When one looks at the financial/economic mess, one cannot help but be moved and saddened by the “collateral damage,” as functionaries call innocent bystanders killed and maimed in a terrorist or counterterrorist assault. Among the victims, start with the people who owned good stocks in 401(k) and investment accounts who’ve seen their retirement accounts down by 40 percent, even after the recent rally. For that we can thank the hedge funds and the shorts. Then add the people who lost their jobs and incomes thanks to the hot, heavy work of AIG Financial Products and its ilk without ever having benefited financially from the former’s shenanigans. Throw in the towns and authorities swindled by “financial engineers” whose business cards bore the most elite Wall Street logos. And the “scammees” of Madoff and innumerable crooked investment advisers and wizards. The list goes on and on. Millions harmed, trillions lost.
But of all those who unfairly suffered, one group especially plucks my heartstrings and causes my soul to weep. This sad lot, women and children mainly, I’m certain, not only may have been exposed to financial shrapnel, but—even worse—have had fiercely stripped from them one of the few sustaining illusions of innocence, indeed of Western culture.
I refer to the members of the Goldman Sachs family, who presumably learned late last year that “no, Virginia, there is no Santa Claus!”
What other conclusion can one draw? After all, I think we’ll all agree that in order to have Santa Claus, you have to have Christmas, and to have Christmas, you have to have December—but at Goldman Sachs, apparently, there is no such thing as December. Hence no Christmas, hence no Santa. And hence, apparently, no problemo.
Last week, when Goldman reported its sparkling first quarter, the world learned that on midnight of Nov. 30, 2008, Goldman and all who sail in that mighty vessel bedded down for the night, and when they awoke the next morning, it was Jan. 1, 2009: a bright new dawn, if ever there was one. December had simply vanished. In Greenwich and East Hampton, children’s eyes may have brimmed at the realization that Christmas had passed them by, and trophy wives may have inquired after the expected Yule bauble, but what are a child’s tears or a trophy wife’s shrieks compared to an additional bottom-line zero?
By a single stroke of Goldman’s accountants, Mickey Mouse & Co., an entire month was gone, and with it a whole lot—billions, one can only assume—of inconvenient bad-balance-sheet stuff. And made to disappear along with this financial offal would have been Santa Claus, Christmas, sugarplum fairies and the like, the stuff that dreams are made of.
Eliminating December, I need hardly add, also eliminates discomfiting episodes like Christmas Eve visits from spirits sent to point out the misery one’s avarice and rapacity have cost the world, spirits who, I dare say, had scheduled a 2008 visit to Goldman CEO Lloyd Blankfein to interrogate him about his firm’s business model, which is based on the entirely logical proposition that the surest path to profit is to be on every side of every deal or trade or political backslap or ethical situation. This model was set in motion by Gus Levy, Goldman’s managing partner back when I was on the Street, who seldom hesitated to use his influence as chairman of the New York Stock Exchange to prejudicially advance Goldman’s interest. To Gus, corners were for cutting.
WHAT AN INCREDIBLE arrogation of power it is to simply eliminate December! If Goldman can do this, what cannot Goldman do! In all the millennia since men started scratching crude records of the movements of the sun and phases of the moon on rocks and mammoth tusks, no one has ever simply done away with a whole month! Weekends have been lost, to be sure, and in their Revolution, the French changed the months’ names, but forever and ever, until Goldman came along, every year has consisted of 12 months. Well, no longer—and the weird part is, it seems to have been federally sanctioned.
Take this business of TARP repayment. Goldman wants to repay its TARP funding, so as to eliminate ceilings on compensation, etc., but I don’t see Mr. Blankfein offering to repay the billions in F.D.I.C.-guaranteed “Free Money” with which Washington has fattened his firm’s calf. Why aren’t Geithner, Bernanke and Bair insisting that every dollar of TARP repayment be matched by a dollar of “Free Money” repayment? Would Goldman then be so eager to reduce its TARP footings? I rather doubt it. But let’s see if Goldman gets away with it. I know which way I’m betting.
Like Lola, whatever Wall Street wants, Wall Street seems to get. It wasn’t always this way. I was there in 1969 when after years of excess the Fed appeared on our collective doorstep and laid down the law: No more buyout loans, cut the crap, make sure your capital is adequate and your records accurate and current. Violators will be shut down. And some, including Lehman, were—until they got themselves straightened out.
The procedure today is for the regulators to turn themselves inside-out to make nice and unthreatening, to be solicitous of the delicate feelings and purses of people who, in a justly ordered world, deserve to be strung up from every lamppost for what they have done to the rest of us. People who still bank (sic!) on the financial naïveté of We the Taxpayers.
What’s with this deference to Wall Street? Who’s making the running inside the administration? Summers, whose intellectual arrogance apparently passeth all understanding? I have known such men: one thing to which they tend to be utterly blind is the possibility of a conflict of interest. The Goldman alumni club: Geithner and others? How can the fix still be in? Anyone concerned with these issues needs to read MIT economist Simon Johnson’s “The Quiet Coup” in the new Atlantic (in print or online), which is an entirely convincing account of how Wall Street and its consorts in piggery have sliced and diced this country financially, morally and politically.
We now find ourselves nine months into a curative process that was supposed to unblock the credit arteries. And, indeed, banks are reporting record earnings (mainly, I suspect, by trading TARP funds for their own account)—but at retail, interest rates have moved from the merely punitive to the homicidal, credit remains hard to come by. For all I can tell, the toxicity indices of the too-big-to-fail set are about where they were last fall. How can a political economy with the slightest claim to moral and fiscal legitimacy permit taxpayer investment on this scale to have yielded so little in the way of public benefit?
Forget Santa Claus: What I’m starting to want to know is, is there really a Barack Obama? Sunday’s Times to the contrary, the talk is going one way, the facts another. Listen to what I’m saying and pay no mind to what they’re doing—that seems to be the rhetoric.
What we’re hearing from Washington and the Fed reminds me of a singular piece of wisdom uttered years ago by my late, great stepmother. After hearing my father describe a deal, she looked him skeptically and observed, “Well, that’s Wall Street for you. All good news and no money!” I wish she’d lived to see this performance.