The ballad of Greg Smith

By Felix Salmon
March 14, 2012
Greg Smith quit now.

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It’s that time of year — think February to March — when bonus checks have cleared and voluntary departures from investment banks spike. So it’s obvious why Greg Smith quit now. The question is, why decide to quit in as public and destructive a manner as possible?

When Smith joined, Goldman was transitioning from a partnership model to being publicly-traded. And I suppose it’s possible that Smith has such deep nostalgia for the partnership he never really knew that he’s willing to hurt his entire current team — everybody who helped him make his millions — in an attempt to goad Goldman into returning to those halcyon days.

But it certainly doesn’t seem that way. Smith says that Goldman is currently “toxic and destructive”. He goes on to say that “It makes me ill how callously people talk about ripping their clients off,” and that “the morally bankrupt people” need to be weeded out — how, he doesn’t say — by the board of directors. It’s much easier to see the disgruntled ex-employee here, quitting in a huff, than it is to see someone genuinely trying to do his part to reconstitute the Goldman Sachs of Gus Levy and John Whitehead.

To a certain extent, time will tell. If Smith ends up founding or joining a rival company, his decision to harm Goldman as deeply as possible will end up looking rather self-serving. On the other hand, if he goes to, say, join his former colleague Gary Gensler at the CFTC, working to regulate all investment banks from the outside and to try to level the playing field between the buy-side and the sell-side as much as possible, then we might start taking him a bit more seriously. Smith has declared a serious moral purpose today; that’s not something you can wear for just one news cycle before moving on to the next thing, and so I hope and trust that he’s going to spend the proceeds of his ill-gotten final bonus check in the service of that moral purpose. After all, it was the work of those morally bankrupt traders in the ripping-eyeballs-out business which got him all that money in the first place.

Which is not to say that Smith doesn’t make important points. He’s in the equity-derivatives business, which is also where Andrew Clavell came from. Clavell’s blog is down, now, but these words are immortal:

If you claim you do know where the fees are, banks want you as a customer. You don’t know. Really, you don’t. Hang on, I hear you shouting that you’re actually smarter than that, so you do know. Read carefully: Listen. Buster. You. Don’t. Know.

Smith’s clients thought they knew where Goldman was making its money when it sold them equity derivatives. Nine times out of ten, they were wrong. I can guarantee you that every single one of the clients referred to as “muppets” within Goldman considers themselves to be a sophisticated investor. Mainly because they have Goldman employees phoning them up on a regular basis and flattering them with tales of how sophisticated they are.

Clients know in principle that every time they do a trade with Goldman, Goldman makes money. But they don’t know how much money Goldman makes on those trades. And Goldman is extremely good at structuring deals which can’t easily be replicated by combining various liquid derivatives. In turn, that gives Goldman pricing power — so much power, indeed, that in some instances the bank will go so far as to insist that if the client attempts to get independent pricing for the contract in question, then the whole deal is off.

Smith has been in this business for 12 years, and he’s done extremely well by it. And to a certain extent, if the people who work for him are constantly asking how good a deal is for Goldman, rather than how good the deal is for Goldman’s clients, then that’s because of the example he set. What’s missing in his op-ed is any sense of mea culpa, any sense that he was at all part of the problem.

There’s a strong smell of faux-naive coming from Smith’s op-ed. “Leadership used to be about ideas, setting an example and doing the right thing,” he writes. “Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.” Here’s a question for him: back when he made videos for Goldman urging candidates to join the company, were the people who got promoted those who had ideas and did the right thing? Or were they the ones who made lots of money for the firm? To ask the question is to answer it.

So let’s not pretend to be shocked that the most successful bankers are the ones who make the most money off their clients. And let’s not try to imply that the solution to this problem lies at the Goldman Sachs board level. It doesn’t. The real muppets, in this story, are Goldman’s board members, who have never had any real control over how the company is run. And, frankly, never will. The most remunerative skill, at Goldman, is the ability to flatter someone into believing that they’re incredibly important and clever and sophisticated, even as you’re getting that person to do exactly what’s in your own best interest. No one rises to lead Goldman Sachs who doesn’t have that skill. And you can be sure that Lloyd Blankfein uses it on the board every time he meets with them.


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it’s okay. Danny_Black will appear here in the comments of this blog soon to convince everyone who read Greg Smith’s piece that Goldman, as well as every other firm on Wall Stree, is as pure as the driven snow and that people who think otherwise just don’t understand finance. Just you wait.

