Bailout Goldman

The more I think about the bail out of firms like Goldman Sachs I really get fired up. Goldman is / was a gambling firm, nothing more, nothing less. They did business with the biggest gamblers out there, hedge funds, private equity, off balance sheet firms of banks and individual investor / speculators.

We bailed them out. They were not a regulated bank / financial firm. The Treasury had no right to bail them out with taxpayer money, or Morgan Stanley or any other unregulated entity.

The fact that the Treasury and Fed rushed through applications to make these firms "regulated banks" infuriates me. This was a complete hijack of sensible regulations and laws in place to define what firm is a regulated entity that has to conform to routine inspections and a certain legal framework and those that can gamble at will with money from people who wish to be involved in their conduct.

As far as I am concerned, the folks in Washington who orchestrated the bail out of unregulated financial institutions and who are now making over a trillion dollars of taxpayer money available to unregulated industries to buy debt should all be indicted and tried for wrong doing.

I am very firm on this opinion. In addition, I read yesterday in the WSJ about the way banks are treating business lines of credit. It appears no only have hedge funds and unregulated (now regulated) gambling institutions have figured out how to make a killing on CDS products but now the banks are using the CDS market pricing of institutional debt as a guide on pricing that debt. From article:

Now, lenders are cutting the length of many commitments to less than a year. They are charging higher fees for the lines of credit, known as revolvers. And instead of promising an interest rate determined mainly by the company's credit rating, banks will now charge more if the cost of insuring the company's debt against default is higher.

I feel this is very dangerous. Although the traditional credit rating agencies completely failed to do their job correctly for the last 5+ years with respect to the secondary market for various types of debt and companies who engaged in selling various secondary products, to resort to making credit available and at what price based on what speculators are paying and or charging for credit default products is very dangerous and will lead to very distorted pricing and benefit money lenders and speculators at the cost to real companies that create real products and employ people in industries that ad real economic output to our GDP (unlike the financial products / debt "industry")

The time has come to fire the Washington insiders, tell congress to get a spine and regulate the CDS and other derivative markets, pull the cash out from the unregulated firms who were fast tracked into becoming "regulated" entities and force them to fend for themselves. All this BS about "to big to fail" is baloney. The sooner these financial companies who have come to dominate our economy through debt products are gone the better for the long term health of our economy.