Sunday, August 9, 2009
7.1-magnitude quake hits off eastern Japan
TOKYO — A major, 7.1-magnitude earthquake struck off eastern Japan Sunday, the US Geological Survey said.
The quake was felt across Honshu island, especially its central and northern regions, including Tokyo, at 7.56 pm (1056 GMT), the Japan Meteorological Agency said.
The quake rocked buildings in the Japanese capital, but no damage was reported. Some local trains experienced slight delays.
The Japanese agency estimated the quake's magnitude at 6.9, and at a depth of 340 kilometres (213 miles) under the Pacific ocean, roughly 170 kilometres south of the Izu peninsula.
The agency said there were no fears of a tsunami
The US agency estimated the quake's depth at 303 kilometres.
Seismologists in Japan, which experiences around 20 percent of the world's most powerful earthquakes, believe disastrously strong quakes will strike off its Pacific coastline in the near future.
Local municipalities routinely hold earthquake drills.
Sunday's quake was among the largest in magnitude to strike Japan this year.
On Wednesday quakes of magnitude 6.5 and 5.0 struck in separate locations in southern Japan, but caused no damage.
In April, a 6.6-magnitude quake struck off northern Japan.
No tsunami expected from quake in Japan
The Pacific Tsunami Warning Center said early today that no destructive sea wave was expected in the aftermath of a 6.9-magnitude earthquake that struck southeast of Honshu, Japan.A preliminary report had the magnitude at 7.1.
The center at Ewa Beach notified Hawaii Civil Defense that a historical data from the region indicate no Pacific-wide tsunami was expected and there was no threat to Hawaii.
The quake struck at 12:56 Sunday, Hawaii time, near the Izu Islands of Japan.
中國‧“天鵝”“莫拉克”夾擊‧百人失蹤
（中國‧北京）中國官方媒體報導，熱帶風暴“天鵝”襲擊南中國海，數十艘中國、越南和柬埔寨漁船在風暴中失蹤，近100船員下落不明。
受熱帶風暴“天鵝”影響，海南省遭遇連續降雨，導致儋州市大部分地區變成水鄉，造成嚴重損失。圖為當地居民走過一條被水淹沒的街道。（圖：美聯社）
襲擊南中國海數十船隻
海南省海事人員向新華社透露，海南島岸外有逾20艘船隻受困，當局已派遣援救艦和直升機前往施援。
中國中央電視台報導，至少有一艘船在風暴中沉沒。
報導指出，原本在廣東台山登陸後減弱為熱帶低壓的“天鵝”，在颱風“莫拉克”登陸前再次加強為熱帶風暴。
四川山崩阻斷大渡河
“莫拉克”將於週六（8月8日）傍晚到夜間在福建省登陸。
福建省氣象台已於較早時升級發佈颱風紅色預警。
此外，四川省雅安市漢原縣發生嚴重山崩阻斷大渡河，迄今仍有29人失蹤。跨塌的山體阻斷了河流，並危及附近一座水力發電站。
中國水利部的網站指出，這起發生在週四（8月6日）的意外，共造成2人死亡，18人受傷。
據報導，失蹤的29人相信大多為外地工人，事發時他們正乘搭一列當地的火車，前往工作地點。
報導也指出，土崩至少沖毀了10輛交通工具，惟沒有透露失蹤的工人是否在那些交通工具裡。目前，搜救行動還在進行中。
樂山市數萬居民疏散
新華社早前報導，垮塌的山體帶著大量泥濘和石頭流入河中，造成阻塞，僅剩下細小的水流通往瀑布溝發電站。有關方面擔心河水會突然決隄引發洪流，吞沒住在下游地區的民眾。
報導稱，金口河區樂山市多達數萬的居民已經被疏散。樂山市豎立了世界最大的佛像，長年俯瞰大渡河。
台灣‧豪雨溪水暴漲‧台東溫泉酒店沖塌
（台灣‧台北）受颱風“莫拉克”吹襲，台東縣知本溫泉區一間酒店的地基今日（週日，8月9日）不抵豪雨和溪水暴漲的沖刷，整幢酒店被沖塌，所幸沒人傷亡。
由於知本溪的河水暴漲，知本溫泉的聯外道路遭沖塌了一段。建於溪畔的6層樓高酒店“金帥飯店”，當天地基被大水掏空，初時呈現傾斜，最後在早上11時30分左右，整幢倒在知本溪。
台東縣一個小鎮，洪水滔滔，整個鎮幾乎滅頂。（圖：美聯社）
無人傷亡數百人受困
在該酒店前方的商店街，也大約有10間商店，被沖到知本溪裡，員工及時被疏散，無人傷亡。
溫泉業者較早時表示，金帥酒店一旦倒塌，將會威脅其後方的3家大型飯店。
由於溪水暴漲，附近的聯外道路跟橋樑都暫時封閉。初步估計，光是在知本溫泉區，就有大約近400名遊客和居民受困，亟待救援。中央社此前報導，當地仍有2000名遊客被洪水圍困。
由於雨勢太大，原定到台東勘察災情的總統馬英九，因台東機場關閉而被迫改道，搭專車前往嘉義災區。
“莫拉克”連續3天侵襲台灣，據中央災害應變中心統計，已造成1死19輕傷29失蹤。
雖然“莫拉克”已離台，它的暴風圈仍籠罩台灣一半以上陸地，空中及地面交通週日持續受影響，鐵路部份停駛，航班部份取消或延後。
Twitter Down: It's an Online Attack on One Political Blogger
ABC News Interviews Him. Twitter, Facebook, YouTube Hit By Attack on Him
Twitter, Facebook, LiveJournal, Google Blogger and other Web sites were hobbled Thursday -- Twitter was completely down for many users -- and it all appears to have been because of a coordinated online attack on one political blogger in the Republic of Georgia.
http://bit.ly/7HZk6The man called himself "Cyxymu." ABC News tracked him down in Tblisi, Georgia, and spoke to him by phone.
He said he is a 34-year-old economics professor named Georgy (he wouldn't give his last name), a married father of two. He said he is a refugee from Abkhazia, a region of Georgia that declared its independence in 1991 after the breakup of the Soviet Union, but is recognized by only a few of the world's governments.
Georgy said he started a blog on the LiveJournal site to unite fellow refugees who would like Abkhazia to recognize Georgia's authority over it. Last summer, Georgia and Russia went to war with each other, and Georgy started criticizing Russia -- which recognized his homeland's independence -- online.
Georgy said he believes he was targeted by a group linked to the Kremlin. "It's hard to say who did it but I looked at how it was done and it definitely cost a lot of money. An operation like this couldn't have been done by a group of enthusiasts."
What they did is known as a Denial of Service attack (DoS). They sent out computer viruses that infected thousands of computers around the world -- and, at a specified time, inundated the sites used by Georgy with e-mails.
Twitter, its servers apparently overwhelmed, was unavailable to many users for more than a day; Facebook and LiveJournal confirmed they had disruptions.