Posted by Strych09 | Report as abusive

Whatever happens this guy has more integrity in his little finger than journalists seem to have as a collective – you know for a FACT this statement “in some instances the bank will go so far as to insist that if the client attempts to get independent pricing for the contract in question, then the whole deal is off” is outright false. Maybe Mr Smith is preparing for a career in the media where faux-outrage, fabrication and lying is considered perfectly acceptable. Of course, he will probably fall down on not being completely ignorant about the field he is writing about.

For example, why would a client come to an investment bank to buy a derivative that is “easily replicable with exchange-traded derivatives” as opposed to “easily” replicating themselves? Or this idiotic claim that somehow the evil, highly paid sell-side are just taking advantage of the innocent, poorly paid buyside. Did the whole of the last decade with hedge funds just pass you by? How did you manage to spend more than 10 seconds covering the field and still make this claim with a straight face?

Posted by Danny_Black | Report as abusive

Strych09, whereas you’ll instantly accept that in this case an investment banker from GS no less is telling the gods own truth.

There is nothing that says people have to understand finance but when it is someone’s job to understand finance or when someone wilfully misrepresents it then one has to question their motives. To be clear, I don’t think Mr Salmon “doesn’t understand finance”, I think he wilfully and knowingly misrepresents it and that he is paid to do so because it is profitable. More profitable than telling the truth.

Posted by Danny_Black | Report as abusive

Heh… Easy to denounce the capitalist corruption AFTER you’ve already made millions off of it.

Is Greg Smith offering to return a decade of bonuses? Thought not!

Posted by TFF | Report as abusive

So the bonus was not satisfactory!!!!!

Posted by Nonsense101 | Report as abusive

I like Muppets, in fact. Your average Swedish Chef has more gumption than your average GS desk lackey.


Posted by ottorock | Report as abusive

Seems as if the author hit a nerve in the financial community.

Posted by alwayslearning | Report as abusive

“What’s missing in his op-ed is any sense of mea culpa”
I disagree..he hung in there for years and watched the integrity disintegrate, then he left and spoke his mind. By leaving he is being part of the solution, not the problem.
I’m thankful to see from one inside the trojan horse that’s it’s wise to beware the gifts offered.

Posted by traderbilly | Report as abusive

Greg Smith might have a number of reasons for his ‘apologia’. I can personally only verify his expose on the blatant deceptions with their clients trust and their demeaning interoffice remarks.
I am not a financial person, I come from the advertising business as a production man, and from around 1994 to 2000 the firm I worked for was one of GS print & promotions vendors. I had seen many of the GS internal proposed promotional projects that never got approved, because they were not ‘subtle’ enough in misleading their clients. After while I was able to accurately predict which of these proposed projects would be approved and which would be rejected. Some of theses presentations were designed only for single client, apparently very wealthy.
Later on one evening I was invited and I was accompanied to a very exclusive Victorian styled private club on Fifth Ave for very successful investment consultants. There were only 30′s & up men in this cigar smoke filled room. My companion and a good friend of mine, the only female there, was a 24 yo beautiful and tall blonde, and she and her mother had appeared on the cover of Newsweek two weeks earlier as two of top investment consultants. She had given me advance warning of the expected conversations there, and they were practically identical to what Mr. Smith describes.
Big names of clients, such as Barbara Walters, were being dropped constantly as to impress themselves. The only thing they all asked me there was if the lady was my girlfriend, she was 24 & I was 54.
We were there to solicit funds for a philanthropic project.

Personally I think Goldman Sucks.

Posted by GMavros | Report as abusive

Aside from the banal and unoriginal title of the post, it also largely misses the point of what this guy is trying to say. The real problem of shops like GS is purely cultural and it is a result of the transition from traditional relationship banking to transaction banking that started in the US about 15 years ago. That the guy’s motivation to go public is or why he is doing it is largely irrelebvant. The importnat thing is -is it true and how would it impact GS’s business going forward. The rest of the stuff, insights into renumerative skills and other fluff is also irrelevant (and frankly sounds silly coming out of someone who has not worked there). So this is hardly a balad, mate, more like a swan song. Cheers

Posted by Tseko | Report as abusive

I might add these were mainly GS people, and they were also bragging about the size of their commissions.

