I live in downtown Manhattan, within a few blocks of the new Goldman Sachs World Headquarters and the (still) aching hole that was once the World Trade Center. The latter is a site where time stopped and the world gasped, where the unthinkable happened and heroes laid down their lives; the former is the site of unthinkable greed.
What does it say that the toil and sweat of the first responders who willingly streamed into the burning towers is used to enrich people who "earn" more in a week than a nurse or teacher makes in a year? What does it say that Iranians can march by the millions, put life and limb on the line, while Americans sit meekly by as a financial colossus with tentacles deep into the federal government enriches itself beyond our imagination on the backs of the poor and struggling? What does it say that the media and online commentariat, the crafters of conventional wisdom, spend a hundred times the focus on Michael Jackson and Sarah Palin? What does it say that Democrats, handed the reins of power, are allowing this to happen under their watch?
Count me as a Democrat deeply troubled by my own party. Here's why:
The day George W. Bush and Dick Cheney entered office, I devoted myself to helping defeat them and delegitimize their policies: making war in the name of peace, pillaging the environment, defying science, gutting Constitutional rights and transferring wealth to the wealthy. Leaving behind another career, I entered the world of online politics, believing that the brewing anger on progressive sites could become a bigger movement and eventually turn the country against Bush and his cronies.
After Howard Dean exploded onto the national stage by tapping into the ethos of progressive blogs, I became determined to take that defiant mindset into the campaign against Bush. I ended up working for John Kerry as the netroots emissary in the 2004 presidential race. I was burrowed in Kerry's war room for a year, emerging briefly to attend the Democratic convention. (Where, incidentally, I encountered one of the rising stars of the convention and had a conversation about the power of the Internet, never imagining I was speaking to the next president!) I was back at it the next cycle, with Hillary Clinton, gearing up to finally put a Democrat in the White House. As Internet Director, my role there was much broader than in the Kerry campaign, but I was still the netroots guy, the designated progressive, dealing with MoveOn and the online activist community, the community I joined back when the Daily Howler, Billmon and Democratic Underground were the places to be and people to read.
The intensity of the 2008 campaign far exceeded 2004 and the result was not what I had hoped for, but when she withdrew from the race, I followed Hillary Clinton's example and put my heart into helping the Obama campaign, working quietly to help my friends on Obama's web team, doing my small part to restore sanity to the White House. I've always believed that we are most successful in politics when we dedicate ourselves to principles, not people, and that moment on Election Day couldn't have been sweeter when I held my American-Lebanese-British-Chinese baby daughter and pointed at the TV screen as the ultimate racial barrier was broken.
But anyone who has read my recent blog posts knows my elation on Election Day has given way to discouragement. It's still hard to believe that Bush is gone -- especially when Cheney, Rove, Yoo and others are as vocal as ever, lacking the dignity or self-awareness to accept the mess they made of the world -- and the benefits of having a Democratic president are real and tangible. But from civil liberties to gay rights to the economy, and even the environment, the disappointments are piling up. The White House and Democratic leaders are setting (and reaffirming) some of the worst of Bush's precedents.
The latest travesty, the Goldman Sachs fiasco, is one of the most egregious examples of inequity, injustice and sheer rapaciousness I've ever seen. This isn't the kind of America I envisioned under Democratic leadership.
One of the worst traits of the Bush years was the unending rationalization of his actions by the right. With Democrats in power, I'd like to believe that progressives will avoid that kind of blind cheerleading and act as a firm check on the White House and Congress.
Regarding Goldman Sachs, I'll leave it to others more eloquent and knowledgeable than I to describe the firm's heinous behavior:
So what's wrong with Goldman posting $3.44 billion in second-quarter profits, what's wrong with the company so far earmarking $11.4 billion in compensation for its employees? What's wrong is that this is not free-market earnings but an almost pure state subsidy. Last year, when Hank Paulson told us all that the planet would explode if we didn't fork over a gazillion dollars to Wall Street immediately, the entire rationale not only for TARP but for the whole galaxy of lesser-known state crutches and safety nets quietly ushered in later on was that Wall Street, once rescued, would pump money back into the economy, create jobs, and initiate a widespread recovery. This, we were told, was the reason we needed to pilfer massive amounts of middle-class tax revenue and hand it over to the same guys who had just blown up the financial world. We'd save their asses, they'd save ours. That was the deal. It turned out not to happen that way. ... One of the most hilarious lies that has been spread about Goldman of late is that, since it repaid its TARP money, it's now free and clear of any obligation to the government -- as if that was the only handout Goldman got in the last year. Goldman last year made your average AFDC mom on food stamps look like an entrepreneur.
