With the demise of the Eurozone in sight, Trump’s Goldman alumni — Gary Cohn, Steven Mnuchin, Jim Donovan, Dina Powell — insulate themselves from the inevitable bailouts to come, and prep to give 200 West Street the leg-up in the fix that follows.

Under Crisis to Come, we wrote:

The euro (as we know it) will not survive 2018. The reasons are manifold, but the math alone will tell you why: By early 2017, Germany’s Target-2 balance was fast approaching one-third of German GDP. In Feb 2017 alone, it rose by €20 billion. Germany’s Target-2 tangent is the epitome of unsustainable. It’s political suicide for any German Chancellery, or Bundestag, or Bundesbank, to allow such a tangent for too long. It’s already been too long for the Bundesbank, which is why we hear, through a grapevine we consider reliable, that agents of the Germany’s central bank have drawn up ‘exigent’ ‘contingency’ ‘protocols’ for a sudden and unannounced German exit from the euro and a concurrent German re-entry into the Deutsche Mark, over a weekend that extends ‘at least 2 days into the weekday’ in government-mandated banking holiday.

In Feb 2017, Spain’s Target-2 deficit surged to €361 billion

In March 2017, Italy’s Target-2 deficit surged to a record of €420 billion.

The Eurozone (as we know it) is doomed for reasons we detail HERE and HERE and HERE. As we mapped out (at length) within those links, a breakup in the Eurozone will be accompanied by a breakdown in the euro currency’s exchange rate, in particular against the the U.S. dollar, resulting in a meltdown on Wall Street, and bailouts, all baked into bills we know of, that were signed into law with exemptions and loopholes packed into those laws, inserted during the so-called “rule-writing” phase, by lawyers and lobbyists on the megabankers’ payroll.

So, it is no wonder we find Goldman Sachs’ most strategic plants in the Trump White House, led by Mr. Cohn, talking up a 21st-century Glass-Steagall act, to shield Goldman from blame and advantage what comes after, as Goldman’s systemic banking competitors on Wall — Citigroup, Bank of America, etcetera — are (potentially) divvied-up into parts and cut-down to size, post-bailout, that is after Goldman’s made whole on all counterparty exposures it has to the other Systemics.

Reminder:

In 2008, Goldman had counterparty exposure to A.I.G. — the insurer of a lot of Main Street — by way of parent AIG’s London subsidiary, A.I.G. Financial Products — the insurer of a lot of Wall Street — although, contrary to gov’t propaganda at the time of the bailouts, the two Wall/Main components were independently capitalized for the most part. The $180-some billion taxpayer rescue of parent AIG was largely a backdoor bailout of Wall Street’s and Goldman Sachs’ derivative books.

That Goldman and others would be made whole on their A.I.G.F.P. Credit Default Swaps, was something Goldman’s Henry Paulson (at Treasury) and the Federal Reserve — specifically the New York Fed, its head Timothy Geithner, and his deputy (from Goldman) William Dudley — wanted kept secret from the public. But, as all dirty secrets of the feds do in the end, this one (too) got out.

In the end, some $93 billion of AIG’s rescue got funneled to various Wall Street actors, including nearly $13 billion to Goldman. (Yes, TARP’s $700 billion was only the tip of the iceberg — you knew that, didn’t you?)

For their chivalry and bravery under fire (from the taxpayer), Bush’s Chairman of the Fed, Ben Bernanke, got re-appointed by Obama; Bush’s Chief Bailout Officer at the New York Fed, Tim Geithner, got promoted by Obama; and Bush’s Treasury Securities coordinator at the New York Fed, Bill Dudley, got promoted under Obama.

So, as you can see: the more things change, the more they stay the same.

Viva “Change We Can believe In” — now you know why he’s laughing in that photo (click to see how happy he looks).

Update:

On May 23 2017, Treasury Secretary Steven Mnuchin said: Trump’s “budget will achieve savings through reforms that prevent taxpayer bailouts…”

What he’s implying: taxpayer bailouts are on the horizon for Wall Street.

Obviously, the White House budget — even in the unlikely scenario that it did pass Congress — will NOT prevent bailouts. Goldman’s man in Treasury is simply blowing smoke to cover his and his colleagues’ back when bailouts do happen again on Wall Street.

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