Like I said, Goldman Sucks.

Posted by GMavros | Report as abusive

A more appropriate openinig question would be: “Why did the New York Times print a corporate exit rant on its Opinion page”?
Twelve years at GS is plenty of time to make enough money to never need to lift a finger again. This guy is either a hypocrite or has delusions of grandeur (I’m saving the world from etc.).
Either way, the question re the NY Times’ motives still stands…

Posted by bertibus | Report as abusive

Felix, surely you aren’t trying to say that the only way to make a living in the world of finance is to rip off your clients? You also seem to be implying that the internal culture of a company never changes, and that if anyone leaves it’s because they’re in some sort of sulk, not because a line was crossed.

Posted by FifthDecade | Report as abusive

Greg Smith spent a decade selling out his integrity, one bonus check at a time. Now, finally, he checks his portfolio and concludes he finally has enough socked away to support a modest but comfortable lifestile for the rest of his life.

That is to say, he worked out his price, Goldman met it, and now he feels entitled to the ultimate luxury good: righteous indignation.

He gets to keep the cash, set himself up in a pleasant little cottage somewhere, and tell the world how the money doesn’t taint him, because, by God, he quit after only thirteen years of professional robbery.

Forgive me if I’m not falling all over myself in my rush to congratulate the man. Felix comes close to the truth here. Let’s wait for the stories about Mr. Smith dedicating his life to feeding the hungry and healing the sick. The saga of the Last Honest Man at Goldman doesn’t impress me in the least.

Posted by ckbryant | Report as abusive

Too cynical Felix.
The truth is probably more like each day you one sees oneself making more and more compromises and the culture of Goldman like much(perhaps more than) of the big bulge firms has gotten markedly worse since the days of Goldman being a private bank and the undoing of Glass Stegal.
Sure he made his money, and probably he reached the point that he can walk from Wall Street, but it’s probably true that one day he looked around and said, “I don’t know how it got to this, but it’s wrong”. Felix did you not catch Levit’s grueling of Goldman in Congress?
Lots of firms have stopped doing business with GS because of how they are.

Posted by Sechel | Report as abusive

I think Smith is right about how GS only cares about making money, but the bigger issue is how this has become S.O.P. for most large corporations in the last decade or so. Executives seem to believe that their top (and often, only) priority is to increase profits. While there is nothing wrong with companies wanting to make money, their customers don’t patronize them for that purpose; i.e., they are looking for a product or a service that meets their needs. When the seller believes that profit trumps product, and does not represent this fact to the customer, they are effectively misleading the customer in regards to what they are selling. Goldman attracts so much criticism because it has been very successful at generating profits, often at the expense of their clients.

Managing a business with profit targets as the input to the machine is not sustainable. As all decisions are made with a focus on the short term bottom line, the quality, features, performance, and customer satisfaction become nice-to-haves, and often don’t materialize. Eventually, the business will fail, as customers will be dissatisfied and leave. If the managers are able to extract enough wealth from their employers before that happens, well, they will just move on, while their successors are left with the task of reviving the business and its reputation.

It’s not just Goldman, you can say the same for most U.S. airlines, who don’t seem to care about the happiness of their passengers, and blame security reasons and fuel costs for their incredibly horrible service; ATT, which wants to provide as little service as possible and charge as much as they can get away with, while limiting the ability of consumers (and their local governments) to pursue alternative service options; health insurance companies, whose focus on the bottom line does not yield better health, but rather filters out risky clients and looks for excuse to reject claims; banks in general (I shouldn’t need to talk about how little they care about their customers); I could go on.

Businesses are rarely started with a goal of just making money; the founders usually believe they can offer a superior service or product or solve a problem that needs solving. They focus on making customers happy, and the profits happen because their customers are happy (see Apple). Then at some point the company goes public, the founders leave, and managers whose priority is to maximize short term personal compensation get hired, and the focus of the company shifts from satisfying customers to satisfying management. Goldman is just another one of those companies, but unfortunately, they have a huge impact on the economy, and the criticism they receive is earned.

Posted by KenG_CA | Report as abusive

I can see why Goldman would call these idiots “muppets”. I mean seriously…they’re buying these complicated, ireplicable, illiquid instruments under the assumption that the bank is going to be honest and fair about it (HA!). And if Goldman has managed to actually get them to agree in writing NOT to seek independent pricing for said instruments, its even more amazing. Apparently Goldman’s true specialty is finding chumps with deep pockets and buttering their toast for them.

