Goldman Sachs is a corrupt corporation. During the 2008 financial crisis it deliberately exploited its own clients, unloading upon them, without so advising them, securities deliberately designed to collapse in value. Its senior personnel move effortlessly in and out of cabinet positions in the federal government, pursuing anti-capitalist policies wherever possible. Its personnel help corrupt governments – Greece is a particular example – in breaking rules designed to maintain transparency in budgetary affairs. Its CEO, Lloyd Blankfein, arguably is the most corrupt corporate leader in the United States.
It comes as no surprise, therefore, to find that Goldman Sachs is working hard to discredit GOP attempts to shave the 2011 budget of its massive built-in deficit. The proposed GOP budget cuts would cut just 2 percent from the $3.6 trillion fiscal 2011 spending endorsed by President Obama. Economists at Goldman Sachs, devastated by this threatened decline in the size of the state, are united in claiming that such a cut would wipe 2 percent from U.S. gross domestic product in the months ahead. In so doing, they support Big Labor claims that, if implemented, the cuts would eliminate 800.000 jobs.
Unsurprisingly, both claims are based on hydraulic Keynesian economic models that erroneously predicted in 2009 that Obama’s stimulus package would lower the rate of unemployment to 8 percent within 12 calendar months. Hello! Has that happened even over an ensuing two years of economic stagnation?
Implicit in such modeling is the assumption that the spending multiplier is 1.5, whereas in reality it is probably less than 1.0. A multiplier of less than 1.0 implies that an increase in government spending lowers gross domestic product; conversely it implies that a cut in government spending increases gross domestic product. And that is the more likely fiscal reality.
The economics department of Goldman Sachs has long been a festering hothouse for Keynesian economists. So one might well ask how such a policy framework can ever prove profitable for a financial corporation? And here is the sadistic wisdom of the Lloyd Blankfein mindset. Lloyd Blankfein and Goldman Sachs are not interested in whether the United States’ economy thrives or declines. They are not interested fundamentally in whether their clients prosper or fail. They are interested only in the wealth that they can transfer from unwary individuals into their corporate pockets.
If Goldman Sachs can hold their captive politicians to a pursuit of harmful Keynesian policies, then the corporation can exploit the bad economic consequences to fill its coffers with extracted wealth.
In Goldman Sachs, you should not trust, unless you are in their employ! And even then, cover your backs whenever Lloyd Blankfein is on the premises.
Charles Rowley's Blog 