"I tried LiveJournal, it didn't work," said Georgy. "I tried Facebook and it didn't work. Then I tried Twitter and it didn't work. I then realized that something serious had happened. I didn't connect it to myself at first, I didn't imagine that I could have caused it."
Twitter, based in California, could not immediately be reached for comment. Facebook replied to queries from ABC News with a statement:
"Yesterday's attack appears to be directed at an individual who has a presence on a number of sites, rather than the sites themselves. Specifically, the person is an activist blogger and a botnet was directed to request his pages at such a rate that it impacted service for other users. We've isolated the issue and almost all of our users are able to enjoy the normal Facebook experience."
Twitter, Facebook Hobbled by Attack on a Single Georgian Blogger
Meanwhile, back in Tblisi, Georgy said he only realized the outage was connected to him when he gained access to his accounts again and found tens of thousands of e-mails. Hundreds of thousands of e-mails went out in his name, he says.
Georgy said he doesn't use Twitter very much, but he was impressed by its capacity for quickly disseminating information. He said he saw the way it was used by dissidents this spring in Iran, and says he has apologized to several Iranian bloggers for the disruption.
He said he doesn't believe that it's his fault, but he is sorry it happened and says once back online, he apologized to those who follow his online postings.His views have not changed. "Cyxymu" is an alternative name for Sukhumi, the capital of Abkhazia.
By ALEXANDER MARQUARDT in MOSCOW and NED POTTER in NEW YORKRegulators close 3 banks in Fla., Ore.; total 72
NEW YORK (AP) - Regulators on Friday shut down two banks in Florida and one in Oregon, bringing to 72 the number of federally insured banks to fail this year under the weight of the weak economy and rising loan losses.
The Federal Deposit Insurance Corp. was appointed receiver of the banks: First State Bank, of Sarasota, Fla.; Venice, Fla.-based Community National Bank of Sarasota County, and Community First Bank (FRBA) (CFBN), of Prineville, Ore.
First State Bank had total assets of $463 million and deposits totaling $387 million. Community National Bank had $97 million in assets and $93 million in deposits. Community First Bank had $209 million in assets and $182 million in deposits.
The FDIC said Stearns Bank, of St. Cloud, Minn., agreed to assume all the deposits of both Florida banks. Stearns Bank also agreed to buy $451 million of First State Bank assets and $94 million of Community National Bank assets.
The nine branches of First State Bank will reopen Monday as Stearns Bank branches, while Community National Bank's four branches will reopen Saturday.
Nampa, Idaho-based Home Federal Bank agreed to assume all of Community First Bank's deposits, except about $31 million in brokered deposits. Home Federal also agreed to buy about $197 million of the failed bank's assets.
Community First Bank's eight branches will reopen on Monday as branches of Home Federal Bank.
There were 25 bank failures nationwide last year and three the year before.
The FDIC estimates that the cost to the deposit insurance fund from the failure of the three banks will be around $185 million.
Record unemployment, sinking home prices and dwindling personal wealth have put major constraints on consumers this year, making it difficult for them to pay off debt. Bank failures have cascaded as the economy soured and loan losses soared, sapping billions of dollars out of the deposit insurance fund. It now stands at its lowest level since 1993, $13 billion as of the first quarter.
While losses on home mortgages may be stabilizing, delinquencies on commercial real estate loans remain a trouble spot, especially for regional banks that hold large amounts of the high-risk loans.
The number of banks on the FDIC's list of problem institutions leaped to 305 in the first quarter - the highest number since 1994 during the savings and loan crisis - from 252 in the fourth quarter. The FDIC expects U.S. bank failures to cost the insurance fund around $70 billion through 2013.
The bank failure costliest to the fund came in July 2008 with the seizure of IndyMac Bank. The insurance fund is estimated to have lost $10.7 billion on the closure of the big California lender.
The largest U.S. bank failure ever in terms of bank assets also came last year. Seattle-based thrift Washington Mutual Inc., which had about $307 billion in assets, fell in September and was acquired by JPMorgan Chase & Co. for $1.9 billion in a deal brokered by the FDIC.
Typhoon Morakot lands in east China, causing casualties
·One person was killed as Morakot slammed into east China's Fujian Province Sunday.
·It made landfall in the coastal areas of Beibi Town, Xiapu County in Ningde City at 4:20 p.m.
·It packed winds up to 12 kilometers an hour in its eye, Fujian's meteorological bureau said.
FUZHOU, Aug. 9 (Xinhua) -- One person was killed as Typhoon Morakot slammed into east China's Fujian Province Sunday.
Morakot made landfall in the coastal areas of Beibi Town, Xiapu County in Ningde City, at 4:20 p.m., packing winds up to 12 kilometers an hour in its eye, the province's meteorological bureau said.
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| Affected by typhoon "Morakot", strong tides surge on the Qiantang River in Haining, a city of east China's Zhejiang Province, Aug. 8, 2009. ((Xinhua Photo) |
The eighth typhoon of the year had previously triggered continuous downpours and strong winds before its landing in Fujian and neighboring Zhejiang Province.
Five houses were destroyed as the typhoon brought rainfall of 700 mm to Wenzhou City in Zhejiang just after 8 a.m. Sunday.
Four adults and a 4-year-old boy were buried in debris and the child died during the afternoon after emergency treatment failed, the city's flood-control headquarters said.
More than 490,000 residents of Zhejiang and more than 505,000 from Fujian have been evacuated to safer areas.Typhoon Morakot's approach forces evacuation of 1 mln in east China
·More than 970,000 in two east coastal provinces have moved to safe places by Sunday.
·Morakot was likely to land in Zhejiang and Fujian Sunday afternoon or in the evening.
·Strong winds and heavy rainstorms are expected to slam most part of Zhejiang.
HANGZHOU, Aug. 9 (Xinhua) -- Typhoon Morakot, the eighth of the year, forced the evacuation of nealry 1 million people in two coastal east China provinces Sunday.
HANGZHOU, Aug. 9 (Xinhua) -- Typhoon Morakot, the eighth of the year, forced the evacuation of nealry 1 million people in two coastal east China provinces Sunday.
More than 490,000 residents of Zhejiang and more than 505,000 from Fujian have been relocated to safety.
In Zhejiang approximately 35,440 ships have been called back from sea, the provincial flood-control headquarters said Sunday morning.
Typhoon Morakot landed in east China's Fujian Province at 4:20 p.m. on Sunday, packing winds up to 12 kilometers per hour in its eye.
The 8th typhoon of the year made landfall in the coastal areas of Beibi Town, Xiapu County of Ningde City, the provincial meteorological bureau said.
Zhejiang issued a red alert, the highest, Sunday morning, as it registered a maximum wind speed of nearly 180 km an hour in the coastal Taizhou City area. Gales, expected to last for 60 hours, were expected to cause waves up to 7 meters.