The smart thing to do would be to look at the instrument, acknowledge that there’s no way in hell you’ll be able to understand it or model its performance and politely say “no thanks”. There. That’s how you beat big banks. Yes, it’s really that easy.

Posted by CapitalismSays | Report as abusive

CapitalismSays, “if Goldman has managed to actually get them to agree in writing NOT to seek independent pricing for said instruments, its even more amazing” – they didn’t, Mr Salmon simply fabricated that claim.

What is missing is that alot of these clients can lose money on the direct bet with GS but still come out ahead. For instance, Greece may have lost money on those currency swaps but if they helped it borrow at a much lower rate for a few more years they are a net winner.

Sechel, the guy was a mid-level executive after 12 years. I suspect he won’t have made “enough money” but now he can do an Yves Smith and start making real money writing an “expose”. Thanks to rampant cutting and pasting from journalists, he already has the PR.

Posted by Danny_Black | Report as abusive

KenG_CA, you hit the nail on the head. I’m not sure when or why businesses became so focused on the short term. Does it have to do with the rules around executive compensation around stock benefits? It seems to me that sometime in the 90s (maybe it was earlier), results for the next quarter and the resulting stock prices became the most important thing for large corporations. It’s become a race to the bottom. There is a whole generation who will see this as how business is done and will expect nothing better.

Posted by GusMN | Report as abusive

The only thing more self-righteous than a born-again financial moralist is a born-again financial journalist. C’mon Felix your cynicism is gushing all over my happy meal. GS has had their name on just about every underhanded Wall Street scandal the past 10 years and everybody knows it. I think this is response to Smith’s op-ed is “muppet” journalism ..

Posted by Woltmann | Report as abusive

KenG_CA and Gus, so very true. Airline management happily refers to all of us as ‘bums in the seat’ (I sat in on many a management meeting with CFO/CEO using just that term) just as theatres have done. Fortunately there are front line people to soften that blow, but the same management would fire employees for referring to customers so disrespectfully. Quite the conundrum…

There are alternatives out there and those who continue to treat the customer/client as though they are a pile of excrement and focus only on themselves and their bonuses deserve to go bankrupt. That Goldman remains so respected is also quite the conundrum.

Strych09, your timing was impeccable! Thanks for the laugh!

Posted by youniquelikeme | Report as abusive

“they didn’t, Mr Salmon simply fabricated that claim”

From the Bloomberg piece:

“Sardelis couldn’t actually do what every debt manager should do when offered something, which is go to the market to check the price,” said Papanicolaou, who retired in 2010. “He didn’t do that because he was told by Goldman that if he did that, the deal is off.”

Posted by btomdarga | Report as abusive

We may have some overthinking going on. It’s called “Forget You [or something like that] Money” for a reason.

What if Smith finally just added it all up, had enough to shove off, and figured he could say what he was thinking on his way out the door?

Posted by SelenesMom | Report as abusive

@ youniquelikeme – You aren’t getting confused by the British term “bum” meaning what you Americans call an “ass” which is what we call a donkey? It’s quite common in the UK to refer to “needing more bums on seats” and it isn’t at all derogatory.

@ KenG_CA You hit the nail on the head. Look at Germany. They didn’t go the same way as the Anglo-Saxon West chasing short term gains at the expense of so much of value; Germany looked for long term growth which is why they are the world’s No 2 exporter with a net trade surplus and cash in the bank. As Goldman Sachs is representative of so much that is wrong with the US/UK model, and has driven this model onwards and outwards to suck in more and more victims, we shouldn’t just point the finger at them but as you say, at what drives the corporations generally. Gone is concern for customer, in it’s place, bonus chasing millionaire managers with no loyalty to long term benefits since they won’t be around to pick them up. They get paid bonuses even when the companies fail. That’s just wrong.

Posted by FifthDecade | Report as abusive

Well put, KenG. There are others I could cite as well.

Posted by TFF | Report as abusive

btomdarga, read to the bottom of the article.

Posted by Danny_Black | Report as abusive

GusMN, they became focused on the short-term figure when mutual funds became popular because most investors – especially retail – will not stick with a losing stock or losing fund for an extended period of time. Remember buysides get compensated as a percentage of assets under management – and increasingly percentage of upside too.

