He quit all right. In fact he went out in a Blaze Of Glory! Or, his fiery exit might be more like a toxic spill, because the OpEd piece describing his reasons for quitting was a - "scathing" hardly expresses it - denunciation of the predatory culture of greed that exists there.
If I have piqued your interest, go read about it here: http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html. Even if I have NOT piqued your interest, go read it.
In this piece he discusses what has become essentially a "f**k 'em all!" kind of attitude, where making money for G.S. - and enriching themselves - has become far more important than serving their so-called customers.
As expected, there were legions of comments supporting "his gutsy move," and a similar legion dissing him for "closing the barn door after the horse had left"; that is, lining his own pockets for twelve years - and then jumping ship.
I thought about this all night - becoming angrier and angrier - until this morning I woke up fit to be tied. After a nice loooong walk outside in the fresh air, I have calmed down enough to pen a reasoned response to all of this.
Ignoring the merits, motives, or possible agenda behind his move, I want to explore a much more relevant topic - the way Wall Street, (et. al.), have distorted our free market economy - creating opportunities for the kind of economically damaging and rapacious behavior we see here.
As anyone who was born in the last two thousand years knows, free market capitalism is based on two fundamental economic concepts:
- You are free to do whatever you want within the market, assuming someone is willing to pay for it.
- Excesses in the market are stabilized by what are called "the invisible hands" - those corrective market forces that compel everyone to play on the same playing field, by the same rules.
- The "whatever" that you do must not be socially destructive. Rapine, plunder, and holding people up at gun-point are not acceptable free-market "whatevers".
(i.e. raw greed) - Your market influence must not become great enough to displace, or tie, the invisible hands for your own selfish interests.
(i.e. monopolistic greed)
Absent these rules you do not have an "economy". What you end up with is a Wild West shoot-'em-up where we are all at the mercy of whatever thundering Mongol horde rides into town, destroying everything in their path.
Wall Street investment houses like Goldman Sachs sell so-called "derivatives", along with other toxic investment waste.
Derivatives are not like real investments where you buy a part of something tangible like shares in General Motors or Lukoil, where investment leads to innovation, which leads to more investment. Instead they are entirely synthetic figments of the traders imagination - a system of smoke, mirrors, and fancy investment double-talk to give you the impression that they are based on something tangible.
These derivatives are securitized investments that are themselves derived from other securitized investments that are themselves securitized in a long and convoluted chain where the initial shares end up being securitized investments of the self-same investments that depend on them. And like one of Escher's drawings, it goes around and around, seemingly without logic. Just like a merry-go-round, these traders come back and back again, grabbing the brass rings until there are no rings left. Once that happens, the entire convoluted mess disintegrates leaving market chaos and ruined lives in its wake.
In essence, these investment practices are parasitic - draining funds away from more productive use.
Do these traders care? No. They've already made their millions, and the mere fact that these millions and millions are based on thousands and thousands of ruined lives is not important to them. They walk away and come up with their next financial shell game to get on yet another merry-go-round, grabbing brass rings again and again until that scheme disintegrates too. And then on to the next one. And the next. And the next.
Money buys influence and influence creates power, until it is the foxes themselves who are assigned the task of guarding the chicken-coop. When that chicken-coop is emptied, they go find another one to "guard".
Many of the replies that objected to both the OpEd piece and the motives of the author, described these markets as a "shark-eat-shark" environment. They base their objections on the idea that those who trade with Goldman Sachs, (or investment houses like them), are themselves sharks. The know the industry, they know how to analyze an investment portfolio, they know the ropes as well as anyone else does. So, if they get hozed, it just stinks being them.
And. . . . . If these sharks were in a tank by themselves, located in a distant Oceanarium, isolated from the rest of the markets and the people within them, I would agree. Let them beat each other silly. And just like the so-called "wrestling" matches that the WWF puts on, it would be an excellent show to watch. They beat each other up while we buy popcorn and watch the fun.
Unfortunately this is not so. They are not alone in the tank. We - each and every one of us - is in there with them. When they foul the waters with their toxic activities, we are the ones that suffer. And when our tank becomes so toxic that even they cannot stand it - they simply jump into a new tank, leaving us to face the consequences of their toxic activities.
Likewise, I hear again and again that "regulation" of the securities industry stifles the free market.
Again, this is not so. The kind of "deregulation" they desire is the complete absence of any kind of law or restraint, allowing them to do whatever their rapacious little hearts desire.
I will admit that excessive regulation is not good - it's like putting your leg in a cast. The knee and leg eventually atrophy, rendering them useless.
However, complete and utter de-regulation is tantamount to removing ALL the ligaments and supporting tissues from the knee. With nothing to support it, it simply falls apart.
"With great power comes great responsibility."
Voltaire, et. al.
This is the phrase that should be carved in the stones above every trading pit, brokerage house and stock exchange in the world. And because the money that they play with is often not their own, the various stock, trade, and exchange markets of the world should be held to the very highest of moral standards.
So what is needed is:
- Training in both schools and universities that emphasizes the social impact of this kind of rapacious behavior - and why it is undesirable.
- Laws that hold brokerage and investment houses to a very high standard of behavior.
- Effective oversight of the markets to limit the damage and parasitic behavior, with the teeth to make it count.
What say ye?
Jim (JR)
