11/19/09 London, England – The Lloyd’s Prayer
Our Chairman, who art at Goldman
Blanfein be thy name
The rally’s come
God’s work be done
On earth as there’s no fear of correction
Give us our daily gains…
Poor Goldman Sachs. Everyone is on its case. Criticizing. Carping. Jealous. Envious.
So, today we rise in defense of the Wall Street giant. Yes, the Goldmen may be shysters. But they are honest shysters…
We pick up sword and shield, ready to fight for Goldman, after reading The Financial Times. The FT has devoted a whole page to Goldman bashing. It’s time someone stood up to say a kind word for the firm.
Besides, Lloyd Blankfein said he was sorry. That’s right. He announced that the firm regretted its role in the world financial crisis. And if that weren’t enough, he pledged half a billion dollars to helping small business through tough times.
In his apology, Blankfein mentioned that he thought Goldman was doing “God’s work.” That is what prompted humorists to make up the “Lloyd’s Prayer,” we have republished above. On the surface of it, it does seem absurd. If any group of people ever worshipped Mammon, it is the bunch that works at Goldman. Money is what makes that mare run; no one doubts it.
In 2008, the average compensation of the average Goldman employee averaged $364,000 – or more than 6 times the earnings of the average American who was not employed by Goldman. Naturally, the widespread publication of this fact caused a surge of envy. Now comes news that the average Goldman man expects to make about twice as much this year – or about $765,000. As you can imagine, this did nothing to soothe the jealous spirits. Instead, it inflamed them.
And now, everyone has Goldman in his sights. Newspaper editorials kvetch and moan. Union-organized yahoos demonstrate in front of Goldman’s offices. Cartoons make fun of Blankfein. Commentators say the Goldman crew is greedy. Rolling Stone magazine described Goldman as a “vampire squid.” Saturday Night Live mocked the company. Stand up comics stock up on Goldman jokes. Even priests criticize the firm’s claim to be doing ‘God’s work.’
The regulators cannot be far behind. It is illegal to trade on “inside information.” So, when a company targets the shares of a rival, and passes its buy orders through a Wall Street firm, the traders are forbidden from trading the shares on their own account. They cannot profit from ‘front running’ shares, based information not yet available to the public.
Goldman clearly profits from front running. But it does it by aggregating information from clients rather than using the inside information from a single client. This gives them a “market color,” rather than precise trading targets. In other words, if you have a client who sets out to acquire Acme Cement Company, you can’t buy up the shares yourself in anticipation of the rise in the share prices. That information is “protected, inside information.” But suppose you have two clients, each of whom targets a cement firm? You quickly get a “market color,” don’t you? You put two and two together. If they’re both after cement makers, probably, the whole cement sector will go up. You buy cement makers, though not those that your clients are buying.
This aggregated inside information gives Goldman a big advantage. So do its close contacts with the feds. Goldman has its former operatives in key posts throughout the government. It knows what the government is doing; it has a fair idea of what the government will do next. In trading US government securities, the biggest business in the financial world, this “insider” knowledge is no doubt a handy thing to have. It doesn’t hurt either that the Fed is making money available to Goldman at practically no cost. Nor, that the Fed is buying its mortgage backed securities – perhaps even ones that would be hard to unload on the private market.
These contacts and sources of ‘insider’ information are what George Soros has called the “hidden gifts” that Goldman enjoys…and that contribute mightily to its success.
But so what? As far as we know, Goldman holds no gun to any counterparty’s head. Nor does it lie…unless you call saying things that aren’t true “lying.” Goldman merely says the same falsehoods as the rest of the financial industry…the things people want to hear…which almost everyone believes anyway. And is there anything wrong with taking money from the US government? Doesn’t every retiree do so? Doesn’t every larcenous Congressman and every conniving contractor and every shiftless welfare addict aim to do the same thing? Isn’t the whole idea of government to take from someone and give to someone else? Then, why not to those who are most able to claim it? The swift…the strong…the smart…the Goldmans!
No, dear reader, we cannot criticize Goldman. Instead, we admire it. Goldman took advantage of the financial boom by selling debt and derivatives all over the world. Now, it takes advantage of the ‘recovery,’ by trading on its client information. And who can blame it for wanting to do business with the richest and dumbest client of all, the US government?
In God’s plan, at least as we see it, the lowly are raised up. The rich…the proud…and the foolish are brought down. God deals with the meek on his own. Goldman helps him bring the boom down on the others.
Until tomorrow,
Bill Bonner
The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
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Yup, there is the unholy trinity at work here: the govt, the big financials (like Goldman), and the unions. Together, they have maanged to constraint him (via the unions), cheat him (via the Goldman-types) and squeeze him dry (via the govt).
Who would blame a man if he feels inclined to cause grevious harm onto them? Or if he is disinclined towards violence and sinking to their level, should head for the hills with a gun and ammo? Indeed, “Sauve qui peut” as you so aptly put it in the past.
It would be all well and good to accept Goldman’s actions if there were no countries and no governments. If Goldman was not (at least theoretically) subservient to a higher power (not god), their actions would be completely fair enough in a pure free market. However, Goldman is in theory subservient to the supposed democracy it operates in, and there is no such thing as a pure free market if humans are involved.
Even though Goldman has not done anything different to many many other people and organizations, they will be singled out when things get nasty. Because all the other people who had the same attitude will gladly point the lynch mob in their direction.
In case you are not aware of this, there has been a recent screening of a documentary on Australian television called “addicted to money”, which was shown in prime time. Although somewhat tabloid in its presentation, it did lay out the facts quite well.
http://www.addictedtomoney.com.au/
It is interesting to see this view is hitting the mainstream.
Bill Bonner, you are the best at what you do, but it grieves me when you mistakenly support a sort of Ayn Rand social and economic idiology. Unregulated capitalism doesn’t work for the same reason Communism doesn’t work. Their citizens don’t have the high character, ethics, moral values, and integrity these systems both demand. Also, society must invest in welfare, which is for the benefit primarily of society, not the poor. A farmer has to feed his horse through the winter to keep it from starving to death so it will be there for work next spring.
No doubt this is a tongue in cheek column. And if it isn’t then I love you anyway.
JMR – that was pure Bonner, same as ever
Fred G – free markets don’t rely on ethics just corrections when people act unethically – we haven’t seen it yet but that correction is coming, oh is it coming
There is no doubt GS is doing god’s work – separating fools from their money. Is it not written “blessed are the poor”? And today the biggest fool of all is the central government and those that support it.
The point is that Goldman and the gov are both like two parasites who cannot survive without the other. And they are sitting on top of the pyramid. The little guy looks up to them and thinks “Hey, what they are doing, I will be able to do, too.” On a much smaller scale, of course and within his own little means and limitations . Thus, comes time comes corruption and theft all over society.