Do read [Taibbi's] whole thing, if only to nod your head in grudging respect at how well Goldman Sachs scammed America. It would be one thing to get played by the likes of George Bush and the Crawford Keystone Kops, but Goldman Sachs has been buggering us professionally. It's a refreshing change of pace from the adolescent pawing and groping of the Bushies. I can completely see the Goldman Sachs crew going over to Helicopter Ben and Timmy, using the words of Don Cheadle in Ocean's Eleven: "It'll be nice working with proper villains again." And like Danny Ocean's crew sticking it to all three of Terry Benedict's casinos in that movie, the Treasury got hit like a tornado and Goldman Sachs walked out with the money in plain sight. It's disgusting, and yet you have to respect how well the plan worked.
Yesterday's opinion section of the Wall Street Journal offered convincing proof that those who want a progressive financial policy and those who simply want to save capitalism are in agreement about the madness of the administration's Wall Street policies. There, on the editorial page of the capitalist Bible, was a piece taking repeated shots at Wall Street darling Goldman Sachs. And, over on the opposite page, a two-fisted op-ed by former hedge-fund manager Andy Kessler in which he labels the government bailout of Wall Street "a dumb move" and "a bust." ... We've reached the point where the only people defending the administration's Wall Street policies are the people benefiting from them -- or their good friends, Tim Geithner and Larry Summers.
As far as I'm concerned, opposing the bailouts that began in Sept 2008 is on par with opposing the invasion of Iraq. ... The New York Times' Joe Nocera: "If Mr. Obama hopes to create a regulatory environment that stands for another six decades, he is going to have to do what Roosevelt did once upon a time. He is going to have make some bankers mad." Via MoJo: "Does the Obama administration have the political will to break up financial giants? If the government's continuing transfer of wealth from ordinary taxpayers to Goldman partners is any indication, probably not."
Zero Hedge has made the case that Goldman could be using their program trading to move the markets in the direction they prefer, as the largest program trader in the market, twice as large as the next biggest. The case was reasonably strong, but was made stronger when the New York Stock Exchange suddenly decided to stop releasing the data on program trading which made it possible to track what Goldman was doing. Coincidence? Possibly. It is also possible that you may wish to purchase this fine bridge I have for sale, only ever driven over by a little old lady.
Goldman's profits only count as "profit" if you consider a pass-through federal subsidy to AIG, quick and easy loans and multiple bailout programs made available to them by the FDIC and the Fed after converting themselves into a bank holding company, the forced collapse of much of its competition and fees from stock issuance from other banks having to repay TARP to be something based on hard work and ingenuity and not political connections and corporate welfare.
I'm starting to wonder about the mental health of our nation when I read stuff like, "Analysts estimate that [Goldman Sachs] will set aside enough money to pay a total of $18 billion in compensation and benefits this year to its 28,000 employees, or more than $600,000 an employee. Top producers stand to earn millions." (Update from Reuters: "That puts the average Goldman employee on pace to earn more than $900,000 this year. Chief Executive Lloyd Blankfein, senior officers and star traders will likely receive tens of millions of dollars.") Are we out of our minds? How can we sit by and let this happen?
Goldman's resurgence should send shivers down the backs of every hardworking American who has lost a large chunk of retirement savings in this economic debacle, as well as the millions who have lost their jobs. Why? Because Goldman's high-risk business model hasn't changed one bit from what it was before the implosion of Wall Street. Goldman is still wagering its capital and fueling giant bets with lots of borrowed money. While its rivals have pared back risks, Goldman has increased them. And its renewed success at this old game will only encourage other big banks to go back into it.
The New York Times adds:
On Thursday, JPMorgan Chase became the latest big bank to announce stellar second-quarter earnings. Its $2.7 billion profit, after record gains for Goldman Sachs, underscores how the government's effort to halt a collapse has also set the stage for a narrowing concentration of financial power. Both banks now stand astride post-bailout Wall Street, having benefited from billions of dollars in taxpayer support and cheap government financing to climb over banks that continue to struggle. They are capitalizing on the turmoil in financial markets and their rivals' weakness to pull in billions in trading profits.
And here are a couple of videos that tell the story:
What can Democrats do? Speak out, at the very least. Words do matter.
UPDATE: Krugman weighs in:
Goldman made profits by playing the rest of us for suckers. And Wall Streeters have every incentive to keep playing that kind of game. The huge bonuses Goldman will soon hand out show that financial-industry highfliers are still operating under a system of heads they win, tails other people lose. ... The bottom line is that Goldman's blowout quarter is good news for Goldman and the people who work there. It's good news for financial superstars in general, whose paychecks are rapidly climbing back to precrisis levels. But it's bad news for almost everyone else.