Moral Hazard: Panama Papers versus Government Sachs Accounts

Sankarshan Acharya[1]
Founder, Pro-Prosperity.Com and Citizens for Development

April 9, 2016

To: Leaders and Followers

Please feel free to circulate.
This is also available and updated

Panama Papers are the tip of the iceberg of MORAL HAZARD afflicting the economies worldwide. 

Trading accounts (papers) at the likes of Goldman Sachs (known as Government Sachs) - which are the largest hedge funds operating as too-big-to-fail banks run by too-big-to-be-jailed bankers in collusion with US lawmakers and protected by US law - will never leak, unless some hacker succeeds to get account details. 

The selective leak through Panama Papers appears designed to divert the attention of Angry Americans (fueling current presidential election rallies) towards 'dirty' foreigners to depict, ostensibly, that there are no counterparts among US political leaders and their allies.

Goldman Sachs is known as Government Sachs because it maintains accounts of US leaders who foist systemic rules of robbery of enterprising wealth creators that was exposed in the financial market crash of 2008 which has roiled the U.S. economy even after pumping to the economy $15 trillion of new money (borrowed and printed by government and Federal Reserve) in last 8 years. 

Goldman Sachs got the largest chunk (an estimated $60 billion) of the $187 billion paid by Federal Reserve at NY in the name of 'rescuing' AIG - which was ripped off by Goldman Sachs due to Credit Default Swaps - in 2008.  Goldman Sachs was also made overnight a bank holding company to get 100's of billions of cheap Federal Reserve funds in 2008.

If AIG were allowed by government regulators to face bankruptcy like Lehman Brothers and if Goldman Sachs were not made a bank holding company, all the private accounts of systemic robbers at Goldman Sachs would have been exposed to public in 2008. The public has a right to know who robbed them systemically. Why did the government regulators take unconstitutional steps to pump huge sums of public money (printed by the Federal Reserve) to Goldman Sachs if the purpose was not to suppress the vital information about the accounts of systemic robbers held at Goldman Sachs? 

As a financial economist at the Federal Reserve (during 1990-95), I had asked for data on the trading books of too-big-to-fail banks run by too-big-to-be-jailed bankers for my research on moral hazard, when I was challenged by Fed officials to prove existence of moral hazard in banking and finance in the context of my paper on efficient resolution of mimeographed at the Fed in 1991. The 2008 financial catastrophe proved that moral hazard has not only afflicted but also discredited the U.S. system of banking and finance (with most money flowing to U.S. Treasuries). Now, even the Fed has admitted that moral-hazard is a serious problem afflicting the US. A natural legal shutdown of a bankrupt Goldman Sachs in 2008 would have publicly exposed the systemic robbers.

I learned at the Federal Reserve that even the top regulator has (by law) no access to the trading books of the TBTF-TBTJ banks.  Why? 

The answer to this question is available in a paper, forthcoming in the Journal of Governance and Regulation. This paper is at the epicenter of how private hedge funds borrow cheap public funds - via the so-called 'private banks' which are too-big-to-fail and run by too-big-to-be-jailed bankers - to bet against the public to rob public wealth with impunity by making such systemic robbery legal under the laws foisted on the public. 

An impartial auditing of the trading books of the TBTF-TBTJ banks like Goldman Sachs and their regulator, Federal Reserve, can still reveal the systemic robbers that caused the 2008 financial catastrophe. This is the most urgent and preeminent issue of U.S. national security. Naming and shaming a few systemic robbers will certainly help stabilize and revive the US economy and cool down the American public for betterment of the nation. This is necessary to contain the spread of animosity towards the entire establishment and to arrest random shootings, rising drug overuse, suicide and premature death - which happen naturally after gargantuan loss of wealth and jobs of enterprising wealth creators.