Louis Proyect: The Unrepentant Marxist

December 18, 2018

Goldman-Sachs and 1MDB: the discreet stench of the bourgeoisie

Filed under: capitalist pig,Goldman Sachs — louisproyect @ 5:26 pm

LLoyd Blankfein: laughing over ill-gotten gains

As a former employee of Goldman-Sachs, I have the dubious distinction of getting their alumni newsletter. Yesterday, it contained a farewell interview with Lloyd Blankfein filled with self-congratulations befitting questions like “What did you come to learn and appreciate about what it takes to be a great leader?”. Part of what made Goldman so “successful” for the past 150 years in the eyes of the departing helmsman was hiring people who embraced its core “values”. Such hires could be counted on to “go into philanthropy or government, which is attractive to people who want to work at an organization that can prepare them for such work later in life.”

As for government, we got a taste of that from Gary Cohn, who was president of Goldman from 2006-2017. During his time there, he helped the Greek government buy complex bond products that led to the terrible financial crisis. He was also identified in the Panama Papers as one of the plutocrats who concealed income in offshore banks to avoid paying taxes. It was this sort of CV that must have persuaded Trump to choose him as chief economic adviser.

Another Goldman alumni called upon to uphold the firm’s values in government was Steve Mnuchin who was their Chief Information Officer among other posts. Fortunately for me, I bailed out of information services before he became my boss. After leaving Goldman, he eventually took over a California bank that specialized in foreclosing on homes, including the one that belonged to a 103-year-old woman who accidentally allowed her insurance to lapse. Like Cohn, Mnuchin’s chief goal as Secretary of the Treasury was to cut taxes for the rich and regulations that might get in the way of corporate profits even if they turned the air and water filthy. Mnuchin is married to a b-movie actress named Louise Linton who is as grubby as him and every other Trump administration figure. Here they are holding up dollar bills fresh off the Mint presses.

Continuing with Blankfein’s interview, we learn that he is a big-time student of history who has interviewed two of his faves in Goldman HQ: Doris Kearns Goodwin and Ron Chernow. Kearns and Chernow are notorious for writing history that flatters American politicians for their centrist appetites. Goodwin, like her fellow Harvard professor Alan Dershowitz, has plagiarism on her record while Chernow wrote the biography of Alexander Hamilton that inspired the Broadway hip-hop musical that celebrated him as an “immigrant” when he was nothing but a colonizing settler.

Ironically, this obsequious interview appeared the same day as a N.Y. Times article headlined “1MDB Case in Malaysia Deepens Goldman’s Crisis”. It turns out that the firm was instrumental in stealing millions of dollars from the country’s treasury in order to spend on various luxury items. Najib Razak, the former Prime Minister, made Imelda Marcos look like an ascetic. The Malaysian cops seized 1,400 necklaces, 567 handbags, 423 watches, 2,200 rings, 1,600 brooches and 14 tiaras from his properties worth $273 million.

Timothy Leissner, who was Goldman’s top henchman in the grand larceny, was arrested on November 9th. Leissner said that his decision to conceal his actions from Goldman’s compliance department was “very much in line” with a wider culture at the firm. Working closely with Leissner, Malaysian financier Jho Low served as an intermediary on behalf of Goldman in its dealings with Malaysian officials and 1MDB. Like Razak, Low never saw a luxury item he could resist. According to the FBI, he spent more than a billion dollars on watches, jewelry and the like. Between October 2009 and June 2010 alone, he spent more than $85 million in Las Vegas casinos as well as “luxury yacht rental companies, business jet rental vendors (and on) a London interior decorator” according to CNN.