FifthDecade, ironic you say this about GS who has a reputation for holding on to it’s bankers for years. Maybe you are confusing banks with software houses?

Posted by Danny_Black | Report as abusive

Paco, from Red Hook, our bookie, says the odds are 2:5 that Smitty has a book contract and tour already in hand.

What a sanctimonious, self-promoting Stanford fool. Unfaithful to the end. Twelve years ago Goldman was coming off one of the largest fleecings of the American public in history, a la the pump and dump, and any Stanford clown who joined them then either saw it and didn’t care or willfully ignored it (or was dumber than a post, another possibility). So, religion now? We doubt it.

We don’t like Goldman, but we really don’t like teensy-weensy snitch boys who blow up their resumes when flaming out the door.

By the way, thanks to Strych09 and Danny-Black, above, for adding so much color to these boards. Reuters and FT have the best commenters. The mo-rons who comment on the WSJ are various illiterati (did we spell that right?) and make reading there much less stimulating.

Posted by WeWereWallSt | Report as abusive

The culture at Goldman reflects the American culture in general and has been standard business practice for decades for the real estate, financial, and insurance industries, as well as the majority of sales driven businesses. The culmination of hubris and predatory abuse finally resulted in financial crisis, but had already been slowly draining the life blood out of middle class and working Americans. The first step to solving a problem is admitting that there is one.

Posted by Greenspan2 | Report as abusive

According to today’s NYT, Smith had nobody working for him.

Posted by jayackroyd | Report as abusive

Missing from the Goldman stories in the NYT, and from this post, is the sentence “Formerly an investment bank, Goldman Sachs became a bank holding company in 2008, a commercial bank insured by the FDIC with access to the Fed’s discount window.”

Posted by jayackroyd | Report as abusive


You gotta get over your Ivy thing and get out more. The local state U guys are easily as successfully conniving as any of your east coast porkers, they just do it with BLM leases and Indian Mineral Trust money.

Posted by ARJTurgot2 | Report as abusive

So Goldman of 2007, the Goldman of Abacus, CDO’s, working with AIG, contributing to the housing bubble, that Goldman was OK. Goldman of today, not OK. I don’t get it.

Posted by winstongator | Report as abusive

Gensler working to “regulate the banks”, is he? Not heard of “revolving door” yet, I take it? What a joke.

Anyway, why is it that your first question (which is apparently not intended as sarcastic) is how “destructive” this might be for Goldman’s reputation? Yes, he is a hypocrite, but it does not follow from this that Goldman does not deserve to burn. But no, the “they were sophisticated investors” caveat emptor excuse of looting is not a valid argument, because it presumes that those investors care about the long-term health of their company when the real point was to drive up short-term profits as much as possible in order for them to cash in and run. Read Bill Black’s “The best way to rob a bank is to own one”.

Posted by Foppe | Report as abusive

This sort of shenanigans has been going on since economies were first invented. The usurer was identified as wasteful and against society’s best interest. The difference now is that the system has become corrupted. It used to be run by powerful capitalists who knew what risk was and used their ability, work, and intelligence to mitigate it and create real profits. It has now devolved to a system where the so called risk takers are in reality weak little boys. They fear the challenge of creating true wealth on their own. Instead of building they merely want to take from the system what is created by others. This corruption was presented as a method to grow America’s wealth to leaders too stupid to understand or too corrupt to care. There will be a correction because the current course cannot be sustained, but at what cost and who will bear the burden.

Posted by keebo | Report as abusive

The disgusting behaviour of serial recidivists such as Citibank and UBS, I can hardly write their names without spewing venom all over my screen, needs to be called what it is: criminal. Their front offices need to be cleaned out, and their fraud-laced transactions – their bets against the very “assets” they touted to their clients – prosecuted to the fullest. The perps need to go to jail, it’s that simple.

If that doesn’t happen, then it’s trivial to predict that the crowds flooding cities across this and other countries are just the start. The alternatives become much starker as this goes on, with police and security being seen as active agents of a corrupt oligarchy and their kleptocratic stooges in government. You can all figure out the flavour of the tensions arising from those confrontations. Where this all goes after that is anybody’s guess.
There has never been a uniform script for that sort of chaos.

But that will not stop the problem and it doesn’t begin to address what’s really going on here. Smith’s moral blast at Wall Street comes as no surprise, both to those who write it off to business as usual, as well as those willing to acknowledge that the rot poses an existential threat to the global financial system. That’s the point. Business as usual was never able to pose such a threat prior to the era of networked computing power. Now it can.

