From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression -- and they're about to do it again. T he first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who's Who of Goldman Sachs graduates. Invasion of the Home Snatchers. By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street.

The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman — not to mention ….

But then, any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

The bank's unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere — high gas prices, rising consumer credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you're losing, it's going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it's going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth — pure profit for rich individuals.

They achieve this using the same playbook over and over again.

The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage.

Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased.

They've been pulling this same stunt over and over since the s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet. If you want to understand how we got into this financial crisis, you have to first understand where all the money went — and in order to understand that, you need to understand what Goldman has already gotten away with.

It is a history exactly five bubbles long — including last year's strange and seemingly inexplicable spike in the price of oil.

There were a lot of losers in each of those bubbles, and in the bailout that followed. But Goldman wasn't one of them. BUBBLE 1 The Great Depression. G oldman wasn't always a too-big-to-fail Wall Street behemoth, the ruthless face of kill-or-be-killed capitalism on steroids —just almost always.

The bank was actually founded in by a German immigrant named Marcus Goldman, who built it up with his son-in-law Samuel Sachs. They were pioneers in the use of commercial paper, which is just a fancy way of saying they made money lending out short-term IOUs to smalltime vendors in downtown Manhattan.

You can probably guess the basic plotline of Goldman's first years in business: In that ancient history there's really only one episode that bears scrutiny now, in light of more recent events: Wall Street's Big Win.

This great Hindenburg of financial history has a few features that might sound familiar. Back then, the main financial tool used to bilk investors was called an "investment trust. Much as in the s, when new vehicles like day trading and e-trading attracted reams of new suckers from the sticks who wanted to feel like big shots, investment trusts roped a new generation of regular-guy investors into the speculation game. Beginning a pattern that would repeat itself over and over again, Goldman got into the investmenttrust game late, then jumped in with both feet and went hogwild.

The trading corporation then relentlessly bought shares in itself, bidding the price up further and further. Eventually it dumped part of its holdings and sponsored a new trust, the Shenandoah Corporation, issuing millions more in shares in that fund — which in turn sponsored yet another trust called the Blue Ridge Corporation. In this way, each investment trust served as a front for an endless investment pyramid: Goldman hiding behind Goldman hiding behind Goldman.

Of the 7, initial shares of Blue Ridge, 6, were actually owned by Shenandoah — which, of course, was in large part owned by Goldman Trading. Commentary on Politics and the Economy by Matt Taibbi. The end result ask yourself if this sounds familiar was a daisy chain of borrowed money, one exquisitely vulnerable to a decline in performance anywhere along the line.

The basic idea isn't hard to follow. If the last fund in the line starts to lose value, you no longer have the money to pay back your investors, and everyone gets massacred. In a chapter from The Great Crashtitled "In Goldman Sachs We Trust," the famed economist John Kenneth Galbraith held up the Blue Ridge and Shenandoah trusts as classic examples of the insanity of leveragebased investment.

BUBBLE 2 Tech Stocks. F ast-forward about 65 years. Goldman not only survived the crash that wiped out so many of the investors it duped, it went on to become the chief underwriter to the country's wealthiest and most powerful corporations.

Thanks to Sidney Weinberg, who rose from the rank of janitor's assistant to head the firm, Goldman became the pioneer of the initial public offering, one of the principal and most lucrative means by which companies raise money.

During the s and s, Goldman may not have been the planet-eating Death Star of political influence it is today, but it was a top-drawer firm that had a reputation for attracting the very smartest talent on the Street. It also, oddly enough, had a reputation for relatively solid ethics and a patient approach to investment that shunned the fast buck; its executives were trained to adopt the firm's mantra, "long-term greedy. But then, something happened. It's hard to say what it was exactly; it might have been the fact that Goldman's cochairman in the early Nineties, Robert Rubin, followed Bill Clinton to the White House, where he directed the National Economic Council and eventually became Treasury secretary.

While the American media fell in love with the story line of a pair of baby-boomer, Sixties-child, Fleetwood Mac yuppies nesting in the White House, it also nursed an undisguised crush on Rubin, who was hyped as without a doubt the smartest person ever to walk the face of the Earth, with Newton, Einstein, Mozart and Kant running far behind. Rubin was the prototypical Goldman banker. And "what Rubin thought," mostly, was that the American economy, and in particular the financial markets, were over-regulated and needed to be set free.

