A crisis made on Wall Street

With the outpouring of policy soundbites and manifesto pledges from the political parties swamping the airwaves and column inches, it's difficult not to take your eye off the ball where the world's outlaw banks are concerned. And that isn't helped by a more natural crisis caused by the rogue volcano which has cleared Britain's skies of air transport, almost smothering any other coverage. In the tradition of good days to bring out bad news, it's almost tempting to believe that the bankers have suborned Eyjafjallajokull to act as a distraction. Because those bankers are at it again, believe it or not. Goldman Sachs, one of the biggest parasites the world has ever had to contend with, has just announced its profit figures for first quarter trading in 2010. And, surprise,surprise, they've nearly doubled. It's reported net earnings of $3.46 billion for the three months to March, up from $1.8 billion a year ago. Goldman also revealed that it has paid its employees about $5.5 billion in bonuses for the period, equivalent to 43 per cent of its revenue. This is, of course, the same Goldman Sachs that Gordon Brown described as "morally bankrupt" at the weekend.

It's the same Goldman Sachs which is facing an investigation by the US Securities and Exchange Commission over allegations of fraud, involving its activities during the subprime mortgages debacle that sparked off the worldwide credit crisis. According to the commission, it was quite a fraud. Goldman is accused of creating a collateralised debt obligation (CDO) product called Abacus, bundling together loads of high-risk mortgages, so that the Paulson hedge fund could bet that the CDO would collapse in value, without telling those who bought into the CDO they were buying a doomed product. Both Goldman and the SEC agree this is what happened in the Abacus case, but Goldman still insists that it has done nothing illegal. This dubious transaction resulted, in the end, in the hedge fund making around a billion-dollar profit and the poor old punters who bought the product making a roughly equivalent loss. On Tuesday, Britain's Financial Services Authority announced that it, too, was starting an investigation into the alleged fraud. You might well ask why Britain is getting involved, but you won't like the answer.

The fact is that a big chunk of the risk in the dodgy Abacus package was sold on - to RBS, the bank that you, the taxpayer own 84 per cent of. And so it works out that Goldman Sachs was involved in producing a gain to a hedge fund of a cool billion dollars - out of the pockets of British taxpayers. This is the same Goldman Sachs that was being lauded in the capitalist press for not being as dramatically hit by the banking crisis as other banks. But, far from being uninvolved in the crisis, its dealings were part of the cause of it. And it doesn't stop there. It's widely reported that Goldmans is seeking involvement in the planned privatisation of Northern Rock and state interests in RBS and Lloyds, together with sales of assets including the Tote, the Student Loans Company and the Channel Tunnel rail link, all of which sales result from government efforts to recoup the cost of the bank bail-out. Goldman's role in the Greek sovereign debt crisis is being investigated by the US Federal Reserve, which is looking into whether the use of investment instruments to make bets that Greece would default on its debt contributed to that country's crisis. It's long been argued that the banks are not just the unacceptable face of capitalism, it's capitalism itself that is unacceptable. But if capitalism, in all its ugliness, greed and irresponsibility, needs a face, these grotesque and amoral profiteers certainly fill the job description. And we don't need that face in this country.