The People vs. Goldman Sachs – Matt Taibbi’s Magnum Opus

Matt Taibbi of Rolling Stone Magazine has issued his latest masterpiece of Wall Street/Washington corruption:

They weren’t murderers or anything; they had merely stolen more money than most people can rationally conceive of, from their own customers, in a few blinks of an eye. But then they went one step further. They came to Washington, took an oath before Congress, and lied about it.

Thanks to an extraordinary investigative effort by a Senate subcommittee that unilaterally decided to take up the burden the criminal justice system has repeatedly refused to shoulder, we now know exactly what Goldman Sachs executives like Lloyd Blankfein and Daniel Sparks lied about. We know exactly how they and other top Goldman executives, including David Viniar and Thomas Montag, defrauded their clients. America has been waiting for a case to bring against Wall Street. Here it is, and the evidence has been gift-wrapped and left at the doorstep of federal prosecutors, evidence that doesn’t leave much doubt: Goldman Sachs should stand trial.

Basically it confirms what everyone with half a brain has known for years now.  Goldman defrauded the markets and then sucked down billions of tax payer dollars while paying themselves insane bonuses with your money.

Fraud in the libertarian world view is a fickle thing.  Part of me wants to say the investors who bought Goldman’s junk should take the fall for not doing their due diligence.  But the other part of me wants to see Goldman prosecuted for lying to their investors about the quality of the debt they were selling.

Clearly Goldman did engage in fraud – but we must remember that Goldman was simply a bit player in the sub-prime disaster.  The cause of the disaster in the first place was central banking monetary policy.

Without the Fed artificially driving down interest rates and flooding the banks with reserve capital, none of this would have been possible in the first place.  Without the FDIC, Fannie/Freddie and bailout assurances creating massive moral hazard, banks never would have gotten away with no money down home loans to crack addicts.  Without the TARP bailouts to AIG, Goldman would have taken it in the chin.  Goldman is the beneficiary of fraud, but that fraud never could have unfolded without the help of the US government.