Top Ten Reasons Goldman Sachs Would Be Dead Without Government Help

10) TARP

9) TALF

8) Being allowed by the Government to become a Bank Holding Company (thus gaining an implicit government guarantee) overnight;

7) Being able to issue FDIC insured debt as a bank holding company;

6) Temporary SEC ban on shortselling when investors starting selling Goldman short during the height of the crisis and Goldman changed its position on short sales and asked the SEC for a ban;

5) Getting paid 100 cents on the dollar as a counterparty to AIG credit default swaps as a result of the government's AIG bailout that prevented AIG from going bankrupt;

4) The revolving door between the Fed, Treasury and Goldman that made Goldman privy to non-public information regarding the government's deliberations during the crisis;

3) Selective government intervention, or lack thereof, that allowed some of Goldman's competitors to fail, most notably Lehman Brothers, thereby bolstering Goldman's trading positions;

2) Being allowed to actively market and sell the toxic assets at the heart of the crisis while at the same time selling them short and eliminating them from their balance sheet;

1) If murder wasn't illegal mainstreet would have killed everyone at Goldman by now for being tone deaf while doing God's work.

Death of the Dollar

Funny how the dollar is supposed to be so weak but everyone runs to it when global economic catastrophe looms. Why is that? A panicked sense of tradition? The size of our military? A capitalist legal system? Then when the storm clears everyone says it was a nice visit but now they have to go.

Bearing Scalia's Cross

Ahh, Justice Scalia, just when I was going to lay off you for a while you paint a big bulls eye on your forehead with an intemperate outburst about how a war memorial cross on what was once public land is not an establishment clause violating religious symbol but a one size fits all commemorative symbol. Scalia's outburst was in reaction to an ACLU lawyer upstaging Scalia by pointing out, to laughter in the courtroom, that Scalia's argument that the cross was a generic commemorative symbol in the memorial context made no sense in light of the fact that there is a dearth of crosses in Jewish cemeteries. The ACLU lawyer's riposte was in reaction to Scalia's smug question as to whether it would be better if instead of a cross there was some sort of amalgamation of the cross, the star of David, and Islam's star and crescent. Because you know, all dead soldiers belong to one of the religions of Abraham and there are no atheists in foxholes. Scalia emphatically argued that crosses in this context aren't really Christian symbols because they're all over the place in cemeteries, everybody does it, so it's really not religious symbolism but popular symbolism that is not subject to establishment clause challenges. Scalia is all about majority rule on this point, the minority can and is going to hell as far as he's concerned. No doubt if the case was about a secular attack on Catholicism for its seemingly entrenched pederasty and ritual cannibalism he would rush to protect minority rights. Weak. What happened to you Scalia? I used to have a grudging respect for you. Were you just fronting in the Texas flag burning case?

Defending Polanski

As a father of two children I have no sympathy for what Polanski did and believe he needs to face the music without any "but I'm a great artist" mea culpas. If he had any guts he'd waive extradition and confront the situation head on. But as a defense lawyer I can't help note that a lot of what has been written, pro and con, about Polanski misconstrues the procedural record and the weight one should give to grand jury testimony.

Some basic facts. He never had a trial and has never been sentenced. He pleaded guilty to statutory rape to avoid trial on more serious charges and then was put under psychiatric observation for 42 days for the purposes of preparing a sentencing report. When Polanski decided that the Judge was not going to honor the terms of Polanski's deal with the prosecution (a plea deal does not bind a court because the deal is only between the prosecution and the defense) and just give him probation he fled the country in the face of a maximum twenty year sentence.