In a New Yorker article on “Billion Dollar Whale”, a new book about Jho Low, we discover how Goldman Sachs and other banks helped raise ten billion dollars for 1MDB, following which five billion dollars of the money disappeared into the pockets of Razak, Low and their cronies. This paragraph suggests that we are living in a period approximating Nero’s rule over the Roman Empire:

Five billion is a large sum, perhaps too much to easily dispense with in a short amount of time, but the book’s opening scene offers an idea of where it went. In November, 2012, the sweaty, awkward Low threw himself a thirty-first birthday party, in Las Vegas. The guests included the hip-hop producer Swizz Beatz, the actors Leonardo DiCaprio and Benicio del Toro, and many unnamed beautiful women, and all were chauffeured by limousine to a night club that had been transformed into a circus-party space, where Cristal flowed like water. There, more celebrities appeared, including Kim Kardashian and Kanye West, along with investment bankers who had worked with Low. Low was gifted three Ducati motorcycles and a two-and-a-half-million-dollar sports car. The high point came when Britney Spears jumped out of a giant birthday cake wearing a skimpy gold outfit. The whole thing is so tacky and over the top it almost seems made up.

You wonder where Leonardo DiCaprio, the staunch crusader against climate change, fits in? It turns out that Jho Low financed films with some of this loot, including “The Wolf of Wall Street”, the 2013 Martin Scorsese film that some critics viewed as a dark satire on Wall Street excess. It tells the story of Jordan Belfort, a stockbroker who started out selling penny stocks before he moved on to become a major deal-maker on Wall Street and a crook. In my CounterPunch review (https://www.counterpunch.org/2014/01/03/the-confidence-men/), I made the essential connection in light of the Blankfein/Leissner/Razak/Low criminal conspiracy:

Belfort started a “bucket shop” called Stratton Oakmont in the late 1980s that eventually turned into a billion-dollar operation that challenged blue chip firms like Goldman Sachs for market share. A bucket shop specializes in selling dubious penny stocks to working class people over the phone using high-pressure tactics with a high commission to the salesman. There is only a difference in quantity as opposed to quality between a Stratton Oakmont and a Goldman Sachs. The government tends to go after people like Jordan Belfort and Bernie Madoff rather than Lloyd Blankfein and Jamie Dimon because their crimes are illegal as opposed to legal. When Blankfein and Dimon were marketing collateralized mortgages, they were inflicting far more damage than a Jordan Belfort could dream of in his wildest imagination.

The only change I would make to this is in describing Blankfein as now involved in “illegal” activities. The stench arising from 1MDB is not likely to disappear very soon. It is a function of an Empire in decline, much like Nero’s Rome. Instead of gladiators, we have NFL games on Sunday. With Rome relying more and more on commodities extracted from colonies East and West by captive peoples, the inner fiber of Roman society began to rot like a house whose foundations had been weakened by years and years of termite infestation. Those who hope to reconstruct American democracy on a new social democratic footing without replacing that capitalist foundation are just conning themselves. We need to speak the truth about the situation we face, not sweep it under the rug.


  1. Louis Proyect: “After leaving Goldman, he eventually took over a California bank that specialized in foreclosing on homes, including the one that belonged to a 103-year-old woman who accidentally allowed her insurance to lapse.”

    Indeed! But, also … Let’s not forget that these guys have enablers in the Democratic Party. Here’s a clip from an article by Intercept:

    “In an internal memo published … by The Intercept, prosecutors at the California attorney general’s office said they had found over a thousand violations of foreclosure laws by his bank during that time, and predicted that further investigation would uncover many thousands more.

    “But the investigation into what the memo called “widespread misconduct” was closed after Harris’s office declined to file a civil enforcement action against the bank.”
    [Source: https://theintercept.com/2017/01/05/kamala-harris-fails-to-explain-why-she-didnt-prosecute-steven-mnuchins-bank/ ]

    There were thousands and thousands of cases, yet Kamala Harris (rightly called the new Obama) refused to prosecute (just like Obama).

    Comment by Reza — December 18, 2018 @ 6:34 pm

  2. Big eyesore requiring a hefty poke of the Proyect-ile thumb. Well done. Reza adds value.

    Comment by Farans Kalosar — December 20, 2018 @ 2:11 pm

  3. From the last lines of the article: “Those who hope to reconstruct American democracy on a new social democratic footing without replacing that capitalist foundation are just conning themselves.” Can you go into more detail, or have you, with regard to the replacement? TIA.

    Comment by Mark Heffernan — April 19, 2019 @ 5:55 pm

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