During his tenure at Treasury, the Clinton White House made a series of moves that would have drastic consequences for the global economy — beginning with Rubin's complete and total failure to regulate his old firm during its first mad dash for obscene short-term profits. The basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren't much more than potfueled ideas scrawled on napkins by uptoolate bongsmokers were taken public via IPOs, hyped in the media and sold to the public for mega-millions.

It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out story windows and opening the phones for bids.

In this game you were a winner only if you took your money out before the melon hit the pavement. It sounds obvious now, but what the average investor didn't know at the time was that the banks had changed the rules of the game, making the deals look better than they actually were.

They did this by setting up what was, in reality, a two-tiered investment system — one for the insiders who knew the real numbers, and another for the lay investor who was invited to chase soaring prices the banks themselves knew were irrational.

While Goldman's later pattern would be to capitalize on changes in the regulatory environment, its key innovation in the Internet years was to abandon its own industry's standards of quality control. But Wall Street took these guidelines and threw them in the trash. The problem was, nobody told investors that the rules had changed. They'd been intact since the s. Jay Ritter, a professor of finance at the University of Florida who specializes in IPOs, says banks like Goldman knew full well that many of the public offerings they were touting would never make a dime.

Then it was one year, then it was a quarter. By the time of the Internet bubble, they were not even requiring profitability in the foreseeable future. Goldman has denied that it changed its underwriting standards during the Internet years, but its own statistics belie the claim. Just as it did with the investment trust in the s, Goldman started slow and finished crazy in the Internet years. After it took a little-known company with weak financials called Yahoo! Of the 24 companies it took public ina third were losing money at the time of the IPO.

Inat the height of the boom, it took 47 companies public, including stillborns like Webvan and eToys, investment offerings that were in many ways the modern equivalents of Blue Ridge and Shenandoah.

The following year, it underwrote 18 companies in the first four months, 14 of which were money losers at the time. As a leading underwriter of Internet stocks during the boom, Goldman provided profits far more volatile than those of its competitors: Inthe average Goldman IPO leapt percent above its offering price, compared to the Wall Street average of percent.

How did Goldman achieve such extraordinary results? One answer is that they used a practice called "laddering," which is just a fancy way of saying they manipulated the share price of new offerings.

Here's how it works: Say you're Goldman Sachs, and Bullshit. You agree on the usual terms: You'll price the stock, determine how many shares should be released and take the Bullshit.

You then promise your best clients the right to buy big chunks of the IPO at the low offering price — let's say Bullshit. That seemingly simple demand gives you inside knowledge of the IPO's future, knowledge that wasn't disclosed to the day trader schmucks who only had the prospectus to go by: Goldman was repeatedly sued by shareholders for engaging in laddering in a variety of Internet IPOs, including Webvan and NetZero.

Maier told the SEC that while working for Cramer between andhe was repeatedly forced to engage in laddering practices during IPO deals with Goldman. And it's specifically that kind of behavior that has caused the market crash. They built these stocks upon an illegal foundation — manipulated up — and ultimately, it really was the small person who ended up buying in.

Goldman, which has denied wrongdoing in all of the cases it has settled, refused to respond to questions for this story. Another practice Goldman engaged in during the Internet boom was "spinning," better known as bribery. Here the investment bank would offer the executives of the newly public company shares at extra-low prices, in exchange for future underwriting business.

Banks that engaged in spinning would then undervalue the initial offering price — ensuring that those "hot" opening-price shares it had handed out to insiders would be more likely to rise quickly, supplying bigger first-day rewards for the chosen few. So instead of Bullshit. In one case, Goldman allegedly gave a multimillion-dollar special offering to eBay CEO Meg Whitman, who later joined Goldman's board, in exchange for future i-banking business.

According to a report by the House Financial Services Committee inGoldman gave special stock offerings to executives in 21 companies that it took public, including Yahoo! Such practices conspired to turn the Internet bubble into one of the greatest financial disasters in world history: But the real problem wasn't the money that was lost by shareholders, it was the money gained by investment bankers, who received hefty bonuses for tampering with the market.

Instead of teaching Wall Street a lesson that bubbles always deflate, the Internet years demonstrated to bankers that in the age of freely flowing capital and publicly owned financial companies, bubbles are incredibly easy to inflateand individual bonuses are actually bigger when the mania and the irrationality are greater. Nowhere was this truer than at Goldman. Those numbers are important because the key legacy of the Internet boom is that the economy is now driven in large part by the pursuit of the enormous salaries and bonuses that such bubbles make possible.

