Goldman Sachs Chairman Lloyd Blankfein testified before the federal Financial Crisis Inquiry Commission yesterday. The following exchange is telling. (From Dana Millbank's column in today's Washington Post.)
"Would you look back on some of the financings as negligent or improper?" asked the commission chairman, former California state treasurer Phil Angelides.
"I think those were very typical behaviors in the context that we were in," Blankfein replied.
Angelides pointed out that others regarded Goldman's behavior -- in which the firm sold mortgage securities to customers and then placed bets against those same securities -- was "the most cynical" of practices. "It sounds to me a little bit like selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars," observed the chairman.
Blankfein treated the chairman to a patronizing account of Goldman's function. "That's what a market is," the CEO explained.
Capitalism has proven to be the most effective economic system in history, when practiced reasonably. When pushed to its extreme, it may be the worst.
2 comments:
Capitalism has proven to be the most effective economic system in history when practiced reasonably.
For the "haves" it sure has ... those with the greatest advantage have little to concern themselves about ... but reasonable seems to have gone out the window.
When pushed to its extreme, it may be the worst.
Maybe not the absolute worst, but for the "have nots" it must seem that way; like a pyramid where the greater the gap between the richest and poorest, the wider that bottom section becomes.
No regulation is a guarantee for disaster ... but that doesn't seem to bother this administration at all ... or we would've had some by now, no?
Goldman Sachs is doing what Goldman Sachs does ... aside from the fact so many of their former CEO's and other executives are part of the current administration, the current administration is in lock step with the program the same way the last administration was ... and it's all at our expense.
What bothers me most about capitalism in its most unfettered forms is that those with the most to lose have the least to gain.
The bubble breaks and people lose their jobs. The hedge fund trader has millions of dollars in the bank. Sure, he might have lost ten times that much on paper, but he still has ten figures to fall back on. So maybe he moves into a $700,000 instead of one for $4 million.
Meanwhile the secretary loses her house, her retirement, and her health insurance. She was never going to get rich in the best of times, but she'll among the first to take it in the chute when things go bad.
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