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Tsarkon Reports THE GREAT AMERICAN BUBBLE MACHINE (-1, Offtopic)

Anonymous Coward | about 5 years ago | (#28565581)

Tsarkon Reports THE GREAT AMERICAN BUBBLE MACHINE - By MATT TAIBBI - Rolling Stone (Current Issue, July (9-23) 2009) - and two other articles by Matt Taibbi.

"It's a gangster state, running on gangster economics, and even prices can't be trusted anymore; there are hidden taxes in every buck you pay"

THE GREAT AMERICAN BUBBLE MACHINE

From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression - and they're about to do it again

The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who's Who of Goldman Sachs graduates.

By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup - which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the rear end in a top hat chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibillion-dollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden parachute payments as his bank was self-destructing. There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailed-out insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York - which, incidentally, is now in charge of overseeing Goldman - not to mention ...

But then, any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain - an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

The bank's unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere - high gas prices, rising consumer-credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you're losing, it's going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it's going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth - pure profit for rich individuals.

They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s - and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet. ...

IF AMERICA IS NOW CIRCLING THE DRAIN, GOLDMAN SACHS HAS FOUND A WAY TO BE THAT DRAIN..

BUBBLE #1 - THE GREAT DEPRESSION
Goldman wasn't always a too-big-to-fail Wall Street behemoth, the ruthless face of kill-or-be-killed capitalism on steroids - just almost always. The bank was actually founded in 1869 by a German immigrant named Marcus Goldman, who built it up with his son-in-law Samuel Sachs. They were pioneers in the use of commercial paper, which is just a fancy way of saying they made money lending out short-term IOUs to small-time vendors in downtown Manhattan.

You can probably guess the basic plotline of Goldman's first 100 years in business: plucky, immigrant-led investment bank beats the odds, pulls itself up by its bootstraps, makes shitloads of money. In that ancient history there's really only one episode that bears scrutiny now, in light of more recent events: Goldman's disastrous foray into the speculative mania of pre-crash Wall Street in the late 1920s.

This great Hindenburg of financial history has a few features that might sound familiar. Back then, the main financial tool used to bilk investors was called an "investment trust." Similar to modern mutual funds, the trusts took the cash of investors large and small and (theoretically, at least) invested it in a smorgasbord of Wall Street securities, though the securities and amounts were often kept hidden from the public. So a regular guy could invest $10 or $100 in a trust and feel like he was a big player. Much as in the 1990s, when new vehicles like day trading and e-trading attracted reams of new suckers from the sticks who wanted to feel like big shots, investment trusts roped a new generation of regular-guy investors into the speculation game.

Beginning a pattern that would repeat itself over and over again, Goldman got into the investment-trust game late, then jumped in with both feet and went hog-wild. The first effort was the Goldman Sachs Trading Corporation; the bank issued a million shares at $100 apiece, bought all those shares with its own money and then sold 90 percent of them to the hungry public at $104. The trading corporation then relentlessly bought shares in itself, bidding the price up further and further. Eventually it dumped part of its holdings and sponsored a new trust, the Shenandoah Corporation, issuing millions more in shares in that fund - which in turn sponsored yet another trust called the Blue Ridge Corporation. In this way, each investment trust served as a front for an endless investment pyramid: Goldman hiding behind Goldman hiding behind Goldman. Of the 7,250,000 initial shares of Blue Ridge, 6,250,000 were actually owned by Shenandoah - which, of course, was in large part owned by Goldman Trading.

The end result (ask yourself if this sounds familiar) was a daisy chain of borrowed money, one exquisitely vulnerable to a decline in performance anywhere along the line ....

BUBBLE #2 - TECH STOCKS
Fast-Forward about 65 years. Goldman not only survived the crash that wiped out so many of the investors it duped, it went on to become the chief underwriter to the country's wealthiest and most powerful corporations. Thanks to Sidney Weinberg, who rose from the rank of janitor's assistant to head the firm, Goldman became the pioneer of the initial public offering, one of the principal and most lucrative means by which companies raise money. During the 1970s and 1980s, Goldman may not have been the planet-eating Death Star of political influence it is today, but it was a top-drawer firm that had a reputation for attracting the very smartest talent on the Street.

It also, oddly enough, had a reputation for relatively solid ethics and a patient approach to investment that shunned the fast buck; its executives were trained to adopt the firm's mantra, "long-term greedy." One former Goldman banker who left the firm in the early Nineties recalls seeing his superiors give up a very profitable deal on the grounds that it was a long-term loser. "We gave back money to 'grownup' corporate clients who had made bad deals with us," he says. "Everything we did was legal and fair - but 'long-term greedy' said we didn't want to make such a profit at the clients' collective expense that we spoiled the marketplace." ...

But then, something happened. It's hard to say what it was exactly; it might have been the fact that Goldman's co-chairman in the early Nineties, Robert Rubin, followed Bill Clinton to the White House, where he directed the National Economic Council and eventually became Treasury secretary. ...

Rubin was the prototypical Goldman banker. He was probably born in a $4,000 suit, he had a face that seemed permanently frozen just short of an apology for being so much smarter than you, and he exuded a Spock-like, emotion-neutral exterior; the only human feeling you could imagine him experiencing was a nightmare about being forced to fly coach. It became almost a national cliche that whatever Rubin thought was best for the economy - a phenomenon that reached its apex in 1999, when Rubin appeared on the cover of Time with his Treasury deputy, Larry Summers, and Fed chief Alan Greenspan under the headline THE COMMITTEE TO SAVE THE WORLD. And "what Rubin thought," mostly, was that the American economy, and in particular the financial markets, were over-regulated and needed to be set free. ...

The basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren't much more than pot-fueled ideas scrawled on napkins by up-too-late bong-smokers were taken public via IPOs, hyped in the media and sold to the public for megamillions. It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out 50-story windows and opening the phones for bids. In this game you were a winner only if you took your money out before the melon hit the pavement.

It sounds obvious now, but what the average investor didn't know at the time was that the banks had changed the rules of the game, making the deals look better than they actually were. They did this by setting up what was, in reality, a two-tiered investment system - one for the insiders who knew the real numbers, and another for the lay investor who was invited to chase soaring prices the banks themselves knew were irrational. While Goldman's later pattern would be to capitalize on changes in the regulatory environment, its key innovation in the Internet years was to abandon its own industry's standards of quality control.

"Since the Depression, there were strict underwriting guidelines that Wall Street adhered to when taking a company public," says one prominent hedge-fund manager. "The company had to be in business for a minimum of five years, and it had to show profitability for three consecutive years. But Wall Street took these guidelines and threw them in the trash." Goldman completed the snow job by pumping up the sham stocks: "Their analysts were out there saying Bullshit.com is worth $100 a share."

The problem was, nobody told investors that the rules had changed. "Everyone on the inside knew," the manager says. "Bob Rubin sure as hell knew what the underwriting standards were. They'd been intact since the 1930s." ...

Goldman has denied that it changed its underwriting standards during the Internet years, but its own statistics belie the claim. Just as it did with the investment trust in the 1920s, Goldman started slow and finished crazy in the Internet years. After it took a little-known company with weak financials called Yahoo! public in 1996, once the tech boom had already begun, Goldman quickly became the IPO king of the Internet era. Of the 24 companies it took public in 1997, a third were losing money at the time of the IPO. In 1999, at the height of the boom, it took 47 companies public, including stillborns like Webvan and eToys, investment offerings that were in many ways the modern equivalents of Blue Ridge and Shenandoah.. The following year, it underwrote 18 companies in the first four months, 14 of which were money losers at the time. As a leading underwriter of Internet stocks during the boom, Goldman provided profits far more volatile than those of its competitors: In 1999, the average Goldman IPO leapt 281 percent above its offering price, compared to the Wall Street average of 181 percent.

How did Goldman achieve such extraordinary results? One answer is that they used a practice called "laddering," which is just a fancy way of saying they manipulated the share price of new offerings. Here's how it works: Say you're Goldman Sachs, and Bullshit.com comes to you and asks you to take their company public. You agree on the usual terms: You'll price the stock, determine how many shares should be released and take the Bullshit.com CEO on a "road show" to schmooze investors, all in exchange for a substantial fee (typically six to seven percent of the amount raised). You then promise your best clients the right to buy big chunks of the IPO at the low offering price - let's say Bullshit.com's starting share price is $15 - in exchange for a promise that they will buy more shares later on the open market. That seemingly simple demand gives you inside knowledge of the IPO's future, knowledge that wasn't disclosed to the day-trader schmucks who only had the prospectus to go by: You know that certain of your clients who bought X amount of shares at $15 are also going to buy Y more shares at $20 or $25, virtually guaranteeing that the price is going to go to $25 and beyond. In this way, Goldman could artificially jack up the new company's price, which of course was to the bank's benefit - a six percent fee of a $500 million IPO is serious money.

Goldman was repeatedly sued by shareholders for engaging in laddering in a variety of Internet IPOs, including Webvan and NetZero. The deceptive practices also caught the attention of Nichol as Maier, the syndicate manager of Cramer & Co., the hedge fund run at the time by the now-famous chattering television rear end in a top hat Jim Cramer, himself a Goldman alum. ...

"Goldman, from what I witnessed, they were the worst perpetrator," Maier said. "They totally fueled the bubble. And it's specifically that kind of behavior that has caused the market crash. They built these stocks upon an illegal foundation - manipulated up - and ultimately, it really was the small person who ended up buying in." In 2005, Goldman agreed to pay $40 million for its laddering violations - a puny penalty relative to the enormous profits it made. (Goldman, which has denied wrongdoing in all of the cases it has settled, refused to respond to questions for this story.)

Another practice Goldman engaged in during the Internet boom was "spinning," better known as bribery. Here the investment bank would offer the executives of the newly public company shares at extra-low prices, in exchange for future underwriting business. Banks that engaged in spinning would then undervalue the initial offering price - ensuring that those "hot" opening price shares it had handed out to insiders would be more likely to rise quickly, supplying bigger first-day rewards for the chosen few. So instead of Bullshit.com opening at $20, the bank would approach the Bullshit.com CEO and offer him a million shares of his own company at $18 in exchange for future business - effectively robbing all of Bullshit's new shareholders by diverting cash that should have gone to the company's bottom line into the private bank account of the company's CEO. ...

Such practices conspired to turn the Internet bubble into one of the greatest financial disasters in world history: Some $5 trillion of wealth was wiped out on the NASDAQ alone. But the real problem wasn't the money that was lost by shareholders, it was the money gained by investment bankers, who received hefty bonuses for tampering with the market. Instead of teaching Wall Street a lesson that bubbles always deflate, the Internet years demonstrated to bankers that in the age of freely flowing capital and publicly owned financial companies, bubbles are incredibly easy to inflate, and individual bonuses are actually bigger when the mania and the irrationality are greater.

GOLDMAN SCAMMED HOUSING INVESTORS BY BETTING AGAINST ITS OWN CRAPPY MORTGAGES.

Nowhere was this truer than at Goldman. Between 1999 and 2002, the firm paid out $28.5 billion in compensation and benefits - an average of roughly $350,000 a year per employee. Those numbers are important because the key legacy of the Internet boom is that the economy is now driven in large part by the pursuit of the enormous salaries and bonuses that such bubbles make possible. Goldman's mantra of "long-term greedy" vanished into thin air as the game became about getting your check before the melon hit the pavement.

