Just one big happy company trading in favors

According to Bloomberg:

"Goldman Sachs Group Inc., which got $10 billion and debt guarantees from the U.S. government in October, expects to pay $14 million in taxes worldwide for 2008 compared with $6 billion in 2007.

The company’s effective income tax rate dropped to 1 percent from 34.1 percent, New York-based Goldman Sachs said today in a statement. The firm reported a $2.3 billion profit for the year after paying $10.9 billion in employee compensation and benefits."

Ho, Ho, Ho. Merry Christmas. So we taxpayers, many of whom are now applying for unemployment checks or standing in a line of 937 for 10 jobs waiting tables, passed the hat for Goldman Sachs Christmas bonuses, which I'm sure were part of "compensation and benefits." Were no guidelines written into this give away package? The $18 billion bonus fund was set aside in 2007. Why didn't they use their own money for the bailout?

Couldn't Congress see this coming? Their own stimulus package so they can pay the mortgage on the multi-million dollar home and the 3rd Mercedes lease. Normally, I don't worry myself about bonuses, perks and salaries--unless I've loaned the company money or own stock in it. And I think I'm now an owner and should have a say in this one. What do you think?

Henry Paulson, the architect of these bailouts, and currently king of the world, is a former employee of Goldman Sachs and a partner with Al Gore in the next great ponzi scheme, cap and trade, a multi-million dollar business called, Generation Investment Management (GIM).

Al Gore might have invented the internet and a new religion, but he's not smart like Hank in money matters. GIM is part of the major carbon-credit trading firms that currently exist: the U.S. Chicago Climate Exchange (CCX) and the Carbon Neutral Company (CNC) in Great Britain. The CCX, is a regulated exchange whose members are committed to cutting their emissions (all the big players are in it--Ted Turner, Kofi Annan, Gore's former chief of staff, Peter Knight, Canadian industrialist Maurice Strong). It is the only cap-and-trade system in North America for six greenhouse gases. Last September, Goldman Sachs bought 10% of CCX shares for $23 million. CCX owns half the ECX (European Climate Exchange), so Goldman Sachs has a stake there as well. See how neatly this works--and it is so bi-partisan, Republicans, Democrats, Americans, Canadians, Brits, Socialists and little 3rd world U.N. tyrants all working together, singing Kum-ba-ya around a non-polluting campfire.

Another former Goldman employee--18 years--is Obama's choice for a "sweeping overhaul" of the Commodity Futures Trading Commission, Gary Gensler. He probably had his cap set (no pun intended) on the SEC but has lost out the Mary Schapiro, head of FINRA, which was asleep at the switch in catching Bernie Madoff.

When Paulson was appointed in 2006 apparently two things on his side (to assure confirmation) was that 1) like most Goldman Sach CEOs he was "insanely wealthy", and 2) a committed environmentalist. Something for everyone.

For information on CCX, ECX, GIM, Hank and Al, see here, and here.

All in the Family

Today a friend was explaining to me an educator's theory (I've forgotten her name) of class and education:

the lower and working class families tend to live for today, without saving a lot, or looking ahead, and they hold their family members very close and rely on family;

the middle class and upper middle class are more goal oriented, they save, they encourage their children to take risks and achieve, and they are less bonded emotionally to their kids and immediate family;

the upper class and extremely wealthy live on past loyalties and connections, and they also hold their values, family and wealth very close.

Watching the Madoff ponzi scheme meltdown and his family ties I think she's on to something. Madoff's niece married a SEC employee, and Walter Noel (Fairfield Greenwich Fund with close ties to Madoff) has 4 or 5 sons-in-laws in the business and they have involved banks and clients for billions around the world--Spain, Brazil, Switzerland, etc.

"The Securities and Exchange Commission plans to probe the relationship between the niece of financier Bernard L. Madoff and a former official at the agency, according to a report in The Wall Street Journal on Wednesday. The probe comes on the heels of an admission by SEC Chairman Christopher Cox that the agency was aware of numerous red flags raised over Bernard L. Madoff Investment Securities LLC, the focus of an alleged $50 billion Ponzi scheme." Market Watch

"In 2002, Vanity Fair dispatched the photographer Bruce Weber to shoot a lavish spread of Mr. Noel’s wife and their five grown daughters at his home in Connecticut (“Golden in Greenwich,” read the headline). That was followed, in 2005, by a Town and Country story on the Noel family’s tropical retreat in Mustique." NYT

Makes you wonder if the glossies will be the next victim of the meltdown, because they follow all the socialites and charity balls. Some charities are closing their doors, and the wealthy aren't answering their phones. In today's WSJ, Holman W. Jenkins, Jr. asked, "When has the SEC ever found a fraud except by reading about it in the newspaper.?" These allegations surfaced in the late 90s, but the SEC never recommended any action. Sort of reminds me of the banking committees in Congress, aka The Barney and Chris Dog and Pony Show. They didn't think there was any problem in the Fannie and Fred housing schemes to back loans to people who couldn't possibly pay it back. Jenkins also suggested that the government, when Madoff makes bail which is tough since the people who could help him are his victims, he be put in charge of Social Security, an even bigger ponzi scheme.

Chart of Madoff losses