clinton's former Treasury secretary, banks are Goldman alums, as is the head oftheWorld Bank, the spent 26 years at Goldman before becoming chairman of Citi~ head ofthe New York Stock Exchange. the last two heads ofthe ILLUSTRATIONS BY VICTOR JUHASZ
S2· ROLI.ING STONll, JUI.Y 9-23.2009
Federal Reserve Bank ofNewYork - which, incidentally, is now which is just a fancy way of saying they made money lend in charge ofoverseeing Goldman - not to mention ... ing out short-term IOUs to small-time vendors in downtown Eut then, any attempt to construct a narrative around all the Manhattan. former Goldmanites in influential positions quickly becomes You can probably guess the basic plotline ofGoldman's first an absurd and pointless exercise, like trying to make a list of 100 years in business: plucky, immigrant-led investment bank everything. What you need to know is the big picture: IfAmer beats the odds, pulls itselfup by its bootstraps, makes shit10ads ica is circling the drain, Goldman Sachs has found a way to be ofmoney. In that ancient history there's really only one episode thatdrain - an extremely unfortunate loophole in tbe system of that bears scrutiny now, in light of more recent events: Gold Western democratic capitalism, which never foresaw thatin a So man's disastrous foray into the speculative mania ofpre-crash cietygoverned passivelybyfree markets and free elections, orga~ Wall Street in the late 19208, nized greed always defeats disorganized democracy. This great Hindenburg of financial history has a few fea The bank's unprecedented reach and power have enabled it tures that might sound familiar. Eack then, the main finan to turn all ofAmerica into a giant pump-and-dump scam, ma cial tool used to bilk investors was called an ~investmenttrust." nipulating whole economic sectors for years at a time, moving Similar to modern mutual funds, the trusts took the cash ofin the dice game as this or that market collapses, and all the time vestors large and small and (theoretically, at least) invested it gorging itself on the unseen costs that are breaking families in a smorgasbord of Wall Street securities, though the securi everywhere - highgas prices, rising consumer-creditrates, half ties and amounts were often kept bidden from the public. So a eaten pension funds, mass layoffs, future taxes to payoffhail regular guy could invest $10 or $100 in a trust and feel like he outs. All that money thatyou'relosing, it's going somewhere, and was a big player. Much as in the 19905, when new vehicles like in both a literal and a figurative sense. Goldman Sachs is where day trading and e-trading attracted reams ofnew suckers from it's going: The bank is a huge, highly the sticks who wanted to feel like big sophisticated engine for converting shots, investment trusts roped a new' the useful, deployed wealth of soci generation of regula.r-guy investors ety into the least useful, most waste into the speculation game. ful and insoluble substance on Earth Beginning a pattern that would - pure profit for rich individuals. IF AMERICA repeat itself over and over aga.in, They achieve this using the same Goldman got into the investment playbook over and over again. The IS NOW trust game late, then jumped in with Cannula is relatively simple: Goldman both feet and wenthog-wild. Thefirst positions itselfinthe middle ofa. spec effort was the Goldman Sachs Trad ula.tive bubble, selling investments CIRCLING ing Corporation; the bank issued a they know are crap. Then they hoover million shares at $100 apiece, bought up vast sums from the middle and all those shares with its own money lowedloors ofsocietywith theaid ofa THE DRAIN, and then sold go percent of them crippled and cormptstate thatallows to the bungry public at $104. The it to rewrite the rules in exchange for GOLDMAN trading corporation then relentless the relative pennies the bank throws ly bought shares in itself, bidding the atpolitical patronage. Finally, when il SACHS HAS price up further and further. Eventu all goes bust, leaving millions ofordi ally itdumped part ofits holdings and nary citizens broke and starving, they FOUND A WAY TO sponsored a new trust, the Shenan~ begin the entire process over again, doah Corporation, issuing millions riding in to rescue us all by lending us BE THAT DRAIN. more in shares in that fund - which back our own money at interest, selI in turn sponsored yet another trust ingthemselves as men above greed,just a bunch ofreally smart called the Blue Ridge Corporation. In this way, each invest guys keepingthe wheels greased. They'vebeen pulling thissame ment trust served as a front for an endless investment pyramid: stunt over and over since the 1920s - and now they're preparing Goldma.n hiding behind Goldman hiding behind Goldma.n. to do it again, creating what maybe the biggest and most auda Ofthe 7,250,000 initial shares ofElue Ridge, 6,250,000 were cious bubble yet. actually owned by Shenandoah - which, ofcourse, was in large Ifyou want to understand how we got into this financial cri part owned by Goldman Trading. sis, you have to first understand where all the money went - and The end result (ask yourself if this sounds familiar) was· a in orderto understand that, you needto understand whatGold daisy chain ofborrowed money, one exquisitely vulnerable to a man has already gotten away with. Itis a historyexactlyfive bub decline in perfonnance anywhere along the line. The basic idea bles long - including last year's strange and seemingly inexpli isn't hard to follow. You take a dollar andborrownine againstit; cable spike in the price ofoi!. There were a lot oflosers in each then you take that $10 fund andborrow $90; thenyou takeyour ofthose bubbles, and in the bailout that followed. But Goldman $100 fund and, so long as the public is still lending, borrow and wasn't one ofthem. invest $900. Ifthe last fund in the line starts to lose value, you no longerhave the money to pa.y back your investors, and every BUBBLE #1 one gets massacred. In a chapter from The Great Crash, 1929 titled ~In Goldman Sachs We Trust,~ the famed economist Jobn Kenneth Galbraith THE GREAT DEPRESSION held up the Blue Ridge and Shenandoah trusts as classic exam OLDMAN WASN'T ALWAYS A TOO-BIG-TO-I'AIL ples of the insanity of leverage-based investment. The trusts, Wall Street behemoth, the rulhless face of kill he wrote, were a major cause ofthe market's historic crash; in or-be-killed capitalism on steroids - just al today's dollars, thelosses the hanksufferedtotaled $475 billion. most always. The bank was actually founded -It is difficult not to marvel at the imagination which was im in 1869 by a German immigrant named Mar plicit in this gargantuan inslUlity," Galbraith observed, sound Gcus Goldman, who built it up with his son-in-law Samuel inglike Keith Olbermann in an ascot. -Ifthere must be madness, Sachs. They were pioneers in lhe use of commercial paper, something may be said for having it on a heroic scale,'"
