Tag: TK News

Con of the Week: Greensill Capital

Mary Pat Campbell

Link: https://taibbi.substack.com/p/con-of-the-week-greensill-capital

Excerpt:

In finance there regularly appears a character who stands on a soapbox and claims to have re-discovered the natural laws of the universe. Go ahead, jump: with 10 shares of Invest-O, you won’t come down! Alan Greenspan’s declaration in the middle of the first tech bubble that we might be in the middle of a “once-or twice-in-a-century phenomenon that will carry productivity trends to a new higher track” helped birth the “new paradigm” theory, which denounced caution before investing in companies without revenues or plans as anachronistic timidity.

Greensill prophesied a revolution in his erstwhile dull trade. He hammered the theme that “AI” and “Big Data” were bringing about a “tectonic shift,” described by one writer as “the biggest revolution in history.” 

Author(s): Matt Taibbi

Publication Date: 19 May 2021

Publication Site: TK News

TK Newsletter: Introducing “Racket of the Week”

Mary Pat Campbell

Link: https://taibbi.substack.com/p/tk-newsletter-introducing-racket

Graphic:

Excerpt:

In 2007, before the crash, Goldman, Sachs CEO Lloyd Blankfein even inadvertently paid tribute to one of the most ancient scams — the pig in the poke — when he ordered subordinates to start selling off the mortgage-backed “cats and dogs” on his company’s books. This detail, which came out in a Senate investigation of Goldman’s “Big Short,” let the “cat out of the bag” about the real value of mortgage-backed securities.

In 2021, we’re seeing a surge in con-like corruption cases once again, many involving old-school ripoffs. An economy puffed up by the steroid enhancement of Fed support has led to a great flowering of such creative grifts. Some are not terribly accessible to non-financial audiences at first glance, so to make it a bit easier to keep track of new cases coming in, I’m creating a new feature, “Racket of the Week.”

We had a cartoonist draw up icons for a key system, which will help explain how and if the story covered contains elements of common street rackets.

Author(s): Matt Taibbi

Publication Date: 7 May 2021

Publication Site: TK News

The Heroic Congressional Fight to Save the Rich

Mary Pat Campbell

Link: https://taibbi.substack.com/p/the-heroic-congressional-fight-to

Graphic:

Excerpt:

However, the SALT cap didn’t so much go after “Democrats” as “affluent Democrats.” It only applied to people who itemize their taxes, which meant the 90% of Americans who take the standard deduction were unaffected. The deduction raised over $70 billion in just the first year, and roughly 56% of that money came just from the top 1% of taxpayers, living in a few states in particular.

The tax nastygram seemed directed at Trump’s hometown delegation. Congresswoman Carolyn Maloney in April of 2017 complained about the cost of protecting “Trump and his family here in NYC”; the SALT cap affected 19% of Maloney’s constituents in Brooklyn and on the Upper East Side, and taxpayers in that 19% each lost an average of $100,405 in breaks. Chuck Schumer, one of Trump’s fiercest critics, personally took over $58,000 in SALT deductions just in 2016.

Overall, 39 of the 40 districts most affected by the SALT cap were represented by Democrats. Of those, 28 came from New York, New Jersey, and Connecticut. Also affected: Nancy Pelosi’s San Francisco district, where residents lost an average of $53,471 of write-offs. Trump’s campaign promises to take on “elites” proved phony, except when he was able to effect this targeted partisan strike at the people he knew and hated the most: rich, socially liberal Democrats, especially ones from the tri-state area.

Author(s): Matt Taibbi

Publication Date: 23 April 2021

Publication Site: TK News at substack

“This is for you, Dad”: Interview with an Anonymous GameStop Investor

Mary Pat Campbell

Link: https://taibbi.substack.com/p/this-is-for-you-dad-interview-with

Excerpt:

Since 2008, the tendency among mainstream commentators has been to shrug off reverberations from the crash that force their way into news, usually on the grounds that the millions who lost homes, careers, marriages, lifetimes of savings, health, and in thousands of cases, their lives, are not truly poor or “working class,” or are only “relatively low-wealth,” as New York magazine recently put it. In the case of GameStop, there’s been a parade of stories describing investors as dupes, dummies, financial Trumpists, irresponsible gamblers, even crooks, their trade pegged as almost everything but what on some level it surely was and is, an echo of a suppressed national disaster.

Was GameStop “recreational” investing gone haywire, or a climax to a story building for a generation? Here’s one person’s answer:

SP: I grew up watching my parents struggle with money. Money was discussed all the time. They fought all the time. The older I got, the more I felt I had to do anything to keep my own kids from going through the same thing.

My parents worried in different ways. With my mother, I regularly knew how much money was in her checking account because she would stress-yell the amount whenever I asked for anything. It was really difficult for her.

My dad was the opposite. He wanted you to think he had money, but you were looking around and thinking, “I’m pretty sure we don’t.” Because I don’t have a bed, and my brother is sleeping on a couch. So if you’ve got it, maybe we should use it, I don’t know. So they were different in that regard.

Author(s): Matt Taibbi

Publication Date: 6 February 2021

Publication Site: TK News

Suck It, Wall Street

Mary Pat Campbell

Link: https://taibbi.substack.com/p/suck-it-wall-street

Excerpt:

The only thing “dangerous” about a gang of Reddit investors blowing up hedge funds is that some of us reading about it might die of laughter. That bit about investigating this as a “pump and dump scheme” to push prices away from their “fundamental value” is particularly hilarious. What does the Washington Post think the entire stock market is, in the bailout age?

America’s banks just had maybe their best year ever, raking in $125 billion in underwriting fees at a time when the rest of the country is dealing with record unemployment, thanks entirely to massive Federal Reserve intervention that turned a crash into a boom. Who thinks the “fundamental value” of most stocks would be this high, absent the Fed’s Atlas-like support in the last year?

For context, Goldman, Sachs posted revenues of $44.56 billion in 2020, its best year since 2009, a.k.a. the last year Wall Street cashed in on a bailout. Back then, the shortcut back to giganto-bonuses was underwriting fees for financial companies raising money to purge themselves of TARP debt. This time it’s underwriting fees for bond issues and IPOs. The subtext of both bailouts was that anyone who owned or underwrote financial assets got richer, while everyone else got the proverbial high hat. It’s no accident that income inequality dramatically accelerated after the last bailouts, and that the only people to see net gains in wealth since 2008 have been the richest 20% of Americans, a pattern almost certain to continue.

Author: Matt Taibbi

Publication Date: 28 January 2021

Publication Site: TK News