Amazon's workplace culture doesn't bother most customers and investors

We previously talked about the questionable labor practices at AMZN's DCs, and here is the corporate/tech perspective:

http://mobile.nytimes.com/2015/08/16/technology/inside-amazon-wrestling-big-ideas-in-a-bruising-workplace.html?referrer=&_r=0
https://www.reddit.com/r/Seattle/comments/3ce0s8/dear_amazon_interns_some_advice_from_an_old_man/

After 9/11, we empowered sociopaths in the military-industrial complex to keep us safe and didn't want to know the details - so of course abuses like torture and extra-judicial murder/snooping were bound to occur. Similarly with AMZN, I don't think we should be surprised to hear about allegations of their perverse culture/practices. Our society prioritizes ubiquitous, limitless, instant-gratification consumerism, and AMZN delivers that better than anyone else in the US. Wall Street rewards huge growth and exceeding expectations, even if AMZN never turned a profit until 2015. But we customers and investors never bothered to ask the tough questions about the details - how exactly is AMZN able to deliver such "magic" to us? Eh doesn't matter, I can get my Coach handbag with free overnight shipping! It's also not surprising that AMZN is among the best for customer sat. and brand image.

The sick culture (though it's not a horrible company for everyone, too many independent sources have corroborated it, making it highly unlikely that it was just a few "bad apples") is not unique to AMZN though. Apple is almost as rotten if you forgive the pun (you should see how they treat their vendors). The coolness of their products/brand and corporate mythos make a lot of employees/public see them with rose-colored lenses. Their amazing profits and appreciation doesn't hurt either. Like the NFL and military, Apple is now a cultural fixture, and some sins are given a pass because of the prevailing positive sentiment. Other tech companies work you to the bone too, but at least they give a lot of comp and cash-free gourmet food (AMZN's culture is "frugal"). Also, mgmt. consulting, some law/medicine, and Wall St. are just as bad if not worse - but tech is in the spotlight now and "changing the world" faster than ever before. You kind of expect Wall St. and corporate lawyers to be a-holes, but tech is ostensibly benevolent (and almost omnipotent), so shouldn't they hold themselves to a higher standard?

The scammy, cultish nature of AMZN's employee policies (heavily rear-loading equity grants, putting company over health/family) are fairly extreme... I guess like Scientology? Why don't the complainers just quit? Similar to a cult, it can be hard for some Amazonians to leave because SEA doesn't have a lot of tech employers (until recently), and maybe they are able to indoctrinate the psychology that type-A high achievers have to survive and thrive at AMZN, so they don't feel like failures. They've been winners all their lives and they won't let a few workplace challenges stop them now (even if it costs their marriage or health). Everyone else seems to handle it or even love it (survivor bias), so they can't come up short. Yes, employment is at-will, but it's not so simple in many cases. I just wonder what will be the next chapter of this opera.

Congress avoids another shutdown, passes corporate-friendly budget with Obama's blessing

http://www.reuters.com/article/2014/12/12/us-usa-congress-budget-deadline-idUSKBN0JP23320141212

It was a tough position for Dems: agree to basically roll back Dodd-Frank regs on derivatives trading, and increase contribution limits to political parties, or risk getting an even uglier, GOP-driven budget proposal in January when the new legislators move in. It was sad to see Obama and some other major Dems fold like a cheap suit in the face of this raw deal. More left-leaning Pelosi and Warren were vehemently opposed, but were ultimately overruled.

It was reported that JP Morgan Chase literally wrote the section of the bill relating to derivatives. This is not new, but it's sad to see Obama being such a cheerleader for this bill considering his previous statements on financial reform and Wall Street abuses.

