As Casey Stengel famously said, “it’s déjà vu all over again.”  Last week I wrote on how this bailout was a manufactured crisis, precipitated by greedy administration fatcats leading George “Dummy” Bush into a panic and then into a stupid decision.  I likened this “crisis” to the panic that led us into Iraq.  I suggested that just as Cheney’s old company, Halliburton, profited mightily from Iraq, so too would Paulson’s former cronies at Goldman Sachs profit from this panic.

All that was missing was the smoking gun.  Today the smoking gun turned up on the pages of the New York Times.

It turns out that at the meeting in New York where Paulson and Bernanke were discussing the bailout of AIG, “the only Wall Street chief executive participating in the meeting was Lloyd C. Blankfein of Goldman Sachs, Mr. Paulson’s former firm.”  The article goes on to detail the reason for Goldman Sachs’ interest: it was on the hook for $20 billion as counterparty in trades with AIG.  No bailout for AIG and presto—Goldman loses 20 billion and Blankfein loses this year’s bonus.

Well, all’s well that ends well.  AIG got its bailout and Goldman remains standing—for now.

Oh, by the way, the article also reports the details of how AIG collapsed, mostly due to trades of “handpicked” credit swap guarantees, supposedly risk-free insurance policies on debt paper.  These “insurance policies” written by AIG produced billions in profits, almost of half of which was paid out in employee compensation.  And guess what—the collapse of this market was no surprise.  It could have been easily foreseen as early as a year ago, when AIG first showed a loss on these transactions.

It might have been foreseen earlier had anyone cared to look into the characters behind AIG and this particular bright financial scheme.

It turns out that the guy who ran the AIG subsidiary, Joseph Cassano, was a former colleague of convicted felon Michael Milken, the jailed junk bond king of Drexel Burnham Lambert.  The apple didn’t fall very far from the tree.

One could also look at AIG’s own black history under Maurice Greenberg, the former AIG chief executive who was kicked out because of an accounting “scandal” (closely akin to fraud and theft.)

It seems reasonable to point out that doing business with thieves often results in losing your money to theft.  And so now we, the taxpayers, are going into business with the thieves of Wall Street and—it appears from the smoking gun news—the thieves have completely hoodwinked George “Dummy” Bush and the Congress once again.

Comments (0)

Subscribe to this comment's feed