Goldman Sucks?

The news and our neighborhoods continue to be littered with stories of unemployment, foreclosure, and uncertainty. So it came came as complete surprise when I recently read about Goldman Sachs having an incredible quarter and being poised to pay its employees $18 billion in bonuses and other compensation. Wait???? Weren't banks and speculators primary players in the recent crash? What???? Weren't these same banks and speculators the same people who were reeling and receiving government TARP funds just a few short months ago?

On the surface this seems downright evil.....evil in a greedy villain from a James Bond movie sort of way. And after reading this extraordinary piece by Matt Taibbi in the Rolling Stone my populist impulses were directing me to the nearest hardware store for a pitchfork and torch. Now I normally don't buy into this leftist crap and I normally don't buy into conspiracy theories involving uber powerful greedy, global cabals but the article was so detailed and researched.

These accusations were so incredible that you would think that, if true, they would strike a powerful chord within the American mainstream and that we could demand real change. I started with the Goldman Annual report from 2008 in search of answers. I see wild swings in profitability and cash and it all looks odd. I read more pieces from the New York Times and CNN and my blood really starts to boil. I delve deeper by reading the blog of a man who is trying to shed some public light on their deeds and who Goldman is trying to shut down. I read some counter pieces that defend Goldman from being behind the creation of the bubbles (Tech, Mortgage, Commodities, and soon- Environmental caps) but don't do much in making a defense against the claim that they deliberately profited from the expansion and destruction of those bubbles.

This is going to take a few days to really get my head around. Is this evidence of unbridled greed that needs to be reigned in for the sake of the better overall good? Is this evidence that capitalism is working again? Is it both? I plan to read arguments on both sides.

In the meantime here is what I don't understand. These bankers don't necessarily create value, they throw money behind the people who do. They're not building sky scrapers, they're not creating new innovative products, they are not growing the crops that feed our families. They just seem to gain insane profits by profiting from those who do. These investment banks don't do anything other then control the flow of vast amounts of capital and the levers on which money moves. They create fancy derivatives and securities that profit off of the comings and goings of real tangible value.

And they create incredible wealth and power for themselves. I remember at BYU when it came time for the Career Fair. The biggest lines were always for the investment banks and consulting firms. Like the pied piper they would lure away throngs of smart and ambitious grads with stories of untold wealth. There was a mention of 80 hour work weeks and the fact that you would sacrifice your first 5 or 8 years for the benefit of your career. But once you paid your dues you would have enough money to buy a golden chariot for you and your family....given that your family was still in tact after 8 years of spending every waking hour with the bank and not many moments with them.

Do I seem pretty biased at the moment? Yes. Can that change? Yes. I'm all for free markets and capitalism. But right now my gut is telling me that what some of these banks have been doing these past several years doesn't jibe with the brand of capitalism that made America the force that it once was. My head is telling me that the environment that they fostered did more to destroy value within our economy then to create it.

Time and research will tell. But in the meantime this has the makings of an incredible conspiracy theory.