Our Economic Evolution Continues
See the following article:
Goldman reports $1.8 billion profit.
The big investment firm also sets plans to sell $5 billion in stock, paving the way for it to repay its TARP loans.
This sounds great doesn't it!
Goldman Sachs is solvent again! It earned 1.8 billion this quarter!
Except that it didn't. It received more bailout money. That's where the $1.8 billion came from. It was a gift from you and I. And now that it's stock is up, it's going to ride the bubble and cash out while the getting is good.
And where is this stock coming from? Are they issuing new stock? Splitting? Selling off a percentage of their ownership? I doubt it, though I don't know the answer as a fact.
But I'll be happy to speculate. A few months ago, the US Gov (Paulson) paid $10 billion for preferred shares that had a market value of $2.5 billion.
Then later the gov, so that GS wouldn't have to pay dividends, traded them for common stock at over $7.00 share, when the street price was under $3.50 a share. A few days later GS was a penny stock.
So I can't help but wonder, did Paulson just give the shares back to GS? I think this is a logical outcome of his crappy investment plan.
And what does this have to do with evolution in the economic system? Well it's survival of the fittest in action. The fittest banks, get regular gifts from the government. They don't just work in the marketplace, but they also compete and win at the government trough. Being a Corporate Welfare Queen Whore, pays big. It gives you the power to crush the competition. Especially when the competition doesn't get Sugar Daddy handouts from Uncle Sam.
Investors have caught on. They see that long term survival for a corporation is contingent on regular gifts of free money from the government. Corporations not receiving bailouts, are likely to be squeezed out and go under.
The marketplace is evolving to one in which, regular stimulus payments from the government, is a normal part of doing business. The bailouts are becoming an institutionalized part of our government. Soon it will have a firmly entrenched bureaucracy and will have a very serious name. All of the very important people will agree that this is very necessary and very modern.
I believe that this in inevitable because, the market fundamentals don't suggest a rosy outlook for Goldman Sachs. They and others like them are too big for the planet to support with just normal business. They need for the Ponzi Scheme to continue, to stay afloat. the only way to do this, is for the U Government to become the next bubble and fuel the Ponzi Scheme directly, using taxpayer funds.
I have no doubt that GS will repay the TARP funds. Uncle Sam will give them the money to cover that debt. Uncle Same will keep giving them money to buy good publicity with.
And check this article out:
Uncle Sam won't make ends meet
The IRS will bring in a lot of cash this week, but not nearly enough to foot the government's bill this year.
Government spending grew 33% over the last year and tax receipts are way down.
The article says that spend is projected to be 3.5 trillion this year.
Spending growth at 33% implies a near doubling rate of two years. Let's see how spending will look if it continues at this pace for a few years.
Spending per year in trillions of dollars
2039 $1049.8 Over One Quadrillion Dollars!
How many of you expect to, or hope to live that long?