Too big to........

be charged?

News Alternative, April, 2010

The recent charges laid against Goldman Sachs have sent measured waves of concern through the markets. Such is the clout, connections and audacity of Goldman, many in the markets are probably believing Goldman can ride it out by brinkmanship, something which risk takers excel in.

Having been hand in glove with the current, and especially the previous administrations, Goldman seems to have elevated itself to something akin to statehood, perhaps it feels it deserves a seat at the UN. The stage has been set, and any sign of weakness now from the SEC will surely draw ridicule and embolden further the reemrging arrogant attitude of the US financial industry.

It is privately acknowledged across Wall Street that the so called 'shenanigans' were in fact illegal activities, such as predatory lending, false credit ratings applied to financial products and appaling and or non existent risk mangement all perpetrated by individuals chasing enrichment and who didn't give a damn about the financial system itself. The latter created such systemic risk that it beggars belief when you hear the industry insiders timidly wringing their hands and publicly saying they had no idea. Plenty of people within the mortgage industry knew the ship was going down months and years before the fact. Indeed, EuroPacific Capital's Peter Schiff had been on the networks for years explaining in great detail how it was all a house of cards.

The business press missed it completely, in fact the media was essentially part of the machine that created the illusion of normality and calm, thereby allowing the bubble and frenzy to inflate further. One FT journalist who published a belated but very readable account of the crisis, failed utterly to acknowledge her own newspaper's shortcomings, and failed to give credit to those who years before could clearly see the schemes were built on sand.

Thanks to taxpayers money, Goldman and others were saved from oblivion, and scant gratitude nor humility has been displayed by any of them. Like leaches on the economy, producing no added value whatsover, incessantly skimming profits off the volatility that abritrageurs flourish in and encourage, the bankiing community will possibly be taken down a peg or two.

If the SEC fails to nail Goldman or another bank for the financial anarchy they created for the world, we shall, it seems, see another crisis down the road. The US needs to restructure its economy and definancialize it, for a top heavy financial sector that has no productive contribution to the economy has and will continue to drain the lifeblood from the productive sector. Trillions or dollars of debt owed to the Japanese and Chinese that can't be paid back along with huge trade deficits and a world that is looking towards diversifying out of the dollar is a sure recipe for disaster.

Unfortunately, as Mr. Schiff so cleary points out, the US administration has not steered away from the cliff, moreover it seems to have stepped on the gas and then only now, realizing a bit too late, something needs to be done.