Strong winds and heavy rainstorms have already caused problems in the province and are expected to do further damage when the typhoon lands.
Wenzhou City airport has canceled 39 domestic flights, the airport authority said.
Floods and landslides triggered by continuous rainfall paralyzed traffic in many rural areas.
Officials in some Zhejiang villages were riding bicycles to distribute drinking water and instant noodles to households stranded by deep water.
"Some villages have been inundated and vehicles can't reach them," said taxi driver Wang Jian.
The province registered its greatest precipitation of 800 mm in Taishun County, Wenzhou.
A number of expressways in the province had been closed, said the provincial highway management authority.
Morakot has also caused havoc in Fujian.
A cargo ship was stranded amid strong winds and rescuers were trying to rescue its eight sailors.
The ship, Daqing 254, lost control at about 2:30 a.m. Sunday as it was attempting to take shelter from the wind.
The vessel, with a capacity of more than 30,000 tonnes, has been blown on to a reef area on Qingshan Island near Ningde City.
Li Saixi, a native of Qiyu Village in Luoyuan County, was busy pumping water out of his basement following a downpour Saturday night.
"The rain gushed into my house at midnight and the water level had reached to my thigh about 2 a.m.", he said.
Owners of many coastal aquafarms were securing production facilities as strong winds pushed up high waves.
The supply of vegetables and seafoods to outdoor markets of agricultural products in Lianjiang County has been severely cut, and workers are clearing streets after strong winds scattered trash.
Shanghai, directly north of Zhejiang, has released stored water from inland rivers to reduce levels by up to 40 cm in preparation for the typhoon's arrival, the municipal flood control headquarters said Sunday.
Water conservation and disaster-control authorities of Anhui Province were dispatching working teams to reinforce preventative measures in disaster-prone areas before the typhoon arrives.
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| The urban area of Linbian Township in Pingtung County of southeast China's Taiwan, is flooded Aug. 8, 2009, because of heavy rainfall brought by typhoon "Morakot". (Xinhua/Wu Ching-teng) |
On Saturday afternoon, the National Marine Environmental Forecasting Center upgraded its alert level for both stormy tide and sea wave from "orange" to "red", the highest level.
The center said as a result of Typhoon Morakot, the stormy tide along the coast of Zhejiang Province and northern part of Fujian Province would be 0.5 meters to 1.8 meters high until Sunday afternoon.
The sea in southern part of the East China Sea and Taiwan Strait will be very rough, with monster waves as high as eight meters, the center warned.
Other coastal areas from Shanghai to Guangdong Province will all experience abnormally high waves, from 2.5 meters to six meters high, it said.
China adopts a four-grade warning system for stormy tide, tsunami, sea ice and sea wave, which uses four colors (red, orange, yellow and blue) to indicate different levels of emergency.
East China braces for incoming typhoon Morakot; 10 still missing
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| Fishing boats moor at a port to avoid the approaching Typhoon Morakot in Jinjiang, southeast China's Fujian Province, Aug. 8, 2009. (Xinhua/Xiang Kailai) |
BEIJING, Aug. 8 (Xinhua) -- East China is bracing for typhoon Morakot's approach after it slammed into Taiwan Friday night.
Weather forecasters said late Saturday Morakot was likely to land on the coast from Cangnan, Zhejiang province, to Xiapu, neighboring Fujian province, between 8 a.m. and 10 a.m. Sunday.
Although the typhoon this year is expected to weaken to a tropical storm before it arrives in the Chinese mainland, it was packing winds of 137 kilometers an hour at 7 a.m. Saturday and churning northwestwards at a speed of 15 to 20 kilometers an hour. It has already unleashed torrential rain in Fujian where, at five sites, water levels have been recorded at 0.02 to 0.66 meters above warning levels.
Chinese maritime authorities had rescued 146 by 6 p.m. and the remaining 10 from China were still missing.
PREPARATION IN FUJIAN
More than 480,000 people in Fujian have been evacuated and its Zherong County received more than 300 mm of precipitation on Saturday afternoon.
In Luoyuan county of Fuzhou city, Fujian's capital, people stayed at home during the weekend and roads were almost empty. Fewer sellers appeared in the county's vegetable market.
"Strong winds broke the ropes tying down the horsebeans, and the crown daisies (chrysanthemum greens) were destroyed," she said.
Li brought all her available stock to the market, fearing the storm would destroy it completely.
In downtown Fuzhou, where several big trees have already been toppled by gale-force winds, people were rushing to supermarkets for necessities before the typhoon arrived.
All flights from Saturday noon onwards at the airport in Fuzhou were cancelled, leaving more than 120 passengers stranded. Airport staff were helping with refunds.
Seventeen of the 312 flights to and from the airport in coastal Xiamen city were cancelled, most of which were heading to Anhui, Guangdong and Taiwan.
In Putian City, also in Fujian, all scenic sites and ports have been closed and school classes suspended. A team of 26,222 people has been formed and equipped with flood-control materials, said Huang Dongzhou, director of the city's flood control office.
All of the city's 7,168 fishing ships have returned to harbor, Huang said.
The province's Ningde city is strengthening its defences to bear the brunt of Morakot, local meteorological authorities said.
People there are also reinforcing reservoirs with bricks and stones. Water in the city's 20 major reservoirs is only at 54 percent of their combined capacity, so officials with the flood control office said they think the rainfall will help with drought relief, as long as proper measures are taken to ensure safety.
Residents are also busy reinforcing their own houses.
Chen Kongsheng, a 61-year-old man, has attached four large rocks to the girders of his house, so that the typhoon "won't tear off his roof".
About 118,000 people in the city have been evacuated, said Chen Rongkai, Communist Party chief of the city.
Ningde has readied 103 rescue boats, 15 rafts and 8,300 life jackets to help people affected by the typhoon.
EFFORTS AND TROUBLES ELSEWHERE
In adjacent Zhejiang Province, rainfall exceeded 50 millimetres on 6.8 percent of the province's land on Friday night. The highest reading was 110 millimetres in Cangnan county bordering Fujian.
An expressway from Wenzhou of Zhejiang to Fujian was closed for 12 kilometers, while another from Hangzhou to Anhui Province was cut by landslides.
Power supply to 80 villages was also cut. Nearly 500,000 residents and tourists in danger areas had been evacuated by 9 p.m. and the province has called nearly 30,000 ships back to harbor.
More than 50,000 soldiers were prepared for emergencies in Zhejiang, said the local government.
Shanghai was put on high alert and the World Expo venue is being protected around the clock.
More than 80 foreign ships were delayed or had their voyages cancelled."We are unlikely to resume if the typhoon moves northwestwards," said the captain of a Japanese cargo ship, which was scheduled to sail for Japan Saturday at noon.
In addition, more than 140 flights in Shanghai had been delayed by about 10 p.m..
Anhui issued its first typhoon warning this year, and advised residents to stay indoors.
East China's Shandong province has also warned local governments to take measures beforehand to reduce losses from extreme weather.
