This has been posted here before. Part of me respects then for being such excellent hackers of the letter of the law, but mostly I agree that this firm in specific is a. Armpits squid which is out of control and distorts markets, causes widespread harm to markets and individuals, and is not effectively controlled by regulators (who are largely Goldman alumni, in their revolving door system). I have no idea what the right solution is to this problem. I am kind of ashamed to have several friends who now work for Goldman.
I think you raising "hackers" with this is the perfect way to describe the situation. Goldman are hackers in the same sense the main stream media refers to crackers as hackers, not hackers in the creative sense used by this community.
Futures markets have a purpose, in food and energy for example, but GS along with others has been manipulating them in dodgy ways. Ditto for this article and aluminum. They helped Greece cook the books to enter the eurozone, and then insured against Greek default knowing there would be bailouts. They recommended to various customers to invest in all sorts of CDOs while at the same time betting against them having internally decided they were going to fail. There is absolutely no doubt in my mind that there should be numerous prosecutions in relation to GS but incompetence in public officials with a generous sprinkling of corruption makes this unlikely.
I'm a big fan of America but I've never understood the romanticism around the mafia (the Godfather films and the Sopranos TV series for example). If I had friends in the mafia I would disown them, and I'd seriously rather die than join it. While GS is perhaps not as bad directly, indirectly the consequences of their actions have been and are enormously immoral. I recommend you challenge your friends on these issues firmly, send them a link to Salman Khan's story[1] and tell them to put their (no doubt considerable) talents to better use: doesn't have to be a non-profit either. Even if they decide not to leave they should be made aware that there is social sanction associated with being linked to, if not directly involved in, the vortex of corruption surrounding that company.
The type of people that Goldman employs aren't stupid, or ignorant. I've known a few - they are perfectly aware of what the company does, and the moral minefield they are in.
To accept employment there requires a conscious relinquishing of moral culpability - i.e., these people have decided that, yes, what the company does is fundamentally wrong, but for whatever reason (money, fame, power, the thrill of the hack, satisfaction of working on the winning team, etc) they don't care.
I'm not sure what use it would be to preach to people like this.
I'm going to take massive downvotes on this but...
You can't preach to people like that, they're fully rational and immune to patriotic emotional dulce et decorum est bullshit.
They don't care that their going to hell for their actions because they know hell doesn't exist.
The world isn't some retarded star wars black and white fantasy, it's black and black pretending to be white. Stop naming shadows in platos cave and get out into the sunshine.
Google didn't succeed because open source is some miracle of business, they succeeded because they created a platform for clicking ads and open source software makes that platform cheaper. Gmail isn't a gift to the internet community, it's more ads. If they didn't make money from it, they'd shut it down.
I don't care that I'm going to hell, because I know hell doesn't exist. Indeed, no matter how pious I act, by some religion's definition I'm damned anyways.
But yet I'm not out there destroying livelihoods for personal profit. Way to pander to the stereotype that fear of the hereafter/almighty is the only way to get people to act morally/curb antisocial behavior.
I police my own behavior because, by some lucky stroke of evolutionary development, I have been granted the ability for high-level thought. Many people have been able to use this tremendously powerful ability to better us all collectively. Some seem only interested in using theirs for self-interest, even at the (grave) expense of everyone else.
This really is the core of it though: many people I've met in finance do believe wholeheartedly in "might makes right" - that morality and what the system allows them to do are one and the same.
You're a programmer, most of what you is put people out of work.
That thing you automated? Someone who doesn't know how to program lost their job because of it, and it ain't coming back.
You'll tell yourself that you've created opportunities for two more programming jobs for someone else to enhance your automation work, but that guy with the GED is still out of work. Tough shit buddy, should have learned to program.
The difference between you and people in finance is they've stopped lying to themselves about what they do. Btw, I'm a programmer whose going into finance. Why? Because I can eliminate more jobs and make more money for myself doing that then I could eliminating jobs as a programmer. Now I'm just eliminating big money financier jobs instead of 40K grunt jobs. Hey broker dude, screw your 5% finders fee, my program will take 1% instead. Hit the bricks pal. Middle men need to eat just as much as producers and consumers.
