On Goldman Pond ~ The Risk Averse Alert

Tuesday, April 20, 2010

On Goldman Pond

To anyone thinking that, in six months time civil fraud charges against Goldman Sachs will be a distant memory...

Put your home on this list. The cloud fogging your view forward, today to election day, probably is best explained thus.

In other words, you're just not thinking straight. You're underestimating popular rage ... and political opportunity to keep the casino running via a motion that simply must throw another big sacrificial goat into the volcano, if popular support for further consolidation of the fascist union between government and private finance is to be secured, as it must. This is how truly bankrupt we are, and y'all have made careers denying this end was the inevitable consequence of financial deregulation. Welcome to your sheering, then.

It is little wonder most simply assume public-private partnerships will operate to the benefit of all. Unfortunately, we are long past the point where physical capacity provides enough free capital to keep current the mountain of liabilities built over the past twenty-plus years — most of which are pure gambling debts with a sliver of equity backing. The best that can be done from here on out (up to inevitable systemic bankruptcy reorganization, that is) requires grabbing for pennies on the dollar a rapidly shrinking pie of cash-generating enterprises and levering their revenue streams in an effort to effectively "paper over" collapsing "assets" presently choking balance sheets far and wide.

The operative phrase is "pennies on the dollar." And as 2008 demonstrated, this is most quickly accomplished with a super-sized dose of chaos.

To this end financial "reform" can only serve to buy time for keeping up appearances [of the solvency of the remaining arrangement]. The entire global financial system all too likely will remain entirely vulnerable — bankrupt — and capable only of further dragging down the physical economy. These are the financial facts, Jack, and no rush to buy the i-Pad will change this. Indeed, in these parts the focus on such businesses "firing on all cylinders" ... like dead money Intel, and now, dreamy Apple ... is seen fitting the character of a most dangerous moment as now finds among very visible mainstream consensus woolly sheep who simply fail to fathom why Goldman must be thrown to the wolves.

Suddenly, Goldman's relatively recent public offering (1999) begins to raise suspicion the whole thing was part of a setup — a trap meant to cultivate to the greatest extreme possible the managerial mindset capable of destroying the firm, thus putting it in position to be gobbled up for pennies on the dollar at the appointed time. The SEC's indictment reveals just how successful this effort was.

Probably more than wonder whether the SEC's fraud charges against Goldman are a "Hail Mary," soon to be forgotten, wiser minds (a.k.a. "strong hands") likely only contemplate if Morgan Stanley can be far behind.

Yet far more concerning ... particularly in light of the long-running Goldman Sachs - Washington D.C. revolving door ... is prospect leading to the U.S. Treasury's effective demise. Indeed, the SEC's out-of-character, sudden attack on "Wall Street" fraud begins to make most sense when the real objective is seen aiming at ultimately weakening Treasury further, making it all the more prostrate to the beast of corruption it nurtured ... and this right on the heals of Goldman's intended shredding.

Considered in the context of such present, massive imbalances as finds well over 20% of adult Americans un- or under-employed ... residential foreclosures continuing to skyrocket ... and commercial foreclosures increasingly joining the fray ... one can scarcely imagine what a weak and prostrate Treasury will mean for the average man.

Truly, equity has never looked more dead...

Fast Money
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