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« on: June 15, 2013, 07:37:37 am » |
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I have been fascinated by how Goldman Sachs continues to mount a PR campaign on the periphery of its reputation for corruption and greed. God's Work Blankfein made an allegedly "personal" plea of gay equality on CBS a month or so ago. Blankfein was sporting a growth of facial hair on his chin (since he cannot grow any on top of his head). Warm and Fuzzy Goldman Sachs.
And now a former GS exec is telling us derivatives trading is sapping the economy.
Duh.
HuffPo notes this about derivatives:
The problem is that banks regularly charge up to 10 times as much in rent for derivatives as they do other forms of credit, the Demos paper suggests.
"Because the pricing of derivatives was so complex, customers almost never understood how much a bank charged for entering into the derivative," Turbeville writes. "This constitutes a massive distortion of the credit markets."
Demos sadly does not try to put a dollar amount on how much banks are draining from the economy with their derivatives business. "Many, many billions" seems like a safe guess. The paper cites a study by independent researcher Andrew Kalotay, who found that state and local governments had been overcharged $20 billion by banks between 2005 and 2010 alone. And that's just state and local governments, like the Denver Public Schools and Jefferson County, Alabama, two infamous municipalities that ended up as derivative roadkill. This estimate does not include the many, many other users of derivatives, from hedge funds to pension funds to other banks.
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« Reply #1 on: June 15, 2013, 07:39:33 am » |
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