Sunday, October 18, 2009
The Goldman Sachs conondrum
Is Goldman Sachs the New Wall St? Same as the old Wall St? Frank Rich looks at this and sees the one bank that played the game and the other players very well. While not quite the equal of earlier monopolies, he does not the monopoly of influence enjoyed by the last great economic survivor. As they use that influence to return to business as usual he also notes the great failure of their casino culture.
Even as we wait for Congress and its inquiry to produce results, the cultural toxins revealed by our economic crisis remain unaddressed by the leaders in the private and public sectors who might make a difference now. Blankfein may be giving $200 million to “education,” but Goldman is back to business as usual: making money by high-risk gambling, with all the advantages that the best connections, cheap loans from the Fed and high-speed trading algorithms can bring. As the Reuters columnist Rolfe Winkler wrote last week, “Main Street still owns much of the risk while Wall Street gets all of the profit.”Wall St gets all the profit and more than enough money to buy any legislator who would try to criminalize their behavior.
The idea of investing in the real economy — the one that might create jobs for Americans — remains outré in this culture. Credit to small businesses remains tight. The holy capitalist grail is still the speculative buying and selling of companies and the concoction of ever more esoteric financial “instruments.” The tragic tale of Simmons Bedding recently told in The Times is a role model. This successful 133-year-old manufacturing enterprise was flipped seven times in two decades by private equity firms. Investors made more than $750 million in profits even as the pile-up of debt pushed Simmons into bankruptcy, costing a quarter of its loyal workers their jobs so far.
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