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Investing 101 - Apr 18, 2010 - Printable Version
- The Goldman Gang Rides Again: Short Selling the World
by Mark Faulk
(Editor's note: This is part two of "The Goldman Gang Rides Again". Part one, which was originally posted in September on FinancialWire.net, can be read here) The civil charges filed by the SEC against Goldman Sachs last Friday were a good start, but it was only a first step. There should be criminal charges as well, with those responsible from Goldman, Paulson and Co., and the ratings firms who gave the rotten mortgages a AAA rating being led away in handcuffs.
I’d like to begin this article with a disclaimer: In every walk of life, there are good people. People who just want to work hard, do the right thing, and maybe make a decent living and squeeze a little happiness out of life while they’re at it. Some of those people even work on Wall Street, and to them, I apologize in advance for using broad brushstrokes in this commentary. But here goes….
For the past six years, I’ve been condemning the culture of greed on Wall Street, and along with a handful of other unlikely advocates, have been calling for a complete overhaul of our financial system. The total collapse of our economy didn’t wake up those on Capitol Hill, who instead bailed out the very institutions who destroyed our country, and by extension the entire world, in the first place.
Goldman Sachs was, and still is to this very minute, short selling the world. Like the mythological Ouroboros, who devours its own tail, eventually consuming itself, they have systematically destroyed the world over the past couple of decades with a total disregard for their fellow man, their country, and the world they live in. They are complete sociopaths, bereft of any ideals whatsoever.
But while Goldman Sachs and their cohorts are leading the charge headlong into the total destruction of America, they’re not the only culprits. The culture of greed has permeated all of Wall Street and taken over Washington, DC in the process.
Ever the optimist that somewhere out there is a champion who will stand up to the multi-headed beast, I gained a glimmer of hope from the SEC’s actions last Friday. But reality, and recent history, paint a much different picture. And while it is true that President Obama and current SEC Chairman Mary Schapiro has at least talked the talk when it comes to reforming our financial system, up to now their actions have been tepid at best.
Friday’s civil complaint changed all that….maybe. By finally standing up to the Dark Masters of Wall Street, the SEC has taken the most important single step in the history of our stock market system. But nonetheless, it is only the first step, and the charges of fraud against Goldman Sachs are only the tip of the iceberg. The mock sense of surprise is sickening. I believe that Goldman and the other perpetrators on Wall Street have manipulated our markets and conspired to destroy our very way of life for decades. I wrote over six years ago that the manipulation of our markets is financial terrorism, but it is more than that. It is an ongoing act of treason against our very society, with the fraud built into a con game that resembles neither free enterprise nor the capitalistic society that is supposed to be the foundation of our country.
As for the charges against Goldman Sachs, we can only hope that there is a lot more justice yet to be doled out against the sociopaths on Wall Street. For starters, the DOJ needs to charge Paulson and Co., the hedge fund who masterminded the scheme, with criminal fraud. Those responsible should be led off in handcuffs, along with the crooks at Goldman Sachs, beginning at the top and working down through every single person who was even remotely aware that the scheme took place.
Paulson wasn’t charged because they didn’t misrepresent their actions to their own clients. Of course not, they were on the winning side of the multi-billion dollar bet. Instead, according to the SEC charges, Paulson paid Goldman Sachs to knowingly design and package bad mortgages as something called Collateralized Debt Obligations (CDOs), who in turn, fully knowing they would fail (which 99% did in only a year), then sold those damaged goods to their own clients….while both Paulson and Goldman Sachs made huge bets that they would fail. They pocketed billions, while those who Paulson and Goldman Sachs set up as their suckers lost billions. Not only that, their actions most likely contributed significantly to the ensuing meltdown of the housing market, which helped trigger the collapse of the entire world’s economy.
While Paulson and Goldman set up and perpetrated the scam, they weren’t without accomplices. After the rotten mortgages were packaged, they had to be mislabeled as low risk so that they could be dumped off on investors. They had to have the USDA seal of approval. And the ratings agencies, who are supposed to be impartial but whose biggest clients are the major brokers, were more than happy to do their part in moving the fraud forward by stamping a AAA rating on the certain to fail CDOs. For their part, they are as guilty as Goldman Sachs and Paulson and Co.
But as in any good fraud, the system itself must be rigged to allow it to happen. Because the SEC and Congress has failed time and again in their tepid efforts to regulate hedge funds, they have taken control of our financial system, manipulating everything from the stock market to the bond market, the futures market, and any other complex sounding derivatives or options they can dream up to rob the world blind. Because Wall Street, and in particular Goldman Sachs, has had their fingers in every regulatory action of the past 25 years, our regulations are designed to steal every dollar of wealth from the financial system.
Goldman Sachs even figured out how to short entire countries. The scam that almost destroyed Greece was really not much different than the CDO scheme that they were charged with last Friday. In that one, they packaged together the country’s debt and sold it to investors, and then knowing that Greece was in trouble, betrayed them and their own clients by betting on….and in the process helping to cause…the collapse of an entire country’s economy. And Goldman teamed up with Paulson on that one as well, making a killing on their own bets that Greece would collapse. Just wait until the truth is revealed on that little scheme.
Wall Street began this path of destruction over twenty years ago, destroying small companies by lending them money and then naked shorting them into bankruptcy. And then they moved up the food chain. From development stage companies like Eagletech, to companies like Overstock (mid-sized companies trying to turn the corner to profitability) and Krispy Kreme (large cap companies), to financial institutions (eating their own)......to Greece (entire countries). And the most frightening part is that Greece is the Eageltech of nations, the country equivalent of a small company trying desperately to get on its feet. Wait until the predators move up the food chain of countries, destroying everything in their path, just as they did with thousands of American companies.
Where will it end? If this isn’t a wake-up call to those on Capitol Hill that we need a complete overhaul of our financial system, then the next collapse will make the meltdown of September 2008 look like a walk in the park.
And that, sadly, is the Faulking Truth.
Mark Faulk, author of “The Naked Truth: Investing in the Stock Play of a Lifetime”, which chronicles the story of CMKM Diamonds www.thenakedtruthbook.com , has written over 150 articles on the topic of financial reform and naked short selling since 2004, and has logged hundreds of hours in radio and television interviews. His articles have been reprinted or excerpted in numerous major publications, including The Huffington Post and Financial Wire, and financial journals such as the prestigious Capco Journal of Financial Transformation. He is currently working on a major documentary about financial fraud, due to be released in mid-2010.
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