Morakot, which means "emerald" in Thai, is the eighth storm to hit China this year. It landed in Hualien of Taiwan at 11:45 p.m. Friday, and left at least six people dead or missing. A further 12 were injured. Morakot also overturned cars and cut power supplies.
西藏流亡政府總理對訴求中國人民表樂觀
（中央社記者周盈成日內瓦8日專電）與中國海外知識分子對話的漢藏會議結束，西藏流亡政府首席部長（總理）桑東仁波切表示會議出乎意料地成功，他對於未來持續讓中國人民了解藏人處境與觀點感到樂觀。
西藏流亡政府和民間援藏團體在日內瓦舉辦為期兩天半的漢藏討論會，桑東仁波切今天中午在會議結束後接受中央社訪問說，今後的要務是與中國人民接觸，因為即使中國當局目前態度不善，但「中國遲早會民主化，屆時民意是最重要的」。
西藏流亡政府和民間援藏團體在日內瓦舉辦為期兩天半的漢藏討論會，桑東仁波切今天中午在會議結束後接受中央社訪問說，今後的要務是與中國人民接觸，因為即使中國當局目前態度不善，但「中國遲早會民主化，屆時民意是最重要的」。
和許多與會者所觀察到的一樣，桑東仁波切說，達賴喇嘛和西藏流亡政府說服了許多漢族與會者接受其「中間道路」主張，也就是尋求在中華人民共和國憲法架構下的真正自治。
中間道路面臨的一項主要質疑，是部分與會者指出，中華人民共和國的憲法是堅持共產黨領導、並非民主憲法，和西藏流亡政府追求的民主自治難以相容。
對此，桑東仁波切同意中國的現行憲法是基於共黨意識形態，但他認為，即便是這部憲法，「如果它被誠摰地實行，我們的絕大多數問題都可解決」。
他說，中國本身也會逐步改變，如果西藏爭取到現行憲法中的自治權利，隨著中國的民主化，新的憲法也會再修正關於少數民族的規定，「到時候事情會自行發展」。
他表示，西藏人是有權利尋求獨立，但流亡政府認為留在中國較好。
參加這場會議的近百名漢藏兩族學者、作家、人權運動人士絕大多數支持中間道路，但仍有少數不同意見，因此最後出爐的共識文件指與會者「高度尊重」中間道路。桑東仁波切認為，這已比流亡政府原先預期的還要成功。
去年秋天，西藏流亡政府與中共的第八輪會談再度觸礁。桑東仁波切說，只要中共有正面訊息，西藏仍準備好隨時恢復談判，不過目前為止沒有見到任何跡象。
他說，西藏方面也可能主動提出，但不是現在。
至於這次會議從漢族人士獲得的建議，桑東仁波切說，最重要的就是要多利用中文和網路等現代科技來與中國人民對話。他指出，中共的宣傳在中國人民心中造成了許多誤解，「我們必須加以澄清，否則（中共宣傳）會形成毒害，漢藏人民間的衝突問題不會終止」。
金融危機疑似獨利高盛 前美國財長否認不法
（中央社華盛頓╱芝加哥8日路透電）前美國財政部長鮑爾森（Henry Paulson）的發言人今天表示，鮑爾森在去年信貸危機最嚴重期間，常常與高盛集團執行長布蘭克費恩（Lloyd Blankfein）通話，但是沒有積極要幫助高盛集團。鮑爾森曾擔任這個集團的執行長。
「紐約時報」（New York Times）今天報導，高盛集團的對手「雷曼兄弟」去年9月倒閉的那個星期，保險公司「美國國際集團」（American InternationalGroup）獲得政府資金紓困，就在同一週，鮑爾森與布蘭克費恩通話二十多次。
高盛是AIG紓困案唯一最大受益者，收到AIG支付的130億美元。如果AIG倒閉，高盛將收不到這筆錢。
鮑爾森的發言人戴維斯（Michele Davis）證實，鮑爾森的確與布蘭克費恩通過電話，但否認鮑爾森有特別想要幫助高盛的意圖。
戴維斯發表聲明說：「暗示政府只是為了某家公司而搶救AIG，與消防員撲滅摩天大樓火災，只為搶救大樓內數千人當中的一人，這兩種說法同樣荒謬。」
世銀：沙國為阿拉伯世界最強經濟體
（中央社記者曹宇帆特拉維夫9日專電）一項由「世界銀行」（World Bank）公布的報告，主要產油國沙烏地阿拉伯因去年國內生產總值達4680億美元，為阿拉伯世界中經濟最強國家。
2007年沙烏地阿拉伯的國內生產總值為3810億美元，去年又增加870億美元，全球排名第23，也是中東地區最強經濟體。
阿爾及利亞以國民生產總值1740億美元，在阿拉伯世界中排名居次，其次分別為阿拉伯聯合大公國、埃及，世界排名分居49及50。
葉門在阿拉伯世界中排名墊底，世界排名第83。
伊朗雖未列入阿拉伯世界國家排名，但伊朗去年的國內生產總值3850億美元，若放眼中東地區，則僅次於沙烏地阿拉伯，全球排名第26。
若以國民平均所得而論，卡達去年為5萬9000美元居阿拉伯世界之冠，但與2007的世界排名相較，則下滑2名，居第15位。
科威特以3萬8500美元在阿拉伯世界中僅次於卡達，居全球第17，阿拉伯世界最強經濟體沙烏地阿拉伯的個人年均為1萬5500美元，排名在科威特之後，全球排名第53。
以色列的鄰國敘利亞與埃及，個人平均所得分別僅有2000及1800美元，在阿拉伯世界中排名墊底。
總統：徵調北部橡皮艇 南部救災
總統馬英九今天中午視察嘉義縣民雄鄉金世界社區時強調，南部水患災情嚴重，以救人為笫一優先，已指示台北市消防局長徵調北部的橡皮艇到南部救災。
颱風影響遭退票 將從寬處理
中央社記者高照芬台北2009年8月9日電）莫拉克颱風來襲，台灣地區 7日停止上班，台灣票據交換所表示，支票存款戶若因颱風發生存款不足而遭退票，將從寬處理。
（中央社記者楊淑閔台北 9日電）莫拉克颱風重創農業，累計農損至上午已達新台幣11億餘元。農委會表示，今天公告高雄縣、屏東縣及花蓮縣為辦理農業天然災害低利貸款地區，協助受災農漁民辦理災後復建及復耕。
受到颱風影響，嘉義縣市交界的牛稠溪氾濫，造成牛稠溪潰堤，缺口達50公尺，溪水淹沒金世界社區，近千居民受困。
民雄鄉長陳福成表示，金世界自凌晨 3時起淹大水，鄉公所漏夜派員撤離居民，但仍有多數居民未撤離，清晨4時許有1名老婦被洪水沖走。
颱風影響遭退票 將從寬處理
中央社記者高照芬台北2009年8月9日電）莫拉克颱風來襲，台灣地區 7日停止上班，台灣票據交換所表示，支票存款戶若因颱風發生存款不足而遭退票，將從寬處理。
票交所指出，支票存款戶因莫拉克颱風遭受災害，導致影響票款清償能力，得檢具證明文件向辦理退票的金融業者申請核轉當地票據交換所辦理重大災害的註記，經辦妥註記者，自8月7日起至明年2月6日止所發生的存款不足退票，不因退票達三張而通報為拒絕往來戶。
（中央社記者楊淑閔台北 9日電）莫拉克颱風重創農業，累計農損至上午已達新台幣11億餘元。農委會表示，今天公告高雄縣、屏東縣及花蓮縣為辦理農業天然災害低利貸款地區，協助受災農漁民辦理災後復建及復耕。
農委會指出，上述 3縣受災農漁民有復建、復耕資金需求者，應於農委會公告翌日起的10天內，攜帶土地所有權狀或土地委託經營或租賃契約書，向當地鄉（鎮、市）公所申請核發受災證明書。
並於該證明書核發的翌日起15天內，檢具受災證明書及農業天然災害復建及復耕計畫書向當地農漁會信用部申請貸款。
農委會農業金融局說明，上述貸款提供農漁民災後復建及復耕所需資金，利率為年息 1.25%，擔保能力不足者，可由貸款經辦機構協助送請農業信用保證機構保證。
農漁民若有疑問，農金局說，可洽當地農漁會信用部或農金局諮詢。
Highest Unemployment Rate in State Since 1992
More Than 850,000 New Yorkers Unemployed in June - Highest Number in at Least 33 Years Unemployment Rates* (seasonally adjusted)
Albany, NY (July 16, 2009) - New York State's unemployment rate increased to 8.7 percent in June 2009, its highest level since October 1992, the State Labor Department reported today. At the same time, New York City's rate increased to 9.5 percent in June (the highest level since July 1997), while the rate outside of New York City climbed to 8.2 percent, the highest since June 1983. In June 2009, the number of unemployed state residents jumped to 854,200, the greatest number on record (current data extend back to 1976).
After seasonal adjustment, New York State's private sector job count decreased over the month by 17,700, or 0.2 percent, to 7,078,300 in June 2009; it has now dropped for ten consecutive months. Since the state's private sector job count peaked in August 2008, New York has lost 235,900 private sector jobs, erasing more than half of the 400,000 jobs added during the last economic expansion in 2003-2008.
