Recessions Happen, Crashes Have Causes
Here are my thoughts/reactions after reading “The Bank Job: Goldman’s Elite on the Crisis and Bonus Rage,” by Bethany McLean in the January, 2010 issue of Vanity Fair (it’s online now).
That is, once I gargled to get the bad taste out of my mouth.
One. If your agenda is to rebut the (now widely held) notion that Goldman Sachs exerts altogether too much influence over U.S. fiscal and monetary policy — with highly placed alumni in (or heading!) virtually every significant regulatory or policy-setting body (Treasury, Federal Reserve, New York Fed, Securities & Exchange Commission, Commodity Futures Trading Commission, the New York Stock Exchange, etc.) — you might want to commission an article written by someone . . . OTHER THAN A FORMER GOLDMAN SACHS EMPLOYEE! (true — McLean used to be an analyst there).
Two. Give McLean her due: she knows what makes these guys tick (or at least sounds like she does).
According to her, senior Goldman Sachs executives actually feel they’re underpaid.
Why is that?
Not because their frame of reference is the millions of Americans who’ve lost their homes (due in good measure to a credit bubble Goldman Sachs helped inflate — and profited from hugely).
Nor is it the tens of millions of Americans on food stamps, in the toughest economy since The Great Depression.
(Sorry, I’m not buying “The Great Recession.” I prefer “The Crash of ’08.” Recessions happen, like the weather. By contrast, crashes have causes (and perpetrators, and abettors, and . .)
“Goldman Pay Offensive’
Rather, Goldman Sachs’ senior executives feel that getting anywhere from $20 million to more than triple that, apiece(!), this year — this year, 2009 — is defensible, appropriate, and even justified because . . . the biggest hedge fund guys are making $500 million or even $5 billion apiece. This year.
The really rich part? (sorry, bad pun)
In many cases, they made those billions by shorting — betting against — the housing market.
Need to cancel lunch yet?
P.S.: For a second this morning, I thought it must be April Fool’s Day, or that I grabbed the wrong newspaper (The Onion, maybe, instead of The Wall Street Journal); after all, the headline read “Goldman Pay Offensive.”
Well, not exactly. I have (very) mild dyslexia, and in my quick-browse mode transposed the actual headline:
“Goldman Seizes the Offensive on Pay”