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Goldman Sachs exposes the whole rotten investment bank ethos

Perhaps we should be grateful to Goldman Sachs. It is so brazen in its greed and ruthlessness that it exposes the ugly face of capitalism far more crudely than its detractors ever could. Now we have the resignation letter of one of its executive directors, Greg Smith, to confirm from the inside what Goldman is really like. His main charge could hardly be more damning, that Blankfein the chief executive and Cohn the president had “lost hold of the firm’s culture on their watch”.

Whereas once the culture, Smith claims, was all about “teamwork, integrity, a spirit of humility, and always doing right by our clients”, those values had now been superseded by unadulterated ‘ripping off of clients’ denigrated  contemptuously as ‘muppets’. The incidents he cites bear out these attitudes even more acidly and show they’re not just confined to G.S.

He quotes an officer at another major bank who remembered “one of the structured products guys selling so-called PFI deals. I asked him: where’s the benefit for the local authorities in this? He was aghast. ‘What are you, a socialist’?” The issue was not the welfare of clints, but getting clients to trade “whatever will bring the biggest profit to Goldman”, even it that meant ‘ripping eyeballs out’ on the way. And it’s not only clients that are exploited like this: investment banks treat their own employees in exactly the same way.

There are several critical flaws in corporate and finance governance in current neo-liberal capitalism. They include an overwhelming concentration of power in very few hands, an obsession with tax avoidance on a huge scale via transfer pricing and elaborate manipulation of tax havens, and a systematic downgrading of labour laws, environmental regulation and health and safety standards as an inconvenient interference with naked money-making. It is these trends that have profoundly perverted the business culture in the manner Greg Smith describes.

It is as though the banks and mega-corporations have utterly lost sight of what business is actually for. It’s not about getting a healthy return on capital which is necessary and reasonable, it’s about manipulation, spinning, exploitation, deceiving – anything that will maximise self-interest however much it damages the public interest and erodes community value. It isn’t just a restructuring of institutions, a rebalancing of the economy, which is urgently needed in this country, it’s a fundamental shifting of values in favour of the national interest to override heedless individual and corporate greed.

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