"Labor market conditions continued to deteriorate in June 2009 as the number of unemployed New Yorkers reached its highest level since at least 1976. Nonetheless, the state lost jobs at a slower pace than the U.S.," said Peter A. Neenan, Ph.D., Director of the Division of Research and Statistics.
Note: When comparing different months, seasonally adjusted data provide the most valid comparison, for example, May 2009 versus June 2009. Non-seasonally adjusted data are valuable in year-to-year comparisons of the same month, for example, June 2008 versus June 2009.
1.) Unemployment rates (seasonally adjusted):New York State's unemployment rate, after seasonal adjustment, increased from 8.2 percent in May to 8.7 percent in June 2009. In June 2008, the state's rate was 5.3 percent. The U.S. rate was 9.5 percent in June 2009, up from 9.4 percent in May. In June 2008, the nation's rate was 5.6 percent. New York City's rate increased from 8.9 percent in May 2009 to 9.5 percent in June 2009. In June 2008, the city's rate was 5.4 percent. The rate outside of New York City was 8.2 percent in June 2009, up from May's 7.7 percent. In June 2008, the rate outside of New York City was 5.3 percent.
| June 2009* | May 2009 | June 2008 | |
| New York State | 8.7 | 8.2 | 5.3 |
| United States | 9.5 | 9.4 | 5.6 |
| New York City | 9.5 | 8.9 | 5.4 |
| NYS, excluding NYC | 8.2 | 7.7 | 5.3 |
| *Data are preliminary and subject to change. |
2.) Unemployment Insurance and EUC08 data (not seasonally adjusted):
Under the Regular Unemployment Insurance (Regular UI) program, individuals who are involuntarily unemployed through no fault of their own may be eligible for up to 26 weeks of benefits as long as they remain ready, willing and able to work, and are actively seeking employment.
Under the temporary federal Emergency Unemployment Compensation (EUC08) program, enacted on June 30, 2008, as part of the Economic Stimulus Act of 2008, claimants who have exhausted their 26 weeks of regular benefits are eligible to receive up to 13 weeks of additional benefits. Federal legislation signed into law on November 21, 2008, added up to 20 more weeks to the original 13 weeks of EUC08 benefits. Monthly beneficiaries data for these programs are noted below.
| Program and Data Item* | June 2009 | May 2009 | June 2008 |
| Regular UI, monthly beneficiaries | 425,964 | 421,131 | 193,237 |
| Regular UI, year-to-date beneficiaries | 770,178 | 708,300 | 452,526 |
| EUC08, monthly beneficiaries | 179,989 | 208,869 | NA |
| EUC08, year-to-date beneficiaries | 298,085 | 255,509 | NA |
| *Data are preliminary and subject to revision. |
3.) Job data (seasonally adjusted):
New York State and the nation, May 2009 - June 2009:
The number of private sector jobs in New York State decreased by 17,700, or 0.2 percent, to 7,078,300 in June 2009, on a seasonally adjusted basis. Nationally, the number of private sector jobs decreased by 0.4 percent over the same period. After seasonal adjustment, the number of nonfarm jobs in the state decreased over the month by 23,000, or 0.3 percent, to 8,582,200 in June 2009. Nationally, the number of seasonally adjusted nonfarm jobs decreased by 0.4 percent in June.
4.) Nonfarm jobs since June 2008 (not seasonally adjusted):
| Total nonfarm jobs | -214,900 | ||
| Private sector jobs | -209,000 |
Since June 2008, the number of nonfarm jobs (private plus public sectors) in New York State decreased by 214,900, or 2.4 percent, and the number of private sector jobs decreased by 209,000, or 2.8 percent. Nationally, the number of nonfarm jobs decreased by 4.2 percent and the number of private sector jobs decreased by 5.1 percent between June 2008 and June 2009.
Educational and health services (+31,900) was the only major sector to add jobs over the June 2008-June 2009 period, with increases in both health care and social assistance (+24,000) and educational services (+7,900).
Among declining sectors, trade, transportation and utilities (-62,500) registered the largest drop with losses centered in wholesale and retail trade (-48,800). The second largest employment drop was in professional and business services (-50,300), with sector losses centered in employment services (-31,000). Manufacturing (-43,900) had the third largest employment drop; the decline was focused in durable goods (-34,300). Financial activities (-40,000) had the next largest drop, with the securities industry (-24,400) experiencing the greatest decline in that sector.
