In a review of Why I Left Goldman Sachs: A Wall Street Story, the new (October 2012) book by Greg Smith — who also wrote last year’s bombshell piece “Why I Am Leaving Goldman Sachs” for The New York Times — Michael Lewis makes the following cogent, riveting, and frightening observation about the current world of American high finance and the way it has now mutated into a Frankenstein-like entity and manifested a monster-amok scenario, such that insider confessions and whistle-blowing are rendered meaningless, since the system is effectively operating autonomously, without regard for human morals and meanings.
He also offers one of the most succinct accounts of the real history and nature of the financial crisis in the collusion of Goldman Sachs (and by extension the rest of Wall Street) with government power, the better to pursue an agenda of unfettered greed by gaming the whole system from top to bottom, that you’re likely to read anywhere.
In the end, the reader puts down Why I Left Goldman Sachs a little mystified. Why exactly did Greg Smith leave Goldman Sachs? What did he hope to achieve? If it’s change he is after, his particular story comes too late. If, say, back in 2004, someone such as Greg Smith had stepped forward and explained to the world what was going on inside Goldman, he might have spared us all a lot of pain and trouble. But today’s insider confessions feel like vain and useless acts. And what would he have us do, four years after the Great Collapse, to fix the system, or to change in any way his former employer’s behavior? The dystopia often imagined in the world of artificial intelligence — in which computers somehow take on a life of their own and come to rule mankind — has actually happened in the world of finance. The giant Wall Street firms have taken on lives of their own, beyond human control. The people flow into and out of them but have only incidental effect on their direction and behavior. The firms may not be intent on evil; they aren’t intent on anything except short-term profits: they’re insensible. If anyone attempted to seize control of one of these strange machines and impose upon them a clear moral direction, the machine would hit its own button and he would be ejected.
Stop and think once more about what has just happened on Wall Street: its most admired firm conspired to flood the financial system with worthless securities, then set itself up to profit from betting against those very same securities, and in the bargain helped to precipitate a world historic financial crisis that cost millions of people their jobs and convulsed our political system. In other places, or at other times, the firm would be put out of business, and its leaders shamed and jailed and strung from lampposts. (I am not advocating the latter.) Instead Goldman Sachs, like the other too-big-to-fail firms, has been handed tens of billions in government subsidies, on the theory that we cannot live without them. They were then permitted to pay politicians to prevent laws being passed to change their business, and bribe public officials (with the implicit promise of future employment) to neuter the laws that were passed — so that they might continue to behave in more or less the same way that brought ruin on us all. And after all this has been done, a Goldman Sachs employee steps forward to say that the people at the top of his former firm need to see the error of their ways, and become more decent, socially responsible human beings. Right. How exactly is that going to happen?
— Michael Lewis, “The Trouble with Wall Street,” The New Republic,
Unbelievable. Not the news that Goldman Sachs used its no-strings-attached government money from Hank Paulson’s bank industry bailout last fall to earn inconceivable amounts of money in a titanically underhanded manner, but the fact that mainstream media heavyweight MSNBC would feature such a raw exposé as this one:
The quick version (quicker than watching the still-quick seven-minute video, that is) is this: The video shows Dylan Ratigan, the former host of MSNBC’s Fast Money, who prominently left the show last March in a very public and controversial row, and who announced right about the same time that he was planning to do some deep investigation of Goldman Sachs’s activities during the financial meltdown, appearing on the network’s Morning Meeting show about a week ago wearing a cape and top hat and bearing a magic wand, and presenting a segment titled “Do you believe in magic?” in which he explains how Goldman Sachs performed the “magic trick” of making over three billion dollars in three months.
He opens by announcing, “What we are going to attempt to do today, through magic, is to show how a single investment bank can make three billion dollars in cash in three months’ time and create absolutely no value as unemployment skyrockets, foreclosures soar, and the dollar collapses.”
Near the end he paints Goldman Sachs and also the U.S. government in explicitly criminal terms when he describes last year’s $700 billion bank bailout by saying, “The crime that was committed was committed, in my opinion, by Treasury Secretary Paulson and then-Fed Governor Geithner, who as custodians of America’s wealth made the decision to allow the use of that wealth, the gift of that wealth, to one investment bank, so that that investment bank could accumulate power over all the assets in America, and they themselves could perpetuate the system that they benefit from. . . . It is black magic. That’s how they did it. And we can stop it by simply distributing the truth to everybody in this country and demanding clawbacks for the money that has been stolen from us.”
Yes, this distinctly echoes Michael Moore’s Capitalism: A Love Story, and also, in its hints of an economically promethean motivation behind Goldman Sachs’s actions, Rolling Stone‘s astonishing takedown of the bank earlier this year. But I’m still reeling from having heard such sentiments expressed so forcefully on MSNBC.
I’m also grateful for it, and am hoping that this televised channeling of the real truth and its proper attendant outrage doesn’t prove to be just another helping of bread and circuses courtesy of the Great American Spectacle Machine.