64' ROLLING STONB, JULY 9-23, 1009 BUBBLE #2 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 tirm duringits first mad dash for TECH STOCKS obscene short-term profits. AST-PORWARD ABOUT 65 YEARS. GOLDMAN NOT The basic scam in the InternetAge is pretty easy even for the only survived the crash tha.t wiped out so many of financially illiterate to grasp. CQmpanieg thatweren'tmuch more the investors it duped, it Wellt on to become the chief than pot-fueled i.deas scrawled on napkins by up-too-Iate bong underwriter to the country's wealthiest and most smokers were taken public via {POs, hyped in the media and powerful corporations. Thanks to Sidney Weinberg. sold tothe public for megamillions. It was as ifhankslike Gold Fwho rose from the rank ofjanitor's assistant to head the firm, man were wrapping ribbons around watermelons, tossing them Goldman became the pioneer oftheinitia.l public offering, one of out 50-story windows and opening the phones for bids. In this theprincipal andmostlucrative means by which companies raise game you were a winner only ifyou took your money out before money. Duringthe1970s and1980s, Goldman may nothave been the melon hit the pavement. theplanet,eatingDeath Star ofpolitical influence it is today, but It sounds obvious now, but what the average investor didn't it was a. top-drawer firm that had a reputation for attracting the know atthe timewasthatthe bankshadchanged therules ofthe very smartest talent on the Street. game, making thedealslookbetterthan they actua1\ywere. They It also, oddly enough, had a reputation for relatively solid did this by setting up what was, in reality, a two-tiered invest ethics and a patient approach to investment that shunned ment system - one for the insiders who knew the real numbers. the fast buck; its exec andanotherfor the lay in utives were trained to vestor who was invited to adopt the firm's mantra, chase soaring prices the "long-term greedy'- One banks themselves knew former Goldman bank were irrationa.1. While erwho left the firm in the Goldman's later pattern early Nineties recallssee would be to capitalize on ing his superiors give up changes in the regulato a very profitable deal on ry environment, its key the grounds that it was a innovation in thelnternet long-term loser. "We gave years was to abandon its back money to 'grown own industry's standards up' corporate cli.ellts who ofquality control. had made bad deals with "Since the Depression, us.~ he says. "Everything there wet"e strict under we did was legal and fair writing guidelines that - but 'Iong-teon greedy' Wall Street adhered to said we didn't want to when takiDg a company make such a profit at public," says one promi the clients' collective ex nent hedge-fund manag pense that we spoiledthe er. "The company had to marketplace.ll be in business fol' a min But then, something imum of five years, and happened. It's hard to it had to show profitabil say what it was exactly; ity for three consecutive it might have been the years. But Wall Street fact that Goldman's co took these guidelines and chairmanin theearly Nineties, RobertRubin, followed Bill Clin threw them in the trash.ll Goldman completed the snow job by ton to the White House, where he directed the National &0 pumpingup the sham stocks: "Their analysts were outthere say~ nomicCouncil and eventually becameTreasurysecretary. While ing BulIshit.com is worth $100 a share." the American media fell in love with the story line of a pair of The problem was, nobody t£lld investors that the rules had baby-boomer, Sixties-child, Fleetwood Mac yuppies nesting in changed. ·Everyoneon the inside knew,~ the manager says. 4Bob the White House, it also nursed an undisguised crushon Rubin, Rubin sure as hen knew whatthe underwritingstandards were. who was hyped as without a. doubt the smartest person ever to They'd been intact since the 1930s." walk the face ofthe Earth, with Newton, Einstein. Mozart and Jay Ritter, a professor of finance at the University of Florida Kant running far behind. who specializes in IPOs, says banks like Goldmanknewfull well Rubin was the prototypica.l Goldman banker. He was proba that many ofthe public offerings they were touting would never bly born in a $4,000 suit, he had a face that seemedpermanent make a dime. 4In the early Eighties. the major underwriters in lyfrozen justshort ofan apology for beingso much smarterthan sisted on three years ofprofitability. Then itwas oneyear, then it you, and he ex-uded a Spack-like, emotion-neutral exterior; the was a quarter. By the time ofthe Internetbubble, they were not only human feeling you could imagine him experiencing was a even requiring profitability in the foreseeable future." nightmare about being forced to fly coach. It became almost a Goldman has denied that it changed its underwriting stan national cliche that whatever Rubin thought was best for the dards during the Internet years, but its own statistics belie the economy - a phenomenon that reached its apex in 1999, when claim. Just as itdid withtheinvestmenttrustin the 1920s, Gold Rubin appeared on the cover of Time with his Treasury deputy, man startedslowandfinished crazyin the Internetyears. After it Larry Summers, and Fed chiefAlan Greenspan underthe head took a little-known companywith weak financials calledYahoo! line THE COMMITTEE TO SAVE TaE WORLD. And "what Rubin public in 1996, once the tech boom hadalreadybegun, Goldman thought,~ mostly, was thatthe AmericlUl economy, and in partic quickly becamethe IPO king ofthe Internet era. Ofthe 240 com ularthe financial markets, were over-regulated and needed to be panies ittookpublicin1997. a third were losingmoney at thetime setfree. During his tenure atTreasury, theClinton White House ofthe IPO. In 1999, at the height ofthe boom, it took 47 compa-
56 • ROLLING STONE. JULY 9-:13, 2009 nies public, iTlcluding stillborns like Webvan and eToys, invest of his own company at $18 in exchange for future business mentofferings thatwere in manyways the modern equivalents of effectively robbing all ofBullshit's new shareholders by diverting Blue Ridge and Shenandoah.The following year, it underwrote 18 cash thatshould ha.ve gone tothecompany's bottomline into the companies in the first four months, 140 ofwhich were money los private bank account ofthe company's CEO. ers atthe time. Ai; a leading underwriter ofInternet stocks dur In one case, Goldman allegedly gave a multimillion-dollar ing the boom, Goldman provMed profits far more volatile than special offering to eBay CEO Meg Whitman, who later joined those ofits competitors: In1999, the average Goldman IPOleapt Goldman's board, in exchange for future i-banking business. 