----

My mistake, it was Citigroup that wrote the rider, not Chase. But it really doesn't make a difference. It implies that the rider is in the Street's best interests, not the public's. The language relates to bailouts from losses on derivatives trading. Dodd-Frank had an exception (that would have gone live in 2015) to prohibit taxpayer bailouts for derivatives losses from trading that was deemed too risky (trying to reduce moral hazard). Well the big banks would have none of that - they are like a degenerate gambler in Vegas demanding that Bellagio cover any losses they incur (and then they try to tax dodge any gains they make). Of course the Street insists that derivatives serve to lower systemic risk, not increase it. That is true in some cases, like how gun proponents say that firearms reduce violence. But then what about the times when the opposite occurs? Banks just say, "Oh well, we tried our best. Now pay us." While global wealth evaporates but they still get their bonuses.

http://billmoyers.com/2014/12/12/unsurpriing-connection-two-odious-parts-cromnibus/

“I love the American political system, I really do, but the ability to sneak in substantive policy measures and make it take it or leave it, I think it’s appalling,” said Simon Johnson of the Massachusetts Institute of Technology’s Sloan School of Management and a former chief economist at the International Monetary Fund, who is a prominent critic of the nation’s big banks.

-NYT

----

It's hard to oppose the subtle, gradual rollbacks and changes that are eroding our democracy and "the soul of America". It's not like there was a coup and all of a sudden an evil regime took power. It's easy to fight back when it's a "Red Dawn" scenario, but Americans are lazy/easily distracted and we don't want to do the hard work of citizenship if it's not glamorous or urgent. The people who value power/profit are patient (and wealthy), so they chip away at our values bit by bit, at each election cycle and session of Congress/Supreme Court that the public barely pays attention to.

Reagan declared that we don't torture, and he was far from a dove. Now you have modern-day GOPers making all sorts of excuses to condone torture (or even argue that it's patriotic). In hindsight, Cheney was such a disaster for US ideals - and I think he had more of a negative impact on history than people like Qaddafi and Kim Jong Il (at least those guys practices overt evil, and were therefore easier to oppose). After the deaths of old-schoolers (and mostly straight shooters) like McCain and Hagel, I really fear what direction the GOP will go with unqualified political animals like Cruz and Ryan as the prominent voices. I mean, we already see the direction now: corporate plutocracy, oppression of women/minorities/foreigners, a disdain for science/logic, and unrestrained security state, to name a few.

I don't have much knowledge on this matter, but my personal feeling is that presidents who have the most reform potential have a greater view of themselves vs. the office of the president. What I mean by that is - they are either self-assured iconoclasts/visionaries like Lincoln, tremendously principled and conscientious like the Roosevelts, or chip-on-the-shoulder megalomaniacs like Nixon. They want to mold America into their image, and won't just be passive presidents who don't rock the boat and piss off the powerful. They never ask "is this what a president would do?" They do it because they know it's right, and they don't care if the pollsters and establishment approve or not (the opposite of Hillary).

That is the kind of leader we need to fight the negative trends now - and Sanders/Warren strike me as that type of personality, however their electability and charisma are another issue. Many thought Obama was going to be one of those reformers (he was mostly a DC outsider, "post-partisan", and one of the few presidents who grew up poor), but alas he is just a weak-willed bureaucrat who couldn't influence Congress, and deferred to the Pentagon and Wall St. to our detriment. He's a great campaigner but not a great leader of men. Considering the hand he was dealt, I wouldn't say he was a bad president, but he is a colossal failure in terms of missed opportunities (and the fact that some key issues got worse under his tenure - but not the things that the Tea Party would complain about). That's what's kind of ironic/tragic about Obama, both the left and right curse him for different reasons, which maybe suggests he doesn't have a good sense of his political identity, and tries to float in the center to please everyone, even though it's impossible. And unfortunately the modern US center is further to the right than most prominent European conservative parties. It's been scientifically shown that the US center has drifted right significantly since WWII.