The market was no longer a rationally managed place to grow real, profitable businesses: It was a huge ocean of Someone Else's Money where bankers hauled in vast sums through whatever means necessary and tried to convert that money into bonuses and payouts as quickly as possible. If you laddered and spun 50 Internet IPOs that went bust within a year, so what? By the time the Securities and Exchange Commission got around to fining your firm $110 million, the yacht you bought with your IPO bonuses was already six years old. Besides, you were probably out of Goldman by then, running the U.S. Treasury or maybe the state of New Jersey. (One of the truly comic moments in the history of America's recent financial collapse came when Gov. Jon Corzine of New Jersey, who ran Goldman from 1994 to 1999 and left with $320 million in IPO-fattened stock, insisted in 2002 that "I've never even heard the term 'laddering' before.")

For a bank that paid out $7 billion a year in salaries, $110 million fines issued half a decade late were something far less than a deterrent - they were a joke. Once the Internet bubble burst, Goldman had no incentive to reassess its new, profit-driven strategy; it just searched around for another bubble to inflate. As it turns out, it had one ready, thanks in large part to Rubin.

BUBBLE #3 - THE HOUSING CRAZE
Goldman's role in the sweeping disaster that was the housing bubble is not hard to trace. Here again, the basic trick was a decline in underwriting standards, although in this case the standards weren't in IPOs but in mortgages. ...

None of that would have been possible without investment bankers like Goldman, who created vehicles to package those lovely mortgages and sell them en masse to unsuspecting insurance companies and pension funds. This created a mass market for toxic debt that would never have existed before; in the old days, no bank would have wanted to keep some addict ex-con's mortgage on its books, knowing how likely it was to fail. You can't write these mortgages, in other words, unless you can sell them to someone who doesn't know what they are..

Goldman used two methods to hide the mess they were selling. First, they bundled hundreds of different mortgages into instruments called Collateralized Debt Obligations. Then they sold investors on the idea that, because a bunch of those mortgages would turn out to be OK, there was no reason to worry so much about the lovely ones: The CDO, as a whole, was sound. Thus, junk-rated mortgages were turned into AAA-rated investments. Second, to hedge its own bets, Goldman got companies like AIG to provide insurance - known as credit-default swaps - on the CDOs. The swaps were essentially a racetrack bet between AIG and Goldman: Goldman is betting the ex-cons will default, AIG is betting they won't.

There was only one problem with the deals: All of the wheeling and dealing represented exactly the kind of dangerous speculation that federal regulators are supposed to rein in. Derivatives like CDOs and credit swaps had already caused a series of serious financial calamities: Procter & Gamble and Gibson Greetings both lost fortunes, and Orange County, California, was forced to default in 1994. A report that year by the Government Accountability Office recommended that such financial instruments be tightly regulated - and in 1998, the head of the Commodity Futures Trading Commission, a woman named Brooksley Born, agreed. That May, she circulated a letter to business leaders and the Clinton administration suggesting that banks be required to provide greater disclosure in derivatives trades, and maintain reserves to cushion against losses. ...

Clinton's reigning economic foursome - "especially Rubin," according to Greenberger - called Born in for a meeting and pleaded their case. She refused to back down, however, and continued to push for more regulation of the derivatives. Then, in June 1998, Rubin went public to denounce her move, eventually recommending that Congress strip the CFTC of its regulatory authority. In 2000, on its last day in session, Congress passed the now-notorious Commodity Futures Modernization Act, which had been inserted into an 1l,000-page spending bill at the last minute, with almost no debate on the floor of the Senate. Banks were now free to trade default swaps with impunity.

But the story didn't end there. AIG, a major purveyor of default swaps, approached the New York State Insurance Department in 2000 and asked whether default swaps would be regulated as insurance. At the time, the office was run by one Neil Levin, a former Goldman vice president, who decided against regulating the swaps. Now freed to underwrite as many housing-based securities and buy as much credit-default protection as it wanted, Goldman went berserk with lending lust. By the peak of the housing boom in 2006, Goldman was underwriting $76.5 billion worth of mortgage-backed securities - a third of which were subprime - much of it to institutional investors like pensions and insurance companies. And in these massive issues of real estate were vast swamps of crap.

Take one $494 million issue that year, GSAMP Trust 2006-S3. Many of the mortgages belonged to second-mortgage borrowers, and the average equity they had in their homes was 0.71 percent. Moreover, 58 percent of the loans included little or no documentation - no names of the borrowers, no addresses of the homes, just zip codes. Yet both of the major ratings agencies, Moody's and Standard & Poor's, rated 93 percent of the issue as investment grade. Moody's projected that less than 10 percent of the loans would default. In reality, 18 percent of the mortgages were in default within 18 months.

Not that Goldman was personally at any risk. The bank might be taking all these hideous, completely irresponsible mortgages from beneath-gangster-status firms like Countrywide and selling them off to municipalities and pensioners - old people, for God's sake - pretending the whole time that it wasn't grade-D horseshit. But even as it was doing so, it was taking short positions in the same market, in essence betting against the same crap it was selling. Even worse, Goldman bragged about it in public. "The mortgage sector continues to be challenged," David Viniar, the bank's chief financial officer, boasted in 2007. "As a result, we took significant markdowns on our long inventory positions .... However, our risk bias in that market was to be short, and that net short position was profitable." In other words, the mortgages it was selling were for chumps. The real money was in betting against those same mortgages.

"That's how audacious these assholes are," says one hedge-fund manager. "At least with other banks, you could say that they were just dumb - they believed what they were selling, and it blew them up. Goldman knew what it was doing." I ask the manager how it could be that selling something to customers that you're actually betting against - particularly when you know more about the weaknesses of those products than the customer - doesn't amount to securities fraud.

"It's exactly securities fraud," he says. "It's the heart of securities fraud."

Eventually, lots of aggrieved investors agreed. In a virtual repeat of the Internet IPO craze, Goldman was hit with a wave of lawsuits after the collapse of the housing bubble, many of which accused the bank of withholding pertinent information about the quality of the mortgages it issued. .... But once again, Goldman got off virtually scot-free, staving off prosecution by agreeing to pay a paltry $60 million - about what the bank's CDO division made in a day and a half during the real estate boom.

The effects of the housing bubble are well known - it led more or less directly to the collapse of Bear Stearns, Lehman Brothers and AIG, whose toxic portfolio of credit swaps was in significant part composed of the insurance that banks like Goldman bought against their own housing portfolios. In fact, at least $13 billion of the taxpayer money given to AIG in the bailout ultimately went to Goldman, meaning that the bank made out on the housing bubble twice: It hosed the investors who bought their horseshit CDOs by betting against its own crappy product, then it turned around and hosed the taxpayer by making him payoff those same bets.

And once again, while the world was crashing down all around the bank, Goldman made sure it was doing just fine in the compensation department. In 2006, the firm's payroll jumped to $16.5 billion - an average of $622,000 per employee. As a Goldman spokesman explained, "We work very hard here."

But the best was yet to come. While the collapse of the housing bubble sent most of the financial world fleeing for the exits, or to jail, Goldman boldly doubled down - and almost single-handedly created yet another bubble, one the world still barely knows the firm had anything to do with.

BUBBLE #4 - $4 A GALLON
By the beginning of 2008, the financial world was in turmoil. Wall Street had spent the past two and a half decades producing one scandal after another, which didn't leave much to sell that wasn't tainted. The terms junk bond, IPO, subprime mortgage and other once-hot financial fare were now firmly associated in the public's mind with scams; the terms credit swaps and CDOs were about to join them. The credit markets were in crisis, and the mantra that had sustained the fantasy economy throughout the Bush years - the notion that housing prices never go down - was now a fully exploded myth, leaving the Street clamoring for a new bullshit paradigm to sling.

Where to go? With the public reluctant to put money in anything that felt like a paper investment, the Street quietly moved the casino to the physical-commodities market - stuff you could touch: corn, coffee, cocoa, wheat and, above all, energy commodities, especially oil. In conjunction with a decline in the dollar, the credit crunch and the housing crash caused a "flight to commodities." Oil futures in particular skyrocketed, as the price of a single barrel went from around $60 in the middle of 2007 to a high of $147 in the summer of 2008.

That summer, as the presidential campaign heated up, the accepted explanation for why gasoline had hit $4.11 a gallon was that there was a problem with the world oil supply. In a classic example of how Republicans and Democrats respond to crises by engaging in fierce exchanges of moronic irrelevancies, John McCain insisted that ending the moratorium on offshore drilling would be "very helpful in the short term," while Barack Obama in typical liberal-arts yuppie style argued that federal investment in hybrid cars was the way out.

GOLDMAN TURNED A SLEEPY OIL MARKET INTO A GIANT BETTING PARLOR - SPIKING PRICES AT THE PUMP.

But it was all a lie. While the global supply of oil will eventually dry up, the short-term flow has actually been increasing. In the six months before prices spiked, according to the U.S. Energy Information Administration, the world oil supply rose from 85.24 million barrels a day to 85.72 million. Over the same period, world oil demand dropped from 86.82 million barrels a day to 86.07 million. Not only was the short-term supply of oil rising, the demand for it was falling - which, in classic economic terms, should have brought prices at the pump down.

So what caused the huge spike in oil prices? Take a wild guess. Obviously Goldman had help - there were other players in the physical-commodities market - but the root cause had almost everything to do with the behavior of a few powerful actors determined to turn the once-solid market into a speculative casino. Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures - agreeing to buy oil at a certain price on a fixed date. The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.

As is so often the case, there had been a Depression-era law in place designed specifically to prevent this sort of thing. ... In 1936, Congress recognized that there should never be more speculators in the market than real producers and consumers. If that happened, prices would be affected by something other than supply and demand, and price manipulations would ensue. A new law empowered the Commodity Futures Trading Commission - the very same body that would later try and fail to regulate credit swaps - to place limits on speculative trades in commodities. As a result of the CFTC's oversight, peace and harmony reigned in the commodities markets for more than 50 years.

All that changed in 1991 when, unbeknownst to almost everyone in the world, a Goldman-owned commodities-trading subsidiary called J. Aron wrote to the CFTC and made an unusual argument. Farmers with big stores of corn, Goldman argued, weren't the only ones who needed to hedge their risk against future price drops - Wall Street dealers who made big bets on oil prices also needed to hedge their risk, because, well, they stood to lose a lot too.

This was complete and utter crap - the 1936 law, remember, was specifically designed to maintain distinctions between people who were buying and selling real tangible stuff and people who were trading in paper alone. But the CFTC, amazingly, bought Goldman's argument. It issued the bank a free pass, called the "Bona Fide Hedging" exemption, allowing Goldman's subsidiary to call itself a physical hedger and escape virtually all limits placed on speculators. In the years that followed, the commission would quietly issue 14 similar exemptions to other companies.

Now Goldman and other banks were free to drive more investors into the commodities markets, enabling speculators to place increasingly big bets. That 1991 letter from Goldman more or less directly led to the oil bubble in 2008, when the number of speculators in the market - driven there by fear of the falling dollar and the housing crash - finally overwhelmed the real physical suppliers and consumers. By 2008, at least three quarters of the activity on the commodity exchanges was speculative, according to a congressional staffer who studied the numbers - and that's likely a conservative estimate. By the middle of last summer, despite rising supply and a drop in demand, we were paying $4 a gallon every time we pulled up to the pump.

