Tag Archives: Goldman Sachs

Michael Lewis At It Again

In his latest column, his wit shines once more: 

If you haven’t figured it out by now, America has hired the wrong Paulson. There are two of them, Hank and John. Hank turned Goldman Sachs from an investment bank into a busload of tourists going to a casino, with borrowed money.

Goldman might have been the smartest investment bank but you only needed to see Dick Fuld testify before a congressional committee to know how much that means. No pun intended, but Dick didn’t know dick.

Astute observers will note that every time they run across a party of midgets, one is tallest, and his name is usually Goldman. Suffice it to say that while Hank’s shop was creating subprime mortgage-backed bonds, John’s was shorting them. Hank wound up working for the government, John wound up making $3.7 billion. For himself.

Wake up America! The teacher has just asked the class to send one member to the chalk board to figure out a problem. You just reached past the A student in the front row and plucked the guy in the middle who’s working hard for a B-minus. And he’s confused!

Lewis also alerts me to this beauty of a letter written by Andrew Lahde. After running the table this year shorting banks–his hedge fund reports earnings over 800 percent–Lahde decided to retire in his prime. The best excerpt of his resignation letter

 I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.

Or as Arnold Kling would put it, it sounds like some geeks made some money off the suits.

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Paulson Uses Nepotism to Provide Financial Stability

Today, the Wall Street Journal reports that Treasury Sec Paulson will name an old disciple from Goldman Sachs, Neel Kashkari, to manage the $700 billion bailout to buy distressed assets from financial institutions. Mr. Kashkari will get to tell his friends he’s the head of the Office Ministry of Financial Stability. Though Kashkari has an MBA from Wharton, not Harvard, I’m going to say this supports Arnold Kling’s ominous prediction

Big Finance and Big Government have much in common. Both are coveted by Harvard graduates. Both are characterized by an arrogant sense of entitlement and importance.

Instead of thinking of the pending bailouts and financial regulation as a new era of government supervisions of markets, think of it as preserving the system in which a Harvard elite controls other people’s money. In fact, very little is likely to change. Reading the news stories about how Secretary Paulson plans to implement the bailout, it seems as though the same people will be in charge of the money. Print some new business cards, change the logo on the front from “Goldman Sachs” to “U.S. Treasury,” and everything else continues as it was. It’s just that it becomes a lot more difficult for ordinary people to opt out of using the elite’s money management services.

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