Saturday, October 10, 2009

The Goldman Bonuses Are Coming! The Goldman Bonuses Are Coming!

It appears that Goldman Sachs is on a major PR campaign to soften the world to the fact that major bonuses are going to be paid out at GS. That's the only conclusion that can be reached from an interview appearing in WSJ and conducted by WSJ regular columnist, Holman Jenkins Jr. This was not what you would call a root canal interview, more like a polishing of Goldman's shark like teeth.

The interview was of Goldman Sachs CEO Lloyd Blankfein, and consisted of a series of Warren Commission type questions. It failed to get at the core of what is wrong about Goldman, and to top it off, it contained important errors of fact.

How is this for an opening paragraph? :
Rightly or wrongly, a business occasionally is picked out by the fates to serve as the "unacceptable face of capitalism"—a term coined by the late British Prime Minister Edward Heath. Goldman Sachs , for a lot of people, is today's UFC.
Am I wrong, is this not near the same distortion of capitalism that Michael Moore conducts in his new movie, Capitalism: A Love Affair?

What has been going down during this financial crisis is not capitalism. It is rule by the elites who use their power and influence within government to rub out competitors, and then use that same power to fill their coffers. This has zero to do with capitalism and everything to do with an alliance of government elite-and corporate elite, the rest of the world be damned.

This first paragraph is enough to justify breaking Jenkins' laptop and never allowing a word he writes to ever appear in WSJ again.

But, he goes on.

He distorts the current problem as though it is simply a case of whether Goldman is simply "too big to fail". This is certainly an issue, but on the list of issues, it is way down on the list.

Where is Jenkins asking Blankfein why he was the only CEO allowed to attend discussions as to whether AIG should be bailed out?

Where is Jenkins asking what went on at those meetings?

Where is Jenkins asking why Blankefein has talked to and/or met with, Treasury Secretary Geithner more times than any other financial person, as reported in a breaking story by WSJ !!?

Where is Jenkins asking what goes on at those conversations/meetings?

Where is Jenkins asking who knew in advance, and when in advance, about the Warren Buffett investment in Goldman Sachs, since it is appears that serious trading on inside information occurred based on inside awareness of that investment?

I could go on, but you get the idea.

Jenkins simply rehashes old material with bland defenses, and even gets important facts wrong at that. He writes:

Mr. Blankfein prefers to emphasize the role of Goldman's self-help initiatives. The firm sped up what he describes as a long-pending application before the Fed to become a bank holding company, allowing Goldman to get out from under its primary regulator, the Securities and Exchange Commission. The SEC's imprimatur, he says, had become worthless after the Bear Stearns and Lehman debacles. "What it looked like at the time was, the Fed had regulated its institutions well, and its validation was a good imprimatur. And the SEC had failed in its supervision, and its validation wasn't good."
Hah! If this is all Blankefein told Jenkins about the bank shell game Goldman is playing, he took Jenkins for a real rag doll that he could play with

Early this week, Goldman spokesman Lucas Van Praag told me, as I reported, that Goldman is no longer a bank holding company, but, as of August 14 they are a financial holding company, which means they can do lots of things that bank holding companies can not. Must have slipped Blankfein's mind, when talking with in Jenkins.

In truth, Goldman's PR firm found a friendly at WSJ that wouldn't ask any difficult questions, but would get the point across that Goldman wants to get across. That point can be found in the closing paragraphs of the Jenkins piece.
In the meantime, what about those Goldman bonuses? Mr. Blankfein frankly says that if the choice is between satisfying the political furies and keeping his people happy, he will keep his people happy. "The core of Goldman Sachs's performance, success and longevity over this period, aside from luck, is that we've put ourselves in a position to be more lucky, because of our people. And I have an obligation to keep the firm and the franchise intact."

It may be the worst time to be a Goldman Sachs partner—but it's still a good time to be a Goldman Sachs partner.
The real point is, of course, not the bonuses themselves, but the sleazy method the profits are obtained, by using government muscle to gain the inside edge. These bonuses are based on a redirection of alot of Wall Street transactions by the money control troika, Goldman, the Fed and the Treasury, for the benefit of Goldman. I'd sure like Goldman to answer a lot more questions about these goings on.

Hey Lloyd, anytime you want to do that interview just call me. I'm ready.


  1. Don't forget Goldman's latest earmark, courtesy of corrupt California Congressman Jerry Lewis:

    "A mining company owned by Goldman Sachs and two private equity funds is in line to get a $3 million earmark for work at a rare earth elements mine in Mountain Pass, Calif. — raising questions as to why Congress would take on some of the risk for a bailed-out investment giant that’s already making a profit."

  2. Wenzel,

    If you are naive and don't understand economics (90% of this country) then 'capitalism' occurs anytime anyone makes a profit. 'Capitalist' systems don't incur losses and that's why they must be bailed out when they do (that's the whole saving capitalism from itself bit). A capitalist is a person who makes money all the time... according to the MSM definition capitalists play no role in exchanging present-goods for future-goods and earning interest on that transaction.