Book : Money And Power How Goldman Sachs Came To Rule The...

-Titulo Original : Money And Power How Goldman Sachs Came To Rule The World

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Excerpt. © Reprinted by permission. All rights reserved. Wall Street has always been a dangerous place. Firms have been going in and out of business ever since speculators rst gathered under a button­wood tree near the southern tip of Manhattan in the late eighteenth century. Despite the ongoing risks, during great swaths of its mostly charmed 142 years, Goldman Sachs has been both envied and feared for having the best talent, the best clients, and the best political connections, and for its ability to alchemize them into extreme pro tability and market prowess. Indeed, of the many ongoing mysteries about Goldman Sachs, one of the most overarching is just how it makes so much money, year in and year out, in good times and in bad, all the while revealing as little as pos­sible to the outside world about how it does it. Another- equally confounding- mystery is the rm’s steadfast, zealous belief in its ability to manage its multitude of internal and external con icts better than any other beings on the planet. The combination of these two genetic strains- the ability to make boatloads of money at will and to appear to manage con icts that have humbled, then humiliated lesser rms- has made Goldman Sachs the envy of its nancial- services brethren. But it is also something else altogether: a symbol of immutable global power and unparalleled connections, which Goldman is shame­less in exploiting for its own bene t, with little concern for how its suc­cess affects the rest of us. The rm has been described as everything from “a cunning cat that always lands on its feet” to, now famously, “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money,” by Rolling Stone writer Matt Taibbi. The rm’s inexorable success leaves people wondering: Is Goldman Sachs better than everyone else, or have they found ways to win time and time again by cheating? But in the early twenty- rst century, thanks to the fallout from Goldman’s very success, the rm is looking increasingly vulnerable. To be sure, the rm has survived plenty of previous crises, starting with the Depression, when much of the rm’s capital was lost in a scam of its own creation, and again in the late 1940s, when Goldman was one of seven­teen Wall Street rms put on trial and accused of collusion by the federal government. In the past forty years, as a consequence of numerous scan­dals involving rogue traders, suicidal clients, and charges of insider trad­ing, the rm has come far closer- repeatedly- to nancial collapse than its reputation would attest. Each of these previous threats changed Goldman in some meaning­ful way and forced the rm to adapt to the new laws that either the mar­ket or regulators imposed. This time will be no different. What is different for Goldman now, though, is that for the rst time since 1932- when Sidney Weinberg, then Goldman’s senior partner, knew that he could quickly reach his friend, President- elect Franklin Delano Roosevelt- the rm no longer appears to have sympathetic high- level relationships in Washington. Goldman’s friends in high places, so crucial to the rm’s extraordinary success, are abandoning it. Indeed, in today’s charged political climate, which is polarized along socioeconomic lines, Goldman seems particularly isolated and demonized. Certainly Lloyd Blankfein, Goldman’s fty-six- year- old chairman and CEO, has no friend in President Barack Obama, despite being invited to a recent state dinner for the president of China. According to Newsweek columnist Jonathan Alter’s book The Promise, the “angriest” Obama got during his rst year in of ce was when he heard Blankfein justify the rm’s $16.2 billion of bonuses in 2009 by claiming “Goldman was never in danger of collapse” during the nancial crisis that began in 2007. According to Alter, President Obama told a friend that Blankfein’s statement was “ atly untrue” and added for good measure, “These