Thursday, July 30, 2009

Pity The Goldman. But Still Destroy It

There's been a yawning gap in financial journalism ever since Andrew Ross Sorkin went on book leave. At least he might be on book leave, or I might just have stopped visiting Dealbook, on account of there being no mergers right now. I'm referring, of course, to the post of Chief Investment Banker Water-Carrier.

I've been obviously bitterly envious about Sorkin for a while now. Which is a shame because he's charming and hard-working, and god knows what the investment bankers would get up to without him to talk to. He serves, in other words, a powerful societal need, almost like a sin-eater.

Which doesn't mean, however, that he needs to be replaced. Still, if anyone's going to do it it's Heidi Moore, whose best stuff at the WSJ's Deal Journal always focused on the comings and goings of bankers rather than that pesky context stuff. She's noticed that there might be an opportunity for a backlash-backlash where the subject of Goldman Sachs is concerned, or at least room enough for the sort of entertainingly contrarian piece that Slate and its offspring go nuts for.

Here she is then, channelling Bill O'Reilly at The Big Money. Of course, the advantage of having such an emptily belligerent headline means that she doesn't even have to set up a straw man Goldman Sachs-hater as opponent. I think we can assume that she has the Matt Taibbi article in mind, although no proper journalist would spend so much time taking down a single article, so she's free to swing a little more freely.

Much like the new scamp in prison, she's already gone after the prison-yard bully, in this instance the Epicurean Dealmaker. Thus Mr Dealmaker is strangely muted when discussing the piece. Which is a shame, because, aside from the reporting, the argument (and yes, it is an argument) is a horrible mess.

Moore's argument relies heavily on the idea that Goldman Sachs isn't infallible, that its alumni have a rotten time of things when they leave the firm. Sure, says Mr. Dealmaker, they're not that smart. They're modest, they communicate effectively by voicemail (lord knows how they made so much money in China), their performance reviews seem to be genuine.

What I think she's doing here is conflating some of the specific criticisms that Taibbi and others have about Goldman Sachs, with the more generalised hatred of investment banks that existed before, during and after the crash. I don't think anyone has been claiming that Goldman Sachs bankers are flashy degenerates, and I think that criticism of the firm is not dependent on accepting the idea that they're geniuses. We did the whole, smart, modest guys screwing up and taking thousands of jobs with them thing when we noticed that Stephen Feinberg existed.

In fact, Moore highlights, and TED fails to pick up on, the most terrifying thing about Goldman - that its employees are selfless, loyal, and utterly disciplined. Goldman's existence is problematic not because it's large, not because its people are smart, and not because its alumni crop up in government, or at least not primarily. It's problematic because Goldman Sachs has assembled a group of rich, motivated, ambitious people whose loyalty is primarily to Goldman Sachs and Goldman Sachs alone. Sort of like the Jesuits crossed with the Fuggers.

When Goldman has molded its employees so much in its image that they'll resist often quite astronomical short-term monetary rewards out of loyalty to the firm, is it so weird that they'll carry this loyalty over to the public sector, or that the firm will engage in actions really quite detrimental to their clients and society at large because its best for the firm?

Or let's put it another way. I'm actually rather happy with bankers being short-termist, greedy and egotistical, if only because it's unlikely they'll coordinate their actions in a sufficiently dangerous fashion to subvert government or bring the world financial system crashing to its knees. Before you note, quite rightly, that these bankers appear to have done just that, I'll note in advance that these bankers had lots of help. Agencies, government, mortgage pimps, and so on.

You might also suggest that Goldman alumni haven't been massively successful in the private sector. As Moore notes, they seem to be rather ineffectual when adrift from the mothership. But then that isn't the point. The point is that they're trying. Can you, after all, imagine a gang of Morgan Stanley doing much more after their stint than running a hedge fund?

So, Goldman must be destroyed because it's so effective. What's good for Stalin's Army isn't good for American capitalism. Actually, it's probably not even good for Stalin's Army, but you get my point. We want our weasels back.