What is even more amazing is that the letter to Goldman, along with most of the other trading exemptions, was handed out more or less in secret. "I was the head of the division of trading and markets, and Brooksley Born was the chair of the CFTC," says Greenberger, "and neither of us knew this letter was out there." In fact, the letters only came to light by accident. Last year, a staffer for the House Energy and Commerce Committee just happened to be at a briefing when officials from the CFTC made an offhand reference to the exemptions.

"1 had been invited to a briefing the commission was holding on energy," the staffer recounts. "And suddenly in the middle of it, they start saying, 'Yeah, we've been issuing these letters for years now.' I raised my hand and said, 'Really? You issued a letter? Can I see it?' And they were like, 'Duh, duh.' So we went back and forth, and finally they said, 'We have to clear it with Goldman Sachs.' I'm like, 'What do you mean, you have to clear it with Goldman Sachs?'" ... [I]n a classic example of how complete Goldman's capture of government is, the CFTC waited until it got clearance from the bank before it turned the letter over.

Armed with the semi-secret government exemption, Goldman had become the chief designer of a giant commodities betting parlor. Its Goldman Sachs Commodities Index - which tracks the prices of 24 major commodities but is overwhelmingly weighted toward oil - became the place where pension funds and insurance companies and other institutional investors could make massive long-term bets on commodity prices. Which was all well and good, except for a couple of things. One was that index speculators are mostly "long only" bettors, who seldom if ever take short positions - meaning they only bet on prices to rise. While this kind of behavior is good for a stock market, it's terrible for commodities, because it continually forces prices upward. "If index speculators took short positions as well as long ones, you'd see them pushing prices both up and down," says Michael Masters, a hedge-fund manager who has helped expose the role of investment banks in the manipulation of oil prices. "But they only push prices in one direction: up."

Complicating matters even further was the fact that Goldman itself was cheerleading with all its might for an increase in oil prices. In the beginning of 2008, Arjun Murti, a Goldman analyst, hailed as an "oracle of oil" by The New York Times, predicted a "super spike" in oil prices, forecasting a rise to $200 a barrel. At the time Goldman was heavily invested in oil through its commodities-trading subsidiary, J. Aron; it also owned a stake in a major oil refinery in Kansas, where it warehoused the crude it bought and sold. Even though the supply of oil was keeping pace with demand, Murti continually warned of disruptions to the world oil supply, going so far as to broadcast the fact that he owned two hybrid cars. High prices, the bank insisted, were somehow the fault of the piggish American consumer; in 2005, Goldman analysts insisted that we wouldn't know when oil prices would fall until we knew "when American consumers will stop buying gas-guzzling sport utility vehicles and instead seek fuel-efficient alternatives."

But it wasn't the consumption of real oil that was driving up prices - it was the trade in paper oil. By the summer of2008, in fact, commodities speculators had bought and stockpiled enough oil futures to fill 1.1 billion barrels of crude, which meant that speculators owned more future oil on paper than there was real, physical oil stored in all of the country's commercial storage tanks and the Strategic Petroleum Reserve combined. It was a repeat of both the Internet craze and the housing bubble, when Wall Street jacked up present-day profits by selling suckers shares of a fictional fantasy future of endlessly rising prices.

In what was by now a painfully familiar pattern, the oil-commodities melon hit the pavement hard in the summer of 2008, causing a massive loss of wealth; crude prices plunged from $147 to $33. Once again the big losers were ordinary people. The pensioners whose funds invested in this crap got massacred: CalPERS, the California Public Employees' Retirement System, had $1.1 billion in commodities when the crash came.. And the damage didn't just come from oil. Soaring food prices driven by the commodities bubble led to catastrophes across the planet, forcing an estimated 100 million people into hunger and sparking food riots throughout the Third World. ...

BUBBLE #5 - RIGGING THE BAILOUT
After the oil bubble collapsed last fall, there was no new bubble to keep things humming - this time, the money seems to be really gone, like worldwide-depression gone. So the financial safari has moved elsewhere, and the big game in the hunt has become the only remaining pool of dumb, unguarded capital left to feed upon: taxpayer money. Here, in the biggest bailout in history, is where Goldman Sachs really started to flex its muscle.

It began in September of last year, when then-Treasury secretary Paulson made a momentous series of decisions. Although he had already engineered a rescue of Bear Stearns a few months before and helped bail out quasi-private lenders Fannie Mae and Freddie Mac, Paulson elected to let Lehman Brothers - one of Goldman's last real competitors - collapse without intervention. ("Goldman's superhero status was left intact," says market analyst Eric Salzman, "and an investment-banking competitor, Lehman, goes away.") The very next day, Paulson greenlighted a massive, $85 billion bailout of AIG, which promptly turned around and repaid $13 billion it owed to Goldman. Thanks to the rescue effort, the bank ended up getting paid in full for its bad bets: By contrast, retired auto workers awaiting the Chrysler bailout will be lucky to receive 50 cents for every dollar they are owed.

Immediately after the AIG bailout, Paulson announced his federal bailout for the financial industry, a $700 billion plan called the Troubled Asset Relief Program, and put a heretofore unknown 35-year-old Goldman banker named Neel Kashkari in charge of administering the funds. In order to qualify for bailout monies, Goldman announced that it would convert from an investment bank to a bankholding company, a move that allows it access not only to $10 billion in TARP funds, but to a whole galaxy of less conspicuous, publicly backed funding - most notably, lending from the discount window of the Federal Reserve. By the end of March, the Fed will have lent or guaranteed at least $8.7 trillion under a series of new bailout programs - and thanks to an obscure law allowing the Fed to block most congressional audits, both the amounts and the recipients of the monies remain almost entirely secret.

Converting to a bank-holding company has other benefits as well: Goldman's primary supervisor is now the New York Fed, whose chairman at the time of its announcement was Stephen Friedman, a former co-chairman of Goldman Sachs. Friedman was technically in violation of Federal Reserve policy by remaining on the board of Goldman even as he was supposedly regulating the bank; in order to rectify the problem, he applied for, and got, a conflict-of-interest waiver from the government. Friedman was also supposed to divest himself of his Goldman stock after Goldman became a bank-holding company, but thanks to the waiver, he was allowed to go out and buy 52,000 additional shares in his old bank, leaving him $3 million richer. Friedman stepped down in May, but the man now in charge of supervising Goldman - New York Fed president William Dudley - is yet another former Goldmanite.

The collective message of all this - the AIG bailout, the swift approval for its bank-holding conversion, the TARP funds - is that when it comes to Goldman Sachs, there isn't a free market at all. The government might let other players on the market die, but it simply will not allow Goldman to fail under any circumstances. Its edge in the market has suddenly become an open declaration of supreme privilege. "In the past it was an implicit advantage," says Simon Johnson, an economics professor at MIT and former official at the International Monetary Fund, who compares the bailout to the crony capitalism he has seen in Third World countries. "Now it's more of an explicit advantage." ...

And here's the real punch line. After playing an intimate role in four historic bubble catastrophes, after helping $5 trillion in wealth disappear from the NASDAQ, after pawning off thousands of toxic mortgages on pensioners and cities, after helping to drive the price of gas up to $4 a gallon and to push 100 million people around the world into hunger, after securing tens of billions of taxpayer dollars through a series of bailouts overseen by its former CEO, what did Goldman Sachs give back to the people of the United States in 2008?

Fourteen million dollars.

That is what the firm paid in taxes in 2008, an effective tax rate of exactly one, read it, one percent. The bank paid out $10 billion in compensation and benefits that same year and made a profit of more than $2 billion - yet it paid the Treasury less than a third of what it forked over to CEO Lloyd Blankfein, who made $42.9 million last year.

How is this possible? According to Goldman's annual report, the low taxes are due in large part to changes in the bank's "geographic earnings mix." In other words, the bank moved its money around so that most of its earnings took place in foreign countries with low tax rates. Thanks to our completely hosed corporate tax system, companies like Goldman can ship their revenues offshore and defer taxes on those revenues indefinitely, even while they claim deductions upfront on that same untaxed income. This is why any corporation with an at least occasionally sober accountant can usually find a way to zero out its taxes. A GAO report, in fact, found that between 1998 and 2005, roughly two-thirds of all corporations operating in the U.S. paid no taxes at all.

This should be a pitchfork-level outrage - but somehow, when Goldman released its post-bailout tax profile, hardly anyone said a word. One of the few to remark on the obscenity was Rep. Lloyd Doggett, a Democrat from Texas who serves on the House Ways and Means Committee. "With the right hand out begging for bailout money," he said, "the left is hiding it offshore."

BUBBLE #6 - GLOBAL WARMING
Fast-Forward to today. It's early June in Washington, D.C. Barack Obama, a popular young politician whose leading private campaign donor was an investment bank called Goldman Sachs - its employees paid some $981,000 to his campaign - sits in the White House. Having seamlessly navigated the political minefield of the bailout era, Goldman is once again back to its old business, scouting out loopholes in a new government-created market with the aid of a new set of alumni occupying key government jobs.

AS ENVISIONED BY GOLDMAN, THE FIGHT TO STOP GLOBAL WARMING WILL BECOME A "CARBON MARKET" WORTH $1 TRILLION A YEAR.

Gone are Hank Paulson and Neel Kashkari; in their place are Treasury chief of staff Mark Patterson and CFTC chief Gary Gensler, both former Goldmanites. (Gensler was the firm's co-head of finance) And instead of credit derivatives or oil futures or mortgage-backed CDOs, the new game in town, the next bubble, is in carbon credits - a booming trillion-dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an "environmental plan," called cap-and-trade.

The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.

Here's how it works: If the bill passes; there will be limits for coal plants, utilities, natural-gas distributors and numerous other industries on the amount of carbon emissions (a.k.a. greenhouse gases) they can produce per year. If the companies go over their allotment, they will be able to buy "allocations" or credits from other companies that have managed to produce fewer emissions. President Obama conservatively estimates that about $646 billions worth of carbon credits will be auctioned in the first seven years; one of his top economic aides speculates that the real number might be twice or even three times that amount.

The feature of this plan that has special appeal to speculators is that the "cap" on carbon will be continually lowered by the government, which means that carbon credits will become more and more scarce with each passing year. Which means that this is a brand-new commodities market where the main commodity to be traded is guaranteed to rise in price over time. The volume of this new market will be upwards of a trillion dollars annually; for comparison's sake, the annual combined revenues of an electricity suppliers in the U.S. total $320 billion.

Goldman wants this bill. The plan is (1) to get in on the ground floor of paradigm-shifting legislation, (2) make sure that they're the profit-making slice of that paradigm and (3) make sure the slice is a big slice. Goldman started pushing hard for cap-and-trade long ago, but things really ramped up last year when the firm spent $3.5 million to lobby climate issues. (One of their lobbyists at the time was none other than Patterson, now Treasury chief of staff.) Back in 2005, when Hank Paulson was chief of Goldman, he personally helped author the bank's environmental policy, a document that contains some surprising elements for a firm that in all other areas has been consistently opposed to any sort of government regulation. Paulson's report argued that "voluntary action alone cannot solve the climate-change problem." A few years later, the bank's carbon chief, Ken Newcombe, insisted that cap-and-trade alone won't be enough to fix the climate problem and called for further public investments in research and development. Which is convenient, considering that 'Goldman made early investments in wind power (it bought a subsidiary called Horizon Wind Energy), renewable diesel (it is an investor in a firm called Changing World Technologies) and solar power (it partnered with BP Solar), exactly the kind of deals that will prosper if the government forces energy producers to use cleaner energy. As Paulson said at the time, "We're not making those investments to lose money."