Leaked tapes reveal "regulatory capture" at the NY Fed

http://www.thisamericanlife.org/radio-archives/episode/536/the-secret-recordings-of-carmen-segarra

In some cases, managers observed behaviors indicating regulatory capture (in other words, when the regulator is kowtowing and in the pocket of the regulatee) as soon as 3 months after the agent was assigned to the bank. But the greater fault was the lack of policy/oversight to prevent this, and the managerial inaction once it was identified. Corruption and human nature will always be with us, so what is the point of a regulatory agency that can't even properly police itself?

The VA, ICE, ATF, NSA, IRS, Secret Service, CONGRESS... I know these recent negative cases may skew the overall assessment of gov't effectiveness, but do they represent a sufficient mass to conclude that our country is seriously broken? What is the point of paying for a gov't that delivers this level of performance? Well, we know that our gov't works extremely well for certain segments of our society, but our leaders need to remember that the middle class in aggregate represents a larger tax base and voting bloc than the rich (and will always be so).

Confidence Men: the dysfunction and rivalries among Obama and his economic team

http://www.npr.org/2011/09/20/140594464/confidence-men-ron-suskind-on-white-house-woes

This recent book describes how Obama and his hand-picked economic team poorly managed the gov'ts role in the financial crisis, and in fact couldn't handle the group dynamics of their "team of rivals." Obama was a "brilliant amateur," who was dynamic enough to rise to the presidency, but grossly unprepared to handle the current burdens of the job. Wall Street alliances of course helped to fund Obama's campaign, but once the magnitude of the crisis came to light, Obama knew and articulated that the nation needed strong, Roosevelt-ian reforms to clean up the Street. But he subverted that goal by hiring Geithner and Summers, two individuals who were about as cozy to Wall St. as possible without being total insiders.

Larry Summers headed Obama's economic team, comprised of economists and officials with top credentials. Obama himself did not have much background in economic theory and policy, and often deferred to Summers in meetings - a man who by most accounts is a total a-hole and has to run the show, which further undermined the president. Obama's stubborn desire to achieve team consensus often delayed or hampered effective decision making. Summers was alleged to compare Obama's team to "Home Alone" with no adult in charge, also claiming that "Clinton would have never made these mistakes." Typical Summers to contribute to Obama's struggles and then criticize him for it.

Obama's hiring of Rahm Emmanuel as chief of staff was a mistake; Emmanuel was a temperamental strategist, not an effective manager. He often forgot to invite key people to meetings, especially the women in Obama's cabinet (deliberately or not). Obama recruited some of the most talented women in the country, yet many of them felt unengaged, disrespected, and resigned in disgust. During some meetings, the "boys" would band together and Obama would mostly listen to them and forget to consult with the women.

Treasury Sec. Tim Geithner felt that Obama was economically naive and also believed that America didn't need a major financial overhaul, so therefore Geithner had to protect the system from the president. Obama made it clear very early that the "TBTF" big banks should be broken up. But instead, Geithner "dragged his feet" on that order to say the least (they only got bigger under his watch), and some would say committed insubordination by instead giving aid to those banks. Clearly this was a herculean task even if Geither was 100% in agreement with Obama, and this was a rare chance to clean up the Street but instead nothing was done. Obama was very displeased with this, but stuck with Geithner so as to not cause additional controversy and economic anxiety. So to avoid the drama, he kept a disloyal, anti-reform guy in a key regulatory role. Maybe that pretty much sums up the squandered potential of the Obama presidency.

----------

I've seen this story making the rounds.  I basically don't buy it, for two reasons.