281 percent above its offering price, compared to the Wall Street According to a report by the House Financial Services Com average ofI81 percent. mittee in 2002, GoldmaTl gave special stock offerings to ex How did Goldman achieve such extraordinary results? One ecutives in 21 companies that it took public, including Yahoo! answer is that they used a practice called "laddering,U which is co-founder Jerry Yang and two of the great slithering vil just a fancy way of saying they manipulated the share price of lains of the financial-scandal a.ge - '!Yco's Dennis Kozlowski new offerings. Here's how it works: Say you're Goldman Sachs, and Enron's Ken Lay. Goldman angrily denounced the report and Bullshit.com comes to you and asks you to take their com as ~an egregious distortion of the facts" - shortly before pay panypublic. You agree on the usual tenns: You'll pricethe stock, ing $110 million to settle an investigation into spinning and determine how many shares should be released and take the other manipulations launched by New York state regulators. Bullshit.com CEO on a "road show~ to schmooze investors, all ''The spinning of hot IPO shares was not a harmless corpo in exchange for a substantial fee (typicallysix to seven percent of rate perk," then-attorney general Eliot Spitzer said at the time. the amountraised). You then promise yourbest clients the right "Instead, it was an integral part ofa fraudulent scheme to win to buy big chunks of the IPO at the low offering price -let's say new investment-banking business.D Bullshit.com's starting share price is Such practices conspired to tumthe $15 - in exchange for a promise that Internet bubble into one ofthe great theywill buy more shares later on the est financial disasters in world his open market. That seemingly sim tory: Some $5 trillion ofwealth was ple demand gives you inside knowl wiped out on the NASDAQ. alone. edge of the IPO's future, knowledge GOLDMAN But the real problem wasn't the thatwasn'tdisclosed to the day-trader money that was lost by shareholders, schmucks who only had the prospec~ SCAMM'ED it was the money gained by invest tus to go by: You know that certain of ment bankers. who received hefty bo your clients who bought X amount of nuses for tamperiTlg with the mar slJares at $15 are also going to buy Y HOUSING ket. Instead of teaching Wall Street more shares at $20 or $25, virtually a lesson that bubbles always deflate, guaranteeing that the price is going the Internet years demonstrated to to go to $25 and beyond. In this way, INVESTORS bankers that in the age offreely flow Goldman could artificially jack up ing capital and publicly owned unan the new company's price, which of BY BETTING cial companies, bubbles lIJ'e incredibly course was to the bank's benefit - a easy to inflate. and individual bonus six percent fee ofa $500 million IPO AGAINST ITS es are actually bigger when the mania is serious money. and the irrationality are greater. Goldman was repeatedly sued by OWN CRAPPY Nowhere was this truer than at shareholdersfor engaging in laddering Goldman. Between 1999 and 2002, in a varietyofInternetIPOs, including MORTGAGES. the firm paid out $28.5 billion in com Webvan and Net2ero. The deceptive pensation and benefits - an average practices also caught the attention ofNicholas Maier, the syndi of roughly $350,000 a year per employee. Those numbers are cate managerofCramer &Co., the hedge fund run at the timeby important because the key legacy of the Internet boom is that the now-famous chattering television asshole Jim Cramer, him the economy is now driven in large part by the pursuit of the self a Goldman alum. Maier told the SEC that while working enormous salaries andbonuses thatsuch bubbles make possible. for Cramer between 1996 and 1998, he was repeatedly forced to Goldman's mantraof"long-term greedyD vanished into thin air engage in laddering practices during IPO deals with Goldman. as the game became about gettingyour check before the melon "Goldman, from what I witnessed, theywere the worst perpe hit the pavement. trator," Maiersaid. "Theytotally fueled thebubble. Andit's specifi· The market was no longer 8. rationally managed placeto grow callythatkind ofbehavior thathas causedthemarketcrash. They real, profitable businesses: Itwas a huge oceanofSomeone Else's builtthese stocks upon an illegal foundation - manipulated up Money where bankers hauled in vast sums through whatever andultimately, it really was thesmall person who endedup buying means necessary and tried to convert that money int.o bonuses in." In 2005, Goldman agreed'to pay $40 million for its ladder and payouts as quickly as possible. Ifyou laddered and spun 50 ing violations - a puny penalty relative to the enormous profits it Internet IPOs thatwent bustwithin a year. so what? By the time made. (Goldman, which has denied wrongdoing in all o(the cases the Securities and Exchange Commission got around to fin it has settled, refused to respond to questions (or this story.) ing your firm $110 million, the yacht you bought with your IPO • Another practice Goldman engaged in during the Internet bonuses was already six years old. Besides, you were probably ". boom was "spinning," better known as bribery. Here the invest outofGoldman by then, running the U.S. Treasury ormaybe the mentbankwouLd offer the executives ofthe newly public compa stateofNew Jersey. (One ofthe trulycomic moments in thehisto ny shares atextra-low prices, inexchange for future underwriting ryofAmerica's recent financial collapse camewhen Gov. Jon Cor business. Banks that engaged ill spinning would then underval zine ofNew Jersey, who ran Goldman from 1994to1999 andleft ue the initial offering price - ensuring that those "hot~ opening with $320 million in IPO-fattened stock, insisted in 2002 that price shares it had handed out to insiders would be more likely "I've never even heard the tenn 'laddering' »efore.~) to rise quickly, supplying bigger first-day rewards for the chosen For a bank thatpaid out $7billion a year in salaries, $110 mil few. So instead of Bullsrul.com opening at $20, the bank would lion fines issued halfa decade late were something far less than approach the Bullshit.com CEO and offer him a million shares a deterrent - they were a joke. Once the Internet bubble burst,
58 • ROLLI NO STONlI, J UL>' 9-'13, 2009 Goldmanhad no incentiveto reassess its new, profit-driven strat be tightly regulated - and in 1998, the head of the Commodity egy; it just searched around for another bubble to inflate. As it Futures Trading Commission, a woman named Bl'Ooksley Born, turns out, it had one ready, thanks in large part to Rubin. agreed. That May, she circulated a letter to business leaders and the Clinton administration suggesting thatbanksbe requiredto BUBBLE #3 provide greater disclosure in derivatives trades, and maintain reserves to cushion against losses. More regulation wasn't exactly what Goldman had in mind. THE HOUSING CRAZE ''Thebanks go crazy - they wantit stopped,nsays Michael Green OLDMAN'S ROLE IN THK SWRKl'ING GLOBAL berger, who worked for Born as director oftrading and markets disaster that was the housi ng hubble is not hard to atthe CFTC andis nowa lawprofessoratthe University ofMary trace. Here again, the basic trick was a decline in land. "Greenspan, Summers, Rubin and [SEC chiefArthur] Lev underwriting standards, although in this case the itt want it stopped.n standards weren't in IPOs but in mortgages. By Clinton's reigningeconomic foursome - "especiallyRubin," ac Gnow almost everyone knows that for decades mortgage dealers cordingto Greenberger- called Born in for a meetingandpleaded insisted that home buyers be theircase. She refused toback able to produce a down pay down, however, and continued ment of"10 percent or more, to push for more regulaUon of show a steady income and the derivatives. Then, in June good credit rating, and