Goldman's mantra of "long-term greedy" vanished into thin air as the game became about getting your check before the melon hit the pavement. The market was no longer a rationally managed place to grow real, profitable businesses: It was a huge ocean of Someone Else's Money where bankers hauled in vast sums through whatever means necessary and tried to convert that money into bonuses and payouts as quickly as possible.

If you laddered and spun 50 Internet IPOs that went bust within a year, so what? Besides, you were probably out of Goldman by then, running the U. Treasury or maybe the state of New Jersey. One of the truly comic moments in the history of America's recent financial collapse came when Gov.

Once the Internet bubble burst, Goldman had no incentive to reassess its new, profit-driven strategy; it just searched around for another bubble to inflate. As it turns out, it had one ready, thanks in large part to Rubin.

BUBBLE 3 The Housing Craze. G oldman's role in the sweeping global disaster that rolling stocks trading the housing bubble is not hard to trace. Here again, the basic trick was a decline in underwriting standards, although in this case the standards weren't in IPOs but in mortgages.

By now almost everyone knows that for decades mortgage dealers insisted that home buyers be able to produce a down payment of 10 percent or more, show a steady income and good credit rating, and veterans day stock exchange open a real first and last name. Then, at the dawn of the new millennium, they suddenly threw all that shit out the window and started writing mortgages on the backs of napkins to cocktail waitresses and ex-cons carrying five bucks and a Snickers bar.

None of that would have been possible without investment bankers like Goldman, who created vehicles to package those shitty mortgages and sell them en masse to unsuspecting insurance companies and pension funds. This created a mass market for toxic debt that would never have existed before; in the old days, no bank would have wanted to keep some addict ex-con's mortgage on its books, knowing how likely it was to fail. You can't write these mortgages, in other words, unless you can sell them to someone who doesn't know what they are.

Goldman how bank of canada make money on mortgages two methods to hide the mess they were selling. First, they bundled hundreds of different mortgages into instruments called Collateralized Debt Obligations. Then they sold investors on the idea that, because a bunch of those mortgages would turn out to be OK, there was no reason to worry so much about the shitty ones: The CDO, as a whole, was sound.

Thus, junk-rated mortgages were turned into AAA-rated investments. Second, to hedge its own bets, Goldman got companies like AIG to provide insurance — known as credit default swaps — on the CDOs.

The swaps were essentially a racetrack bet between AIG and Goldman: Goldman is betting the ex-cons will default, AIG is betting they won't. There was only one problem with the deals: All of the wheeling and dealing represented exactly the kind of dangerous speculation that federal regulators are supposed to rein in. Derivatives like CDOs and credit swaps had already caused a series of serious financial calamities: A report that year by the Government Accountability Office recommended that such financial back office jobs in delhi in stock market be tightly regulated — forex backtest 99 inthe head of the Commodity Futures Trading Commission, a woman named Brooksley Born, agreed.

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That May, she circulated a letter to business leaders and the Clinton administration suggesting that banks be required to provide greater disclosure in derivatives trades, and maintain reserves to cushion against losses. She refused to back down, however, and continued to push for more regulation of the derivatives.

Then, in JuneRubin went public to denounce her psy stock market, eventually recommending that Congress strip the CFTC of its regulatory authority. Inon its last day in session, Congress passed the now-notorious Commodity Futures Modernization Act, which had been inserted into an 11,page spending bill at the last minute, with almost no debate on the floor of the Senate.

Banks were now free to trade default swaps with impunity. But the story didn't end there. AIG, a major purveyor of default who owns the uk stock market, approached the New York State Insurance Department in and asked whether default swaps would be regulated as insurance.

At the time, the office was run by one Neil Levin, a former Goldman vice president, who decided against regulating the swaps. Now freed to underwrite as many housing-based securities and buy binary option mania free deposit much credit-default protection as it wanted, Goldman went berserk with lending lust.

And in these bilinguals make more money issues of real estate were vast swamps of crap. Many of the mortgages belonged to second-mortgage borrowers, and the average equity they had in their homes was 0. Moreover, 58 percent of the loans smc trade online stock trading little or no documentation — no names of the borrowers, no myyearbook lunch money maker of the homes, just zip codes.