First, I don't think the explanation is sufficient.  They're making the argument that Obama wanted to be more progressive in his response and harsher on the banks, but that he was prevented from doing this by the intransigence of his economic team.  However, (A) he picked that economic team, knowing full well their support for the banks.  If your goal is to crack down on the banks, you don't put a pair of guys with a decade-long history of supporting banks at the head of the table.  (B) The pattern of pro-bank behavior is too consistent, and it's positive support as well as negative support.  That is, the White House support for banks wasn't just "not breaking them up" (support by lack of action), it was also actively propping them up (taking positive action) with TARP and TALF and HAMP and Fed discount window and blah blah blah.  An intransigent Treasury Secretary might be able to block breaking up the banks, assuming a sufficient level of incompetence from Obama in overseeing that (does he not periodically ask "hey, how's progress on that break-up?").  But the rest of the positive actions that the WH has taken in support of the banks?  And this continues up to the present: just a few weeks ago the WH was leaning on the NY AG to stop doing real investigations into banking misconduct.  A couple rogue advisors don't create this consistent pattern of behavior.

Second, I think the timing is too felicitous.  In 2007 and 2008 when Obama was campaigning, he said all the right things as a progressive.  Once he got into office, he dropped all of that and took a much more conservative tack than he'd suggested in the campaign.  Now we're getting back into election mode, and Obama is back to playing progressive.  We've got a new jobs bill that says all the right things, but which we all know has zero chance of getting passed.  And now there's a book out which does a nice little whitewash on all of the pro-bank policy Obama did and continues to push, claiming that he wanted to be progressive, he was sabotaged, but *now*, now he's going to really be able to be progressive.  Right.

----------

I see what you mean and I share in the suspicion. But it seems a very bizarre tactic for Obama and his supporters to downplay his pro-banks behavior with an explanation of incompetence/leadership vacuum. They try to remind America that he was a true progressive after all as we approach campaign season, but Suskind's narrative also reminds us that Obama is a bad manager and not very presidential at times. Would that make anyone more likely to vote for him? People like Summers have vehemently denied ever uttering anything anti-Obama while serving under him (though that is to be expected). If this is a PR ploy, it's either genius or wacko, but definitely risky.

While the banks helped Obama get to the White House, it's not uncommon for presidents to turn their back on some supporters once they take the reins of power (or at least not fully live up to the supporters' expectations). Though looking back, I don't think Wall St. has much to complain about Obama, except for maybe a few provisions in Dodd-Frank that eliminate some bank fees (the rest of the act can easily be circumvented by big institutions, and banks are already devising new schemes to replace the lost revenue from the outlawed fees). Obama took Wall St. money in 2007-2008 for sure, but I find it reasonable that in 2009 he wanted to enact financial reform as part of his overall vision for improving the country and responding to voter sentiment. He just had no idea how to implement it, and turned to the wrong people for help.

Obama's naivete came through in his hiring of Summers and Geithner. He's not an economist, so he wanted to defer to "experienced guys". I am sure Summers and Geithner said all the right things while they were being vetted, and maybe Obama ignored their track records, or didn't know enough (and certainly didn't ask the tough questions), or felt confident that his great leadership skills would keep those guys in line with his agenda. I'm not trying to excuse his mistake, but just proposing a possible explanation. Everything about Obama's first quarter was rush, rush, rush to respond to the fin. crisis. And with the GOP being a-holes and trying to block many of his nominations, maybe Obama just wanted to make "safe" choices for his econ. team, which would also hopefully reassure Wall St. and calm Main St. If he hired true crusaders for those posts, it would have been mutiny. Obama wanted to be a different type of leader who achieves change through consensus and cooperation, but set himself and the nation up for disappointment. I don't think he was pulling a fast-one on us; it was just a combination of conditions, inexperience, and poor planning.

And once Summers and Geithner revealed their true selves in DC, it was too late for Obama. Dismissing or marginalizing them (if even possible) would send a bad message. A real leader would have found a way to do something though, rather than keep tolerating Geithner thumbing his nose at Obama's plans. Or maybe Obama was just too gullible and loyal with Geithner - who maybe kept telling him, "I'm working on it but it's really hard to get the ball rolling - it's the GOP, man!" And Obama isn't one to step on toes and micromanage (especially on stuff he doesn't understand), so maybe he just left it on the back burner while he focused on health care and Afghanistan?