pos 1998, Rubin went public to de sess a rcal first and last name. nounce her move, eventually Then, at the dawn ofthe new recommendingthat Congress millennium, they suddenly strip the eYrc of its regula threw aU that shit out the tory authority. In 2000, on its window and started writing last day in session. Congress mortgages on the backs of pa.ssed the Dow-notorious napkins to cocktail waitress CommodityFuturesModern es and ex~cons carrying five ization Act, which had been bucks and a Snickers bar. inserted into an n,OOo~pagc None of that would have spending bill at the last min been possible without invest ute, with almostno debate on ment bankers like Goldman, the floor ofthe Senate. Banks who created vehicles to pack were nowfree totrade default age those shittymortgagesand swaps with impunity. sell them en masse to unsus But the story didn't end pecting insurance coropames there. AIG, a major purveyor and pension funds. This cre ofdefaLllt swaps, approached ated a mass market for toxic theNew York State Insurance debt that would never have Department in 2000 and existedbefore; in the old days, asked whether default swaps no bank would have wanted would be regulated as insur to keep some addict ex-eon's ance. At the time, the office mortgage on its books, know was run by one Neil Levin, a ing how likely it was to fail. former Goldman vice pres You can'twrite U\ese mortgag ident, who decided against es, in other words, unless you regulating the swaps. Now can sell them to someone who freed to underwrite as many doesn't knowwhat they are. housing-based securities and Goldman used two meth buy as much credit-defa.ult ods to hide themess theywere protection a.s itwanted, Gold- selling. First, they bundled man went berserk with lend hundreds ofdifferent mortgages into instruments called Collat inglust. Eythe peakoHhehousingboom in 2006, Goldman was eralized Debt Obligations. Then th~y sold investors on the idea underwriting $76.5 billion worth ofmortgage-backed securities that, because a bunch ofthose mortgages would turn out to be - a third ofwhich were subprime - much of it to institutional OK, there was no reason to worry so much aboutthe shitty ones: investors like pensions and insurance companies. And in these The CDO, as a whole, was sound. Thus, junk-rated mortgages massive issues ofreal estate were vastswamps ofcrap. were turned into AAA-rat.ed investments. Second, to hedge its Take one $494 million issue thatyear, GSAMP Trust2006-83. ownbets, Goldmangot companies likeAIGtoprovide insurance Manyofthe mortgages belonged tosecond-mortgage borrowers, - known as credit-defaultswaps - on the CDOs. The swaps were and the average equitythey bad in theirhomes was 0.71 percent. essentiallya racetrack betbetweenAIG and Goldman: Goldman Moreover, 58 percent ofthe loans included little or no documen is betting the ex-cons will default. AIG is betting they won't. tation - no names of the borrowers, no addresses ofthe homes, There was only oneproblemwiththedeals: All ofthewheeling just zip codes. Yet both ofthe major ratings agencies. Moody's and dealing represented exactly the kind ofdangerous specula and Standard & Poor's, rated 93 percent of the issue as invest tion that federal regulators are supposed to rein in. Derivatives ment grade. Moody's projected that less than 10 percent ofthe Hke CDOs and credit swaps had already caused a series ofseri loans would default. In reality, 18 pel·cent ofthe mortgages were ous financial calamities: Procter& Gamble and Gibson Greetings in defaultT/Jithin 18 rrwnths. hoth lost fortunes, and Orange County, California, was forced to Notthat Goldman was personally atany risk. The bank might default in J994. A rellQrt that year bythe Government Account be taking all these hideous, completely irresponsible mortgages ability Office recommended that such financial instruments from beneath-gangstel'-status firms like Countrywideand selling
ROLLINO STONIl, JULY 9-23,2009 ·159 them offw municipillities and pensioners - old people, for God's BUBBLE #4 sake - pretending the whole time that it wasn't grade-D horsc shit. Bllt even as it was doing Sll, itwas taking short positions in the same market. in essence bettingaj1;ainSllhe same crap itwas $4A GALLON selling. Even worse, Goldman bragged about it in public. uThe y THE IIl\GINNING OF 2008. TliK FIl-l ... NCIAL mortgage sector continues to he challenged," David Viniar, the world was in turmoil. Wall Street had spent the past bank's chief financial offieer. boasted ill 2007. uAs a re~;ult, we lWO and a halfdecades producing one scandal after took significant markdowns on our long inventory positions, ... another, which didn't. leave much to sell that wasn't However, our risk bias in that mal'ket was to be short, and that tainted. The terms junk bond, lPG, 8ubprime mort net short position was profitable." In other word.~, the mortgag Bgage andotheronce-hotfinancial fare were nowfinnly associated es it. was selling were for chumps. The real mOlley was in betting in the public's mindwith scams; the termscredit swaps and CDGR ag-dinst those same mortgages. were about tA) join them. The credit markets werein crisis, and the uThat's howaudacious theseassholes are," says one hedge-fund mantra that had sustained the fantasy economy throughout the manager. "At least with other bank~, yOIl could say that they were Bush years - the notion tllat housing prices never go down - was justdumb - they believed whatthey were selliIlK, and itblew them now a fully exploded myth, leaving the Street clamoringfor a new up. Goldman knew wha.t itwas doing." bnllshit paradigm to sling, I ask the manager howitcould be thatselling something to cus Where to go? With the public reluctant to put money in any tomers thatyou're actuallybettingagainst - particularlywhenyou thing that felt like a paper investment, the Street quietly moved know more about the weaknesses ofthose products than the cus the casino to the physical-commodities market - stuffyou could tomer - doesn't amount to securities fraud. to\l(·.h: corn, coffee, cocoa, wheat and, above all, energy com-
U It's exactlysecurities fraud." hesays. modities, especiallyoil. In conjunction "ft's the heart ofsecurities fraud.n with a decline in the dollar. the credit Eventually, lots of aggrieved inves crunch andthe housingcrash caused a tors agreed. In a virtual repeat of the "flight to commodities." Oil futures in Internet [PO craze, Goldman wa.s hit particular skyrocketed, as the price of with a wave of lawsuits after the col GOLDMAN a single barrel went from around $60 lapse of the housing buhble, many of in the middle of2007to a hij1;h of$147 which accused the bank of withhold TURNED A in the summer of 2008. ing pertinent information about the That summer. as the presiden qualityofthe mortgages it issued. New tial campaign heated up, the accept York state regulators are suing Gold SLEEPY. OIL ed explanation for why gasoline had man and 25 other underwriters tin hit $4.11 a gallon was that there was selling bundles ofcrappyCountrywide a problem with the world oil supply. mortgages to city and state pensioll MARKET In a classic exa.mple of how Republi funds, which lost