The bank owns a 10 percent stake in the Chicago Climate Exchange, where the carbon credits will be traded. Moreover, Goldman owns a minority stake in Blue Source LLC, a Utah-based firm that sells carbon credits of the type that will be in great demand if the bill passes. Nobel Prize winner Al Gore, who is intimately involved with the planning of cap-and-trade, started up a company called Generation Investment Management with three former bigwigs from Goldman Sachs Asset Management, David Blood, Mark Ferguson and Peter Harris. Their business? Investing in carbon offsets. There's also a $500 million Green Growth Fund set up by a Goldmanite to invest in green-tech ... the list goes on and on. Goldman is ahead of the headlines again, just waiting for someone to make it rain in the right spot. Will this market be bigger than the energy-futures market?

"Oh, it'll dwarf it," says a former staffer on the House energy committee. ....

"If it's going to be a tax, I would prefer that Washington set the tax and collect it," says Michael Masters, the hedge fund director who spoke out against oil-futures speculation. "But we're saying that Wall Street can set the tax, and Wall Street can collect the tax. That's the last thing in the world I want. It's just asinine."

Cap-and-trade is going to happen. Or, if it doesn't, something like it will. The moral is the same as for all the other bubbles that Goldman helped create, from 1929 to 2009. In almost every case, the very same bank that behaved recklessly for years, weighing down the system with toxic loans and predatory debt, and accomplishing nothing but massive bonuses for a few bosses, has been rewarded with mountains of virtually free money and government guarantees - while the actual victims in this mess, ordinary taxpayers, are the ones paying for it.

It's not always easy to accept the reality of what we now routinely allow these people to get away with; there's a kind of collective denial that kicks in when a country goes through what America has gone through lately, when a people lose as much prestige and status as we have in the past few years. You can't really register the fact that you're no longer a citizen of a thriving first-world democracy, that you're no longer above getting robbed in broad daylight, because like an amputee, you can still sort of feel things that are no longer there.

But this is it. This is the world we live in now. And in this world, some of us have to play by the rules, while others get a note from the principal excusing them from homework till the end of time, plus 10 billion free dollars in a paper bag to buy lunch. It's a gangster state, running on gangster economics, and even prices can't be trusted anymore; there are hidden taxes in every buck you pay. And maybe we can't stop it, but we should at least know where it's all going.

The Big Takeover
The global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution

It's over we're officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.

The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).

So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company's CEO, actually compared it to catching a cold: "The marketplace is a pretty crummy place to be right now," he said. "When the world catches pneumonia, we get it too." In a pathetic attempt at name-dropping, he even whined that AIG was being "consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet's investment portfolio down."

Liddy made AIG sound like an orphan begging in a soup line, hungry and sick from being left out in someone else's financial weather. He conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its "pneumonia" was making colossal, world-sinking $500 billion bets with money it didn't have, in a toxic and completely unregulated derivatives market.

Nor did anyone mention that when AIG finally got up from its seat at the Wall Street casino, broke and busted in the afterdawn light, it owed money all over town and that a huge chunk of your taxpayer dollars in this particular bailout scam will be going to pay off the other high rollers at its table. Or that this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires.

People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

Candidates for Sale
What do Obama and McCain have in common? The same big donors, who will expect to have their way no matter who wins

MATT TAIBBI

Posted Aug 21, 2008 9:42 AM

Remember the total, hideous, inexcusable absence of oversight that has been the great hallmark of George Bush's America for almost eight years now? Well, now we're getting to see that same regulatory malfeasance applied to yet another cornerstone of our political system. The Federal Election Commission the body that supposedly enforces campaign-finance laws in this country has been out of business for more than six months. That's because Congress was dragging its feet over confirmation hearings for new FEC commissioners, leaving the agency without a quorum. The commission just started work again for the first time on July 10th under its new chairman, Donald McGahn, a classic Republican Party yahoo whose chief qualifications include representing Tom DeLay, the corrupt ex-speaker of the House, in matters of campaign finance.

Apart from the obvious absurdity of not having a functioning election-policing mechanism in an election year in the world's richest democracy, the late start by the FEC makes it almost impossible for the agency to do its job. The commission has a long-standing reluctance to take action in the last months before a vote, a policy designed to help prevent federal regulators from influencing election outcomes. Normally, the FEC tries to root out infractions and loopholes fining campaigns for incomplete reporting, or for taking shortcuts around spending limits in the early months of a campaign season. But that ship sailed way too long ago to take the stink off the 2008 race.

"The time for setting the ground rules was earlier," says Craig Holman, a lobbyist with the watchdog group Public Citizen. "There isn't time to do much now."

That's especially true given the magnitude of what we're dealing with here: the biggest pile of political contributions in the history of free elections, nearly a billion dollars given to presidential candidates in this season alone. Because the FEC has been dead in the water for so long, it's likely that we'll still be in the dark about a large chunk of this record manure pile of campaign contributions when we go to vote in November.

But that doesn't mean that a little sifting through campaign records doesn't tell us quite a lot about who's backing whom in these races. The truth is that the campaigns of both Barack Obama and John McCain are being inundated with cash from more or less exactly the same gorgons of the corporate scene. From Wall Street to the Big Oil powerhouses to the military-industrial complex, America's fat-cat business leaders know that the Animal House-style party of the last eight years that made almost all of them rich with bonuses, government contracts and bubble profits is about to come to an end, and someone is going to have to pay to clean up the mess. They want that someone to be you, not them, and they've spared no expense to make sure both presidential candidates will be there to bail them out next year.

They're succeeding. Both would-be presidents have already sold us out. They've taken the money and run completing the cyclical transformation of the American political narrative from one of monopolistic Republican iniquity to an even more depressing tale about the overweening power of corporate money and the essentially fictitious nature of our two-party system.

In layman's terms, we've gone from being screwed to being fucked. Who knows maybe Barack Obama will surprise us if he wins the election. But if you look at the money, it doesn't look good.

Thanks in part to the dormant FEC, corporate America has had even easier access to the candidates than usual in its effort to buy off the next government before the crash. In fact, this election has seen some excellent new innovations in the area of campaign-fundraising atrocities. Chief among them is the rise of so-called "joint committees."

It used to be that campaigns could raise a maximum of $2,300 from each individual.. Now, both candidates but especially McCain, who far outstrips Obama in this area routinely hold fundraisers in which individuals can give far more to a joint committee. Technically, the candidate still pockets only $2,300 in contributions. The bulk of the money raised in McCain's case, a whopping $70,100, or 30 times the previous limit goes to the state and national arms of the candidate's party, which can then spend the unprecedented haul on behalf of the candidate. "This allows CEOs to walk in the door and drop $70,100," says Holman. "It basically allows campaigns to exceed the spending limits."

McCain has raised more than $63 million via these joint committees, thanks to more than 1,000 "megadonors" who have each given at least $25,000 to his campaign effort. Obama, by contrast, has some 471 megadonors and a close examination of their backgrounds underscores some of the differences in corporate America's attitudes toward the two candidates.

One of McCain's chief sources of corporate money is the private-equity firm Kohlberg Kravis Roberts, memorialized for its takeover of RJR Nabisco in the movie Barbarians at the Gate. Through the pretext of joint committees, 10 KKR executives have given McCain $285,000, and it's not hard to figure out why. Two of McCain's key campaign proposals lowering the corporate tax rate to 25 percent and making purchases of industrial equipment fully deductible would save a single KKR subsidiary, Energy Future Holdings, $49 million.

"Just in his tax policies alone, McCain is saving corporate America $175 billion a year," says James Kvaal, who analyzed McCain's tax policy for the nonprofit Center for American Progress.

McCain has also raked in big contributions from two other giants of the buyout world: the Carlyle Group (famous for its close ties to the Bush administration) and the Blackstone Group (whose co-founder, Pete Peterson, wrote a $28,500 check to McCain after he took home almost $1.8 billion from a public offering last year). McCain has also received monstrous sums from hedge-fund managers, attracted by his pledge to keep the tax rate on their earnings at only 15 percent.. Executives and family members in a single hedge fund, Knott Partners, have contributed some $225,700 to McCain's campaign.

Then there's the predictable influx of cash from would-be military contractors. John Lehman, a former secretary of the Navy whose firm builds the Superferry transport vessel, not only donated $28,500 of his own money, but bundled at least $250,000 for McCain from other donors. Donald Bollinger, who is a contractor on the controversial Littoral Combat Ship, gave $27,300 and bundled a whopping $500,000. Anyone want to bet on a decrease in Naval appropriations in a McCain presidency?

McCain has also received big money from telecommunications magnates. The senator has always been a friend to the industry: Back in 2003, just four days after AT&T sent him a check for $10,500, he sponsored a bill to ban state and local taxes on Internet service. Since 2007, McCain has taken in some $1.3 million from the communications industry. Just four members of the McCaw family, which owns the telecommunications firm Eagle River, have kicked in $123,200. McCain's campaign manager, Rick Davis, was a former lobbyist for BellSouth, Verizon and SBC Communications. His deputy campaign manager, Christian Ferry, was a partner to Davis at Verizon. One of his chief advisers, Charlie Black, is the head of the lobbying firm BKSH and Associates, which represents AT&T. His Senate chief of staff, Mark Buse, worked for AT&T Wireless. All told, of 66 current and former lobbyists working for McCain, some 23 come from the telecommunications industry.

Given McCain's telecom backing, it's not surprising that the senator has had one of his characteristic changes of heart. As recently as last November, McCain was staunchly opposed to retroactive immunity for telecommunication companies that took part in Bush's illegal spying on American consumers, saying their actions "undermine our respect for the law." Now, jammed to the gills with telecom cash, McCain calls himself an "unqualified" supporter of immunity, praising the telecom industry's warrantless wiretapping as "constitutional and appropriate."

All the same, plenty of other evidence suggests that much of Wall Street is betting on an Obama win. In fact, some observers believe that KKR announced a multibillion-dollar public offering this summer because it expects McCain to lose. "They're doing the public offering now so that the compensation can be taxed at the lower rate while Bush is still in office," says a strategist for a major labor union. "They're betting Obama is going to win, and they're getting their money while they can."

Other companies are getting in on the ground floor with the new chief by stuffing money in his ears. Overall, Obama is flat-out kicking McCain's ass when it comes to Wall Street contributions, raking in nearly $9 million from securities and investment executives, compared to $6.2 million for McCain. Obama has received more contributions from Goldman Sachs than from any other employer more than $627,000 at this writing not to mention $398,021 from JP Morgan Chase, $353,922 fr

Re:Tsarkon Reports THE GREAT AMERICAN BUBBLE MACHI (-1, Offtopic)

Anonymous Coward | about 5 years ago | (#28566047)

tl;dr

Re:Tsarkon Reports THE GREAT AMERICAN BUBBLE MACHI (-1)

Anonymous Coward | about 5 years ago | (#28566159)

translation: it's the jews' fault

but you knew that already

Re:Tsarkon Reports THE GREAT AMERICAN BUBBLE MACHI (-1)

Anonymous Coward | about 5 years ago | (#28566189)

Off topic but extremely interesting... but why did your post get cut off? Please post the rest for me.