We put people out of work for our own personal profit, the only difference is you're pretending about what you do and I'm not.
And you know the really funny thing is? We'll all be better off because the next generation of people won't have to do those silly jobs, but in the mean time people are going to be out of work.
Do you know how many researchers, secretaries, etc are out of work because of Google? Stop kidding yourself and get real about how the world works.
I could write a brilliant essay filled with bullshit about how I'm making the world a better place increasing efficiency, allowing one person to do more, and live a better life, and it would be just as true as what I just wrote. Financiers know double entry accounting and they know that for every credit there is a debit, both sides of the leger are equally true.
Ah yes, you're right of course - there is no objective measure of the balance of good and evil. What I do does eliminate jobs. Does the benefit to everyone else outweigh the loss of these jobs? Many people would say yes, some would say no. Some job eliminations open the door for more jobs - for different people. Does this balance the morality of putting people out of work?
I don't know. Nobody does. But there is some measure of balance to what we do. What we do has a benefit - a benefit to someone other than just ourselves. Right now I work in travel informatics. What I do empowers tens of millions of customers to make better choices about how they travel, find better prices, put more information at their fingertips, keeping them informed.
The price of this is that I'm also putting airline service agents out of work, not to mention travel agents. I've made an end run around them and made it easier to get all of this information than going and talking to a human.
Personally, I think this is a worthwhile balance. The loss of these jobs also means a massive improvement to the efficiency of travel, and the happiness of tens of millions of travelers. This isn't a clueless assumption either - the emails I've seen from users demonstrates that people are passionate about what we do. You can disagree - and you wouldn't be wrong. I am, after all, not the arbiter of what is and isn't a worthwhile trade.
There's a difference between this and what Goldman does, though. The balance is way on the other end of the scale. The artificial supply squeeze on industries benefits... what exactly, besides Goldman itself? The price is obvious - rising consumer prices, starving people who can no longer afford to eat (re: the food crisis that Goldman is also accused of contributing to), wars and revolutions caused by desperate, hungry people.
So what's the upside? What did we gain for this price Goldman has exacted?
> "Financiers know double entry accounting and they know that for every credit there is a debit, both sides of the leger are equally true."
Please name the "credit" of what Goldman has done here.
We're not idiots, we know there's a credit and a debit. The question is, this doesn't seem to be the case in situations like these, where it seems we're all paying the price, and the only "credit" is to the financier.
The artificial supply squeeze on industries benefits... what exactly, besides Goldman itself?
If aluminum becomes more scarce in the future (Goldman seems to be betting that it will be), then Goldman has done us all a favor by conserving it in the present.
If it is not more scarce in the future, then Goldman will lose money.
It's troubling that a comment like this has to be buried deep in a thread about religion, Platonic ideals, might-makes-right, higher-order thought, and the nature of morality --- most of it stipulating Goldman is evil.
In an ideal scenario that is what would happen. Unfortunately the invisible hand of adam is now tied behind his back. When 2008-2009 happened I was mildly optimistic that a new kind of finance firm would emerge - one which would use technology more intelligently, have a lower cost structure by virtue of having no bad assets on their books and one that would accept lower margins in order to make a headstart against established firms. In a well functioning market that is what would have happened - established players who got it wrong would have gone out of business leaving room for newer younger firms to spring up and do things in a better way. I still cannot place my finger on what exactly broke but the deadwood does not seem to burn in forest fires anymore.
In case you didn't read the preceding comment carefully, he knows that what you say is true, he just doesn't give a shit -- and, moreover, knows that you can't do a damn thing about it.
I suppose - though I got some sense that he thinks the engineering he does is the same as what we do. To be slightly snarky about it, his argument seems to be "we're all evil, I just own up to being evil, the rest of you suckers are just in denial".
Except, his breed of evil is considerably more extreme than ours.