a~ much as $100 mil cans and Democrats rcspond to cri lion in O\e investments. Massachusetts INTO A GIANT ses by engaging in fier<..'e exchanges of also investigated Goldman for simi moronic irrelevancies, John McCa lar misdeeds, acting on behalf of 714 BETTING PARLOR in insisted that ending the morato mortgage holders who got stuck hold rium on offshore drilling would he ing predatory loans. But once again, -- SPIKING PRICES "very helpful in the short term,~ while Goldman got off .... irtually scot-free, Barack Obama in typical liberal-arUl staving offpmscclltiol1 by agreeing to AT THE PUMP. yuppie style argued thatfederal invest pay a paltry $60 million - about what ment in hybrid cars was the way out. the hank's eDO division madein a day ann a halfduring the real Butit was all a Iil'~ While theglobal supply ofoil will eventually estate boom. dryup. the short·tenn flow hasactuallybeen increasing. Tn thesix The effects ofthe noosing bubble are well known - it led more months beforc prices spiked., according to the u.s. Energy Infor or less directly w the collapse ofBear Stearns, Lehman Brothers mation Administration, the world oil supplyrosefrom 85.24 mil and AIG, whose toxic portfolio ofcredit swaps wa<; in significant lion barrels a day to 85.72 million. Over thesameperiod, world oil pa.rt compo.~ed ofthe insmance that hanks like Goldman bought demand dropped from 86.82 million barrels a day to 86.07 mil againsttheirown hOllsing portfolios. Infact, at least $1.3 billion of lion. Notonly was the short-tenn supply ofoil rising, the demand thetaxpayerDloney given to AIGin the bailout ultimatelywentto tor ilwas falling - which, in classic economic terms, should have Goldman, meaning th:lt the bank madeouton thehousingbubble brought prices at the pump down. tWice: It fucked the investors \,,1\0 boughttheirl\orseshitCOOs by &> what causell the huge spike in oil prices'~ Take a wild guess. betting againstits own crappy product. then it turned aroundand Obviously Goldman had help - there were other pla.yers in the fucked the taxpayer by making him pay otJ'those same bets. physical-commodities market - but the root cause had almost And onceagain, while the world was crashingdown all around everything to do with the behavior of a few powerful actors the ba.nk, Goldman made sllre it was doingjust fine in the com detenTlined to turn the once-solid market into a speculative casi pensation department. In 2006. the firm's payroll ju roped to nO. Goldman did it by persuading pension funds and other large $16.5 billion .. an average of$622,000 per employee. As a GoJd institutional investors to invest in oil futures - agreeing to buy oil ma.n spokesman explained, UWe work very hard here." at a certain price on a fixed date. The push transformed oil from But the best was yet to come. While the collap!;C ofthe housing a physical commodity, rigidly subjectto supply and demand, into bubble sent most of the financial world l1eeing for the exits, or to something to bet on, like a stock. Between 2003 and 2008, the jail, Goldman boldly doubled down - and almostsingle-ha.ndedly amount ofspeculative money in commodities grew from $13 bil created yet another bubble, one the world still barely knows the lion to $317 billion, an increase of2,300 pcrcent. By 2008, a bar firm had anything to do with. rel of oil was lraded 27 times, on average, before it wa..~ actually delivered and consumed. Conl.1'ibutingeditorMATT TAl BBI wrote ahouttlw collapse ofAIG, As is so often the case, there had been a Depression-eralaw in and the resulting bailout, in "The Big Takeover" -in RS 107.';. place designed specifically to prevent this sort ofthing. The com-
60 • ROLLING STON\<. JULY 9-23, 2009 modities market was designed in large part to help farmers: A What js even more amazingis thattheletter to Goldman, along growerconcerned aboutfuture price drops could enterinto a con with most oftheother trading exemptions, was handed outmore tract to sell his corn at a certain price for delivery later on, which orless in secret. "I was thehead ofthe division oftradingand mar made him worry less about building up stores ofhis crop. Whcn kets, and Brooksley Born was the chair ofthe CFrC,usa.ys Green no one was buying corn, the farmer could sell to a middleman berger, "and neither ofus knewthis letter was outthere." In fact, known as a "traditional speculator,n who would slore the grain the letters only came to light by accident. Last year, a staffer for a.nd sell it later, when demand returned. That way, someone was the House Energy and Commerce Committeejusthappenedtobe always there to buy from the farmer, even when the market tem at a. briefing when officials from the CFrC made an offhand ref porarilyhad no need for hiS crops. erence to the exemptions. In 1936, however, Congress recognizedthat there should never "1 had been invited to a briefing the commission was hold be more speculators in the market than real producers and con ing on energy,~ the staffer recounts. "And suddenly in the mid· sumers. 1fthathappened, prices would be affected by something die ofit, they start saying, 'Yeah, we've been iSSUing these letters oilier than supply and demand, and price manipulations would for years now.' I raised my hand and said, 'Really? You issued a ensue. A new law empowered the Commodity Futures Trading letter? Can I see it?' And they were like, 'Duh, duh.' So we went (',ommission - the verysame back and forth, and finally body thatwouldlater tryand they said, 'We have to clear fail to regulate credit swaps it with Goldman Sachs.' I'm - to place limits on specu like, 'Whatdoyou mean,you lative trades in commodi have to clear it with Gold ties. As a resultofthe CITC's man Sachs?'n oversight, peace andharmo The CFTCcited arulethat ny reigned in the commod prohibited it from releas ities markets for more than ing any information about 50 years. a company's current posi All that changed in 1991 tion in the market. But the when, unbeknownst to al staffer's request was about most everyone in the world, a letter that had been issued a Goldman-owned com 17 year8 earlier. It no lon modities-trading subsid ger had anything to do with iary called J. Aron wrote Goldman's current position. to the CFTC and made an What's more, Section7ofthe unusual argument. Farm 1936 commodities law gives ers with big stores of corn, Congress the right to any Goldman argued, weren't . information it wants from the only ones who needed the commission. Still, in a to hedge their risk against classic example ofhow com future price drops - Wa.ll plete Goldman's capture of Streetdealers who madebig government is, the CFTC bets on oil prices a/,so need waited until it got clear ed to hedge their risk, be ance from the bank before it cause, well, they stood to turned the letter over. lose a lot too. Armed with the semi This was complete and secret government exemp uHer crap - the 1936 law, tion, Goldman had become remember, was specifically the chiefdesigner ofa giant designed to maintain dis, commodities betting parlor. tinctions between people Its Goldman Sachs Com who were buying and selling modities Index - which real tangible stuff and people who were