Polanski's detractors (including me) repeatedly cite to the victim's grand jury testimony for the facts of Polanski's rape ("the so called crime") of a 13 year old carried out in part by plying her with champagne and quaaludes. But caution is in order when citing to grand jury testimony as proof of facts. When you read the grand jury testimony of the victim it's quite obvious that she was coached. This doesn't mean it's not true, but doubtless the DA sat the victim down for witness prep before her testimony. It is perfectly legitimate to prepare a witness, particularly a rape victim, for the experience of testifying as long as you don't tell them what to say. But it's not always so easy during a prep session to avoid shaping a witnesses testimony to conveniently fit your case. Particularly when you are dealing with a young and probably impressionable witness. The transcript reads as if the prosecutor had gone over his line of questioning with the victim before hand. Whether everything that she testified to was accurate is difficult to determine however because there was no cross-examination. Grand jury witnesses are not subject to cross-examination. Grand juries are convened to determine if there is sufficient evidence supporting a finding of probable cause for an indictment, not to make final findings of fact. The prosecutor runs the show exclusively. So when you're reading the grand jury testimony, you're reading the Prosecutor's unchallenged narrative exclusively, and the prosecutor is always striving for the most dramatically compelling narrative possible to justify the charges. Thus grand jury testimony should always be read with some skepticism.

Simplistic Scholasticism

Justice Scalia is a fan of the old canard that because lawyers don't produce anything they lack value. Or to be fair to his position, he maintains that great minds are wasted on the legal profession because the minds would be put to greater use producing, say, a car that runs on solar energy or some other thing that under his feudal (Catholic) ideology adds value to society. Implicit in his view is the proposition that only those that produce useful commodities have value for society. This view has some bizarre implications. Under it, for example, doctors have no value. Same for anyone who has a "great mind" (whatever that is) who chooses to provide a service for society rather than a commodity.

Scalia's myopia has earned him many fans who cling to the simplicity of his absolutist statements because they are easily digestible and don't upset the orthodox stomach. But enough of this "kill all the lawyers" crap. Justice Scalia, if you have such a dim view of your profession and such a high view of your acuity, please resign your post as Supreme Court justice and go invent something of value. Go back to the impotent (non-producing) outposts of academia from which you came as you obviously have little experience in the real world of lawyering beyond the asphyxiating cloister you operate in. Litigators and transactional lawyers add value to our society every day.

Litigators facilitate the non-violent resolution of the innumerable conflicts that arise in our society every day. Don't take that for granted. One does not have to look too far in the world to find examples where violence is used to resolve a disagreement over a transaction, or where the government executes an innocent person as a convenient scapegoat. Adversarial proceedings in court are a form of ritualized fighting that resolves conflict without bloodshed. On more than one occasion I have put an end to an abusive husband's reign over his wife by using the tools that the law provides me. Don't tell me that has no value. By so doing perhaps I've even freed a "great mind" to go and invent something useful. And litigators have often served as a bulwark against the tyranny of a government run amok. As such litigators play a crucial role in our civilization.

As for transactional lawyers, how is the purported "great mind" going to actually produce their society changing commodity without the legal structures necessary to raise the capital necessary to produce the commodity on a scale large enough to impact society? Corporations, partnerships, limited liability partnerships, limited liability companies, subscription commitment facilities and other legal entities facilitate the raising and free flow of capital necessary to the production of any commodity on a large scale. And it is transactional lawyers who create these entities, as well as securing the rights of the "great mind" via the private law of contract that allows the commodity producer to profit from their invention. Without a contractual guarantee of remuneration for your invention there is little incentive to create one. Why waste your time on something that won't put food on your table?

I could go on and on by the point is made. Grade school Marxist economics that fetishizes commodities over service is misguided and unworthy of a "great mind." Another day in my love/hate relationship with Justice Scalia.

Enemy of the People

"Capitalism is the enemy of democracy." - Michael Moore

This is where Mr. Moore and I part ways. No economic system is equitable but non-capitalist economic theories have wrought worldwide bloody havoc. Certainly unbridled Capitalism is rapacious. Imperialistic. Exploitative. Enslaving. Just like the rest. But that's just an argument for a bridle given Capitalism’s virtues versus the empirical disasters that non-capitalist systems have proven.

Capitalism is unique because it can order individual self-interest in a way that failed systems like communism can't. Capitalism admits the overwhelming influence of two fundamental principles of human psychology that the other theories ignore or misconstrue at their peril: self-interest and the desire for freedom. Admitting and accepting that all humans primarily act in their own self interest frees Capitalism from utopian social engineering that in seeking to mitigate self interest in the name of equity only exacerbates inequity by providing the powerful with the means for suppression. Capitalism instead allows self-interest free reign within the boundaries of the rule of law thereby maximizing freedom.