Overall, I don't think the book can persuade people one way or another on Obama's progressive bona fides. Conservatives already think he's a socialist, and fed up progressives think he's a phony and a sellout. Even if he is committed to his campaign agenda, is he competent enough to make it happen? Sadly, Obama tells Suskind in the book that after his staff shake-up after the horrible midterms, he now has the team in place to be the president the nation expects, and he's starting to hit his stride with the job. Well it's a bit late for that. Suskind does seem to paint Obama as a victim, but a lot of it was of his own making (despite the best of intentions), so I don't have much sympathy. But you have to agree that so many factors were aligned against him that even if he made flawless decisions, a lot was out of his control. It's possible that not much would be different today.

The short-sellers during the Wall Street crisis

http://www.npr.org/templates/story/story.php?storyId=124690424

Here's a Fresh Air interview with Michael Lewis, a very cool author (and former Wall Street alum) who wrote "Moneyball" about the Oakland A's (soon to be a Brad Pitt film) and the book that "The Blindside" film was based on. His theme is writing about innovators who beat the odds to succeed in their trades, much to the disdain of the establishment. His recent book is about a few observant investors who saw through the mortgage-backed securities (MBS) scam and actually made a fortune betting on them to fail. You'd think that these guys were sharks who exploited the system and hoarded secret information from the rest of us. But actually it's not the case. The real "bad guys" were obviously the big Wall Street banks who didn't realize (or didn't admit) that they were trading and peddling in crap securities. The short-sellers we actually doing what the brokers and advisors were supposed to do (and claimed to be doing for their customers): making the best trades possible that would net the most profit under current market conditions. Would you rather risk your money at the blackjack table, or buy an insurance policy that pays you off if another dude loses his money at blackjack?

Some background definitions that you may already know:

Credit default swap (CDS) - Basically insurance on an investment (usually debt/credit based). But the trick is it's off the books - a confidential agreement between two private parties. So say I bought a risky bond, and propose to Goldman Sachs that I will pay them a premium to protect the bond's value. If it defaults, Goldman will pay me my losses. So obviously Goldman wouldn't agree to it unless they thought the chance-cost of default was lower than the premiums I would pay them.

http://en.wikipedia.org/wiki/Credit_default_swap

Short-selling - You borrow security X from a third party lender at cost Y, and sell it on the open market immediately, expecting it to go down. Then after it does, X now costs Z. You buy X back at Z in order to repay the lender. So now you've made Y-Z profit (minus transaction fees or whatnot).
http://en.wikipedia.org/wiki/Short_(finance)

So the short-sellers did their research and saw the insanity behind the MBS's: bonds made of pools of subprime mortgages where payouts depended on homeowners faithfully maintaining impossible payments. In one example, a couple of "garage hedge-fund managers" gathered up $100k to start short-selling. Their research suggested that Wall Street insurance for unlikely catastrophes was excessively cheap, so it made sense to pay the pocket change and possibly reap huge rewards if a bad event occurred. They grew their seed money to $15M, and then entered the subprime market expecting those bad securities to default. They were soon up to $120M. But they didn't just exploit this discrepancy for personal gain; once they saw that the entire US financial system was basically built like a Ponzi scheme, they contacted the SEC. But as you would expect, they were ignored. In fact, this is the common trend for all the short-sell success stories: after they figured out how to capitalize off this market vulnerability, they alerted the authorities, but to deaf ears. So short of taking out a full-page ad on the NYT, they did their reasonable best to do the right thing, and can't really be faulted for others' stupidity and greed. In fact, many of the short-sellers were terribly distraught over the situation and had poor health during the crisis. It's not like they felt guilty for profiting on other people's foreclosures, but they lost faith in the American financial system and social structure that permitted this scam to materialize. They really feared that the masses would rise up and destroy the elites for perpetrating all this. But unfortunately, we were too gutless and gullible to demand justice.