Thank you.

Slashdot users are fucking bastards (-1, Troll)

Anonymous Coward | about 5 years ago | (#28565617)

Admit linux will never be on the desktop so uninstall it and stop watching anime.

Finally, some hope (4, Insightful)

QuantumG (50515) | about 5 years ago | (#28565681)

The move is the strongest sign yet that the DOJ may block the settlement, which critics claim would grant Google (GOOG) a monopoly on orphaned works-copyrighted texts without an identifiable copyright holder.

Heh, really? Maybe if there was some copyright reform no deal would be necessary. Maybe if copyright was an opt-in system, publishers could publish out of print books without having to worry about being sued by an absentee copyright holder.

Re:Finally, some hope (5, Interesting)

Darkness404 (1287218) | about 5 years ago | (#28566051)

Exactly, if we would go to a 20 year copyright (10 years with mandatory registration with a 10 year renewal) along with clauses allowing for non-commercial use and distribution of any book, movie, program, etc. which is not being sold to the general public or is not available in the USA. And allowing the breaking of DRM for non-commercial use. Such things would eliminate this so called "Google monopoly" and improve our economy/country.

Re:Finally, some hope Mt Pot Meet Mr Kettle (1, Insightful)

Anonymous Coward | about 5 years ago | (#28567173)

"along with clauses allowing for non-commercial use and distribution of any book, movie, program, etc. which is not being sold to the general public or is not available in the USA."

That from a nation whose major corporations ideas of copyright are being forced upon the rest of the world. Maybe there is a reason some works are not available in the USA.

Maybe as the author I didn't like the terms offered so you can just steal my work because your American?

 

Grammar Nazis...Assemble! (0)

Anonymous Coward | about 5 years ago | (#28567293)

I can steal your work because your grammar is awful!

Re:Finally, some hope Mt Pot Meet Mr Kettle (2, Insightful)

Darkness404 (1287218) | about 5 years ago | (#28568005)

How would that be stealing if it wasn't offered? Thats as stupid as me saying that you are stealing my profits when you buy a computer from Best Buy because I have a computer. Now, would I sell that computer to you? Probably not. How do you say that its stealing when you could never buy it anyways? With the cost of distribution approaching 0, there is no real reason to not make things available over the internet.

Re:Finally, some hope (1)

smitty_one_each (243267) | about 5 years ago | (#28567619)

You seem to fantasize of a future where the federal government regulates in a relatively unbiased way, with power distributed amongst the 50 States United and "We the People" in charge.
Our aristocrac^Wpolitical class and their plutocratic owners will educate you otherwise.

Re:Finally, some hope (3, Interesting)

cdrguru (88047) | about 5 years ago | (#28567887)

That sort of non-copyright system would mean that anyone could block the revenue from any sort of creative work by simply making it available non-commercially. In other words, posting it on a P2P network would be legal, downloading it would be legal and nothing could be done to stop it.

That would mean I would never have to pay for a movie ever again, and there would be no legal recourse. It would mean that nobody would ever have to pay for software ever again, because it would all be free.

Oh, except for stupid people that would not know how to use P2P for downloading. They would have to pay. Too bad for them.

I agree, it would be nice, except for anyone that is paid for software today. Or movies. Or music. Or books. I guess it would be great if you work in a WalMart, because you could now afford all that stuff. My employees would have to join you at WalMart.

Re:Finally, some hope (-1, Troll)

chrismcb (983081) | about 5 years ago | (#28567197)

Yeah maybe if we got rid of the laws against theft, we would have no need to throw thieves in jail. Every could just take anything they wanted, without have to worry about some absentee owner coming after them? Maybe if ownership of something was an opt-in system. Perhaps the law is, if you want to keep it, lock it up. Otherwise it is fair game?

Re:Finally, some hope (0, Troll)

QuantumG (50515) | about 5 years ago | (#28567217)

you're a retard.

Re:Finally, some hope (1)

shentino (1139071) | about 5 years ago | (#28567237)

What about armed robbery?

What about lock picking?

Re:Finally, some hope (5, Insightful)

Anonymous Coward | about 5 years ago | (#28567423)

Yes, the "monopoly" in question is called "copyright". If companies are worried about the monopoly of orphan works, the answer is easy. Orphan works should fall into the public domain.

So much for "do no evil" (0)

Anonymous Coward | about 5 years ago | (#28565685)

in b4 a million slashtar comments denying that google is just as bad (in some ways worse) as every other corporate entity.

deny what ? (1)

unity100 (970058) | about 5 years ago | (#28565949)

this is a motion that was put underway during last vestiges of bush admn. who were very chummy with microsoft.

Re:deny what ? (0)

Anonymous Coward | about 5 years ago | (#28566041)

As, apparently, so is the Obama administration.

So much for "change" -fuck, so much for "two party" system.

Re:deny what ? (0)

Anonymous Coward | about 5 years ago | (#28566055)

Hasn't every administration in the last...ever since Microsoft was founded been chummy with them?

Re:So much for "do no evil" (3, Funny)

Hatta (162192) | about 5 years ago | (#28565981)

Maybe the DOJ is investigating because Google has a monopoly on not doing evil.

Re:So much for "do no evil" (0)

Anonymous Coward | about 5 years ago | (#28567739)

You're totally right. they are forcing the other companies to be evil by making such a great product everyone else has to cheat to get close.

I'm ok with this, as long as..... (5, Insightful)

phantomfive (622387) | about 5 years ago | (#28565709)

I'm ok with this, as long as they investigate the Authors Guild and the Association of American Publishers as well.

Re:I'm ok with this, as long as..... (0)

Anonymous Coward | about 5 years ago | (#28566433)

they investigate SCO et al

I can see it now... (-1, Flamebait)

Anonymous Coward | about 5 years ago | (#28566779)

...Obama standing there posed like the Colossus of Rhodes as his nuts erupt all over your adoring grille, and he has a good laugh at your expense while you sing psalms to him and offer him burnt offerings. I've never heard of a ruler who has such contempt for their subjects since Marie Antoinette, while at the same time maintaining such loyalty. It's amazing, really. I wonder how long it will take for the last Obamabot to finally admit that change = more of the same with a double portion.

Serves you right! (5, Insightful)

pablo_max (626328) | about 5 years ago | (#28565719)

Stupid companies.. Stop getting too big! Stop making so much money! Stop being so much better than your competition that everyone only uses your product. Being competitive means allowing the other guys to catch up! It also means you can't branch out too much..so keep your focus narrow.

Anyone else think this is a little over zealous?

Re:Serves you right! (2, Interesting)

sexconker (1179573) | about 5 years ago | (#28565809)

Yup. I also think the shit they pulled against MS was overzealous.

Re:Serves you right! (5, Insightful)

Darkness404 (1287218) | about 5 years ago | (#28566225)

Theres a big difference between MS and Google. What part of Google locks you in? Lets see... I can have my Gmail on a third party computer. My Google Docs can be exported to a non-proprietary format without losing formatting unlike MS Office. Etc. There is not a single thing that keeps me tied in to using only Google products except that Google products are better. On the other hand MS (still does or at least used to) prevent other OEMs from selling or at least adverting products without Windows or with a different OS or else they suffer financially. Use DOC or DOCX to keep Word documents locked in a proprietary standard and proprietary implementation (and no MS's implementation of OOXML does not follow the specs). IE broke many standards forcing web developers to code for IE only and because it didn't match the standards other browsers either had to emulate these bugs or suffer incorrectly rendered pages. Etc.

Google is simply good at what it does so people keep coming back. MS simply forces people to use them.

Re:Serves you right! (0, Troll)

sexconker (1179573) | about 5 years ago | (#28566339)

What part of MS locked me in?
Let's see, I could use any browser or search engine or media player or OS I wanted.

Won't even respond to anything else, your agenda is clear.

You can shit on MS all you want, and for many things I'd agree with you, but to say Google is any different is naive at best.

Re:Serves you right! (4, Insightful)

Darkness404 (1287218) | about 5 years ago | (#28566457)

Let's see, I could use any browser or search engine or media player or OS I wanted.

No, for a long time if you used something other than IE, you would get an incorrectly rendered page because of IE having a huge chunk of the marketshare of browsers and thats what people used to only code for. Sure, you could use any search engine you wanted because of two main things A) The learning curve for a search engine is nearly non existent, if you can use MSN you can use Google, Yahoo, Ask, Bing, Live Search, etc. and B) it takes less than 2 minutes to change the homepage on nearly every modern browser. But lets say you wanted to use any media player, too bad you won't be playing any WMAs unless you want to fork out for a patent license or break the DMCA by reverse engineering your own codecs. As for your own OS, how are you going to return the Windows license you unwillingly paid for? Sure, there are ways, but its not as simple as going into your local Best Buy and coming out with a $50 in your hand.

If the USA had A) No software patents, B) No DMCA and C) mandates that all government files/programs must use an open standard with an open implementation we would have no MS monopoly. However we do have software patents to the point where they can sue a GPS manufacturer for using perhaps the most basic filesystem in order to maintain compatibility with MS's own OS (want to use something patent free? Too bad the Ext drivers won't work in Vista due to changes by MS). We have the DMCA which won't let you hardly reverse engineer anything even for non-commercial use, and we have a government that still could require you to use proprietary technologies to do things like file tax returns.

Re:Serves you right! (1)

bertoelcon (1557907) | about 5 years ago | (#28566619)

Everything you have sounds right up until

and we have a government that still could require you to use proprietary technologies to do things like file tax returns.

I was unaware that pen and paper are proprietary technology, as that format will be available for a lot longer than you think.

Re:Serves you right! (1, Insightful)

Anonymous Coward | about 5 years ago | (#28566801)

well I did file tax returns by using Fedora (T..tax online version)... but kinda agree with other claims ... ... and would love to get that $50 check from my local , but one can always dream ...

Re:Serves you right! (1)

namespan (225296) | about 5 years ago | (#28567349)

What part of MS locked me in?

The part where they've used their market power in anti-competitive ways, meaning that unless you're paying close attention, you're not even aware of where Microsoft has bullied OEMs to keep competitors from negotiating preinstall deals, depriving them of revenue and visibility. Where they've deliberately introduced incompatibilities in order to make development difficult for competitors. Where they've struck deals over shelf space in retail stores.

So, no. They don't lock *you* in. They do their best to manipulate markets so that they don't even have to worry about locking you in.

I can't think of a good analog for Google. The closest stretch is their placement as default search engine in Firefox, but not only is it possible to switch, it's *convenient*.

Re:Serves you right! (0)

Anonymous Coward | about 5 years ago | (#28567629)

exclusive deals are perfectly legal and considered good business practice, until you're tagged a monopoly. Why do you think it is that all of the major fast food change have either pepsi products or coke products? Do you honestly think it's because they all wouldn't like to have the top selling drinks of both companies at once? Coke has an exclusive deal with McDonalds, Wendy's, etc. and Pepsi has exclusive deals with Taco Bell, Pizza hut, etc. If either one of them suddenly lost market share, then all of those deals would be considered anti-competitive abuse of a monopoly.