trading in paper alone. tracks the prices of24 major commoditiesbutis overwhelming Butthe CFTC, aIru1zingly, bought Goldman's argument. Itissued ly weighted toward oil- became the placewhere pension funds the bank a free pass, called the "Bona Fide Hedging" exemption, and insurance companies andotherinstitutional investors could allowing Goldman's subsidiary to call itselfa physical hedger and make massive long-term bets on commodity prices. Which was escapevirtually all limits placed on speculators. Jn theyears that all weU and good, except for a couple of things. One was that followed, the commission would quietly issue 14 similar exemp index speculators are mostly "long only" bettors, who seldom if tions to other companies. evertakeshort positions - meaningtheyonlybeton prices to rise. Now Goldman and other banks were free to drive more While this kind ofbehavior is good for a stock market, it's terri investors into the commodities mal"kets, enabling specula blefor commodities, becauseit continuallyforces prices upward. tors to place increasingly big bets. Thai 199) letter from Gold "If index speculators took short positions as well as long ones, man more or less directly led to the oil bubble in 2008, when you'd see them pushing prices both up and down," says Michael the number of speculators in the market - driven there by Masters, a hedge-fund manager who has helped expose the role fear of the faning dollar and the housing crash - finally over· ofinvestment banks in the manipulation ofoil prices. "But they whelmed the real physical suppliers and consumers. By 2008, at only push prices in one direction: up." least three quarters of the activity on the commodity exchang Complicating matters even further was thefact that Goldman es was speculative, according to a congressional staffer who itself was cheerleading with all its might for an increase in oil studied the numbers - and that's likely a conservative estimate. prices. In the beginning of2008, Arjun Murti, a Goldman ana By the middle oflast summer, despite rising supply and a drop lyst, hailed as an "oracle ofoil" by 1MNew Ycn'k Times, predict in demand, we were paying $4 a. gallon every time we pulled ed a "super spike" in oil prices, forecasting a rise to $200 a bar up to the pump. rel. At the time Goldman was heavily invested (Cont.on98)
ROl.LING STONll, JUL\' 9-23, ~009 • 6l GOLDMAN SACHS shares ofa fictional fantasy future ofend head. "I think they just don't understand lessly rising prices. the problem very well," he says. "You can't [Cant.from 61J in oil through its com In what was by now a painfully famil explain it in 30 seconds, so politicians modities-trading subsidiary, J. Awn; it iar pattern, the oil-commodities melon hit ignore it." also owned a stake in a major oil refinery thepavementhard inthesummer of2008, BUBBLE #5 in Kansas, where itwarehoused the crude causing a massive loss of wealth; crude it bought and sold. Even though the sup prices plunged from $147 to $33. Once Rigging the Bailout ply ofoil was keeping pace with demand, again the big losers were ordinary peo FTER THE OIL BUIlBLE COL Murti continually warned of disruptions ple. The pensioners whose funds invest lapsed last fall, there was no new to the world oil supply, going so far as to ed in this crap got massacred: CalPERS, A bubble to keep things hunlming broadclI.st the fact thatbe owned two hy the California Public Employees' Retil-e - this tim~, the money seems to be re brid cars. High prices, the bank insist menl System, had $1.1 billion in commod ally gone, like worldwide-depression gone. ed, were somehow the fau1t ofthe piggish ities when the crash came. And the dam So the financial safari has moved else American consumer; in 2005, Goldman age didn'tjustcome from oil. Soaring food where, and the big game in the hUllt has analysts insisted that we wouldn't know prices driven by the commodities bubble become the only remaining pool ofdumb, when oil prices would fall until we knew led to catastrophes across the planet, forc unguarded capital left to feed upon: tax "when American consumerswill stopbuy ing an estimated 100 million people into payer money. Here, in the biggest bailout inggas-guzzlingsport utility vehicles and hunger and sparking food riots through in history, is where Goldman Sachs really instead seek fuel-efficient alternatives." out theThirdWorld. started to /lex its muscle. But it wasn't the consumption of real Now oil prices are rising again: They Itbegan in September oflastyear, when oil that was driving up prices - it was the shot up 20 percent in the month of May then-Treasury secretary Paulson made a trade inpaperoil. By thesummerof2008, and have nearly doubled so far this year. momentous series of decisions. Although in fact, commodities speculators had Once again, the problem is not supply he had alreadyengineered a rescue ofBear bought and stockpiled enough oil futures or demand. "The highest supply of oil in Stearns a few months before and helped to fill 1.1 billion barrels of crude, which the last 20 years is now,n says Rep. Bart bail out quasi-private lenders Fannie Mae meant that speculators owned more fu Stupak, a Democrat from Michigan who and Freddie Mac, Paulson elected toletLe ture oil on paper than there was real, serves on the House energy committee. hmanBrothers· oneofGold man's lastreal physical oil stored in all of the country's "Demand is at a IO-year low. Andyet pric competitors - collapse without interven commercial storage tanks and the Strate esareup." tion. ("Goldman's superhero statuswas left gic Petroleum Reserve combined. It was a Asked why politicians continue to harp intact," says market analyst Eric Salzman, repeat ofboth the Internet craze and the on things like drillingor hybrid cars, when Hand an investment-banking competitor, hOllsing bubble, when Wall Streetjacked supply and demand have notlling to do Lehman, goes away.") The very next day, up present-day profits by selling suckers with the high prices, Stupak shakes his Paulson greenlighted a massive, $85 bil-
98
FROM ASBURY PARK TO THE PROMISED LAND: THE LIFE AND MUSIC OF' lion bailoutofAIG, which promptlyturned primary supervisor is now the New York SOl' at MIT andformer official at the Inter around and repaid $13 billion it owed to Fed, whose chairman atthe time ofits an national Monetary Fund, who compares Goldman. Thanks to the rescue elfort, the nouncement was Stephen Friedman, a the bailout to the crony capitalism he has bank ended up getting paid in full for its former co-chairman of Goldman Sachs. seen in Third World countries. "Now it's bad bets: By contrast, retired aula work Friedman was technically in violation of more ofan explicit advantage." ers awaiting the Chrysler bailout will be Federal Reserve policybyremainingon the Once the bailouts were in place, Gold lucky to receive 50 cents fur every dollar board ofGoldman even as he was suppos man went right back to business as usual, they are owed. edly regulating the bank; in order to rec dreaming up impossibly convoluted Immediately after the AIG bailout, tify the problem, he applied for, and got, schemes to pick the American carcass Paulson announced