How do Wall Street banks make their money?

In the March 4, 2000 episode of Rolling Stone, Matt Taibbi answers a question on many peoples' minds: To exactly does Wall Street make so much money that it could hand out multi-billions of dollars in bonuses last year and this year? The story of Taibbi detailed article is that the Wall Street banks use at least seven major scams to make their money, and most of them involve taking advantage of American taxpayers. The seven scams can be summarized in one principle: "the answer . . . is basically twofold: they raped the taxpayer, and they raped their clients." Taibbi's entire article is available online. If the extremes, the corruption and the opacity of Wall Street have angered you, you'll appreciate Taibbi's facts, as well as his colorful descriptions. The first of the seven major cons described by Taibbi is the "Swoop and Squat," by which Taibbi is referring to the fact that AIG should not have been able to hand over big chunks of cash to a single creditor like Goldman when AIG was about to go belly up. Taibbi correctly refers to this maneuver as a "fraudulent conveyance." That money accounts for $19 billion in cash that Goldman would not have had without the massive intervention by the United States. As Taibbi asks: "To is that $13.4 billion in 2009 profits looking now?" Taibbi cautions that these numbers don't even include the direct bailouts of Goldman Sachs and other big banks. I'll mention one more of the seven major Wall Street cons described by Taibbi: "The Dollar store." Less than a week after the AIG bailout, Goldman and another investment bank, Morgan Stanley applied for and received permission to become bank holding companies, which made them available for increased federal financial support. Why would they do that? You probably won't read this anywhere in your local newspaper, because it's real news.

Institutions that were, in reality, high risk gambling houses were allowed to masquerade as conservative commercial banks. As a result of this new designation, they were given access to a virtually endless stream of "free money" courtesy of unsuspecting taxpayers. The $10 billion that Goldman received under the better-known TARP bailout was chump change in comparison to the smorgasbord of direct and indirect aid it qualified for as a commercial bank.

When Goldman Sachs and Morgan Stanley received those expedited federal bank charters, they were given permission to go to the Fed to borrow huge amounts of money at 0%. Taibbi points out that without this federal gravy, these banks would've totally collapsed, because they had no other way to raise capital at the time. Consider what the banks did with this taxpayer money, however.

Borrowing at 0% interest, banks like Goldman now have virtually infinite ways to make money. In one of the most common maneuvers, they simply took the money they brought from the government at 0% and went it back to the government by buying treasury bills that pay interest of three or 4%. It was basically a license to print money--no different than attaching an ATM to the side of the Federal Reserve.

Taibbi writes that that "The Dollar Store" goes a long way to explaining the enormous profits of Goldman Sachs last year. The entire article is well worth reading. Taibbi has once again done a terrific job of describing the corrupt ways of Washington and Wall Street.

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The rot at the center

Robert Reich has noticed how the democratic base is demoralized. Who is to blame?

A growing portion of the public, fed by the right, blames our problems on "big government." Much of the reason for the Democrats' astonishing reluctance to place blame where it belongs rests with big business's and Wall Street's generous flows of campaign donations to Democrats, coupled with their implicit promise of high-paying jobs once Democratic officials retire from government. This is the rot at the center of the system. And unless or until it's remedied, it will be difficult for the President to achieve any "change you can believe in.
And if you are looking for America by the numbers, you'll find the sad up to date statistics right here, in this Alternet post by David DeGraw.

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Women should shut up.

According to 1 Timothy 11-12, woman should be silent. They should not teach or lecture to men:

A woman should learn in quietness and full submission. I do not permit a woman to teach or to have authority over a man; she must be silent.
I personally think that this is absurd advice, but when I hear female neocons and fundamentalists (e.g., Sarah Palin) lecturing to the country on "family values," morals or anything political, I'm going to be pulling out the above quote from the New Testament. It's a simple two-step to deal with woman who get on the national stage to tell the rest of us that we must continue being an aggressive, war-mongering nation, or that we shouldn't teach real science in biology classes, or that we can't provide instruction and medicine and devices to prevent pregnancies:
A) Do you believe the Bible to be inerrant? B) If so, then you most be silent. It is the Word of your God.
Note further, that braided hair, gold, pearls and expensive clothing are absolutely banned.

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Climate: OJ and the Haystack

Why Climate Change Denial Is Like the O.J. Trial is an interesting article. The essence is that the climate denialists are using the same techniques as the OJ defense team: Find anything resembling a needle in a vast haystack of data, then claim that the presence of the needle casts doubt on the character of the haystack itself. Because there is an overwhelming pile of evidence in support of anthropogenic global warming, there are bound to be occasional pieces of data that can appear to contradict the mass of affirmative information. The pile is overwhelming, especially to non-scientists. Therefore few have the patience to understand the whole thing. Those who want to spin the counter argument claim that, because the two sides are both represented, therefore the issue is in doubt. And, as in the OJ trial, if there is cause for doubt, then no action is to be taken.

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What passes for ethics in DC

What do they want in order to make a finding that a politician was politically corrupt? Apparently a signed confession, based on an article in the Washington Post:

The House ethics committee ruled Friday that seven lawmakers who steered hundreds of millions of dollars in largely no-bid contracts to clients of a lobbying firm had not violated any rules or laws by also collecting large campaign donations from those contractors.

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