Monday, June 8, 2009
Lloyd Antoinette Blankfein and the FT
"Simon Johnson's comparison of corporate financiers with Russian oligarchs has justifiably attracted attention. ... When a group becomes too rich and powerful, it can wield influence over politics and over commerical activities in which its members are not directly involved. The effect is to enhance that wealth and power. This process is likely to end in political and economic crisis. That was the history of royal courts across Europe, from Versailles to St. Petersburg. More recently, it has been the experience of many developing countries and transitional economies. ... Dukes and cardinals, oligarchs and financiers, fixers and traders become very wealthy not by virtue of their talents but as a result of the position they occupy. Legislators and the heads of large corporations readily come to feel that their functions deserve similar recognition. We may be relaxed that some people do become filthy rich, but we should not be relaxed about how they become so or how they behave once they are. Few people quibble about Bill Gates' fortune, although they may occasionally think that $50bn is rather a lot. They see the evident benefits of the personal computer revolution that he helped to bring about. ... It is difficult to think about bond salesmen in the same way, as it was difficult to feel positive about the hangers-on at the court of Louis XVI. ... Historians would find much that is familar in today's developments. In Washington, the young, fresh King Obama finds his economic councils filled by representatives of the same interests who advised his predecessor so unwisely. ... Only if the anger of the populace grows large enough, or the resources of the state are exhausted, does a counter-coup provoke change. Breaking the political power of the financial services industry will not happen easily. ... When the New Economy bubble burst in 2000 ... [m]inor courtiers were executed but the essential power structure remained. But, as Louis XVI learnt as the guillotine fell, the longer reform is delayed, the bloodier the revolution. And the more unsettled and chaotic would be the eventual outcome for us all", my emphasis, John Kay at the FT, 20 May 2009.
Llloyd Blankfein, here's my advice: take your hundreds of millons off the table, now. Then liquidate Goldman Sachs (GSG). You may live to 100. Insha Allah! Kick GSG's traders out. Now! In my 2 May 2009 post I noted GSG's David Viniar noted its dedication to public service. Create a South African-style "truth and reconciliation" commission. Thomas Jefferson opposed creating corporations, believing them tools of oppression. The kings of England granted various "monopoly" charters, like that to the East India Company. Just like we do with our 36 Treasury paper broker-dealers, and NRSROs Big 87654 CPAs, etc.