his federal bailoutfor a conllict-of-interest waiver from the gov clean of its loose capital. One of its tirst the financial industry, a $700 billion plan ernment. Friedman was also supposed to moves in the post-bailout erawas to qui called theTroubled AssetReliefProgram, divest himselfofhis Goldma.n stock after etly push forward the calendar it uses to and put a heretofore unknown 35-year Goldman became a bank-holding com report its earnings, essentially wiping old Goldman banker named Nee] Kash pany, butthanks to the waiver, he was al December 2008 - with its $].3 billion in kari in chargeofadministeringthe funds. lowed to go out and buy 52,000 addi pretax losses - off the books. At the same In ord~r to qualify for bailout monies, tional shares in his old bank, leaving him time, the bank announced a highIy suspi Goldman announced that it would con $3 million richer. Friedman steppeddown cious $1.8 billion profit ior the first quar vert from an investment bank to a bank in Ma.y, but the man now in charge of ter of2009 - which apparently included a holding company, a move that allows it supervising Goldman - New York Fed large chunkofmoneyfunneled toitby tax access not only to $]0 billion in TARP presidentWilliam Dudley - is yet another payers via the AIG bailout. "They cooked funds, but to a whole galaxy ofless con former Goldmanile. those first-quarter results six ways from spicuous, publicly backed funding - most The collective message ofall this - the Sunday,~ says one hedge-fund manager. notably, lending from the discount win AlG bailout, the swift approval for its "They hid the losses in the orphan month dow of the Federal Reserve. By the end bank-holding conversion, the TARP funds and caned the bailout money profit." of March, the Fed will have lent or guar - is thatwhen itcomes to Goldman Sachs, 1Wo more numbers stand outfrom that a.nteed at least $8.7 trillion under a series there isn'ta free marketat aU. Thegovern stunning first-quarter turnaround. The of new bailout programs - and thanks ment mightlet other players on the mar bank paid out an astonishing $4.7 billion to an obscure law allowing the Fed to ket die, but it simply will not allow Gold in bonuses and compensation in the first block most congressional audits, both the man to fail under any circumsta.nces. Its three months of this year, an 18 percent amounts and the recipients ofthe monies edge in the market has suddenly become increase over the first quarter of2008. It remain almost entirely secret. an open declaration ofsupreme privilege. also raised $5 billion by issuingnewshares Converting to a bank-holding compa "In the past it was an implicit advantage,~ almost immediately after releasing its ny has other benefits as well: Goldman's says Simon Johnson, aneconomics profes- first-quarter results. Taken together, the
99 numbers show that Goldman essentially revenues offshore anddefer taxes on those Here's how it works: Ifthe bill passes, borrowed a $5 billion salary payout for its revenues indefinitely, evenwhiletheyclaim there will be limits for coal plants, util executives in the middle ofthe global eco dcductions upfront on that same untaxed ities, natural-gas distributors and nu nomic crisis it helped cause, using half income. This is why any corporation with merous other industries on the amount baked accounting to reel in investors, just an at least occasionally sober accountant of carbon emissions (a.k.a. greenhouse months after receiving billions in a tax can usually find a way to zero out its taxes. gases) they can produce per year. Ifthe payer bailout. A GAO report, infact, found thatbetween companies go over their allotment, they Even more amazing, Goldman did itall 1998 and 2005, roughly two-thirds of all will be able to buy "allocations" or cred right before the government announced corporations operating in the U.S. paid no its from other companies that ha,ve :WilD the results ofits new"stress test" for banks taxes atall. aged to produce fewer em:issions:~Pre§i seeking to repay TARP money suggest This should be a pitchfork-level outrage dentObamaconservatively estiml'j,t()~ tl~\lct ing that Goldman knew exactly what was - butsomehow, when Goldman released its about $646billionworthofcarbQ~cre4it§ coming. The government was trying to post-bailouttaxprofile, hardlyanyone said will be auctioned in thc first seven yeirlii carefully orchestrate the repayments in an a word. One ofthefew toremarkontheob one ofhis top economic aides speculu,tes effort to prevent further trouble at banks scenity was Rep. Lloyd Doggett, a Demo that the real number might be twice Qr that couldn't pay back the money right crat from Texas who serves on the House even three times thatamount. away. But Goldman blew oft' those con Ways and Means Committee. "With the The feature of this plan that has ,spe cerns,,brazenlyflaunting its insiderstatus. right hand out begging for bailoutmoney," cial appeal to speculators is thatthe "cap" "Theyseemed toknoweverythingthatthey he said, "the left is hiding it offshore." on carbon will be continually lowered by needed to do before the stress test came thegovernment, which means thatcllrbon out, unlike everyone else, who had to wait BUBBLE #6 credits will become more andmorescarce until after," says Michael Hecht, a manag with each passingyear. Which means thllt ing director ofJMP Securities. "The gov Global Warming this is a brand-new commodities market ernment came out and said, 'To pay back AST-FORWARD TO TODAY. IT'S where the main commodity to be tracleq. TARP, you have to issue debtofatleastfive early June in Washington, D.C. is guaranteed to rise in price over tim.e. years that is not insured by FDIC - which F Barack Ohama, a popular young The volume ofthis new market will be Goldman Sachs had already done, a week politician whose leadingprivatecampaign upwards ofa trillion dollars annu!tlly;for ortwo before." donor was an investment bank called comparison's sake, the annual combined And here's the real punch line. After Goldman Sachs - its employees paid some revenues ofall' electricity suppliers in the playing an intimate role in four histor $981,000 to his campaign - sits in the U.S. total $320 billion. ic bubble catastrophes, after helping White House. Having seamlessly navi Goldman wants this bill. The plan is (1) $5 trillion in wealth disappear from the gated the political minefield ofthcbailout to getinonthegroundfloor ofparadigm NASDAQ, after pawning off thousands era, Goldman is once again back to its shifting legislation, (2) make sure that oftoxic mortgages on pensioners and cit old business, scouting out loopholes in a they're the profit-making slice ofthatpar ies, after helping to drive the price ofgas new government-created market with the adigm and (3) make sure the slice is~ a big slice. Goldman started pushing hard for cap-and-trade long ago, butthings rl'lally ramped up lastyear when the firm spent As envisioned by Goldman, the fight to $3.5 million to lobby climate issues. (One stop global warming will become a of their lobbyists at the time was none otherthan Patterson, nowTreasury chief "carbon market" worth $1 trillion a year. ofstaff.) Back in 