Here’s my assessment of the suits in the offices of GS and the ever-dwindling list of behemoths who inhabit the financial stratosphere. They’re nothing but glorified bean-counters, working on ever-more esoteric forms of arbitrage that they themselves barely comprehend, and acting as zoo-keepers for the bestiary over in IT.

And those folks, the so-called smartest guys (and gals) in the room, are themselves nothing but keyboard-serfs, handmaidens to the global financial machine that’s been built. The quants are charming only in their quaintness. They can’t possible know what’s going to happen outside the context of the models they use for a very simple reason: they dynamic isn’t theirs to control. It never has been. It belongs to the whole which is considerably greater than the sum of its parts, be they the suits in the front office, the politicians at the other end of the line, or the glorified accountant-widgets down in the engine-room.

The dynamical system has the following characteristics: it’s iterative (transaction-oriented), discrete (those transaction happen in chunks) and non-linear (with enough feedback to make Pete Townsend blush). Such systems can transition at any time into very different portions of their so-called state space. In market-parlance they can crash, as in flash crash.

All of you may want to go back to school and get serious about your education. Here’s the magic word: ecology. If you’ve not heard of people like Robert May or George Sugihara, then Google “Complex Systems: Ecology for Bankers” to get a leg up. It’s been well-understood for a very long time that complex systems can develop emergent properties that don’t have any obvious analogues from simply looking at the parts.

Smith correctly intuits something obvious: things are not like they were. What he doesn’t do is nail down what’s really changed. No surprise there. Surrounded by it on a day to day basis, we are oblivious to the changes wrought by technology. To whit: do fish know they live in the ocean?

It’s time for all of us to get a handle on what financial markets have become. Paper has been replaced by electrons, and the velocity of transactions has gone from days, to hours, to minutes, to micro-seconds, while the market pool has gone global. Anyone who thinks this creature at this scope and scale resembles anything that’s been seen in the past is delusional.

Posted by NCimon | Report as abusive

I left Wall Street in 1997 after more than 15 years dealing with financial futures and later both fixed income and equity derivatives from the trading, structuring and risk management angles. The first thing that struck me about Mr. Smith’s Op-Ed other than the obvious truth in the portrayal of the atmosphere of ANY Street firm is that it smacked of a resume. Why else would we care about his education or ping-pong prowess, the fact that he was at Goldman for 12 years is sufficient to credential him.

But the fact that it took 12 years to open his eyes to the obvious tells me that he was in sales since what he complains about is and always has been the lifeblood of traders, that is price opacity. As money moved faster and information flowed more freely it’s no surprise that trading trumped relationship investment banking as the big money maker for these firms and thus the power and culture followed.

What Smith reveals is nothing new to anyone who has been paying attention – the problem is the increased power that has come with the unparalleled wealth and the socialization of losses of the “Too Big To Fail” institutions. If the steps used to save the banks and the economy had included short term nationalization, firing with possible criminal charges against those who led the debacle and elimination of off balance sheet treatment to enforced a reduction in leverage we would be less likely to face a repeat of the 2008 collapse.

Smith is complaining about the loss of a bygone “Good Old Boy, White Shoe Banker” era that’s not coming back. Probably the fact that he drank the Kool-Aid made him such a good recruiter, but if thinks the traders only disparaged the customers, he should have heard what they thought of some of the salesmen.

Posted by Maxwells_Demon | Report as abusive

Smith might have had the poetic wit to wait until today, the Ides of March, to stick the knife in….”the most unkindest cut of all”…IIRC, Brutus came to a bad end….

Danny Black, btw, is a voice of reason, a breath of fresh air…

Posted by NotoriousBOB | Report as abusive

Notorious BOB,

Good point. According to Shakespeare, who was working from classical sources, Brutus impaled himself on his sword after the Battle of Philippi. The good news, though, is that the victor in that battle, Augustus, saw Brutus as an honorable enemy and ordered that his body be wrapped in Augustus’ own purple mantle.

I guess that’s only ‘good news’ if you’re of a rather Stoic temperament.

Posted by Christofurio | Report as abusive

(quote) “Another sign that it was time to leave.”

Felix writes as thought the Smith had an epiphany and simultaneous saw his money was tainted.

