All wrong about Goldman all wrong

Well this op ed piece of the young Mr Greg Smith and his resignation from Goldman Sachs published in the New York Times.  I hope someone paid him a lot of money to do it so publicly.  Maybe a competitor?  It has been all over the media, whether the edgy blogs or mainstream.  From reputational experts, the markets, to equity analysts, or just commentators on those big nasty banks.

And you know what?  Not a single commentator got it right.  Including Mr Smith.  Which is of course a perfect name for anybody wishing to go public with grievances.

Goldman is everything he said.  Mr Smith is absolutely correct in what he says, based on my experience in international investment banking.  No, where he is wrong, is he assumes it was different or that “something” has changed.  The behaviour of Goldman has been going on for centuries in various different fields:  think of the financial institutions leading up the great crash and depression in the 1920s, from the early oil fields of Texas, to the gold rushes of Australia, to the railway scams of early last century.  To slave labour, or child labour – over the centuries until this very day.  Property developers, lawyers, accountants, across the finance industry (just read this treatise on Bank of America and its systemic corruption and admitted fraud).

It is no different to what was happening decades ago.  Back then I recall bankers calling their clients stuffees:  a party into whom you stuffed as many rotten financial products as you could.  There is much more.

Commentators have said it will hurt Goldman’s rep; it won’t hurt Goldman’s rep; they will lose clients; they will gain more clients.  You know what?  Nothing.  A big fat nothing.  Until they trip up in the money making stakes, absolutely nothing will happen to Goldman.  Okay, it lost $3b in market cap – but that is just pretend.  It will come back.  I mean, if the greatest financial crisis since the great depression, caused by Wall Street, causes a slap on the wrist, some young 33 year old hasn’t a chance.  

What this story is about is the arch of personal and professional maturity.  It is reported that Mr Smith is 33 years, but it is not clear when he finally came to this conclusion before resigning.  He may have concluded this three years ago and has been planning his resignation some years out when he was financially stable.  It seems highly unlikely that he concluded Goldman was a pile of manure (which it is) on Wednesday and resigned the next day.  No this has been planned for a while, and he has waited until he is in a position to do so.  

This apparent revelation is something that happens with every employee in the highly paid finance / legal / accounting worlds.  It usually occurs about late 20’s early 30’s depending on socialisation, intellectual maturity, and emotional intelligence.  If Mr Smith only came to it at 33, then he is weak in all three of these measures.

We start out all bright and shiny and hopeful.  Our ideologies are wanting to change the world, to contribute, make truck loads of money [which does not usually come until your thirties anyway unless you are a ‘star’].  We believe the employee codes of conduct, dutifully sign them, and conduct ourselves appropriately and work like Trojan horses.  Well most ambitious young people do – statistics suggest only about 10% at this level are corporate psychopaths, although that percentage rises the higher up the food chain you go.

We watched cowboy movies where the sherrif rode into town and ran out the bad guys.  Or Star Wars and the wise Jedi.  We believed them.   We were altruistic.

As we rise up the ladder [if we are lucky] we start to notice that the pats on the head do not come as quickly, if at all.  That it is increasingly not about merit but politics – who you know, who’s your patron, your connections.  By the time we hit our 30’s, merit as a measure of success is eroding and politics takes over.  And soon it is overwhelming.  And, as the above article on Bank of America refers:  it is about measuring penises.

Certainly by then you would have recognised that if you wish to stay you have to play.  If you want to be in the game you have to be on the field.  If you want to be on the field you have to abide by those rules and the ref. We start adjusting our personalities, overlooking things we do not agree with or push out the ethical boat until we become inured to it.  Or it is lost over the horizon.  We conform, conform conform. 

And in the end it depends on our threshold of success.  Mr Smith reached his threshold of financial success.  Some people need more money so play the game longer, and some play it to the end.  But the latter are very very few.  Maybe 2%?  I am guessing.

I think all we can conclude is that Mr Smith maybe just finally grew up, looked around, and opted out.  He was in any event on a losing team:  selling derivatives to Europe in 2011?  Please.  I mean it is not just the financial institutions Mr Smith, have a look at what someone once referred to as the murder belt.  Life is tough.  The sherrif isn't coming, and Jedi was make believe.  There is nothing new here.  I just hope you saved your pennies.  

PS Mr Smith.  Companies in America can sue for defamation.  So I hope you have your pennies in a tax haven where Goldman's has no influence.  Good luck with that. .