Goldman Sachs’ Profits Defy Reality

Now is the time. Seize the day. Take the bull by the horns. Step up and get control of your life. There is no reason left to hesitate, your choice of action is clear: get a job with Goldman Sachs. Do whatever it takes. Graduating this year with a degree in chemistry? English? It’s not too late to switch. Drop all your classes and get into anything and everything at the business school. Suck up to your professors. Manipulate your peers. Network. Just make sure you get to Goldman. It doesn’t matter who you alienate or what bridges you burn along the way, it will all be worth it the very first time that bonus check comes bouncing your way.

Goldman Sachs, one of the banks that destroyed the economy only to receive billions of dollars to keep their executives afloat, reported third quarter earnings of $3.19 billion just last week. That’s $3.19 billion for one quarter of the year. It was the richest payout in the 140-year history of the company. And if the recent years are any indication, Goldman will pay around 1 percent of that in taxes. Of course, Goldman Sachs does so much charitable work that the tax rate makes sense. Right?

But isn’t this just a sign of the economic recovery we have all been waiting for? It is a sign of recovery, sure, just not one that involves actual people. The national unemployment rate is still climbing near 10 percent (which excludes those people who gave up looking for jobs); foreclosures proceed apace, with people getting kicked out of their homes; and consumer spending is down (because no one has any money). Banks that have continued to focus on consumer lending and investment have not managed to do quite as well as those like Goldman Sachs and JP Morgan Chase ($3.6 billion in third quarter profits) that, well, move money around. With expanded debt-to-equity ratios, credit default swaps and Synthetic Collateral Debt Obligations, they make money without doing anything messy like producing goods and services. If the big banks and financial players can’t be bothered with an economy that actually creates things, why should you?

In the last three quarters of the year, Goldman Sachs has put aside nearly $17 billion for compensation, projected to reach about $23 billion this year. That means, according to the calculators at the New York Times, that each employee at Goldman Sachs could be paid somewhere around $700 thousand this year. That is each and every person who pushes paper around for this one company. You don’t even have to perform well, just get in the door and you are virtually guaranteed the big bucks. If last year is any indication, even if you destroy the world economy and almost destroy the company itself, you can still be part of $4.82 billion in bonuses. A bonus for failure! Why are you even thinking about evolutionary biology?

Not good enough for you? Concerned that regulation might shut the party down? Not to worry, Goldman Sachs has taken the necessary steps to take over your government, ensuring that the funnel of tax money is stationed squarely over the engorged neck of Sachs’ shares, should they fall again. For instance, a number of top aides for Timothy Geithner, the U.S. Treasury Secretary, were on the payroll of Goldman Sachs and other Wall Street banks and hedge funds last year. None of these men, who have considerable influence and power in the economic arm of our government, have been vetted by Congress. Geithner’s Chief of Staff, Mark Patterson, was the chief lobbyist for Goldman Sachs before joining the Treasury Department. The man Obama picked to be chairman of the U.S. Commodity Futures Trading Commission (a commission set up to protect consumers from financial fraud) is Gary Gensler, an 18-year veteran of Goldman Sachs. And now, the Securities and Exchange Commission has hired a 29-year-old straight from Goldman Sachs to head the enforcement unit. Geithner himself has multiple conversations every week with the top executives at Goldman Sachs, JP Morgan Chase and Morgan Stanley, talking over ways to “stimulate” the economy. The types of regulation required to reel in unsafe practices will never be implemented as long as firms like Goldman Sachs continue to staff government agencies meant to regulate them. It reads like a coup, with Sachs in the role of Generalissimo.

But wait, you say, “isn’t Obama going to get into the fray? Hasn’t he spoken out about this culture of greed and corruption that rules the financial sector as well as our government?” Yes, he has. Just a few weeks ago, in a speech he gave to an audience from the financial sector, he promised that the government and banks would be de-coupled, and that the tax payers would not be there to help out the next time these financial gamblers lose their shirts through illegal and risky behavior. He drew a line in the sand. It was a stirring speech, uplifting to those of us on the outside. And in the audience were, let’s count –no bank heads. None. They didn’t care. They have no respect for the president because they already own the government. Obama can spit all the rhetoric he wants; we have already lost the battle, and soon, the war. So I say you better get to the party before the cops show up. Rush the oligarchy and try for that job at Goldman Sachs.

Brock Cutler is a history graduate student. He can be reached at bcutler@uci.edu.