Change in Jobs by Sector,
June 2008-June 2009 Sectors with Job Gains: Educational & Health Services +31,900 Sectors with Job Losses: Trade, Transportation & Utilities -62,500 Professional & Business Services -50,300 Manufacturing -43,900 Financial Activities -40,000 Construction -23,900 Information -12,300 Leisure & Hospitality -7,200 Government -5,900 Other Services -500 Natural Resources & Mining -300
5.) Nonfarm jobs since May 2009 (not seasonally adjusted):
| Total nonfarm jobs | +26,900 | ||
| Private sector jobs | +33,200 |
In June 2009, New York State had 8,672,500 total nonfarm jobs, including 7,151,300 private sector jobs. From May 2009 to June 2009, the number of nonfarm jobs increased by 26,900 and the number of private sector jobs increased by 33,200. On average, in the previous ten years, the number of nonfarm jobs in New York increased by 44,400 from May to June, and the number of private sector jobs increased by 51,400.
The not seasonally adjusted job count increased over the month in leisure and hospitality (+28,900), trade, transportation and utilities (+16,100), construction (+8,200), professional and business services (+6,200), financial activities (+2,100), other services (+1,900), manufacturing (+1,500), information (+1,200), and natural resources and mining (+200). The job count in educational and health services (-33,100) and government (-6,300) decreased over the month.
6.) New York State nonfarm job highlights since May 2009 (not seasonally adjusted):
Leisure and hospitality
Leisure and hospitality employment increased over the month, with hiring activity in both accommodation and food services, particularly food services and drinking places, and arts, entertainment, and recreation.
Trade, transportation and utilities
Most of this month's employment increase in the trade, transportation and utilities sector reflected seasonal gains in retail trade.
Construction
Construction employment experienced its typical seasonal increase in June, with most of the increase due to specialty trade contractors.
Professional and business services
This month's hiring increase was concentrated in professional, scientific, and technical services, especially legal services, and in administrative and support services.
Financial activities
Seasonal employment gains in real estate and rental and leasing outweighed losses in finance and insurance.
Other services
This sector's over-the-month job growth was greatest in personal and laundry services, and in religious, grantmaking, civic, professional and similar organizations.
Manufacturing
Manufacturing's job count increased over the month as gains in non-durable goods, particularly food manufacturing, more than offset losses in durable goods.
Information
The motion picture and sound recording industry accounted for most of this sector's employment gain in June.
Natural resources and mining
Natural resources and mining employment experienced its usual May-June increase.
Government
Overall public sector employment decreased seasonally, as many public colleges and universities reduced staffing levels in June.
Educational and health services
Sector employment decreased over the month, with educational services -- especially colleges, universities, and professional schools -- losing the most jobs in June.
7.) Metropolitan Areas:
Job Growth and Unemployment Rates (not seasonally adjusted):
Note: All data reported in this section are not seasonally adjusted; the most valid comparisons with this type of data are year-to-year comparisons of the same month, for example, June 2008 versus June 2009.
Albany-Schenectady-Troy: Since June 2008, the number of nonfarm jobs has decreased by 11,900, or 2.6 percent, and the number of private sector jobs has decreased by 9,300, or 2.7 percent. The area's unemployment rate was 7.4 percent in June 2009, compared with 6.7 in May and 4.8 in June 2008.
Binghamton: Since June 2008, the number of nonfarm jobs has decreased by 3,200, or 2.7 percent, and the number of private sector jobs has decreased by 3,200, or 3.5 percent. The area's unemployment rate was 8.5 percent in June 2009, compared with 7.9 in May and 5.3 in June 2008.
Buffalo-Niagara Falls: Since June 2008, the number of nonfarm jobs has decreased by 13,000, or 2.3 percent, and the number of private sector jobs has decreased by 13,600, or 2.9 percent. The area's unemployment rate was 8.9 percent in June 2009, compared with 8.3 in May and 5.6 in June 2008.
Glens Falls: Since June 2008, the number of nonfarm jobs has decreased by 2,400, or 4.1 percent, and the number of private sector jobs has decreased by 2,200, or 4.7 percent. The area's unemployment rate was 7.4 percent in June 2009, compared with 7.5 in May and 4.6 in June 2008.
Ithaca: Since June 2008, the number of nonfarm jobs has decreased by 500, or 0.8 percent, and the number of private sector jobs has decreased by 500, or 0.9 percent. The area's unemployment rate was 6.8 percent in June 2009, compared with 5.4 in May and 4.6 in June 2008.
Kingston: Since June 2008, the number of nonfarm jobs has decreased by 1,100, or 1.7 percent, and the number of private sector jobs has decreased by 1,600, or 3.3 percent. The area's unemployment rate was 8.2 percent in June 2009, compared with 7.4 in May and 5.3 in June 2008.
Nassau-Suffolk: Since June 2008, the number of nonfarm jobs has decreased by 40,300, or 3.1 percent, and the number of private sector jobs has decreased by 40,400, or 3.7 percent. The area's unemployment rate was 7.5 percent in June 2009, compared with 6.9 in May and 4.7 in June 2008.
New York City (five boroughs): Since June 2008, the number of nonfarm jobs has decreased by 96,100, or 2.5 percent, and the number of private sector jobs has decreased by 95,100, or 2.9 percent. The area's unemployment rate was 9.3 percent in June 2009, compared with 8.7 in May and 5.1 in June 2008.
Poughkeepsie-Newburgh-Middletown: Since June 2008, the number of nonfarm jobs has decreased by 6,000, or 2.3 percent, and the number of private sector jobs has decreased by 6,100, or 3.0 percent. The area's unemployment rate was 8.3 percent in June 2009, compared with 7.6 in May and 5.3 in June 2008.
Putnam-Rockland-Westchester: Since June 2008, the number of nonfarm jobs has decreased by 10,200, or 1.7 percent, and the number of private sector jobs has decreased by 10,100, or 2.1 percent. The area's unemployment rate was 7.5 percent in June 2009, compared with 6.9 in May and 4.7 in June 2008.
Rochester: Since June 2008, the number of nonfarm jobs has decreased by 7,700, or 1.5 percent, and the number of private sector jobs has decreased by 7,400, or 1.7 percent. The area's unemployment rate was 8.4 percent in June 2009, compared with 7.7 in May and 5.3 in June 2008.
Syracuse: Since June 2008, the number of nonfarm jobs has decreased by 4,900, or 1.5 percent, and the number of private sector jobs has decreased by 5,600, or 2.1 percent. The area's unemployment rate was 8.6 percent in June 2009, compared with 8.0 in May and 5.4 in June 2008.
Utica-Rome: Since June 2008, the number of nonfarm jobs has decreased by 1,900, or 1.4 percent, and the number of private sector jobs has decreased by 1,800, or 1.8 percent. The area's unemployment rate was 7.7 percent in June 2009, compared with 7.2 in May and 5.2 in June 2008.