The desire for freedom from hunger, want, disease, the elements, and the freedom to chose the life one wants to live is something that all economic theories strive for but Capitalism has proven more successful at than any other. Capitalism, unlike most of its competitors, was not theorized and then implemented; it was implemented and then theorized. This explains its empirical success. It evolved in the real world, and not at the desk of an academic. It successfully feeds billions of people daily. More people were lifted out of poverty by China’s turn towards Capitalism than at any other time in the history of the world.

The butcher does not sell you his meat out of benevolence as Adam Smith memorably said. We work for money to survive and to be free. Money frees us from agrarian barter and allows us to pursue our life unshackled from having to produce our subsistence. And attempts to do away with sale transactions, money, and the like by eliminating private property miserably fail because they prevent the individual from controlling the objects in the material world necessary to her survival and satisfaction. If anyone can take without consequence the tools you work with or the food produced by your labor your freedom to control your world has been diminished and you are subject to the often-wicked caprice of others who invariably act in their own self-interest despite the utopian fantasies of wistful theorists.

Private property creates freedom precisely because it protects self-interest and the freedom of the individual to chose what to do with their property, including the freedom to exchange it for value in mutually beneficial exchanges between contracting private parties with a minimum of governmental interference. Like the butcher does when he sells you his meat. This benefits society as a whole, as any empirical comparison between the world’s capitalist and non-capitalist societies demonstrates.

Finally, it is simplistic to say Capitalism is brutal and amoral. Capitalism as an empirical phenomena is constantly evolving: slavery is now illegal; the labor movement tempered Capitalism’s exploitation, and a body of law emerged recognizing equality and freedom of choice in a world awash in castes and inequality. Of course there is much work to be done (and I suspect this is what Moore’s movie is really about), but I’d much rather stick with a system that actually feeds people than ones that have only produced despotism and scarcity.

Teabirther Constitutionalism

Listening to the latest paranoid political fringe of Teabaggers and Birthers discuss the Constitution I find that I share some of their constitutional views. I support judicial review, that ultimate negation of the purported popular will by judicial fiat by unelected life time justices of the Supreme Court. It's not always perfect (see. e.g., Dred Scott), but it has proven effective in preserving individual liberties in the First, Fourth, Fifth, Sixth and Fourteenth Amendment contexts. The Teabirthers seek the judicial nullification on constitutional grounds (Article 2 sec. 1) of the democratic decision of the People as to their President. This is the ultimate act of judicial review. The Teabirthers want the Supreme Court to rule that the sitting President of the United States must step down. Radical. You don't get a more expansive view of judicial review than that. Too expansive for my tastes. Makes Roe v. Wade's judicial review look insignificant. Of course the Teabirthers ultimately fail because their view is unconstitutional under an unavoidable textualist reading of the Constitution. The Framers clearly intended the power to remove a President to reside with the People's representatives, not the judiciary. The power to remove a sitting President is solely vested in Congress through impeachment (Art I, secs. 2 & 3) and is not an Article III power delegated to the judiciary. This betrays the Teabirthers ignorance of the Constitution they so jealously guard. But I share their fervor for the Constitution.

I take solace that the Teabirther crowd is so angry that constitutional blasphemy is afoot. At least they are not citing biblical blasphemy (at least not all of them). I share their fervor for all things constitutional and their belief that the Constitution is what the living people say it is and not necessarily what the Framers allegedly said it was. After all, if they were textualists they'd have a hard time saying government health care or emergency (hopefully temporary) nationalizations of key industries and financial institutions are unconstitutional when the first sentence of the Constitution says one of its purposes is to promote the general welfare. And if keeping people from dying and preventing economic collapse isn't promoting the general welfare well let me know what is. But if you take a more plastic interpretation of the Constitution, one unmoored from its text, you could plausibly argue that some sort of liberty interest was being violated by government healthcare and industrial and financial nationalization. This view, however, is similar to the logic of Roe v. Wade and Miranda, decisions the teabirthers abhor. Thus goes the cognitive dissonance of their Constitutional theory.