Yesterday at a Trump ‘cult rally’ in Iowa, The President elect stated that he did not want poor people running the country because they weren’t successful. Whereas his current assembled cabinet is both dependable and pragmatic, because of their business acumen. Let’s just ignore the fact Trump just essentially said he prefers an oligarchical system of government, but let’s focus on the self-indulgence and incompetency of one of his current administration members: Mr Gary Cohen. After all it was his business perspicuity that led the international community into economic decline, which led to austerity measures universally.
Mr Cohen was the former President and COO of Goldman Sachs from 2006-2017. You remember, the investment bank at the centre of the subprime mortgage scandal which led the entire global economy into cataclysm? That’s the “kind of thinking we want”, as Trump stated at his Kim Jong-Un style rally.
In this article we will examine how Goldman Sachs and Gary Cohen were partially responsible for guiding the international economy into disintegration, and whether Trump’s theory holds up.
The Goldman Sachs Scandal
During the housing boom, in 2006 alone (under Gary Cohen’s supervision), Goldman underwrote $2 billion worth of Credit Default Obligations (CDO) or Credit Default Swaps (CDS). These CDOs were made up of a collection of poorly rated subprime mortgage loans, with a combination of no income verification and adjustable rates which weren’t sustainable. However when they were repacked into a CDO, and the standards agency gave them a AAA rating.
Basically these CDOs had no economic or fiscal value. This created a ticking time bomb on what was seen as the most stable financial commodity on the market – housing.
When the housing market crashed the US Securities and Exchange Commission investigated the origin of the economic collapse. The essential charge that the SEC claimed was that Goldman built the financial equivalent of a time bomb, and sold it unwitting to investors. Other offences the SEC accused Goldman Sachs of committing follows:
- Failing to disclose conflicts of interest in mortgage loan investments it sold, as the housing marketing was deteriorating
- Collusion with private hedge fund, Paulson & Co, in helping create and then bet against subprime mortgage securities that Goldman sold to investors
- Costing investors over $1 billion with fraudulent information, and collusion with hedge funds who bet on the housing market crash (the one they helped create)
- Of course the last two points are also an indication of insider trading
After a lengthy time in court, the Justice Department, along with federal and state partners, announced that Goldman Sachs settled out of court for $5.06 billion on crimes relating to packaging, securitisation, marketing, sale and issuance of residential mortgage backed securities. This settlement did not come close to the lives were destroyed because of their actions; however it did Goldman Sachs complicit in the insidious actions which led to the global economic meltdown in 2007.
The reverberations and repercussions of these heinous crimes committed by Goldman Sachs, and by extension Gary Cohen, are still being felt today. Here are just a few consequences to the subprime mortgage loan crisis:
- In the UK, because of the financial crisis, we have implemented austerity measures. This has mainly been to our public sector. The National Health Service has suffered radically, with the current conservative government cutting billions in public spending, and privatising in areas where cost efficacy is deemed more important than service. Cuts to our police and fire brigade have also been made. This has caused great strains on our ability to combat the growing power in decentralised terrorist networks. Our public safety and our health care are in jeopardy because of austerity measures.
- Chronically high unemployment is a great concern everywhere is the world after the crash. In 2009 the unemployment rate in America was at a staggering 10.75%. In the UK the number is down significantly during the past 5 years, but a large part of that is due to zero-hour contracts. These contracts are non-guaranteed. This means if you work 1 hour a week, you are declared as employed. Yet that 1 hour of work is not guaranteed by employers, nor does it support living costs or rent.
- Poverty rates in first world countries are ascending at historical rates (adjusted to inflation). This has become a central dilemma in North America and Europe. After the crash many people lost their homes, and because of redundancies in the workplace; people lost their jobs too. This effect has had lingering ramifications, and is still being felt in 2017.
So no Trump’s theory that the people running this country should be ‘successful’ business personnel is incorrect. Because a business does not, or should not, affect the lives of people who aren’t directly involved with it. You need empathy, integrity and compassion to run a country. This is lacking in modern day politics.
Yet the people most affected by the actions of Goldman Sachs and Gary Cohen, are in the crowd at this rally worshiping their oligarchical cult leader. They are obliviously unaware that their decadence and agony is rooted in Trump’s administration. Or maybe they are fully aware, but realise the social benefits of facilitating Trump’s anti-immigrant narrative – a narrative that they truly believe in. That’s cultural hegemony for you, but we will revisit that concept another day. Good night and good luck.