Note: Labor force statistics, including the unemployment rate, for New York and every other state are based on statistical regression models specified by the U. S. Bureau of Labor Statistics. Jobs data for New York are obtained from a survey of 18,000 business establishments. Jobs data exclude agricultural workers, the self-employed, unpaid family workers and domestic workers in private households.
See State and Area Unemployment Rates
莫拉克颱風侵襲 全台農損逾5千萬元
（中央社記者唐佩君台北8日電）行政院農委會今天表示，因莫拉克颱風侵襲，全國農作物損失逾新台幣5000萬元，其中彰化、台南及南投3縣損失皆逾1000萬元。
農委會彙整各縣市政府查報資料後，統計出莫拉克颱風合計造成全國「農業產物」及「民間設施」毀損計5666萬元。
其中，農作物損失方面，農作物被害面積1499公頃，損害程度12%，換算無收穫面積180公頃。
農委會進一步說明，受損作物以香蕉倒伏較為嚴重，餘為果樹類倒伏及落果、蔬菜葉面破損及倒伏等災情；合計損失金額總5421萬元，以彰化、台南及南投3縣損失都超過1000萬元居多。
至於在農業設施損失部分，估計損失金額245萬元。
星上半年經濟萎縮6.5% Q2失業率維持3.3%
（中央社記者康世人新加坡8日專電）新加坡總理李顯龍今天在新加坡國慶前夕發表談話指出，雖然新加坡今年上半年經濟萎縮6.5%，但第2季失業率仍維持在3.3%。不過，他也警告，今年仍會有職位流失。
李顯龍表示，和去年同期相較，新加坡今年上半年經濟萎縮6.5%，而全球經濟不佳的狀態可能會維持一段時間。
李顯龍說，由於全球經濟衰退傷害了東南亞的出口，所以東南亞的整體國內生產毛額（GDP）可能萎縮4%到6%。
他強調，雖然新加坡無法倖免於全球經濟風暴，但是政府已經採取積極行動，例如把國家預算提前使用，以及把國家儲備金拿來用在雇用補貼（Jobs Credit）計畫。
李顯龍認為，只要民眾保持團結，新加坡將可渡過這次難關。
李顯龍也警告說，現在要慶祝（經濟復甦）還為時太早，前景仍烏雲罩頂，並不明朗，先進的經濟體（advanced economies）預期經濟不會很快反彈，新加坡的出口仍遠低於去年，諸如新加坡航空公司等新加坡企業仍面對非常艱難的環境。
雖然新加坡今年第2季的失業率仍維持在3.3%，但李顯龍指出，今年稍後的時間，可能還會有一波裁員，所以大家必須對可能到來的更多挑戰保持警惕。
李顯龍表示，儘管外在環境不利，但不代表新加坡無法成長，企業和勞工已經開始藉著尋找商機和重新接受職業訓練，來適應新的環境。
他強調，機會仍然存在，特別是亞洲。政府成立的經濟戰略委員會正與私人領域合作，尋找新模式讓經濟轉型，相關報告會在明年發表。
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
Click to watch Matt Taibbi break down his report in our exclusive video.
For more on Wall Street's march on Washington, read Taibbi's "The Big Takeover."
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 asshole 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 multibilliondollar 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 goldenparachute payments as his bank was selfdestructing. 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 bailedout 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 pumpanddump 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 consumercredit rates, halfeaten 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 you want to understand how we got into this financial crisis, you have to first understand where all the money went — and in order to understand that, you need to understand what Goldman has already gotten away with. It is a history exactly five bubbles long — including last year's strange and seemingly inexplicable spike in the price of oil. There were a lot of losers in each of those bubbles, and in the bailout that followed. But Goldman wasn't one of them.
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 soninlaw Samuel Sachs. They were pioneers in the use of commercial paper, which is just a fancy way of saying they made money lending out shortterm IOUs to smalltime vendors in downtown Manhattan.
You can probably guess the basic plotline of Goldman's first 100 years in business: plucky, immigrantled 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 precrash 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 etrading attracted reams of new suckers from the sticks who wanted to feel like big shots, investment trusts roped a new generation of regularguy investors into the speculation game.
Beginning a pattern that would repeat itself over and over again, Goldman got into the investmenttrust game late, then jumped in with both feet and went hogwild. 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. The basic idea isn't hard to follow. You take a dollar and borrow nine against it; then you take that $10 fund and borrow $90; then you take your $100 fund and, so long as the public is still lending, borrow and invest $900. If the last fund in the line starts to lose value, you no longer have the money to pay back your investors, and everyone gets massacred.
In a chapter from The Great Crash, 1929 titled "In Goldman Sachs We Trust," the famed economist John Kenneth Galbraith held up the Blue Ridge and Shenandoah trusts as classic examples of the insanity of leveragebased investment. The trusts, he wrote, were a major cause of the market's historic crash; in today's dollars, the losses the bank suffered totaled $475 billion. "It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity," Galbraith observed, sounding like Keith Olbermann in an ascot. "If there must be madness, something may be said for having it on a heroic scale."
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 topdrawer 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, "longterm 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 longterm 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 'longterm 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 cochairman 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. While the American media fell in love with the story line of a pair of babyboomer, Sixtieschild, Fleetwood Mac yuppies nesting in the White House, it also nursed an undisguised crush on Rubin, who was hyped as without a doubt the smartest person ever to walk the face of the Earth, with Newton, Einstein, Mozart and Kant running far behind.
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 clichè 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. During his tenure at Treasury, the Clinton White House made a series of moves that would have drastic consequences for the global economy — beginning with Rubin's complete and total failure to regulate his old firm during its first mad dash for obscene short-term profits.
The basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren't much more than potfueled ideas scrawled on napkins by uptoolate bongsmokers were taken public via IPOs, hyped in the media and sold to the public for mega-millions. 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."
Jay Ritter, a professor of finance at the University of Florida who specializes in IPOs, says banks like Goldman knew full well that many of the public offerings they were touting would never make a dime. "In the early Eighties, the major underwriters insisted on three years of profitability. Then it was one year, then it was a quarter. By the time of the Internet bubble, they were not even requiring profitability in the foreseeable future."
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 littleknown 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 daytrader 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 Nicholas Maier, the syndicate manager of Cramer & Co., the hedge fund run at the time by the now-famous chattering television asshole Jim Cramer, himself a Goldman alum. Maier told the SEC that while working for Cramer between 1996 and 1998, he was repeatedly forced to engage in laddering practices during IPO deals with Goldman.
"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 firstday 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.
In one case, Goldman allegedly gave a multimillion-dollar special offering to eBay CEO Meg Whitman, who later joined Goldman's board, in exchange for future i-banking business. According to a report by the House Financial Services Committee in 2002, Goldman gave special stock offerings to executives in 21 companies that it took public, including Yahoo! cofounder Jerry Yang and two of the great slithering villains of the financial-scandal age — Tyco's Dennis Kozlowski and Enron's Ken Lay. Goldman angrily denounced the report as "an egregious distortion of the facts" — shortly before paying $110 million to settle an investigation into spinning and other manipulations launched by New York state regulators. "The spinning of hot IPO shares was not a harmless corporate perk," then-attorney general Eliot Spitzer said at the time. "Instead, it was an integral part of a fraudulent scheme to win new investment-banking business."