Seriously people, it's not black and white like that. Microsoft was an average company doing the same stuff that all of the other companies do. They're now a monopoly and have to play by different rules.

Re:Serves you right! (0)

Anonymous Coward | about 5 years ago | (#28567497)

How about the part where, when you bought a computer, you paid for microsoft crap if you wanted it or not. And where microsoft pushed hardware manufacturers to only make drivers for windows. And how about the times where microsoft told software vendors what their API would be and then changed it at the last minute? Or...

Probably won't convince a microsoft shill, but microsoft has persistently made it more than difficult for anyone to compete with them on all kinds of levels and with all kinds of products.

Re:Serves you right! (3, Insightful)

The_Quinn (748261) | about 5 years ago | (#28566461)

Theres a big difference between MS and Google.

No - there really isn't - not in a fundamental sense.

Both companies make voluntary deals with everyone involved, to mutual advantage. Both companies make products that people like and want, and people are willing and glad to pay for them. Both companies provide technologies that help their customers make a lot of money, using them.

As long as companies are dealing with everyone voluntarily, the government should not be involved. Only when a business violates an invidual's rights through force or fraud should the government get involved.

Anti-trust is based on the altruist idea that the more successful you are - (aka "selfish") - the more evil you are, and the evil successful need to be brought down to favor the less successful, or failures. This also happens to be the moral underpinning for bailouts, welfare, "soak the rich", government healthcare, and many more.

Oh yeah, it's also a Christian ideal.

Re:Serves you right! (1, Interesting)

Darkness404 (1287218) | about 5 years ago | (#28566573)

As long as companies are dealing with everyone voluntarily, the government should not be involved. Only when a business violates an invidual's rights through force or fraud should the government get involved.

That would be true, but the government uses a lot of MS software. By keeping the specs of a bunch of things closed or by not adhering to standards, they end up costing us, the taxpayers more in the long run. By locking the government into proprietary technologies that they are the only ones who can have a 100% guarantee they are rendering the document "correctly" the government will keep buying into them. Its effectively the same as having a public works bid but only allowing one company to bid.

Anti-trust is based on the altruist idea that the more successful you are - (aka "selfish") - the more evil you are, and the evil successful need to be brought down to favor the less successful, or failures. This also happens to be the moral underpinning for bailouts, welfare, "soak the rich", government healthcare, and many more.

However, the lack of anti trust cases only work in a free economy. The economy of the USA especially with copyright, patents and IP is not free. Repeal the DMCA, software patents, reduce the length of copyrights to a sane term. Then we can get rid of anti-trust. But the problem is, in the current state of things it makes no sense to get rid of perhaps the only thing left to strike against major corporations. I agree, we should move to your ideal state where the government is small and doesn't control the economy. When we move to there, sure, anti-trust acts make no sense. But while we still have the DMCA and other copyright atrocities as laws, it simply makes no sense to abolish anti-trust acts.

Re:Serves you right! (0)

Anonymous Coward | about 5 years ago | (#28566673)

Google's monopoly in ad market is harmful to competition, harmful to people wants to do ad. There is no enough competition in that market, so that ad can be do cheaper. The monopoly is not target at you and me as end user. That is different from the MS case.

Re:Serves you right! (1)

networkBoy (774728) | about 5 years ago | (#28565819)

yes.
sounds just like the EU and Intel:
"No company should have over a 50% market share for any reason"

Re:Serves you right! (4, Informative)

royallthefourth (1564389) | about 5 years ago | (#28565829)

Slow down a bit. They're being investigated, not prosecuted. Even if they get brought to court and convicted of some antitrust charge, history has shown us the the punishments directed at corporations are inconsequential.

Re:Serves you right! (4, Insightful)

Brian Gordon (987471) | about 5 years ago | (#28565883)

We can get mad about investigations too because they cost millions.

Re:Serves you right! (4, Insightful)

Rycross (836649) | about 5 years ago | (#28566123)

I'll stop worrying about companies getting too big when I stop hearing about how companies are "Too big to fail." Or when they aren't big enough to put serious economic pressure on other people/businesses. Or when they aren't big enough to be able to legally harass people despite having a flimsy case. Or when common people are able to routinely exact damages from them.

Until then, I'm perfectly happy with society telling companies that they are too big and need to limit their scope. Large businesses have disproportionate power over me. Even more so if there are only a few options. I don't like being coerced, whether its by private companies or governments.

Re:Serves you right! (3, Insightful)

The_Quinn (748261) | about 5 years ago | (#28566375)

The government is behind all of those problems: "Too big to fail", laws favoring business over individuals, and persecution of successful businesses.

You are taking a "I'm fine with it until it changes" stance - but how does that attitude help anything? You are not even identifying the source of the problem, which is the power that the government wields over individuals and businesses.

Once you have named this source, you can fight against it, explicitly, instead of taking an "I'm fine with it until it (magically) changes" approach.

Re:Serves you right! (2, Interesting)

Rycross (836649) | about 5 years ago | (#28566613)

It is, is it? You don't really offer any proof to that effect. Companies are perfectly able to grow very large without government assistance, and once they have disproportionate resources (economy, manpower, social influence), its a simple matter to utilize those resources to coerce people. Government is certainly part of the problem, and is certainly corruptible. But government is, in theory, the people working together to certain ends, and is, paradoxically, the best way for us to deal with entities that are trying to infringe upon our rights.

I won't simply accept, "Government is bad, mmkay. Government is the source of all our problems, mmkay," as a valid argument. Government causes many problems, but it is also a tool that we use to fight many others. Balance is important.

Re:Serves you right! (1)

moosesocks (264553) | about 5 years ago | (#28567189)

The "too big to fail" argument was made about AIG, and is largely true.

AIG insured so many customers that no other company would have had the capital necessary to pick up the slack, not to mention that an AIG bankruptcy would have left a huge number of individuals and businesses around the globe without insurance. Liquidating $800+ billion of assets isn't easy when no other investors have that sort of capital.

(This all doesn't mean the bailout was conducted particularly well. That's an entirely different discussion.)

Re:Serves you right! (2, Insightful)

Nethemas the Great (909900) | about 5 years ago | (#28567537)

So you're saying that companies must operate under the same principles as public schools where the stupidest kid sets the pace for everyone else? That's brilliant. I was under the impression that the whole notion of antitrust was participating in anti-competitive behaviors not out-competing others.

What has Google done to prevent Yahoo, Microsoft, or anyone else for that matter to secure a similar agreement with copyright holders of books so that they can create a competitor product? Shall we next go after Toyota because more people want their products than they do GM or Chrysler?

Antitrust laws were created to protect society from organizations such as AT&T, Clear Channel, Intel, Microsoft, etc. that do/did not compete on the merit of their products but on their ability to squeeze out or prevent competition from ever starting by engaging in aggressive and generally unethical practices. Such companies do not focus on providing maximum societal benefit through their products and services but on maximizing their bottom line by any means possible usually to the detriment of society.

Can you provide a ration argument for how Google by enabling the dissemination of knowledge once locked in less accessible, much more difficult to search printed media is causing societal detriment? Business paradigm shifts do not count as a society detriment. Society is none-the-worse for having lost the need for horse drawn lauries roaming cities emptying out privies, telegraph operators, milkmen, or the local blacksmith.

Re:Serves you right! (1)

Demonantis (1340557) | about 5 years ago | (#28567313)

No it is not over zealous. An investigation does not mean that there is monopolistic behavior that just means Google has gotten big enough to possibly be monopolistic. The indicators are all there, which could mean nothing. The DOJ is just making sure it is truly not occurring.

Anti-trust punishes success (5, Informative)

duncan bayne (544299) | about 5 years ago | (#28565799)

Yet another case of punishing business for success. Alan Greenspan had it right back in 1966 when he wrote this memo on anti-trust legislation [archive.org] :

...
The world of antitrust is reminiscent of Alice's Wonderland: everything seemingly is, yet apparently isn't, simultaneously. It is a world in which competition is lauded as the basic axiom and guiding principle, yet "too much" competition is condemned as "cutthroat." It is a world in which actions designed to limit competition are branded as criminal when taken by businessmen, yet praised as "enlightened" when initiated by the government. It is a world in which the law is so vague that businessmen have no way of knowing whether specific actions will be declared illegal until they hear the judge's verdict -- after the fact.
...

Re:Anti-trust punishes success (4, Insightful)

Hatta (162192) | about 5 years ago | (#28565991)

Why should we listen to anything Alan Greenspan has to say?

Re:Anti-trust punishes success (3, Insightful)

Rycross (836649) | about 5 years ago | (#28566285)

I don't know why you're modded flame-bait. Greenspan was completely wrong on the banking industry and the economy, even admitting so himself. Is there any evidence that his opinion is worthwhile, or that following his suggestions would be prudent? Because it sure as hell isn't working out so well for us right now.

Re:Anti-trust punishes success (1)

duncan bayne (544299) | about 5 years ago | (#28566925)

Actually yes; Greenspan abandoned his hard-core laissez-faire philosophy when he began working for the Government.

The linked memo was written when he was still a friend of Rand's, and quite opposed to Government intervention in business or finance in any way.

Re:Anti-trust punishes success (1, Interesting)

Anonymous Coward | about 5 years ago | (#28567415)

Are you talking about the time that Greenspan warned that Fannie Mae and Freddie Mac were a "systemic risk" to the US economy?

You know, in 2005?

Stop talking about things you know nothing about.

Re:Anti-trust punishes success (-1, Flamebait)

Anonymous Coward | about 5 years ago | (#28566181)

Greenspan is also an objectivist, which makes him wrong about everything.

Objectivists are literally children.

Re:Anti-trust punishes success (2, Insightful)

Bemopolis (698691) | about 5 years ago | (#28566467)

Yet another case of punishing business for success.

I prefer that to what we've seen lately, which is rewarding companies for failures of sufficient global impact.

Re:Anti-trust punishes success (1)

duncan bayne (544299) | about 5 years ago | (#28567031)

I agree with you on that - businesses that fail should be left to be liquidised, just as individuals should rely on private charity. It's never right to force one group of people to pay for the decisions of another group.

Re:Anti-trust punishes success (2, Informative)

Runaway1956 (1322357) | about 5 years ago | (#28566667)

Greenspan is pretty damned smart - but he isn't quite as smart as he thinks he is.

As already has been noted in this thread, any company that grows so large that it's failure threatens the economic well being of the nation, something is SERIOUSLY wrong. Getting away from Wall Street, GM and Chrysler should never have made all the "acquisitions" they have made in the last 4 or maybe even 5 decades. The economic well being of this nation certainly didn't benefit from it.

That said - DOJ may very well decide that Google is a monopoly, and impose sanctions. But, if they do, they had most certainly better go after Microsoft again. On a scale of 1 to 10, if Google ranks 6 as a monopoly, MS is 10 for certain. MS has spent two decades crafting locks on the market that no other business enjoys.

Yeah, let's go after all the multi-billion dollar corporations, break them up, and put enterprise into the hands of small business, enterpreneurs, and small investors. That is, after all, what built America to start with.