One way they were guilty by association was their participation in the CDS market. This offshoot market is built on risky MBS's, so they were basically multiplying risk and adding more fuel to the fire. Even though they were betting against others and expecting the MBS's to fail, they contributed to popularizing this exotic trading instrument that created terrible havoc for AIG, Bear Stearns, and others, as we now know. It's like I could buy a gun for home protection and be the perfect poster-boy safe gun owner, but I'm still supporting an industry that is involved with crime and suffering. It's a tough call, but it was legal so they did it to make money. Getting back to the CDS's, they're so dangerous because they're off the books. They don't need to be declared to anyone, so John Q. Public (and the SEC for that matter) have no idea how much CDS business the banks have done with each other, and who owes who how much, but it's clearly in the billions. And as we have seen, this uncertainty caused panic and a loss of trust, which sent share prices plummetting. So the short-sellers also bought CDS's against bank stocks. They knew that some of the Wall Street titans were heavily invested in MBS's, so of course they would fall when their investments did. And they were right. 

One of the Wall Street survivors, Goldman, succeeded because they limited their exposure to MBS's, yet pushed MBS's onto their clients, and then placed big side bets on those same MDS's failing (often through CDS's with AIG). It was a real scam job and the perfect hedge: if MBS's go up, they make money on client commission and their own holdings, which will easily cover the meager cost of the CDS premiums. If they go down, AIG covers their losses and so what if their clients get hosed; they're just Guinea pigs. What boggles my mind is that AIG and others were so confident that MBS's were safe that they agreed to insure them so cheaply, and to such a crazy extent that their liability was 20X their total assets. That's like me being so confident that the next roulette spin will be a 00 that I take out a $10M loan on my $500k home to bet on 00. But what was AIG thinking - that they could pull a fast one on Goldman?

The last part of the debacle is the bond-rating agencies (Moody's and S&P). These guys are supposed to be the Yelp that is telling you the best places to spend your money, except that they're financial experts. One problem: they are paid by the banks whose securities they are supposed to objectively evaluate for risk. Apparently Wall Street and Washington are perfectly ok with this, yet it's not like the EPA is funded by Shell and the FDA by Pfizer! One could invest in MBS's in various ways, since an MBS is a collection of low-to-high risk mortgages to spread out exposure. If you want to play it safe, you can buy into the bond at a low interest rate, and get first dibs to the mortgage payments coming in. Those bonds were AAA rated, which is as safe as T-bonds. If you want to gamble for a higher rate of return, you can delay your payout, and possibly reap higher returns if homeowners don't default. But those risky bonds were of course rated worse: BBB barely ahead of junk bonds, and for good reason since a mere 8% default rate of the constituent mortgages would render the bonds worthless. The banks found that no one was buying the BBB bonds, for obvious reasons. So they decided to package a bunch of BBB bonds together, and told the rating agencies that they were safer because again, the volume and geographic diversity of mortgages spread out risk. Somehow Moody's decided to rate 80% of bonds that were collections of BBB crap as AAA, and then they sold better. But all these "bonds of bonds of mortgages" got so damn complicated and inaccurately rated that even the banks themselves didn't know what they were worth and how risky they were. They polished up Yugos, told people they were Porsches, and then when they were flying off the shelves, their greed made them forget what they did and bought them up too.

So Lewis suggests 3 obvious reforms to prevent a future similar crisis: (1) prohibit banks from investing in the same securities that they advise clients on, (2) require CDS's to be transparent and regulated, and (3) prohibit rating agencies taking money from banks. 1 is meant to prevent the Goldman-type conflict of interest. 2 is meant to lift the veil on CDS's so people can better evaluate a bank's health. And 3 is meant to fend off that other conflict of interest and give investors cleaner information. These ideas are already circulating in Congress, but I doubt will make it onto a Senate reform bill. Of course Wall Street are fighting these measures tooth and nail, since they will make it harder for them to make easy money.