But Smith himself is clear that his trajectory to resignation took some time, while earning enormous remuneration at the same time.

Felix cannot claw back that moral rectitude by transfixing it to Smith’s earnings before he resigned. That is a manipulative ploy to play the man and not the issue.

Posted by scyth3 | Report as abusive

“What Smith reveals is nothing new to anyone who has been paying attention – the problem is the increased power that has come with the unparalleled wealth and the socialization of losses of the “Too Big To Fail” institutions. If the steps used to save the banks and the economy had included short term nationalization, firing with possible criminal charges against those who led the debacle and elimination of off balance sheet treatment to enforce a reduction in leverage we would be less likely to face a repeat of the 2008 collapse.”
…right on, right on, right on!

Posted by NCimon | Report as abusive

“What Smith reveals is nothing new to anyone who has been paying attention – the problem is the increased power that has come with the unparalleled wealth and the socialization of losses of the “Too Big To Fail” institutions. If the steps used to save the banks and the economy had included short term nationalization, firing with possible criminal charges against those who led the debacle and elimination of off balance sheet treatment to enforce a reduction in leverage we would be less likely to face a repeat of the 2008 collapse.”
@NCimon: you raced me. This is an excellent comment by Maxwells_Demon. It’s nothing short of amazing that Obama, who is clearly an intelligent man, did not ensure that precisely these things were done… But as we all know, the managers of these operations have been very clever. Mere nationalization (or public buy-out) might not have enabled the new owners to fire the managers, so easily. Bankruptcy might still have been necessary, in order to do that quickly and legally. Romney is dead right about this… If only Romney had been at the helm, in 2008. As everyone on Reuters must know by now, I’m not a fan of everything Romney is recommending; but this is Romney’s specialist area, and it’s where he really shines.

Posted by matthewslyman | Report as abusive

Maxwells_Demon, what losses at GS were socialised?

Posted by Danny_Black | Report as abusive


Posted by Foppe | Report as abusive

Sorry, I wasn’t clear enough. I meant ACTUAL losses, not made-up ones. I know that you have difficulty telling the difference.

Posted by Danny_Black | Report as abusive

Pardon me? You are saying that GS *didn’t* get bailed out to the tune of what, 10B+?
The rot extends far..

Posted by Foppe | Report as abusive

Foppe, I know basic arithmetic is hard for you so will try to make this easy.

Those assets you claim were or would have caused GS losses were being funded at a penalty rate by the Fed and STILL turned a multi-billion dollar profit. Again basic finance – along with basic economics, history and geography apparently – is beyond you but profit is kind of the opposite of loss. You need to pay attention to the plus or minus sign at the front…..

Even at the time the difference between the bottom of the market marks on the tranches GS held and the cash collateral they held against the CDSes was less than a billion.

Posted by Danny_Black | Report as abusive

Pardon? I see you’re still going strong on the childish ad-homming front, but your crony capitalists didn’t have to write down anything.. the $180B AIG after-bailout pay-out (to GS, SocGen, BAC, DB etc) was 100c/$.
Anyway, enjoy wallowing in your lies.

Posted by Foppe | Report as abusive

Foppe, given that literally nothing you say is true bit rich to be making a claim about lies.

Fact, those tranches bought by the fed at 100c on the dollar made money after a penalty rate.

Fact, GS exposure to AIG on those tranches was not 10B+ but substantially less than 1bn and probably vanishingly close to zero.

These are simply indisputable facts. There is no if or what about them. Of course, they mean you self-righteous outrage is simply based on lies but frankly in a age when someone can check the Fed website you are just going to look stupid making that claim unless you talk to other single digit IQ friends of yours holding similar views..

But hey who cares about the truth right? Keep pretending that it was Taiwan that needed IMF help in 1997 – it was Thailand – and that Malaysia suffered no ill effects from its behaviour at that time, despite the fact it tooks far far longer to get back to square one than the countries that DID take IMF aid. One has to wonder what sort of scumbag is so desparate to cling to their world view that they have to cling to such easily disproved lies.

Posted by Danny_Black | Report as abusive

Someone who lays it out better – and more politely – than me: 2009/08/hank-paulson-goldman-and-aig-for .html

Note that when AIG was taken over, GS was holding 1.4bn in collateral against the 2.5bn it had bought as protection on AIG.

Posted by Danny_Black | Report as abusive