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.
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 global 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. By now almost everyone knows that for decades mortgage dealers insisted that home buyers be able to produce a down payment of 10 percent or more, show a steady income and good credit rating, and possess a real first and last name. Then, at the dawn of the new millennium, they suddenly threw all that shit out the window and started writing mortgages on the backs of napkins to cocktail waitresses and excons carrying five bucks and a Snickers bar.
None of that would have been possible without investment bankers like Goldman, who created vehicles to package those shitty 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 shitty ones: The CDO, as a whole, was sound. Thus, junkrated mortgages were turned into AAArated investments. Second, to hedge its own bets, Goldman got companies like AIG to provide insurance — known as creditdefault swaps — on the CDOs. The swaps were essentially a racetrack bet between AIG and Goldman: Goldman is betting the excons 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.
More regulation wasn't exactly what Goldman had in mind. "The banks go crazy — they want it stopped," says Michael Greenberger, who worked for Born as director of trading and markets at the CFTC and is now a law professor at the University of Maryland. "Greenspan, Summers, Rubin and [SEC chief Arthur] Levitt want it stopped."
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 11,000-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 housingbased 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 mortgagebacked 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 2006S3. Many of the mortgages belonged to secondmortgage 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 gradeD 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 hedgefund 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. New York state regulators are suing Goldman and 25 other underwriters for selling bundles of crappy Countrywide mortgages to city and state pension funds, which lost as much as $100 million in the investments. Massachusetts also investigated Goldman for similar misdeeds, acting on behalf of 714 mortgage holders who got stuck holding predatory loans. 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 fucked the investors who bought their horseshit CDOs by betting against its own crappy product, then it turned around and fucked the taxpayer by making him pay off 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.
But it was all a lie. While the global supply of oil will eventually dry up, the shortterm 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 shortterm 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 physicalcommodities market — but the root cause had almost everything to do with the behavior of a few powerful actors determined to turn the oncesolid 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. The commodities market was designed in large part to help farmers: A grower concerned about future price drops could enter into a contract to sell his corn at a certain price for delivery later on, which made him worry less about building up stores of his crop. When no one was buying corn, the farmer could sell to a middleman known as a "traditional speculator," who would store the grain and sell it later, when demand returned. That way, someone was always there to buy from the farmer, even when the market temporarily had no need for his crops.
In 1936, however, 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 Goldmanowned commoditiestrading 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.
"I 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?'"
The CFTC cited a rule that prohibited it from releasing any information about a company's current position in the market. But the staffer's request was about a letter that had been issued 17 years earlier. It no longer had anything to do with Goldman's current position. What's more, Section 7 of the 1936 commodities law gives Congress the right to any information it wants from the commission. Still, in 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 longterm 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 hedgefund 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 commoditiestrading 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 of 2008, 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 presentday 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.
Now oil prices are rising again: They shot up 20 percent in the month of May and have nearly doubled so far this year. Once again, the problem is not supply or demand. "The highest supply of oil in the last 20 years is now," says Rep. Bart Stupak, a Democrat from Michigan who serves on the House energy committee. "Demand is at a 10-year low. And yet prices are up."
Asked why politicians continue to harp on things like drilling or hybrid cars, when supply and demand have nothing to do with the high prices, Stupak shakes his head. "I think they just don't understand the problem very well," he says. "You can't explain it in 30 seconds, so politicians ignore it."
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 investmentbanking 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 35yearold 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 conflictofinterest waiver from the government. Friedman was also supposed to divest himself of his Goldman stock after Goldman became a bankholding 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 bankholding 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."
Once the bailouts were in place, Goldman went right back to business as usual, dreaming up impossibly convoluted schemes to pick the American carcass clean of its loose capital. One of its first moves in the postbailout era was to quietly push forward the calendar it uses to report its earnings, essentially wiping December 2008 — with its $1.3 billion in pretax losses — off the books. At the same time, the bank announced a highly suspicious $1.8 billion profit for the first quarter of 2009 — which apparently included a large chunk of money funneled to it by taxpayers via the AIG bailout. "They cooked those firstquarter results six ways from Sunday," says one hedgefund manager. "They hid the losses in the orphan month and called the bailout money profit."
Two more numbers stand out from that stunning first-quarter turnaround. The bank paid out an astonishing $4.7 billion in bonuses and compensation in the first three months of this year, an 18 percent increase over the first quarter of 2008. It also raised $5 billion by issuing new shares almost immediately after releasing its firstquarter results. Taken together, the numbers show that Goldman essentially borrowed a $5 billion salary payout for its executives in the middle of the global economic crisis it helped cause, using halfbaked accounting to reel in investors, just months after receiving billions in a taxpayer bailout.
Even more amazing, Goldman did it all right before the government announced the results of its new "stress test" for banks seeking to repay TARP money — suggesting that Goldman knew exactly what was coming. The government was trying to carefully orchestrate the repayments in an effort to prevent further trouble at banks that couldn't pay back the money right away. But Goldman blew off those concerns, brazenly flaunting its insider status. "They seemed to know everything that they needed to do before the stress test came out, unlike everyone else, who had to wait until after," says Michael Hecht, a managing director of JMP Securities. "The government came out and said, 'To pay back TARP, you have to issue debt of at least five years that is not insured by FDIC — which Goldman Sachs had already done, a week or two before."
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 fucked 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 twothirds of all corporations operating in the U.S. paid no taxes at all.
This should be a pitchforklevel 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.
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 cohead 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 carboncredit 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 billion 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 all 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 paradigmshifting legislation, (2) make sure that they're the profitmaking slice of that paradigm and (3) make sure the slice is a big slice. Goldman started pushing hard for capandtrade 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 climatechange problem." A few years later, the bank's carbon chief, Ken Newcombe, insisted that capandtrade 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 Utahbased 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 greentech … 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 energyfutures market?
"Oh, it'll dwarf it," says a former staffer on the House energy committee.
Well, you might say, who cares? If cap-and-trade succeeds, won't we all be saved from the catastrophe of global warming? Maybe — but capandtrade, as envisioned by Goldman, is really just a carbon tax structured so that private interests collect the revenues. Instead of simply imposing a fixed government levy on carbon pollution and forcing unclean energy producers to pay for the mess they make, cap-and-trade will allow a small tribe of greedy-as-hell Wall Street swine to turn yet another commodities market into a private taxcollection scheme. This is worse than the bailout: It allows the bank to seize taxpayer money before it's even collected.
"If it's going to be a tax, I would prefer that Washington set the tax and collect it," says Michael Masters, the hedgefund director who spoke out against oilfutures 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.
by MATT TAIBBI
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