Goldman Sachs Has a Strategy to Beat Its Rap

Goldman Sachs is claiming that an SEC suit and Senate questioning of the way it pushed risky assets on its clients without revealing their riskiness is unfair. And, of course, there is strategy to beat the rap, according to Slate.com:

"Long, thoughtful pauses followed by rambling non-responsive answers can easily devour half of a member's allotted questioning time."
-- K. Lee Blalack II, lawyer hired by Goldman Sachs to prep execs for Congressional hearings, explaining strategy in a 2009 article

Yeah, that's right. Stall. It is a time-honored tradition after all. And, of course, Goldman wasn't doing anything illegal. And the fat cats can even argue that there was nothing ethically wrong with encouraging clients to buy something that they wanted to fail in the first place -- as evidenced by the shorting they were doing of all these "great" assets they were foisting off on unwitting clients. These guys are brokers and salespeople, not advisers with a fiduciary duty toward their clients.

I think just listening Goldman Sachs, and other Wall Street types, defend themselves provides its own argument as to why a laissez-faire market, with almost no regulation, would be a bad idea. While it's nice to say that "market forces" should be the ultimate arbiter, it's clear that there would be no operation on a playing field that even remotely resembles something that those of us on the demand side could do in order to control the supply side. Those on the supply side would be too busy running rings around everything and manipulating those market forces that we, for some reason, assume to be above all such manipulation. Unfortunately, "market forces" aren't the be all and end all. They are, in fact, corruptible and controllable by anyone who has enough time, money and/or power.

Our strange focus of national priorities on the idea that regulation-free, unrestrained capitalism will result in honest companies, companies not trying to pull one over on us with lies and obfuscation, baffles me. These guys have shown us time and again that the "free market" is anything but, and if we just give them free rein, they will get all they can and leave the rest of us and our financial system in shambles. Without even feeling a little bad about it.

We do need more transparency, especially if more of us common folk are going to continue to be affected by the types of investing that happens on Wall Street. If people like those at Goldman Sachs are going to be able to manipulate market forces, then We the People, via the government, should be able to influence them as well through reasonable and moderate regulation that enforces transparency.

Also, thanks to Sean at Growing Money for bringing this video to my attention.

Shameless Self-Promotion: Earth Day Edition

Image via Wikipedia

Today is Earth Day! As you know, I am concerned about the environment. (Although my feelings on the global climate change debate reflect annoyance.) We try to do what we can for the environment, and we teach our son to be respectful of the planet. But it doesn't have to be all about Earth. You can also make money from an up and coming green economy. Assuming, of course, that the green economy actually does emerge -- and is robust. Here are 4 posts I wrote today in honor of Earth Day on the subject of going green while getting a little green:

1. Looking for Green Jobs
2. Participating in the Green Economy
3. Investing in Green Stocks
4. Tax Credits for Green Home Improvements

Health Care in the Olden Days

Saw this on Slate.com this morning:

"You know, before we all started having health care, in the olden days our grandparents, they would bring a chicken to the doctor, they would say I'll paint your house. I mean, that's the old days of what people would do to get health care with your doctors. Doctors are very sympathetic people. I'm not backing down from that system."
-- Sue Lowden, U.S. Senate candidate in Nevada

Yeah. I'd like to go back to that health care system. I'll start raising chickens in my backyard so I can make a payment. Seriously, though, I assume she's talking about the method where we pay doctors in cash, for services rendered up front, rather than going through insurance companies.

That works up to a point (I've received cash discounts on some care), but with today's medical technology and what things cost right now, just dropping everyone back into a system where we pay up front would be likely to decrease, rather than increase, the access to affordable health care. I doubt there's a hospital out there that will allow you to paint the outside in lieu of paying for heart surgery.

And about doctors being sympathetic? Most of them probably are. However, they are also businesspeople. If they aren't making a profit, it is difficult for them to continue offering good care with state of the art equipment. The guys you see offering free clinics and traveling to poverty stricken nations have been going for years and amassing enough money that they can afford to provide such services.

It's bad enough that we have a health care system that doesn't measure up with the rest of the developed world. Do we really want to revert to a system that is on par with third world countries?

