Will Goldman Sachs prove greed is God?
People have to understand this Randian mindset is now ingrained in the American character. You have to live here to see it. There's a hatred toward "moochers" and "parasites" – the Tea Party movement, which is mainly a bunch of pissed off suburban white people whining about minorities consuming social services, describes the battle as being between "water-carriers" and "water-drinkers". And regulation of any kind is deeply resisted, even after a disaster as sweeping as the 2008 crash.
This debate is going to be crystallised in the Goldman case. Much of America is going to reflexively insist that Goldman's only crime was being smarter and better at making money than IKB and ABN-Amro, and that the intrusive, meddling government (in the American narrative, always the bad guy!) should get off Goldman's Armani-clad back. Another side is going to argue that Goldman winning this case would be a rebuke to the whole idea of civilisation – which, after all, is really just a collective decision by all of us not to screw each other over even when we can. It's an important moment in the history of modern global capitalism: whether or not to move forward into a world of greed without limits.
It's time to reject the "vampire squid."
I, in general like Taibbi, but his populist/liberal leaning often makes his commentary about as objective as Pailin's critiques of the US's energy policy...you know where they stand before the lipstick can be put on the pig.
ReplyDeleteIn light of that, his comparison of Goldman to a used car salesman falls short of an ample allegory, IMO. It's a overly simplistic, self-serving comparison. The reality is both sides of these trades (meaning Goldman's clients) weren't the financial equivalents of the schmuck buying a mini-van. They were professional, institutional money managers at hedge funds, multi-national banks, corporate treasuries etc.
The better metaphor might be that of a bookie. A bookie takes bets from two parties whose analysis (drunken or otherwise) has concluded the likelihood of far different outcomes. That's what Goldman effectively did here...they conjured a fantastic game and allowed parties to make bets on it (sort of like a season of Fantasy Lost). Paulson and Co. determined that the real estate assets in this 'game' would lose (Man in Black). Savvy, sophisticated investors bet the other side of this game....and lost decisively.
Like a bookie, is Goldman required to tell the gamblers that Tony Romo was out all night before a game bumping lines off strippers asses in Dallas? No. I mean it would be swell if they told you everything they knew but that's not their function. The bookie might have this knowledge but his job is NOT to tell someone they're making a stupid or uninformed bet...he's merely the middleman...whether that's tasteful or not.
But here's the rub: if they merely took bets, I'm not sure how illegal their actions were; however, if they actually misrepresented the quality of this bet then we have issues... moral, ethical, legal et al. Also, you can certainly argue whether entities (ones that ultimately get bailed out by govt's) should be ALLOWED to make such bets. Something I think the new bill will certainly address.