financially not e plurabus unum

at another web site a blogger londonyoung argued that the aig bailout did not benefit goldman significantly more than any other large financial institution and that absent the aig bailout goldmans other hedges and couter-parties would have off set the 13 billion flow thru goldman got from aig after the US gov aig bailout

my response

it seems to me that LondonYoung argues that one way or another goldman sachs would be made whole via a host of interwoven counter-party agreements except under the remote occurrence of systemic meltdown, in which case the governments bailout of aig was no more beneficial to goldman than many other financial institutions

the system is not a zero sum game contrary to the scientists among us who love elegance

the financial system just faced a day of reckoning with ponzi scheme economics...most everybody made money during the last decade off of casino finance, because money was literally being "made" as in fabricated rather than earned

if you doubt this all you have to do is track M3, which of course the federal reserve made very obscure two years ago (why do you think!)

this game of musical chairs the financial system was built upon,of late, was played to the tune of debt and leverage

some institutions leveraged on average 30 or 40 to one, and when the music stopped many were left without a chair

the idea that goldman was more deserving, or smarter, or obeyed more fundamental principles or had a better trading strategy is nonsense

in fact goldman sold securities and hawked them as great investments at the very time they were shorting those same instruments... fiduciary responsibility anyone?

goldman real expertise, or skill was its connectedness to the power structure by way of the rotation in and out of high government office of its executive management

goldman got to the head of the line, or the top of the food chain if you prefer, as an analogy

wikipedia goldman and look at the bottom of the article for the list of goldman and government incestuousness

as for LondonYoungs claim on a previous thread that probably the average middle class american was more the beneficiary of these financial innovations (ha more like schemes) than the elite...

it is intuitively obvious that such a claim makes no sense, but for those who disdain intuition consider this

the top 2 percent wealthiest americans own more than half of everything

financial services ebit accounted for the largest earnings of any corporate sector traded in the new york exchanges, and hedge fund managers are compensated best amongst all "professions" in america

if the system crumbles and we shall see who has farthest to fall