Moody's projected that less than 10 percent of the loans would default. In reality, 18 percent of the mortgages were in default within 18 months. Not that Goldman was personally at any risk. The bank might be taking all these hideous, completely irresponsible mortgages from beneath-gangster-status firms like Countrywide and selling them off to municipalities and pensioners — old people, for God's sake — pretending the whole time that it wasn't grade D horseshit.

But even as it was doing so, it was taking short positions in the same market, in essence betting against the same crap it was selling.

Even worse, Goldman bragged about it in public. The real money was in betting against those same mortgages. Goldman knew ftse stock market close time it was doing.

I ask the manager how it could be that selling something to customers that you're actually betting against — particularly when you know more about the weaknesses of those products than the customer — doesn't amount to securities fraud. Eventually, lots of aggrieved investors agreed. In a virtual repeat of the Internet IPO craze, Goldman was hit with a wave of lawsuits after the collapse of the housing bubble, many of which accused the bank of withholding pertinent information about the quality of the mortgages it issued.

Massachusetts also investigated Goldman for similar misdeeds, acting on behalf of mortgage holders who got currency currency exchange exchange foreign foreign gruppo11.net trade trading holding predatory loans.

The effects of the housing bubble are well known — it led more or less directly to the collapse of Bear Stearns, Lehman Brothers and AIG, whose toxic portfolio of credit swaps was in significant part composed of the insurance that banks like Goldman bought against their own housing portfolios. It fucked the investors who bought their horseshit CDOs by betting against its own crappy product, then it turned around and fucked the taxpayer by making him pay off those same bets.

And once again, while the world was crashing down all around the bank, Goldman made sure it was doing just fine in the compensation department. As a Goldman spokesman explained, "We work very hard here. But the best was yet to come. While the collapse of what timeframe is best for binary option housing bubble sent most of the financial world fleeing for the exits, or to jail, Goldman boldly doubled down — and almost single-handedly created yet another bubble, one the world still barely knows the firm had anything to do with.

B y the beginning ofhow did george soros make his money financial world was in turmoil. Wall Street had spent the past two and a half decades producing one scandal after another, which didn't leave much to sell that wasn't tainted.

The terms junk bond, IPO, sub-prime mortgage and other once-hot financial fare were now firmly associated in the public's mind with scams; the terms credit swaps and CDOs were about to join them.

The credit markets were in crisis, and the mantra that had sustained the fantasy economy throughout the Bush years — the notion that housing prices never go down — was now a fully exploded myth, leaving the Street clamoring for a new bullshit paradigm to sling.

With the public reluctant to put money in anything that felt like a paper investment, the Street quietly moved the casino to call forwarding setting in android physical-commodities market — stuff you could touch: In conjunction with a decline in the dollar, the credit crunch and the housing crash caused a "flight to commodities.

In a classic example of how Republicans and Democrats respond to crises by engaging in fierce exchanges of moronic irrelevancies, John McCain insisted that ending the moratorium on offshore drilling would be "very helpful in the short term," while Barack Obama in typical liberal-arts yuppie style argued that federal investment in hybrid cars was the way out.

But it was all a lie. While the global supply of oil will eventually dry up, the short-term flow has actually been increasing. In the six months before prices spiked, according to the U. Energy Information Administration, the world oil supply rose from Over the same period, world oil demand dropped from Not only was the short-term supply current currency rates in pakistan oil rising, the demand sole trader accounts excel template free it was falling — which, in classic economic terms, should have brought prices at the pump down.

Can i buy infosys stocks what caused the huge spike in oil prices?

Take a wild guess. Obviously Goldman had help — there were other players in the physical commodities market — but the root cause had almost everything to do with futures market terminology behavior of a few powerful actors determined to turn the once-solid market into a speculative casino. Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures — agreeing to buy oil at a certain price on a fixed date.

The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet marlin 17 hmr thumbhole stocks, like a stock. Bya barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.

As is so often the case, there had been a Depression-era law in place designed specifically to prevent this sort of thing. The commodities market was designed in large part to help farmers: A grower concerned about future price drops could enter into a contract to sell his corn at a certain price for delivery later on, which made him worry less about building up stores of his crop.

When no one was buying corn, the farmer could sell to a middleman known as a "traditional speculator," who would store the grain and sell it later, when demand returned. That way, someone was always there how much money can you make cleaning out foreclosed homes buy from the farmer, even when the market temporarily had no need for his crops.

Inhowever, Congress recognized that there should never be more speculators in the market than real producers and consumers. If that happened, prices would be affected by something other than supply and demand, and price manipulations merlin entertainment stock exchange ensue.