2005, when Hank Paul son was chief of Goldman, he person ally helped author the bank's environ up to $4 a gallon and to push 100 mil aid of a new set of alumni occupying key mental policy, a document that contains lion people around the world into hunger, governmentjobs. some surprising elements for a firm that after securing tens ofbillions oftaxpayer Gone are HankPaulson andNeel Kash in all other areas has been consistently dollars through a series ofbailouts over kari; in their place arc Treasury chief of opposed to any sort ofgovernment regu seen by its former CEO, what did Gold staffMarkPatterson and CFTC chiefGary lation. Paulson's report argued that "vol man Sachs give back to the people ofthe Gensler, both former Goldmanites. (Gen untary action alone cannotsolve the cli United Statcs in 2008? sler was the firm's co-head of finance.) mate-change problem." A few years later, Fourteen million dollars. And instead of credit derivatives or oil the barik's carbon chief, Ken Newcombe, That is what the ,firm paid in taxes in futures or mortgage-backed CDOs, the insisted that cap-and-trade alone won't 2008, an effective tax rate of exactly one, new game in town, the next bubble, is be enough to fix the climate problem read it, orie percent. The bank paid out ip carbon credits - a booming trillion and eaIled for furthcr public investments $10 billion in compensation and bene dollar market that barely even exists yet, in research and development. Which is fits that same year and made a profit of but will if the Democratic Party that it convenient, considering that Goldman more than $2 billion - yet it paidtheTrea gave $4,452,585 to in the last election made early investments in wind power sury less than a third of what it forked manages to push into existence a ground (it bought a subsidiary called Horizon over to CEO Lloyd Blankfein, who made breaking new commodities bubble, dis Wind Energy), renewable diesel (it is an $42.9 million last year. guised as an "environmental plan," called investor inafirm ealled Changing World Howis this possible? Accordingto Gold cap-and-trade. Technologies) and solar power ~(it part man's annual report, the lowtaxes are due The new carbon-credit market is a vir nered with BP Solar), exactly the kind of inlarge partto changes inthebank's "geo tual repeat ofthecommodities-marketca deals that will prosper ifthe government graphic earnings mix." Inotherwords, the sino that's beenkindto Goldman, except it forces energy producers to use clean bankmoveditsmoneyaround so thatmost has one delicious new wrinkle: Ifthe plan er energy. As Paulson said at the time, ofits earnings took place in foreign coun goes forward as expected, therise in prices "We're not making those investments to tries with low tax rates. Thanks to our will be government-mandated. Goldman lose money." completely fucked corporate tax system, won't even have to rig the game. Itwill be The bank owns a 10 percent stake in companies like Goldman can ship their rigged in advance. the Chicago Climate Exchange, where the
IOO • ROLLING STONE, JULY 9-23, 2009 AD\/ERnSEMENT carbon credits will be traded. the same as for all the other Moreover, Goldman owns a bubbles that (}{)ldman helped Ininority stake in Blue SouTce create, fron\ 1929 to 2009. LLC, a Utah-based firm that In almost every case, the sells carbon credits of the very same bank that behaved type that will be in great de recklessly for years, weighing mand ifthe bill passes. Nobel down the system with toxic Prize winner AI Gore, who is loans and predatory debt, and intimately involved with the accOinplishing nothing hut planning of cap-and-trade, massive bonuses for a few BACARD~ started up a company called IntroducJng DRAGON BERRY'", bosses, has been rewarded strawberry rum inlused wilh dra(JJnfTult. Generation Investment Man with mountains of virtually This Asian-ll\SIlired in(usion combines agement with three former free money and government ripe, juicy slraVlbe"las alld sweet, exollc bigwigs from Goldman Sachs guarantees - while the actu dragon(ruil f(J( abrilliant aIId memoraDle laste. Asset Management, David al victims in this mess, ordi Try BACAflDI" DMGON BEAflY'" I'.1th ginger are {J( lext 'dragon' 1065579 for more recipes, Blood, Mark Ferguson and nary taxpayers, are the ones Peter Hanis. Their business? paying tor it, IlacardiFlavors.com Investing in carbon offsets, It's Dot always easy to _'J:~':~::~'~~:~~~:~~:'~:: There's also a $500 million accept the reality of what we . ~"'Y~f'A~ I~ • :lJ~lk'J;}:r~ A ~lao:1; ~Irlto~. b.¥CU~. K, /ClIT;~'L f\IrrI~,lf),'-3~~;;.~~ Green Growth Fund set up now routinely allow these peo .._----- by a Goldmanite to invest in ple to get away with; there's a l green-tech ... the list goes on kind of collective denial that and on. Goldman is ahead kicks in when a country goes of the headlines again, just through what America has waiting for someone to make gone th1'Ough lately, when a it rain in the right spot. Will people lose as much prestige S0BE this market be bigger thanthe and status as we have in the energy-futures market? past few years. You can't real "Oh, it'll dwarf it," says a ly register the fact that you're lifewater fonner staffer on the House nolonger a citizenofathriving Zero calorie SoBe lifewaler is aline at greal-fJlsling energy committee. first-world democracy, that erdIanced water beIIarages I'.1th 0 calories and 0 artificial sweeteners, Enjoy our lJIIinhibited flavors burslillg wilh vilamios yOll Well, might say, who you're no longer above getting and antioxicfants, incJuding two new flavors - Acal Fruit PUIlGh cares? If cap-and-trade suc robbed in broad daylight, be and Mango Melon. NallJraIly sweetened. Wildly delicious. ceeds, won't we all be saved cause like anamputee, you can Get A Lijewater! from the catastrophe of still sort offeel things tbat are global warming? Maybe no longer there. but cap-and-trade, as envi But this is it. This is the sioned by Goldman, is really world we live in now. And in just a carbon tax stl'uctured this world, some o[us have to THERE'S A LOT TO en\f® so that private interests col play by the rules, while others lect the revenues. Instead of get a note fronl the principal simply imposing a fixed gov excusing them from home ernment levy on carbon pol work till the end of time, plus lution and forcing unclean 10 billion free doBars in a ~ energy producers to pay for paper bag to buy lunch. It's veri wireless the mess they make, cap-and a gangster state, running on trade will allow a small tribe gangster economics, and even S3lis1y your aDpotile lor apps with of greedy-as-hell Wall Street prices can't be trusted any the en~ 3, com~ele wi rtl a full swine to turn yet another mOre; there are hidden taxes kejOOard made for messaging. 0111'1 from America's Largest commodities market into a in every buck you pay. And 3G Nerwork, Vemon Wireless. private tax-collection scheme. maybe we can'tstop it, but we This is worse than the bail should at least know where verizOIIWlreleS$.com/env ~':1'd 1IIf.J(,';"J\J:tttrf'(l'l,.,.~~.,l,Ilt~N,*~l!Iln'l~k'Pl1n" D::f~~'l(Illtllot:"t~.,l.' out: It allows the bank to seize it's all going. 4) ~:W~,'bl.~~ 101