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Sunday, March 18, 2012

Economic Stories of Relevance in Today's World -- March 18, 2012

Why I Am Leaving Goldman Sachs - New York - Greg Smith - March 14, 2012 - TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.              
To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.                       It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.....

Goldman Reviewing Policies on Its Deal Makers' Conflicts - Other Wall Street Firms Also Weigh Providing More Information to Clients - Wall Street - GINA CHON and ANUPREETA DAS - March 16, 2012 - After being scolded in a recent court opinion, Goldman Sachs Group Inc. GS -0.11% is considering strengthening its internal rules on disclosure to clients of bankers' financial holdings......                       The concerns emerged after a Delaware judge said in a Feb. 29 opinion that the $21.1 billion proposed sale of El Paso Corp. EP +1.04% to natural-gas pipeline operator Kinder Morgan Inc., KMI +1.66% announced last year, was riddled with potential conflicts of interest.                          Among the conflicts, the judge said, was the $340,000 stake in Kinder Morgan of a main adviser to El Paso, Stephen Daniel, Goldman Sachs' top energy banker.
Goldman Sachs, which was aware of Mr. Daniel's investments, according to a person familiar with the matter, said in its statement: "We regret the El Paso Board wasn't aware of the investment." The bank didn't make Mr. Daniel available for comment and he didn't respond to requests for comment.        

Goldman person leaked Apple, Intel secrets: lawyer - Reuters - By Grant McCool - March 16, 2012 - A person at Goldman Sachs Group Inc, who has not been identified or charged in a broad U.S. insider-trading probe, was caught on a wiretap leaking secrets about Intel Corp and Apple Inc, a lawyer for accused former Goldman board member Rajat Gupta said in court on Friday.                Lawyer Gary Naftalis, in a heated exchange with U.S. prosecutor Reed Brodsky during a pre-trial hearing, said the Goldman person leaked confidential information about the two companies to Raj Rajaratnam, the Galleon Group hedge fund founder convicted of insider-trading charges last year.                 Gupta, the best-known corporate executive accused in a sweeping prosecution of insider-trading at hedge funds in recent years, denies criminal charges that he tipped Rajaratnam with Goldman Sachs and Procter & Gamble Co secrets between 2007 and 2009. His trial is scheduled to begin in May.

Goldman Sachs’s long history of duping its clients - Washington - William D. Cohan - March 16, 2012 - Guess what, Greg? You didn’t do your homework about the firm where you worked for more than a decade and happily took home one bonus check after another. Goldman Sachs has been in and out of trouble throughout its 143 years — chiefly because it chose to put its own interests before those of its clients. What appeared to be a revelation to Smith was actually available to anyone who looked for it, buried deep within Securities and Exchange Commission and court records. Smith could have saved himself grief if he had only used his Stanford education to examine Goldman’s DNA before crossing its threshold.                There are numerous examples of Goldman putting its own interests first. But one will suffice: the June 1970 bankruptcy of Penn Central Transportation Company, the nation’s largest railroad....            After Penn Central filed for bankruptcy, an SEC investigation discovered that Goldman had continued to sell the railroad’s debt to its clients at 100 cents on the dollar — even though, by the end of 1969, the firm knew that Penn Central’s finances were deteriorating rapidly. Not only was Goldman privy to Penn Central’s internal numbers, it also heard repeatedly from the railroad’s executives that it was rapidly running out of cash....                  The firm was able to settle many of these lawsuits for pennies on the dollar. But several suits went to trial, including one brought collectively by Welch’s, Younkers and C.R. Anthony, another Midwestern retailer. In their complaint, they charged Goldman with “fraud, deception, concealment, suppression and false pretense” in the sale of the commercial paper to them. They claimed that the firm had “made promises and representations as to the future which were beyond reasonable expectations and unwarranted by existing circumstances,” and had made “representations and statements which were false.”

Bleak outlook for US newspapers - Financial - Andrew Edgecliffe-Johnson -  March 16, 2012 - In recent weeks, LinkedIn, the networking website, and the Council of Economic Advisers have reported that the press is “America’s fastest-shrinking industry”, measured by jobs lost; the Newspaper Association of America has shown that advertising sales have halved since 2005 and are now at 1984’s level; and the Pew Research Center has found that for every digital ad dollar they earned, they lost $7 in print ads.            As media from television to billboards bounce back from the recession, newsprint is being left behind. Zenith Optimedia this week predicted that internet advertising would pass newspaper advertising next year around the world – but in the US, where internet penetration is high and newspaper audiences are shrinking, digital will overtake newspapers’ and magazines’ combined ad sales this year, eMarketer estimates.                      “There’s no doubt we’re going out of business now,” one unnamed executive told Pew’s Project for Excellence in Journalism, which predicted a future of shrinking newsrooms, print deliveries only a few days of the week and more papers closing altogether. A USC Annenberg School study reached the stark conclusion that most printed US dailies would be gone in five years.                        Departing executives and bankruptcy advisers have been among the few people making good money from newspapers. The chief executives of Gannett and the New York Times left in recent months with packages worth $37m and $24m respectively, while advisers to Tribune’s Chapter 11 proceedings have earned $233m.......