We can overthrow existing power structures and execute him. Has happened before, will happen again. Amusingly, the harder he works and the better he is at his job, the closer this gets.
Right around the time you get around to execute him he'll have hired a private security force, bought off judges and police with all his millions and jet off to the next laissez faire economy. Don't kid yourself.
The moral issue raised above was one of corruption and fraud, not efficiency. It seems you are trying to pretend that the issue is increased efficiency taking away people's jobs.
You're just describing one kind of programming. I write code that does things that literally couldn't be done by people. it's a job where there wasn't one before -- and it helps create other jobs where there weren't any before. I don't want to say our company wouldn't be able to exist without that code, because my code wouldn't exist without the rest of the company, either, but the point remains:
If your self-justification works for you -- great. But you're lying to yourself if you think it has to be that way or that that is the only way. Computers (& technology generally) enable new business models at the same time as they make other models obsolete, such is life. Whether you think that balance tips one way or another is your business -- but your blatant cynicism and "oh, the world has to work this way" seems like you just letting yourself off easy.
That said, i wish you the best putting those big-money financier jobs out of work :)
Really? I'm curious to know what code you write then? I write code that does things faster/better/cheaper/easier -- but theoretically at least a person could perform whatever task I'm writing.
It collects measurements from distributed renewable energy installations and uses those measurements to measure & optimize the systems' performance.
I suppose you could have engineers drive around with clipboards, but the amount of data collected and the frequency its collected at would suffer. In other words, that job could never exist for a human.
Is that close enough to count for your "theoretically"? I don't think so, personally, as it could never make business sense to have that job be needed for the operation of the business, so...
"they're fully rational and immune to patriotic emotional dulce et decorum est bullshit."
You give people great intellectual credit in one breath and then decrease their worth vis a vis your bottom line the next. Which is it? Are they smart enough to look through BS or are they cattle for you to replace with a small shell script?
Remember, people voted for Bush for the same reasons you feel they are above: They believed he was a good Christian man that they could share a beer with. His put-upon Southern accent (I mean, really, what born-and-raised New Englander you know has a drawl? Honestly?) won "hearts and minds"
"The world isn't some retarded star wars black and white fantasy, it's black and black pretending to be white"
Yes, and I guess those billions given to the Red Cross were rounding errors on some software somewhere and only robots volunteer at homeless shelters and everyone walks past rape victims on their way to Cabaret. We get it, you're hardcore and you see the world as a gigantic Somalia with money as the single, thin veneer of civilization keeping us from eating each other.
I suppose Lloyd Blankfein is the philosopher-king of this post-apocalyptic wasteland of "black on black" you describe, sitting forlornly on his throne of skulls. I'd laugh if you weren't so goddamn serious about it.
"Google didn't succeed because open source is some miracle of business"
And, yet, Red Hat made $1 Billion last year, gives every stick of code away. So does Wordpress, and Sourcefire. And, before being acquired, so did Xensource and MySQL. Github makes millions from the Git open source SCM.
Isn't it more a case that they divorce themselves from reality by dealing with pure numbers? I gather they would only focus on prices and not even think about the impact it has on other companies and people.
If you knew the gov't would bail you out for any bad market moves made, why WOULDN'T you do exactly what Goldman is doing?
Regulators set stupid rules, Goldman makes money. The US gov't offers insurance via the Federal Reserve, there's nothing immoral about taking advantage of someone else's stupid offer.
If the government opened an Apple store selling 17" MacBook Pros for $200 why would you not buy as many as you could, and resell them for $1500? I don't give a shit if it eventually put every Apple store employee out of business. Oh you have a one laptop per person rule? Ok, I'll pay people to stand in line. Problem sovled.
As for market manipulation of wheat prices, Goldman is only following suit in the official policy of the United States gov't. Exactly why do you think FDR ordered wheat to be burned while people were starving?
As for metal price manipulation you may also want to look at FDR and devaluing the dollar and making holding gold illegal to force the sale.
