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.

March 27, 2017

A letter to Goldman Sachs C.E.O. Lloyd Blankfein

Filed under: Goldman Sachs — louisproyect @ 6:33 pm

Lloyd Blankfein

Dear Mr. Blankfein,

I usually delete emails sent to me as a Goldman Sachs alumnus unread but I was curious to read your recent letter to shareholders since I suspected that it would address the large presence of past and present Goldman employees in the Trump administration, including Steve Bannon who by most accounts is serving as Rasputin to Trump’s Czar Nicholas.

I really have no idea who the typical Goldman  shareholder is but I suspect most of them would be okay with Bannon being exposed as a serial killer if the value of their stock increased handsomely in the next quarter, as I am sure it will with a White House having such incestuous relations with your firm.

You put the best possible spin for your second-in-command becoming one of Trump’s top economic advisers:

This past December, then–U.S. President-elect Donald Trump appointed Gary Cohn, then our president and chief operating officer, director of the National Economic Council. Gary was responsible for developing and leading many of the firm’s most important initiatives, and demonstrated a deep commitment to our clients, our people and the culture of Goldman Sachs.

We have been criticized for the fact that some of our colleagues, after long careers at the firm, have moved to work in the public sector. The charge is that Goldman Sachs is able to extract certain advantages that others cannot. In fact, the opposite is true. Those in government bend over backward to avoid any perception of favoritism.

This, of course, is nonsense. Cohn was hired by Trump to gut financial regulations, including Dodd-Frank that was Obama’s weak-tea answer to Wall Street greed and criminality. To illustrate what a con job the Democrats were involved with in “taming Wall Street”, mogul banker Anthony Scaramucci, who was a fundraiser for Obama and then joined Cohn as a Trump economic adviser, has compared a regulation that required investment firms to act in the best interest of their clients to the Dred Scott decision. That’s almost as crazy as Stephen Schwarzman comparing Obama’s proposal to increase taxation on “carried interest” profits to Hitler invading Poland. Did working on Wall Street make these people crazy or were they crazy to begin with?

To reassure your shareholders that you are not complete knuckle-dragging, mouth-breathing Breitbart.com reactionaries, you point out that you have joined the tech industry in opposing Trump’s Islamophobic immigration bans. While nobody would gainsay the right of Microsoft or Goldman Sachs to hire a top software engineer or investment banker from Somalia or Yemen, I doubt that there’s much of a pool of such talent to begin with.

Once you penetrate through other bromides about how Goldman Sachs is the next best thing to the Catholic Workers, you get to the statement that is what they call the takeaway:

Putting aside one’s individual politics, the outcome of the U.S. election raises the possibility of more stimulative tax and regulatory policies, as well as plans for more infrastructure spending. This represents a substantial change in direction for the U.S., and offers many investors and companies a reason for optimism.

A reason for optimism? My god, are you are out of your mind, Mr. Blankfein? Scientists have concluded that climate change is threatening a sixth extinction. You really need to read Naomi Klein or even watch Al Gore’s documentary. By seeing everything through the cash nexus, you are losing the thread.

In 2012, Forbes reported that despite a $50 billion loss, Hurricane Sandy that some scientists link to climate change may end up being “beneficial” for the American economy according to Goldman Sachs. Why? Because, among other things, it will be good for the construction industry that will be rebuilding flooded away houses. This is like saying WWII was a good thing because it allowed American investors to reap huge profits from rebuilding Japan and Germany.

In terms of stimulative tax policies (ie., cuts), the result will be another step in the direction of “starving the beast”, as Grover Norquist put it. Back in 2015, Norquist stated that Trump’s tax plan was consistent with his Taxpayer Protection Pledge. As should be obvious from Trump’s proposed budget, just about everything except the military and police will lose funding. Among the hardest hit victim be the Department of Education, which is facing a 14 percent cut as opposed to the military that is getting a 10 percent raise.

It is through the Department of Education that students receive Pell Grants and other forms of financial aid. Don’t you understand that the U.S. needs an educated work force to support medical research, technological innovation including robotics and other missions critical to the functioning of a capitalist economy including a fresh supply of managers loyal to your values?

We’ve certainly come a long way from the Morrill Acts of 1862 and 1890 that established land-grant universities that established the flagship universities such as the U. of Wisconsin and U. of California, Berkeley. That Trump’s ally Scott Walker, who does not have a college degree, has laid siege to the U. of Wisconsin and that Trump himself has threatened a cut in funding to Berkeley for its stance on protecting undocumented immigrant students should give you some idea of how little interest the “stimulative” White House has in defending the long-term interests of American capitalism.

Furthermore, the assault on environmental standards will only lead to an outbreak of illnesses caused by toxins in the water we drink and the air we breathe. The EPA’s new chief Scott Pruitt has a long record of opposing environmental regulations. Not only is he a climate change denialist; he dissolved the Oklahoma Environmental Protection Unit after becoming the state’s Attorney General in 2014. He also sued the EPA to block its Clean Power Plan and Waters of the United States rule. Aren’t you aware that your children and your grandchildren are vulnerable to illnesses caused by pollutants? Since you have been stricken with lymphoma, I’d think you’d be up in arms over a corporate pollution defender like Pruitt looking after our interests. The U. of California at Irvine conducted a study that linked heavy air pollution in a Canadian area with cancer spikes. They found that the number of men with leukemia and non-Hodgkin’s lymphoma spiked in areas closer to heavy pollution. Is a “stimulative” economy worth all that?

One of the questions I have discussed with leftist friends over the years is why billionaires like yourself have so little interest apparently in the long-term prospects of capitalism. I’ve said in these chats that if I were a hedge fund billionaire, I’d not be able to sleep at night worrying over the threats to future profits posed by an environmental crisis that is being fueled by short-term profit seeking. You seem to symbolize this conundrum more than any member of the capitalist class I can think of. Your inability to understand and act on this speeding, out-of-control locomotive filled with a pandora’s box of ills, including nuclear weapons, has one benefit, I guess. It will prove so alarming that many young people will make the decision I made in 1967 when the war in Vietnam was out-of-control: to become a socialist and change the system in order to prevent a catastrophe not of our making.

Yours truly,

Louis N. Proyect (Goldman Sachs 1987-1990)

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