Re:Anti-trust punishes success (0)

Anonymous Coward | about 5 years ago | (#28567287)

That is, after all, what built America to start with.

I thought what built America to start with was funding by some of the richest people/governments in the world who persecuted their own citizens, shipped them off to strange lands, let them starve to death, and then seized their assets.

Funny, that model doesn't seem to have changed much in the last few hundred years.

Re:Anti-trust punishes success (1)

NemoinSpace (1118137) | about 5 years ago | (#28567471)

Sure it's changed. Now we import citizens from foreign lands, don't let them starve, at least until we can seize all their assets. China, don't say i didn't warn you. Someone's gotta pay off my mortgage and my hummer and it sure as hell isn't going to be me!

Re:Anti-trust punishes success (1)

duncan bayne (544299) | about 5 years ago | (#28567723)

The economic well being of this nation certainly didn't benefit from it.

A business is run for the benefit of its shareholders (if a listed company) or owners (if not). Are you seriously arguing that the Government should force businesses to regard 'the common good' or 'the national good'?

That is, not just enforce laws against force & fraud, but actually force businessmen to run companies for the benefit of others?

Re:Anti-trust punishes success (1)

malchus842 (741252) | about 5 years ago | (#28567911)

Greenspan is pretty damned smart - but he isn't quite as smart as he thinks he is.

Isn't that pretty much the problem with ALL elected and appointed political figures?

Need Some info.. (1)

joocemann (1273720) | about 5 years ago | (#28565847)

Can someone please post information that relates to what Google is actually doing in the first place? I'm sure I could google it, but it would be nice to see people making posts on slashdot where the subject at hand is sufficiently described or referenced.

Re:Need Some info.. (2, Insightful)

Darkness404 (1287218) | about 5 years ago | (#28566073)

Ok, basically due to the USA having a screwed up copyright system, Google got the exclusive rights to a ton of books with questionable copyright status for them to search/digitize. Because of this a bunch of other companies cried foul and now the people who got us in this screwed up copyright mess and gave Google all these rights is investigating them and costing us even more money then if we would do the sane thing and reform copyright laws.

Re:Need Some info.. (1)

joocemann (1273720) | about 5 years ago | (#28566255)

Interesting... If you don't mind, I have one more question...

Who was it that gave all of this to Google? Why was this not a problem until google got it? Shouldn't they be investigating the prior owners of this 'bundle'?

and lastly.. WTF!? This sounds like a big waste of tax dollars.

Re:Need Some info.. (2, Insightful)

Anonymous Coward | about 5 years ago | (#28566607)

They are doing this because:
If you want a book with questionable copyright status, YOU HAVE TO GO TO GOOGLE, no one but google has the power to deal with that type of book. How would this sound: You want a OS, you HAVE to go to Microsoft. You want a PC, you HAVE to go to Dell. You want to eat, You HAVE to get your food from the Government. You want to sleep, you HAVE to sleep on a bad from Acme.

Re:Need Some info.. (1)

roguetrick (1147853) | about 5 years ago | (#28566493)

Its under related stories, directly below the summary. Learn to use Slashdot damn it!

Sorry I dropped my pitchfork (2, Insightful)

Anonymous Coward | about 5 years ago | (#28565859)

First let me say, don't ever trust the government...but when you have a very large company and a deal that is being called questionable by some. Isn't this what the DOJ is supposed to do, investigate and see if there is any merit to the complaints?

Government needs money (1, Interesting)

xednieht (1117791) | about 5 years ago | (#28565899)

Google has money.
"Investigation" is simply a euphemism for "let's see how much we can extort from them."
In this economic climate, to pull this kind of shit on a company that is not begging for taxpayer money, is utter bullshit.

Why didnt they investigate microsoft properly (2, Insightful)

unity100 (970058) | about 5 years ago | (#28565907)

back at the time ? in the last 8 years, microsoft got major fines from regulators and antitrust institutions around the world for anticompetitive practices, including European Union. yet, doj doesnt do any serious shit about microsoft. what gives ?

Re:Why didnt they investigate microsoft properly (3, Interesting)

Darkness404 (1287218) | about 5 years ago | (#28565989)

Would a crack addicted cop bust their crack dealer? I don't think so. The US government is "addicted" to using MS products even when there are free alternatives available (and something tells me that they can hire 30 guys cheaper to patch OOo to make it work like they want it to than buying MS office licenses). Europe is much less addicted to MS and their anti-trust suits seem to have little basis (just look at Intel which got hit with suits even though there are many alternatives such as AMD and VIA for x86 compatible and entire markets of other architectures such as PPC, ARM, etc.) and seem to think that no company should have more than 50% marketshare for any reason.

Re:Why didnt they investigate microsoft properly (1)

wgoodman (1109297) | about 5 years ago | (#28566497)

It's not that there weren't alternatives to intel, it was that they were doing some shady things to make vendors less likely to use via/amd. A lot of times it's not so much that a company has a monopoly as it is if they were using anti competitive practices to become/maintain such.

Re:Why didnt they investigate microsoft properly (2, Funny)

dhaines (323241) | about 5 years ago | (#28566117)

Lobbyists, lobbyists, lobbyists, lobbyists, lobbyists!

Money talks. (0)

Anonymous Coward | about 5 years ago | (#28566125)

Microsoft was investigated during the Clinton administration. Microsoft gives very little money to the Democrats.
The Microsoft antitrust suit was largely dropped during the Bush administration. Microsoft is a top Republican contributer.

Personally, I find it fascinating that the Obama administration is investigating Google despite the fact that Google is a heavy Democrat contributer. Perhaps Google will start supporting the Republicans now.

Re:Money talks. (0)

Anonymous Coward | about 5 years ago | (#28566681)

Microsoft gave a lot of money to the Democrats. Most lobbyists give a lot of money to BOTH. 2 party system is One party only.

Re:Money talks. (1)

Your.Master (1088569) | about 5 years ago | (#28567083)

http://www.campaignmoney.com/microsoft.asp [campaignmoney.com]
http://www.opensecrets.org/orgs/summary.php?id=d000000115 [opensecrets.org]
http://blog.seattlepi.com/print.asp?entryID=136352 [seattlepi.com] (this one only shows employee contributions, but it compares )

Microsoft contributes more to the Democrats than they do to the Republicans. Last year, it was nearly 3:1. OpenSecrets does show there was a time when Microsoft donated more to the Republicans, but there was never a time when Microsoft was both a top Republican contributor and gave very little money to the Democrats.

When I see this argument, I presume the mindset that produces it must be something along the lines of:

A. Microsoft is evil
B. Republicans are evil
_______________________________
C. Therefore, Microsoft is Republican

The DOJ is after the wrong company! (5, Insightful)

TropicalCoder (898500) | about 5 years ago | (#28565999)

Over the years, Microsoft has proven to be particulary inept at getting any traction with their search business. In January 2008, Microsoft made an unsolicited bid to purchase Yahoo. Their efforts were frustrated when Google came to Yahoo's rescue. To get their revenge Microsoft mobilized their army of lobbyists in a Plot to Kill Google [wired.com] . Microsoft persuaded other companies and trade groups to lend support to their FUD campaign against their arch enemy. You will recall that the powerful American Corn Growers Association was among them - this same organization who's members get billions in subsidies to produce environmentally unfriendly ethanol from corn.

An article [nytimes.com] in the New York Times details Google's public-relations offensive to counteract the Microsoft generated FUD.

The Times articles states about Google: "regulators are intensely scrutinizing its every move, as they once did with ... Microsoft. (My bold)

Why is it - "as they once did with Microsoft"? Microsoft never changed the behaviour that lead to civil actions filed against Microsoft [wikipedia.org] in May of 1998 by the United States Department of Justice (DOJ) and 20 U.S. states.

They have made a big mistake. The DOJ is after the wrong company! With a new administartion in place, their first priority should be to get Microsoft under control. The EU has really shown the world the the US DOJ has been asleep on its watch. If the DOJ woke up and stepped up to its long neglected responsibilities, it would be the USA raking in the billions in fines it will take to get Microsoft to behave itself, instead of the EU. Why in the world are they going after Google at this time?

Google has been a shining example of how a good corporate citizen should behave, and Microsoft should be encouraged to emulate Google's example. Google doesn't lock people into its software or services. Any time you want you can use another search engine or pick up your Google docs and walk away. If there are some justifiable concerns about Google, I suggest that the DOJ first take care of elephant in the room - Microsoft - before turning to Google. It is just so disheartening to see the good guys getting DOJ's attention while the bad guy slips away. Microsoft, you hypocrite, first take the plank out of your own eye, and then you will see clearly to remove the speck from Google's eye.

PS: I couldn't have written this short essay without Google there by my side the whole time as a friend to help me with the research.

Re:The DOJ is after the wrong company! (0)

Anonymous Coward | about 5 years ago | (#28566141)

Hahaha... Google has been worse than MS in my experience. Google's monopoly practices are different from MS. They want to lock in advertisers and affiliates and then be as opaque and slow to respond as possible. You want open APIs? How about an open search based advertising infrastructure? In fact I pitched to Google, Yahoo, and MS a few years ago. Yahoo and MS were interested... Google, not so much. Note, the world has changed. Openness is no longer about document formats -- it's about services and open access to information (e.g., can I license Google's index? Nope, it's proprietary).

BTW, I bet you could've done the same research with Bing and not missed a beat.

Re:The DOJ is after the wrong company! (2, Insightful)

maxume (22995) | about 5 years ago | (#28566151)

Another way of looking at it is that the Yahoo! board completely screwed the pooch when they turned down the offer. Yahoo! currently has a market cap of $21 billion, just under 47% of the $44.6 billion that Microsoft offered for the company. Even if the deal had been entirely for Microsoft stock (much of it was for cash), Yahoo! shareholders would have something like 75 cents on the dollar today, instead of the 47 cents the board so gracefully awarded them.

Re:The DOJ is after the wrong company! (1)

dbcad7 (771464) | about 5 years ago | (#28567343)

Well from an investors point of view, I suppose your right.. but a company is more than the shares that people put into it. Just because a competitor can buy you out, doesn't mean you want to sell out to them.. regardless of the amount.. Redhat is also publicly traded, would you say their board "screwed the pooch" if they rejected being bought out by Microsoft ?

Re:The DOJ is after the wrong company! (4, Interesting)

Rycross (836649) | about 5 years ago | (#28566179)

Microsoft was already brought to court over antitrust matters, lost, and was fined. Then the Bush administration basically gave them a pass. I don't think we can drag them to court again, unless they do something significantly new.

Another thought: I'm not sure if the ISO/DOCX/ODF fiasco counts. I wish that it was looked into by the correct anti-trust officials, but I don't really know if that sort of thing breaks any laws.

On the other hand, I'm not sure if I'd agree that Google has been the shining corporate citizen that you paint them to be. They have done some questionable things (privacy issues with StreetView, China dealings, etc).

Re:The DOJ is after the wrong company! (2, Interesting)

Anonymous Coward | about 5 years ago | (#28567463)

Google was the last search engine to move into China. They don't even maintain logs of China originating transactions. They keep nothing of significance in that country. They don't deploy any of their latest 2 or 3 generations of technology into that country. They are prepared to cut it off from the rest of Google and shut it down in a heartbeat.

