by Scott Creighton
Only the billionaire perpetual mayor of New York could have come up with this little gem… Goldman Sachs is going to be tasked with with making the city’s young criminals less criminal. Yeah… stop laughing.
Yes, billionaire mayor for life Michael Bloomberg of New York is teaming up with masters of the universe Goldman Sachs to take on the problem of youthful recidivism. Bloomberg and Blankfein have bashed their criminal heads together and come up with a little scam laughingly called a “social impact bond” and this is how it works:
Goldman Sachs (keep in mind, this is the entity that created and sold fraudulent derivative instruments designed to demolish the economy and then they bet against their own clients and sent each other emails bragging about it) will put up 9 million or so to “partially fund” a new program designed to use NGOs and “not for profit” organizations to help keep New York’s youth from becoming repeat offenders. The good mayor’s own financial company is backing the loans which Goldman Sachs will make to the city to “partially” pay for this endeavor. It’s a four year program in which if they reduce the recidivism rate by a paltry 10%, Goldman Sachs stands to profit to the tune of 2.1 million dollars.
Understand? Mayor Bloomberg’s own police department which keeps track of statistics like the recidivism rate, will determine whether or not his financial company makes a profit off the deal. Neat-O huh?
Goldman will create one of the nation’s first “social service bonds” to help fund a New York City program that aims to lower the 50 percent recidivism rate among youthful offenders jailed at the Rikers Island correctional facility.
Unlike similar proposals being developed elsewhere, most of Goldman’s ‘Rikers bond’ will be guaranteed by Bloomberg Philanthropies, the mayor’s philanthropic group, which will back $7.2 million of the $9.6 million investment the bank plans. Reuters
(Yep New York taxpayers, they are only going to “help” fund the program which means you will still be on the hook to pay tax dollars into this scam)
Keep in mind, this notion, which could easily be funded by the city to create more opportunity and education for New York’s youthful offenders, is rife with potential misconduct. Essentially what they will create is a pool of “contractors” who will force these kids to do whatever they want, constantly keeping the threat of imprisonment hanging over their heads. And they will do this for a profit.
I am reminded of the Welfare Reform Act that took place under the neoliberal Clinton regime which basically made welfare recipients slaves to places like Taco Bell for little to no money.
The four-year program, in which private non-profit groups will provide education and intensive training and counseling to at-risk incarcerated youths, must reduce the recidivism rate by at least 10 percent for Goldman to recoup the investment. Reuters
What kind of education are we talking about? What do they mean by “intensive training”?
It really doesn’t matter what they do since the numbers which will determine the value of the investment will be controlled by someone with a financial stake in the outcome. That’s pretty remarkable when you think about it.
What is also remarkable is the matter of fact way this is being reported by Reuters. No questions as to the legality or the ethical conflict of interest associated with their mayor investing 7 million or so dollars with another private company on the privatization of social services in their city. It’s been done in the past behind closed doors, but now that the Washington Consensus has left the rhelm of the conspiracy theorists and gone mainstream, I guess it’s just fine to write about it in blatantly sycophantic ways.
Goldman Sachs is chomping at the bit to get their hands on more of these little gems and they hope it starts a trend in America where every thread of the social fabric becomes part and parcel of this “new instrument” (if hearing Goldman Sachs talk about “new instruments” doesn’t scare the shit out of you, you’re an idiot)
Social impact bonds partner local governments with non-profits and private investors in deals that require a government to pay out only if a social services group can meet a specified performance goal.
It is unclear how popular philanthropic bonds will be, given that profits depend on societal improvements. But the notion of social impact bonds is politically attractive: cash-strapped municipalities risk little on innovative social programs and investors benefit from being seen as socially conscientious.
Goldman Chairman Lloyd Blankfein said his firm hopes to drive more private investors toward similar public-private philanthropic partnerships.
“We believe this investment paves the way for a new type of instrument that enables the public sector to leverage upfront funding from the private sector,” Blankfein said in a statement issued on Thursday. Reuters
Now again, keep in mind that this is only due to the fact that the economy is in such horrific shape and the only reason for that is the fact that Goldman Sachs teamed up with other large financial companies to create “liar loans” in the sub-prime market and then they packaged all the financial time-bombs into fraudulent derivatives and sold them over and over again to cities, states, and pension funds around the country.
In short, Goldman is only able to seriously suggest this profitable opportunity because of their own criminal activities. And you can bet your sweet butt that they are going to be setting up a new derivative based on these “public-private philanthropic partnerships”
What will they do with these kids? Well, there seems to be little information regarding that, but here’s what I can see an institution like GS doing: They will set up a “not-for-profit” (biggest and most obvious scam out there now) which will take some of the kids and get them signed up into the for-profit community college and tech school industry. They will probably take some of the more aggressive and at risk kids and sign them up for either the military or give them some “intense training” and ship them off to the company formally known as Blackwater. And of course, for the most hard-core criminals in the young group, they will simply offer them jobs at Goldman Sachs.
There are any number of ways that this scheme can go really bad really quickly and it’s all being done under the left cover of “philanthropy” and the right cover of “business”