Sunday, October 7, 2007

Does Goldman Sachs Run the World?

Not completely, but it doesn't mean they aren't trying. It seems that, literally, only flesh eating bacteria can stop these guys.

The Canadian dollar breaks above parity and, lo and behold, last Thursday, a Goldman managing director, Mark Carney is named governor of the Bank of Canada.

Mario Draghi, governor of the Bank of Italy, is also a former Goldman managing director.

Then, of course, there is U.S. Treasury Secretary, Hank Paulson, who was Chairman and Chief Executive Officer of Goldman.

Goldman did have a man at the Bank of England, but their presence there has gone astray for the time being. Goldman man David Walton was on the Bank of England's Monetary Policy Committee from July 2005 until June 2006 when he died at the age of 43 from necrotizing fasciitis, i.e., flesh eating bacteria.

Unimpeded here by flesh eating bacteria, Goldman's presence in United States government financial power circles remains very strong. Prior to Paulson, during Bill Clinton's second administration, Robert Rubin served as Treasury Secretary. Rubin was Vice Chairman and Co-Chief Operating Officer at Goldman from 1987 to 1990. From the end of 1990 to 1992, Rubin served as Co-Chairman and Co-Senior Partner at Goldman. And, Robert Zoellick, new head of the World Bank after Paul Wolfowitz was booted, was a managing director and chairman of the Goldman's International Advisors department.

How do they use these positions? Who knows all the details? But, at a regularly scheduled Fed monetary policy meeting on August 7, the Fed failed to cut interest rates. Records, obtained through a Freedom of Information Act request by Kenneth H. Thomas, a lecturer at the University of Pennsylvania's Wharton School, show that the next day Rubin called Fed chairman Bernanke. Bernanke cut the discount rate 10 days later. Rubin says he called Bernanke to tell him he was doing a good job.

With the sub-prime crisis making markets extremely volatile, it was a difficult period for most investment banking firms, but not for Goldman.

On September 20, Goldman reported much better than expected 3rd quarter results. Analyst Glenn Schorr at UBS AG writes the earnings demonstrate Goldman's "ability to not only navigate choppy waters, but make a ton of money doing so." Better at navigating choppy waters? Do you think your local investment club would show a better performance if your club members managed to get positions running the U.S.Treasury, the central bank of Canada, the central bank of Italy and the World Bank? And if this isn't enough, wouldn't it be great to get Ben Bernanke to take your call in the middle of the sub-prime crisis?

So what are the Goldman boys up to now? Columnist and political insider, Robert Novak is reporting that the Goldman boys are getting ready for Hillary to move into the White House. Despite Treasury Secretary Paulson working for a Republican Administration, Novak reports:

Eyebrows at the Treasury were raised last Tuesday when Secretary Henry M. Paulson Jr. named a major Democratic fundraiser to an important advisory role. The next day, eyebrows were still elevated when Undersecretary Robert K. Steel participated in an event spearheaded by Bill Clinton's two Treasury secretaries

Oh yeah, Steel also happens to be a retired Goldman Sachs vice chairman who worked at the firm with Rubin and Paulson.

Here's more from Novak, obviously scratching his head at Paulson's moves:

A longtime Republican officeholder now in the Bush administration noted these developments and e-mailed a fellow Republican outside the government: "This leads some to wonder whether this Treasury has become the pre-placed Hillary Clinton team." ...the former Goldman Sachs chief executive does not act or sound much like a conservative Republican to the GOP remnant at the Treasury. "It's not in Hank Paulson's DNA," one official told me. Is he loyal to Bush? "Hank is for Hank," the official replied.

UPDATE 7-2-08: Hillary Clinton is slipping in the polls, will this be a problem for Goldman? What do you think? Here's an update on Goldman Sachs and their latest power move, the infiltration of the Barack Obama campaign.

The infiltration is led, of course, by Robert Rubin, former Co-Chairman of Goldman Sachs, and who is now advising Obama.

Further, Obama has named Jason Furman, his top economic adviser. Furman was an aide in the Clinton White House, and worked there directly under Rubin. He is also a close associate of Rubin through their work together on the Hamilton Project.

Which doesn't mean that current Goldman employees aren't paying attention to Obama. David Brooks of NYT reports that:

When you break it out by individual companies, you find that employees of Goldman Sachs gave more to Obama than workers of any other employer...Over the past few years, people from Goldman Sachs have assumed control over large parts of the federal government. Over the next few they might just take over the whole darn thing.

UPDATE 7-21-08 Goldman's most senior financial-institutions banker, Ken Wilson, is temporarily leaving the firm to advise Treasury Secretary Henry Paulson on how to resolve the country's banking crisis...Also, I just became aware this weekend via an NYT profile of CNBC's Erin Burnett that she worked for Goldman for a year.

UPDATE 9-22-08 Goldman is going to become a bank holding company and former Goldman CEO Paulson is about to become an American oligarch. Details here.

UPDATE 10-2008 Goldman Sachs becomes bank holding company on September 21. On October 6, Treasury Secretary and former Goldman head signs tax rule changes giving huge tax benefits to bank holding companies.

UPDATE 10-2008-Neel Kashkari named Treasury Interim Assistant Secretary for Financial Stability is a former Goldman Sachs man.

UPDATE 12-04-2008-Word has leaked that Gerald Corriagan, the former head of the Federal Reserve Bank of New York, is being tapped by Goldman Sachs as chairman of its newly created bank holding company.

UPDATE 1-18-2009 President-elect Barack Obama announces that his choice the head the CFTC is former Goldman exec. Gary Gensler.

Robert Wenzel is Editor & Publisher of and author of The Fed Flunks: My Speech at the New York Federal Reserve Bank.

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  1. Yes, soon Goldman Sachs will be running the world, or at least they will have gained total control of Amerika!

    It is time that the level-headed and outspoken journalists and bloggers that defy the MSM political correctness start calling the current govt takeover of the financial industry what it really is. Too many are incorrectly calling this "socialism."

    It is not socialism, as many cry. Socialism implies collectivism and state ownership of everything. What we are getting now is emerging totalitarian corporatism, where the govt leaders collude with industrial honchos to enrich themselves at the expense of the taxpayers. They do not want to own everything, they only want to own what is profitable enough to steal from without the taxpayers getting wise.

    This is fascism. Plain and simple. Central control of quasi-private industries, where the industrialists are in collusion with the government to rob all the wealth of everybody else. Next comes martial law and ethnic cleansing: Homeland Security's ENDGAME plan. (Google that.)

    Obama could lose the election or have another hanging chad fiasco (Bradley Effect), riots ensue, markets plunge again, Senate passes S1959, W declares martial law, anybody who does not like it ends up in a FEMA camp. Endgame: end of game. End of freedom.

    Wake up, America!

  2. These frauds will meet their maker one day soon and then they will be judged

  3. I will soon wish wicth-doctor voodoo down on you too.
    Isn't that sorta how Christianity works?
    Go see your maker and ask him, dolt.

  4. Socialism is govt control of the economy. Direct control/ownership is communism, indirect is fascism. We've had the latter in this country a long time.


  6. I have difficulties following this story. Wasn't Rubin working at Citicorp instead of Goldman Sachs when the events occur that you describe? I do miss that point, because in the remainder you discuss Goldman. As far as I understand it, Rubin left Goldman for the Clinton Administration, when it was still a partnership and far less "capitalised" then it became when it transformed into a stock market listed limited liability firm around the turn of the century.

  7. The guy whose at the head of the European Central Bank himself worked for Goldman-Sachs!

  8. So looking for a 2014 update. Did Hillary win then?