As Chuck E. Cheese Goes So Goes America - End of the American - Why are wild brawls breaking out at Chuck E. Cheese restaurants all over the United States? Sadly, the epidemic of Chuck E. Cheese fights that we have seen in recent months is just another symptom of what is happening to America on a larger scale. The truth is that the fabric of our society is slowly but surely coming apart, and the rest of the world is laughing at us. But it is really sad to see Chuck E. Cheese become known more for brawls than for entertainment. When I was a kid, I loved to go to Chuck E. Cheese. The combination of pizza, arcade games and animatronic music shows was irresistible. But if you go to Chuck E. Cheese today, there is a chance that you might get taken out of there in an ambulance. In Susquehanna, Pennsylvania police were called out to one particular Chuck E. Cheese restaurant 17 times in just one recent 18 month time period. Of course it is not just Chuck E. Cheese that is having these kinds of problems. All over the nation we are seeing brawls break out in public places, we are seeing thieves become incredibly bold, and we are seeing a general breakdown in civilized behavior. So where does America go from here? That is a very good question.
If you go on to YouTube and do a search for "Check E. Cheese fight" it will bring up dozens and dozens of search results.        But of course the same could be said about Denny's, IHOP and McDonald's too.         The Chuck E. Cheese brawls are particularly disturbing because Chuck E. Cheese is supposed to be a place for children.  It is supposed to be a place where they can feel safe and forget about the worries of the world for a little while.            Unfortunately, Chuck E. Cheese is now a place where violence could break out at any time.  For example, the following is a news report about a 60 year old grandmother that was taken away in an ambulance after being brutally attacked at a Chuck E. Cheese in Michigan....

If you want to see more you can go on to YouTube and watch restaurant brawl videos from all over America for hours.          So why are Americans acting this way?          What is causing all of this anger and frustration to come out?            Up in Massachusetts, one very angry father brutally assaulted a 6th grade basketball coach after his son's team lost a recent game and actually bit off a piece of his ear.          Why would someone do something like that?            Of course the economy has gotten much worse over the past few years, but certainly that can't account for all of this behavior, can it?              Another very disturbing trend is that thieves all over America are becoming much bolder and are stealing things that you normally wouldn't think they would steal.           For example, Tide detergent has become a form of alternative currency in many urban areas and there is now an epidemic of Tide thefts from coast to coast. 

Consumer Prices in U.S. Rose in February as Gasoline Jumped - Boomberg - By Alex Kowalski - March 16, 2012 - The cost of living in the U.S. rose in February by the most in 10 months, reflecting a jump in gasoline that failed to spread to other goods and services.         The consumer-price index climbed 0.4 percent, matching the median forecast of economists surveyed by Bloomberg News, after increasing 0.2 percent the prior month, the Labor Department reported today in Washington. The so-called core measure, which excludes more volatile food and energy costs, climbed 0.1 percent, less than projected.                  The biggest jump in gasoline in more than a year accounted for about 80 percent of the increase in prices last month, leaving households with less money to spend on other goods and services. Federal Reserve policy makers say the advance in fuel costs will be temporary, and most see little risk inflation will flare out of control as unemployment exceeds 8 percent.

Bank of America: Too Crooked to Fail - The bank has defrauded everyone from investors and insurers to homeowners and the unemployed. So why does the government keep bailing it out? - Rolling - Matt Taibbi - March 14, 2012 - At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time. Did you hear about the plot to rig global interest rates? The $137 million fine for bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of jobless workers? Take your eyes off them for 10 seconds and guaranteed, they'll be into some shit again: This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at your aunt's funeral. They're out of control, yet they'll never do time or go out of business, because the government remains creepily committed to their survival, like overindulgent parents who refuse to believe their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard....

Matt Taibbi : The Banks are too Crooked to fail

Matt Taibbi : The Stress Test Is An Official Government Endorsement Of Widespread Banking Fraud Yes the banks know full well and realize this fact.not just banks. Our entire economy functions by taking money from the people in the form of taxation, and funneling it to the corporations who hire lobbyists to write the laws. Even in the case of intelligence gathering, 70% of money spent on intelligence goes to private corporations. People need to wake up organize, and develop a strategy to effect real change of the entire system. The government will never abolish the monetary system because the state needs an inauditable private printing-money machine to pay for the wars. There's no other way for the state to acquire the money needed for its agendas, it cant tax the people anymore and it cant push tariffs or product taxing prices up

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