A new law empowered the Commodity Futures Trading Commission — the very same body that would later try and fail to regulate credit swaps — to place limits on speculative trades in commodities. As a result of the CFTC's oversight, rolling stocks trading and harmony reigned in the commodities markets for more than 50 years. All that changed in when, unbeknownst to almost everyone in the world, a Goldman-owned commodities-trading subsidiary called J.

Aron wrote to the CFTC and made an unusual argument. Farmers with big stores of corn, Goldman argued, weren't the only ones who needed to hedge their risk against future price drops — Wall Street dealers who made big bets on oil prices also needed to hedge their risk, because, well, they stood to lose a lot too. This was complete and utter crap — the law, remember, was specifically designed to maintain distinctions between people who were buying and selling real tangible stuff and people who were trading in paper alone.

But the CFTC, amazingly, bought Goldman's argument. It issued the bank a free pass, called the "Bona Fide Hedging" exemption, allowing Goldman's subsidiary to envelope mailing make money stuffing uk itself a physical hedger and escape virtually anheuser busch stock options limits placed on speculators.

In the years that followed, the commission would quietly issue 14 similar exemptions to other companies. Now Goldman and other banks were free to drive more investors into the commodities markets, enabling speculators to place increasingly big bets.

That letter from Goldman more or less the greatest forex robot ever led to the oil bubble inwhen the number of speculators in the market — driven there by fear of the falling dollar and the housing crash — finally overwhelmed the real mm forex yang bagus suppliers and consumers.

Byat least three quarters of the activity on the commodity exchanges was speculative, according to a congressional staffer who studied the numbers — and that's likely a conservative estimate.

What is even more amazing is that the letter to Goldman, along with most of the other trading exemptions, was handed out more or less in secret. Last year, a staffer for the House Energy and Commerce Committee just happened to be at a briefing when officials from the CFTC made an offhand reference to the exemptions.

You issued a letter? Can I see it? The CFTC cited a rule that prohibited it from releasing any information about a company's current position in the market. But the staffer's request was about a letter that had been issued 17 years earlier.

It no longer had anything to do with Goldman's current position. What's more, Section 7 of the commodities law gives Congress the right to any information it wants from steve jobs stock option backdating commission.

Still, in a classic example of how complete Goldman's capture of government is, the CFTC waited until it got clearance from the bank before it turned the letter over. Armed with the semi-secret government exemption, Goldman had become the chief designer of a giant commodities betting parlor. Its Goldman Sachs Commodities Index — which tracks the prices of 24 major commodities but is overwhelmingly weighted toward oil — became the place where pension funds and insurance companies and other institutional investors could make massive long-term bets on commodity prices.

Which was all well and good, except for rbi restrictions on forex trading couple of things.

One was that index speculators are mostly "long only" bettors, who seldom if ever take short positions — meaning they only bet on prices to rise.

While this kind of behavior is good for a stock market, it's terrible for commodities, because it continually forces prices upward. Complicating matters even further was the fact that Goldman itself was cheerleading with all its might for an increase in oil prices. At the time Goldman was heavily invested in oil through its commodities trading subsidiary, J. Aron; it also owned a stake in a major oil refinery in Kansas, where it warehoused the crude it bought and sold.

Even though the supply of oil was keeping pace with demand, Murti continually warned of disruptions to the world oil supply, going so far as to broadcast the fact that he owned two hybrid cars.

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High prices, the bank insisted, were somehow the fault of the piggish American consumer; inGoldman analysts insisted that we wouldn't know when oil prices would fall until we knew "when American consumers will stop buying gas-guzzling sport utility vehicles and instead seek fuel-efficient alternatives.

But it wasn't the consumption of real oil that was driving up prices — it was the trade in paper oil. By the summer ofin fact, commodities speculators had bought and stockpiled enough oil futures to fill 1. It was a repeat of both the Internet craze and the housing bubble, when Wall Street jacked up present-day profits by selling suckers shares of a fictional fantasy future of endlessly rising prices.

Once again the big losers were ordinary people. The pensioners whose funds invested in this crap got massacred: And the damage didn't just come from oil. Soaring food prices driven by the commodities bubble led to catastrophes across the planet, forcing an estimated million people into hunger and sparking food riots throughout the Third World.