They recommended to various customers to invest in all sorts of CDOs while at the same time betting against them having internally decided they were going to fail.
This is caused by legally mandated chinese walls, designed to give banking customers confidence that the bank is behaving in their best interest.
The sales/structuring desk is legally obligated to structure/sell CDO's after agreeing to do so. They are also obligated to maintain a fair bit of internal secrecy. They structure the CDO, write the contracts, package and sell it. That's all they do, and they do this because the loan originators paid them to do so.
Meanwhile, probably in a different building, the prop desk is shorting the CDO because they think it's a bad bet. The prop desk knows nothing about the CDO except what is contained in the sales prospectus sent out by the sales desk (which is usually quite a lot).
It's highly illegal for either of these groups of people to talk to one another. Their computer systems don't talk to each other and compliance will fire people if they send each other email. By law, the left hand can't know what the right hand is doing.
So sales produces a prospectus that suggests this is a bad investment. Then they continue agreeing to package and promote these securities. Were there some information excluded from the prospectus which suggested to the sales force that they were actually a good investment, I might still be able to see them as honest. Otherwise, this sounds like an attempt to apply the Nuremberg defense where remaining in the situation of having immoral rules to follow was voluntary.
So sales produces a prospectus that suggests this is a bad investment.
The prospectus presumably described the security being sold as long on housing. If housing went up, it would have increased in value. Since housing went down, it decreased.
The security did what it was supposed to do. The fact that the people who bought it made an incorrect bet doesn't make the people selling it evil.
No, I think it's still in the creative sense. Consider this question from the Y Combinator application:
> Please tell us about the time you, {name}, most successfully hacked some (non-computer) system to your advantage.
Other than the allegations of misleading clients regarding CDOs -- which, if true, are criminal and utterly reprehensible -- pretty much everything else on that list fits this criterion. Amoral and mercenary, but about hacking the system to their advantage.
It's regulators' jobs to close loopholes, but we should hardly be surprised when capitalist enterprises exploit them until they're closed.
I think that most people love the idea of finding opportunities which others haven't discovered. Some take it in their own hands to leverage this advantage by products (e.g. app developers) others take a more collective approach (e.g. open source developers).
From how I understand the article Goldman has rediscovered a valid business opportunity that has been around for centuries. People always stockpiled supplies for later times and Goldman is doing it on a large scale. Even if they would be able to dominate the world market by this strategy, this situation would only sustain to the point when other material can be used as a substitute. So I personally don't see there a problem with this as long as they do not influence the market on the legislative side.
If there is a consensus among society that this is wrong, than it will be regulated. I personally condemn this increasingly popular idea that business should conduct self-infliction by neglecting opportunities just because certain parts of society disagree with perfectly legal practices.
I remember a clip on the news with a GS employee saying to the tribunal (or inquest or whatever) that selling CDOs to some customers while betting against them at the same time was 'not a problem in the context of market-making.'
I'm not really sure what he means by this, although some stuff I read recently suggested that traders will often sell and buy a security at the same time in order to make the stock look more active/liquid and encourage other investors to join in. Anyone care to elaborate on this?
The chinese wall explanation offered elsewhere makes more sense though.
Perhaps it means that you can't dictate the value of an instrument to somebody else. Everyone makes his own assessment of an item, so if someone wants to buy it from you above what you think it's worth, or conversely, sell it to you below what you think it's worth, it's your freedom to trade and not your business to try to change his mind.
However, persuading a potential buyer that something is worth a high value while secretly you believe the value is low is another matter. That's what people do all the time, though, not just bankers. For example, a lot of sales people do that.
However, there is a difference. Most people know to take what a sales person says with a grain of salt. Besides, if you don't like the sales person or his product, you can always walk away. In the case of banks, there is a lack of integrity somewhere. People were expecting the government to protected their interest by making and enforcing the right regulations. The government didn't do that and banks made off with public money. The government involved the public in its complicated legal and financial system that is hard to understand for common people, and failed to make it work for them.