How Goldman Sachs made all their recent loot

http://www.pbs.org/newshour/bb/business/jan-june10/goldmansachs_02-11.html
http://www.pbs.org/newshour/bb/business/jan-june10/goldmansachs_02-12.html

NOMI PRINS, former managing director, Goldman Sachs: First, of course, they received $10 billion in TARP money. Even though, a year later, they can say, "Well, we didn't really need it," They really needed it.

And look what they did with it!

Goldman's CEO recently testified on the Hill about his company's record profits and big bonuses from 2009, when many Americans were suffering terribly. He basically said that they did it without government help, and that they are just a kickass operation that "allocates capital" and grows wealth for millions of people out there. They are "important" to the economy. While that is probably true, it also glosses over some inconvenient details of how they got there.

Goldman is basically a hedge fund that applied for bank status in order to get TARP funds, and the government went along. Only 10% of their revenue comes from i-banking, and 75% came from trading (mostly commodities and currencies). So we can't really buy the "we're nice guys who lend money so you can make money" story. And they did so well in trading partially due to "front running" of clients. Say Goldman thinks oil is undervalued, so they buy up a crap load of it (where they get the funds to do this will surprise you too - I'll explain soon). Then they consult their clients to do the same, of course AFTER they have gotten in at a lower price. So by their sheer size and the reach of their advising, they can move global markets in their favor. Technically this is illegal, but it's hard to prove and enforce. And in their case, it's amazingly profitable.

In addition, they were selling risky mortgage-backed securities to pension funds while they were taking out huge insurance policies with AIG and others to protect against losses from those securities. Pension fund managers were much less savvy, and just wanted to get in on this seemingly booming market. Goldman gave them the green light, and they trusted them. Of course their greed blinded them from questioning why brainy Goldman would want to sell something solid and profitable to another party. But instead, they sold a suicidal guy a gun, and then took out a life insurance policy on him. Most people now agree that Goldman's political connections and heavy pressuring of Washington helped them decide to bail out AIG. This allowed AIG to pay Goldman the $13B it owed on the policies, which Goldman then used in 2009 to make huge bucks off a troubled market.

Goldman was traditionally a trading house, but applied to become a bank-holding company in order to gain access to TARP funds. They claim that they didn't need to for survival, but were pressured to do so by the government (to help disguise to the public which banks were the most distressed, all the banks too some money). They quickly paid back their $10B TARP loans in order to unfetter themselves from government regulations (especially bonus limits). But as a "bank", they had access to basically limitless Federal Reserve credit at near zero interest rate (0.1-0.3% at most). And their debt was insured by the FDIC. What a deal. And here's the best part - Goldman used taxpayer money to buy Treasury bonds that paid out 3.5-4%. So with zero risk, Goldman transferred huge sums of money from the Fed to Treasury, and the government paid them a commission for it.

Of course there were many more lucrative investments out there in 2009 than T-bonds, so Goldman also used Fed cash to make money in other markets. With the security of government backing, Goldman raised a ton of private capital ($28B in 2009) versus other Wall Street players, and they did it at an interest rate only 1-1.5% higher than what the US government borrows at. So basically that means people think Goldman is as meager of a borrowing risk as the USA. And really, is there a difference at this point?

I know some Goldman supporters will say they deserve it, because it was all more-or-less legal. They were smart and they exploited loopholes and panic. They are in the cutthroat business of wealth maximizing, and make no apologies for doing their job. This is their MO; they beat competitors by finding new and "clever" ways of making money. Blame the system and the government (comprised of many ex-Goldman folks and others with an interest in Goldman's success). Well I do also. Drug dealers and weapons traffickers are also innovative businessmen who make big money. Maybe making money isn't a sin by itself, but what depths do you sink to do so?

Like Enron, they're the smartest assholes in the room. But I'm sure that one day they will get Enron-ed too. Pride cometh before the fall.