Now oil prices are rising again: They shot up 20 percent in the month of May and have nearly doubled so far this year. Once again, the problem is not supply or demand. Bart Stupak, a Democrat from Michigan who serves on the House energy committee. And yet prices are up. Asked why politicians continue to harp on things like drilling or hybrid cars, when supply and demand have nothing to do with the high prices, Stupak shakes his head.

BUBBLE 5 Rigging the Bailout. A fter the oil bubble collapsed last fall, there was no new bubble to keep things humming — this time, the money seems to be really gone, like worldwide-depression gone.

So the financial safari has moved elsewhere, and the big game in the hunt has become the only remaining pool of dumb, unguarded capital left to feed upon: Here, in the biggest bailout in history, is where Goldman Sachs really started to flex its muscle.

It began in September of last year, when then-Treasury secretary Paulson made a momentous series of decisions. Although he had already engineered a rescue of Bear Stearns a few months before and helped bail out quasi-private lenders Fannie Mae and Freddie Mac, Paulson elected to let Lehman Brothers — one of Goldman's last real competitors — collapse without intervention.

Thanks to the rescue effort, the bank ended up getting paid in full for its bad bets: By contrast, retired auto workers awaiting the Chrysler bailout will be lucky to receive 50 cents for every dollar they are owed. Converting to a bank-holding company has other benefits as well: Goldman's primary supervisor is now the New York Fed, whose chairman at the time of its announcement was Stephen Friedman, a former co-chairman of Goldman Sachs. Friedman was technically in violation of Federal Reserve policy by remaining on the board of Goldman even as he was supposedly regulating the bank; in order to rectify the problem, he applied for, and got, a conflict of interest waiver from the government.

Friedman stepped down in May, but the man now in charge of supervising Goldman — New York Fed president William Dudley — is yet another former Goldmanite. The collective message of all this — the AIG bailout, the swift approval for its bank holding conversion, the TARP funds — is that when it comes to Goldman Sachs, there isn't a free market at all.

The government might let other players on the market die, but it simply will not allow Goldman to fail under any circumstances. Its edge in the market has suddenly become an open declaration of supreme privilege.

Once the bailouts were in place, Goldman went right back to business as usual, dreaming up impossibly convoluted schemes to pick the American carcass clean of its loose capital.

Two more numbers stand out from that stunning first-quarter turnaround. Even more amazing, Goldman did it all right before the government announced the results of its new "stress test" for banks seeking to repay TARP money — suggesting that Goldman knew exactly what was coming. The government was trying to carefully orchestrate the repayments in an effort to prevent further trouble at banks that couldn't pay back the money right away. But Goldman blew off those concerns, brazenly flaunting its insider status.

And here's the real punch line. That is what the firm paid in taxes inan effective tax rate of exactly one, read it, one percent. How is this possible? According to Goldman's annual report, the low taxes are due in large part to changes in the bank's "geographic earnings mix. Thanks to our completely fucked corporate tax system, companies like Goldman can ship their revenues offshore and defer taxes on those revenues indefinitely, even while they claim deductions upfront on that same untaxed income.

This is why any corporation with an at least occasionally sober accountant can usually find a way to zero out its taxes.

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A GAO report, in fact, found that between androughly two-thirds of all corporations operating in the U. This should be a pitchfork-level outrage — but somehow, when Goldman released its post-bailout tax profile, hardly anyone said a word. One of the few to remark on the obscenity was Rep. Lloyd Doggett, a Democrat from Texas who serves on the House Ways and Means Committee.

BUBBLE 6 Global Warming. It's early June in Washington, D. Having seamlessly navigated the political minefield of the bailout era, Goldman is once again back to its old business, scouting out loopholes in a new government-created market with the aid of a new set of alumni occupying key government jobs.

Gone are Hank Paulson and Neel Kashkari; in their place are Treasury chief of staff Mark Patterson and CFTC chief Gary Gensler, both former Goldmanites. Gensler was the firm's co-head of finance. The new carbon credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.

If the bill passes, there will be limits for coal plants, utilities, natural-gas distributors and numerous other industries on the amount of carbon emissions a. If the companies go over their allotment, they will be able to buy "allocations" or credits from other companies that have managed to produce fewer emissions. The feature of this plan that has special appeal to speculators is that the "cap" on carbon will be continually lowered by the government, which means that carbon credits will become more and more scarce with each passing year.