They haven't coughed up any data on Chinese users to the Chinese government. The fact that they have to filter data (*and* indicate to the user that it *is* being filtered) is up to their government. If the Chinese people want to change it, they can.

Given that the computer you're using to access the internet, your monitor, and probably all the switches and almost certainly all the chips in those devices, your keyboard, mouse, clothes and such are likely all made in China, I fail to see how you can single Google out for "China dealings". China firewall is run on what? Google computers? Google OS?

Privacy issues with Streetview? They drive down public streets taking photos. Like people have done since cameras have been around. The fact that they take a lot of photos (something you could always legally do), stitch them together (again, legal), and post them online (legal) is what's new about it. They apply appropriate solutions when people (or governments) ask them. Generally without going through a court case. They try to do "the right thing". Try asking MS for something.

As corporations go, they are "shining". Way above average.

Everything they do is questionable. So question it. They generally answer. And change. And improve. You cannot rationally expect everything they do to meet 1) your ethic or 2) everyone's ethic.

And...

Never mind, I just realized I'm on slashdot. no point...

Re:The DOJ is after the wrong company! (0)

Anonymous Coward | about 5 years ago | (#28566257)

Microsoft corrected their over-site and started to give money to the Democrats and the Republicans politicians/party. This is how the Microsoft solved its DOJ problem.

Re:The DOJ is after the wrong company! (0)

Anonymous Coward | about 5 years ago | (#28566939)

Google has been a shining example of how a good corporate citizen should behave

Oh, you mean when they censor China's and other repressive governments search terms?

Re:The DOJ is after the wrong company! (1)

shentino (1139071) | about 5 years ago | (#28567335)

I'd rather a company with SOME scruples step into the chinese market instead of letting a company with NO scruples in.

I consider google to be the least of the evils in that case considering what would otherwise happen.

Re:The DOJ is after the wrong company! (1)

jonaskoelker (922170) | about 5 years ago | (#28567227)

If the DOJ woke up and stepped up to its long neglected responsibilities, it would be the USA raking in the billions in fines it will take to get Microsoft to behave itself, instead of the EU.

That's exactly why you shouldn't go tell them!

  -- ancient european proverb

Re:The DOJ is after the wrong company! (1)

slashhax0r (579213) | about 5 years ago | (#28567245)

Next time use BING to do your research, and instead your sentences will read:
"Microsoft has been a shining example of how a good corporate citizen should behave, and Google should be encouraged to emulate Microsoft's example."

BITCH!!!!! (-1, Troll)

Anonymous Coward | about 5 years ago | (#28566013)

I JUST COOKED A PORK CHOP! FUCK YOU!!!!!!!



You know what's funny? That's shit is soooo much more satisfying if you HOLD DOWN shift to talk in all caps, as opposed to simply pressing Caps Lock like some lam ass script-kiddy. I's is leet, biatches!!!! Git de FUCK out!

Hey moderator, DIE IN A FIRE (-1, Offtopic)

Anonymous Coward | about 5 years ago | (#28566935)

This guy was referring to making porkchop sandwiches. And I'm referring to you. Die in a fire. When the fireman comes to rescue you, just stay put instead.

Wait a minute.... (1, Flamebait)

idiotnot (302133) | about 5 years ago | (#28566075)

....weren't they big Obama supporters? How's that workin' out for y'all, now?

Re:Wait a minute.... (1)

Rycross (836649) | about 5 years ago | (#28566213)

Investigation isn't the same as taking them to court. Maybe the investigations will turn up nothing, coincidentally at the same time as Google gives a nice campaign donation some prominent Democrats.

Re:Wait a minute.... (0)

Anonymous Coward | about 5 years ago | (#28566237)

Simply because they were supporting the administration doesn't give them a free pass.

Probably the only reason they're checking up on this over Microsoft is because this is something that's on its first legs. It's easier to prevent seeds from gowning than to stop the chair flinging juggernaut.

An interesting thing I find here so far, though, is that there's so many people decrying the antitrust investigation of Google for being "too successful" but going on about how Microsoft should go under an antitrust investigation for being...too successful. Double standards are so cruel.

Re:Wait a minute.... (2, Informative)

Schraegstrichpunkt (931443) | about 5 years ago | (#28567867)

An interesting thing I find here so far, though, is that there's so many people decrying the antitrust investigation of Google for being "too successful" but going on about how Microsoft should go under an antitrust investigation for being...too successful.

If that's what you "find", then you're not doing an honest [everything2.com] job [slashdot.org] of [groklaw.net] looking [youtube.com] .

why not comcast and AT&T? (3, Insightful)

DragonTHC (208439) | about 5 years ago | (#28566819)

they're monopolies also.

Re:why not comcast and AT&T? (1)

Spy Handler (822350) | about 5 years ago | (#28566913)

cos they probably greased the palms of, erm I mean "contributed to the political campaign fund" of, the appropriate senator/congresscritter.

If it moves, tax it... (1)

Phizzle (1109923) | about 5 years ago | (#28566971)

If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
DOJ is wasting time and tax payers money, makes me sick.

fa1lzors?j! (-1, Flamebait)

Anonymous Coward | about 5 years ago | (#28567089)

consistent with the with the laundry be a lot slower GGod manners

What kind of idiots in the DOJ? (2, Insightful)

wiredlogic (135348) | about 5 years ago | (#28567503)

I can't believe that anyone in the DOJ is stupid enough to believe that Google taking the initiative to provide orphaned works to the public constitutes some sort of monopoly. The original work must still exist somewhere in print. It's not like they're engaging in Fahrenheit 451-style tactics to control all knowledge. Furthermore, making a settlement to get rid of a nuissance lawsuit doesn't represent an admission of wrongdoing. It's not like the idea of mass book scanning and indexing was an original idea of Google's that they have some exclusivity over. If anyone want's to engage in their own mission to do so they can. In fact there were academic projects to do just that before Google came along with their idea of how to do things. Google worked with them to help develop better technology to improve the throughput over existing scanner systems. The whole history of the books project [google.com] is available for anyone to peruse if they are interested. I don't see how anyone can construe the actions described therein as monopolistic.

The only thing that's questionable is how far they're stretching the fair use principle in what they're doing. A strict interpretation of the law suggests that any complete duplication of a protected work constitutes infringement even if it is kept in private with only excerpts revealed to the public. Considering that the complaint centers around orphaned works still under copyright but with no one making a claim to them it isn't clear who the potentially damaged party is in this case. If someone wanted to acquire an orphaned work in its original form how would they do it? Resale of existing copies doesn't deprive the copyright holder of any income. If the publishing industry is wringing their hands over the inability to contact the copyright holder then they obviously can't be producing new copies of these works. So where is the damage?

What's wrong is that it is saddeningly easy for MS to use it's network of lobbyists to buy their own special government services when they need them. What you have is a publishing industry that is scared of being obsoleted like the buggy whip manufacturers. MS loves to take advantage of organizations like this and use them to do their bidding such as how they used SCO to spread FUD on the use of Linux. A previous poster had it right when they surmised that this is payback for Google's interference in the attempted Yahoo buyout.

Wag The Dog (0)

Anonymous Coward | about 5 years ago | (#28567765)

hope sergey and lary are happy about all their campaign contributions...

Antitrust Laws Should Not Exist (1)

Anenome (1250374) | about 5 years ago | (#28567817)

Antitrust laws are nothing more than a pure power-grab by the government, allowing the Gov to threaten endless lawsuits on any large company any time they want. It is rife with circular reasoning and has no definable test. Worse, many companies prosecuted under the law do not even have monopolies in their industry. And worse still, the companies that -do- have monopolies have them because the government gave them to them! Examples include the old phone system (AT&T), many utilities, and the Post Office. The idea of 'natural monopoly' is totally false. And our current President is trying to create a new government monopoly on Health Care. It's despicable. What we need is to end the monopoly on government power.

Because of the way the law on antitrust has evolved, any business situation imaginable can make you subject to antitrust persecution *cough* ...err, prosecution.

If a business increases prices, then clearly it's because they've already driven out their competitors and are now taking advantage of that fact to milk the consumer.

If prices remain the same, then that's evidence of collusion, and thus comes prosecution for milking the consumer.

And if prices fall, then clearly that's predatory pricing designed to drive a competitor out of business entirely, and makes them subject to prosecution yet again.

So, if a company raises their prices, drops their prices, or leaves them the same, they can be prosecuted for monopolistic practices. How can anyone win? It's been said that if the Department of Justice had enough men, they could arrest every businessman in America for monopolistic practices.

But, even worse than all that, the premise of the law, that monopoly is always bad, or even objectively possible, is totally wrong from an economic point of view--underscoring the fact that the law is nothing more than a tool of a repressive government to use against companies whenever they want. Why did Microsoft get hit with the monopoly stick? Because they made Internet Explorer free and thus put Netscape out of business? Not really. That didn't hurt the consumer at all. The real reason is that Netscape hired political muscle on Capitol Hill, made the right connections, donated to the right people, and lobbied for political favors. And Microsoft, naively, ignored Washington.

Here's what the experts have to say:

-( from: http://wiki.lawguru.com/index.php/Antitrust [lawguru.com] )
Monopolistic firms are in a privileged position to reap economic benefits by restricting output and raising prices, without fear of competition. However, Thomas Woods asserts that the industries most frequently accused of holding a monopolistic position in the late nineteenth century were neither restricting output nor raising prices.

The Results of "Predatory Pricing": Commodity Prices from 1880-1890
Steel 58%
Zinc 20%
Sugar 22%

During the 1880s output of monopolistic industries grew seven times faster than the overall economy, while prices in these industries were generally falling--even faster than the 7% rate of decline that occurred in the economy as a whole. Template:Ref

Free market economist Milton Friedman states that he initially agreed with the underlying principles of antitrust laws (breaking up monopolies and oligopolies and promoting more competition), but came to the conclusion that they do more harm than good and that therefore they should not exist. Template:Ref

Critics also argue that the empirical evidence shows that "predatory pricing" does not work in practice, and is better defeated by a truly free market than by anti-trust laws (see Criticism of the theory of predatory pricing).

Thomas Sowell argues that even if a superior business drives out a competitor, it doesn't follow that competition has ended:

        "In short, the financial demise of a competitor is not the same as getting rid of competition. The courts have long paid lip service to the distinction that economists make between competition -- a set of economic conditions -- and existing competitors, though it is hard to see how much difference that has made in judicial decisions. Too often, it seems, if you have hurt competitors, then you have hurt competition, as far as the judges are concerned.[1]"

Alan Greenspan argues that the very existence of antitrust laws discourages businessmen from being productive for society, out of fear that their business actions will be determined illegal and dismantled by government. In his essay entitled Antitrust, he says: "No one will ever know what new products, processes, machines, and cost-saving mergers failed to come into existence, killed by the Sherman Act before they were born. No one can ever compute the price that all of us have paid for that Act which, by inducing less effective use of capital, has kept our standard of living lower than would otherwise have been possible."

(aside: checkout Thomas Sowell's "Citizen's Guide to the Economy" for more info)

Good day sir! (1, Funny)

Anonymous Coward | about 5 years ago | (#28567989)

Doesn't the DOJ have real things to investigate like where all the money the usa government has vanished in attempt to solve their problems by throwing money at them....

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