Taxes

Yesterday day was Tax Day. I owed money, but I'm not complaining. It means I've not been giving the government an interest free loan. In honor of the occasion, I thought I'd share an infographic from BillShrink.



Don't hold against them that they messed up on the date for the Constitution. The Declaration of Independence was 1776. The Articles of Confederation, which governed us until the Constitution, were ratified in 1781, and the Constitution wasn't ratified until 1788. The Constitutional Convention opened in May 1787, with a final draft going to Congress in September 1787. It didn't go into effect until 1789.

National Priorities

I find our national priorities interesting -- and disturbing.

Estimates say we will spend nearly $1 trillion over the course of 10 years (although if you believe the CBO, it will pay for itself by that time, and the net cost will be $0) on providing more people with access to affordable health care. This will arguably also save thousands of lives, since lack of access to health insurance and medical care claims some 45,000 lives a year, if you believe a study published in the Journal of Public Health.

Deficit hawks insist, loudly and angrily, that we can't "afford" a program that will save lives and provide more access to medical care. They even ignore the fact that this means more customers for the health insurance industry and the pharmaceutical industry, both of which have decided to embrace the fact that this is not federally controlled health care, and they will still be able to set their own premiums and prices. Health insurance companies will just no longer allowed to deny coverage to people based on health, and they can no longer break their agreements with customers who pay their premiums faithfully. Insurance companies will still be very much in charge, but they will have to compete more in the marketplace now, offering a wider range of plans. (I thought we liked increased business competition in this country, but maybe not...)

But back to our priorities. Where have these deficit hawks been over the past few years as the price tag for the unnecessary Iraq War has ballooned? The New York Times offers this, from a story written two years ago:

Five years in, the Pentagon tags the cost of the Iraq war at roughly $600 billion and counting. Joseph E. Stiglitz, a Nobel Prize-winning economist and critic of the war, pegs the long-term cost at more than $4 trillion. The Congressional Budget Office and other analysts say that $1 trillion to $2 trillion is more realistic, depending on troop levels and on how long the American occupation continues.

We are now seven years in, and the Iraq War has cost us more than $700 billion so far. If we go for another 3 years, I'm sure the 10 year total for the Iraq War will likley be close to $1 trillion -- making it roughly equivalent in cost to health care reform.



But we the people aren't going to be recouping that war money, like we are likely to do with the cost of health reform. And, of course, instead of providing health services and saving lives, the Iraq War has claimed the lives of more than 4,000 soldiers, and tens of thousands more soldiers have been wounded. But nobody seems concerned about that. And there was no screaming about the deficit back when Larry Lindsey was being fired from the White House for estimating that the Iraq War would cost three or four times what Bush Administration officials kept saying publicly. Even the Pentagon warned, at the beginning, that costs for the Iraq War could get out of hand. But there were no deficit hawks yelling about how we couldn't afford it. No one even seemed too upset, either, when billions turned up missing in Iraq.

I find our national priorities disturbing. We rail against something that will help us care for our own people, and are, at the same time perfectly content to pay the same amount of money for things that do not help us, and that result in death and destruction.

It's disturbing to me that we are more upset about expanding health care coverage to our neighbors than we are about sending them to a foreign country to die.

I'm Going Conservative

Last night, as I lay awake, wondering about my life and my political beliefs, I had an epiphany. I've been so unhappy lately because I've been wrong. I have been undermining America with my progressive politics. Not to mention being a lousy example of my religion. So I'm repenting and mending my ways.

As of this moment (well, as of some moment last night between 1 a.m. and 2 a.m.), I am a conservative. I realize now that this is the only way our country can be saved. We are heading into disaster with all of this progressivism. We've got a way for more people to get health care, but it's too expensive. We should be taking that money and pouring more of it into Iraq. After all, there was a move that made sense. It's all about national security. There's something worth increasing the national deficit by trillions. After all, the best national defense is an invasive offense.

Forget promoting the "general Welfare." Our government has no business trying to make our lives better. That's up to us to do. As long as we can afford what the corporations are charging in an unfettered market. No need for government regulation when the corporations are perfectly capable of regulating themselves. They've never lied to us before.

Happy April Fools' Day.