Which means that this is a brand new commodities market where the main commodity to be traded is guaranteed to rise in price over time. The volume of this new market will be upwards of a trillion dollars annually; for comparison's sake, the annual combined revenues of all electricity suppliers in the U.

Goldman wants this bill. The plan is 1 to get in on the ground floor of paradigm-shifting legislation, 2 make sure that they're the profit-making slice of that paradigm and 3 make sure the slice is a big slice.

One of their lobbyists at the time was none other than Patterson, now Treasury chief of staff. Back inwhen Hank Paulson was chief of Goldman, he personally helped author the bank's environmental policy, a document that contains some surprising elements for a firm that in all other areas has been consistently opposed to any sort of government regulation. Paulson's report argued that "voluntary action alone cannot solve the climate change problem.

Which is convenient, considering that Goldman made early investments in wind power it bought a subsidiary called Horizon Wind Energyrenewable diesel it is an investor in a firm called Changing World Technologies and solar power it partnered with BP Solarexactly the kind of deals that will prosper if the government forces energy producers to use cleaner energy.

As Paulson said at the time, "We're not making those investments to lose money. The bank owns a 10 percent stake in the Chicago Climate Exchange, where the carbon credits will be traded.

Moreover, Goldman owns a minority stake in Blue Source LLC, a Utah-based firm that sells carbon credits of the type that will be in great demand if the bill passes. Nobel Prize winner Al Gore, who is intimately involved with the planning of cap-and-trade, started up a company called Generation Investment Management with three former bigwigs from Goldman Sachs Asset Management, David Blood, Mark Ferguson and Peter Harris. Investing in carbon offsets. Goldman is ahead of the headlines again, just waiting for someone to make it rain in the right spot.

Will this market be bigger than the energy futures market? Well, you might say, who cares? If cap-and-trade succeeds, won't we all be saved from the catastrophe of global warming? Maybe — but cap-and-trade, as envisioned by Goldman, is really just a carbon tax structured so that private interests collect the revenues.

Instead of simply imposing a fixed government levy on carbon pollution and forcing unclean energy producers to pay for the mess they make, cap-and-trade will allow a small tribe of greedy-as-hell Wall Street swine to turn yet another commodities market into a private tax collection scheme. This is worse than the bailout: It allows the bank to seize taxpayer money before it's even collected.

That's the last thing in the world I want. Cap-and-trade is going to happen. Or, if it doesn't, something like it will. The moral is the same as for all the other bubbles that Goldman helped create, from to In almost every case, the very same bank that behaved recklessly for years, weighing down the system with toxic loans and predatory debt, and accomplishing nothing but massive bonuses for a few bosses, has been rewarded with mountains of virtually free money and government guarantees — while the actual victims in this mess, ordinary taxpayers, are the ones paying for it.

It's not always easy to accept the reality of what we now routinely allow these people to get away with; there's a kind of collective denial that kicks in when a country goes through what America has gone through lately, when a people lose as much prestige and status as we have in the past few years.

You can't really register the fact that you're no longer a citizen of a thriving first-world democracy, that you're no longer above getting robbed in broad daylight, because like an amputee, you can still sort of feel things that are no longer there. But this is it. This is the world we live in now.

And in this world, some of us have to play by the rules, while others get a note from the principal excusing them from homework till the end of time, plus 10 billion free dollars in a paper bag to buy lunch. It's a gangster state, running on gangster economics, and even prices can't be trusted anymore; there are hidden taxes in every buck you pay. And maybe we can't stop it, but we should at least know where it's all going.

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Invasion of the Home Snatchers By now, most of us know the major players. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman — not to mention … But then, any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything.

Goldman They achieve this using the same playbook over and over again. BUBBLE 1 The Great Depression G oldman wasn't always a too-big-to-fail Wall Street behemoth, the ruthless face of kill-or-be-killed capitalism on steroids —just almost always. Wall Street's Big Win This great Hindenburg of financial history has a few features that might sound familiar. Commentary on Politics and the Economy by Matt Taibbi The end result ask yourself if this sounds familiar was a daisy chain of borrowed money, one exquisitely vulnerable to a decline in performance anywhere along the line.

BUBBLE 3 The Housing Craze G oldman's role in the sweeping global disaster that was the housing bubble is not hard to trace. This article originally appeared in the Julyof Rolling Stone. We may use your e-mail address to send you the newsletter and offers that may interest you, on behalf of Rolling Stone and its partners. For more information please read our Privacy Policy How we use your email address.