Welcome William D. Cohan (Bloomberg.com), and Host Jeff Madrick (author, Age of Greed).

[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions. Please take other conversations to a previous thread. - bev]

Money and Power: How Goldman Sachs Came to Rule the World

William Cohan is one of the nation’s foremost chroniclers of the most devastating financial crisis the nation has had since the early 1930s. He has told us in depth of the crisis that undid Bear Stearns. He has written many excellent pieces for Vanity Fair and elsewhere on the wide variety of Wall Street shenanigans. In the book we are discussing today, he has tackled the story of the firm that has come to symbolize all of Wall Street, Goldman Sachs—the most envied, most prestigious and now most criticized financial firm in the world.

What is Goldman Sachs all about? Why have so many of its bankers gone on to work in government? Are they really the best? And if so, what are they best at?

But now a bigger question looms. If Wall Street did so much that was unethical, why have there been no major prosecutions on Wall Street? The justice Department has shied away from making any major cases since the two hedged funds at Bear Stearns were found not guilty. And the Securities and Exchange Commission has cited no leading private investment bankers in the civil cases it has brought, only junior employees. It has settled for what are minor fines for these giants, wealth firms; $550 million at Goldman Sachs, $154 million at Merrill , and $285 million at Citigroup. A federal judge dismissed the settlement with Citigroup as is inadequate. Indeed, in none of these cases did the defendants have to plead guilty to any wrongdoing at all.

Was the Wall Street disaster really a matter of well-meaning men and women making very bad decisions? William Cohan can shed more light on these issues than most commentators.

Perhaps we should begin with an offering from Goldman Sachs he covered closely, the Abacus deal, for which Goldman was fined. Mr. Cohan, please explain whether you believe Goldman was guilty of unethical or illegal activity in the sale of Abacus. Ultimately, I hope we get your views on why there have been no convictions.

217 Responses to “FDL Book Salon Welcomes William Cohan, Money and Power: How Goldman Sachs Came to Rule the World”

BevW December 17th, 2011 at 1:51 pm

William, Jeff, Welcome back to the Lake.

Jeff, Thank you for Hosting today’s Book Salon.

dakine01 December 17th, 2011 at 1:57 pm

Good afternoon William and Jeff and welcome back to FDL this afternoon.

But now a bigger question looms. If Wall Street did so much that was unethical, why have there been no major prosecutions on Wall Street?

But I thought President Obama had settled this when he declared that they were all just mis-guided and unethical but no laws were broken! /s

I have not read the book William but somehow, I would be willing to wager that you do present a case for some of the frauds and crimes committed (similar to how some of the writers here at FDL have done over the past three years)

William D. Cohan December 17th, 2011 at 1:59 pm

actually i go through chapter and verse of the many frauds that Goldman has committed or participated in over the years

Jeff Madrick December 17th, 2011 at 2:03 pm

Can you give the best msot vidi example of one of the frauds?

dakine01 December 17th, 2011 at 2:04 pm

As a technical note, there is a “Reply” button in the lower right of each comment. Pressing “Reply” pre-fills the commenter name and comment number being replied to and helps folks to follow the conversation.

And I figured you would have the many frauds detailed.

William D. Cohan December 17th, 2011 at 2:06 pm

well, there are the dramatic examples of the Goldman Sachs Trading Corporation scam in 1929 and 1930 and the decision by Goldman to sell the commercial paper of the Penn Central Corporation to its clients even though Goldman knew the company was in trouble. When Penn Central filed for bankruptcy in 1970, Goldman’s clients lost their investment, turned around and sued Goldman and almost caused Goldman to go out of business

Jeff Madrick December 17th, 2011 at 2:06 pm

As for obama announcing no laws were broken, he did not to my memory. judging by the hesitancy of his justice dept, however, you’d think they think so…

cocktailhag December 17th, 2011 at 2:07 pm

Would you say, Mr. Cohan, that the old ethic of “Gov’t Sachs” was less parasitic in years past? After all, its influence isn’t new; just the fallout is.

eCAHNomics December 17th, 2011 at 2:07 pm

*waving to Jeff Madrick*

William, I worked at GS from 76-86. Can you give us a short version of what has transformed the corp since then? In that wayback machine, GS was viewed as a smart, really sharp outfit, but within the bounds of legal (if not ethical).

Now GS is nothing more than crooks, liars & predators.

Under whose “leadership” did that occur? Why?

GS alums are now in charge of unelected govts in Greece, Italy & Spain. How did GS engineer that? Consequences?

Jeff Madrick December 17th, 2011 at 2:07 pm

Let’s talk about the Abacus case to bring things up to date. Can you explain what Goldman did–or did not do?

William D. Cohan December 17th, 2011 at 2:08 pm
In response to dakine01 @ 5

as i say, there are more than you can imagine and more than Goldman would like discussed in any book, i assure you

dakine01 December 17th, 2011 at 2:08 pm

…turned around and sued Goldman and almost caused Goldman to go out of business

Would that they had succeeded – except that if it weren’t Goldman, there surely would have been another group of would be MOTU gaming the casino

Mauimom December 17th, 2011 at 2:08 pm

I have read your book, and the laundry list of Goldman frauds [and misdeeds] really is stunning!!

Elliott December 17th, 2011 at 2:08 pm

Hi, welcome to the Lake

Do you think the original Goldman and Sachs (Marcus Goldman and his son-in-law Samuel Sachs) would be proud of the Goldman Sachs of today?

William D. Cohan December 17th, 2011 at 2:09 pm
In response to cocktailhag @ 8

since 2008, Goldman’s influence in Washington has dropped dramatically, not that it is devoid of influence. but you are right — for nearly 100 years, as i detail in the book, Goldman has had extraordinary influence in Washington, as i might add, have other Wall Street firms

Jeff Madrick December 17th, 2011 at 2:10 pm

Hi ecahnomics…

you asked te author a lot of questions… let’s let him take one at a time…

William D. Cohan December 17th, 2011 at 2:10 pm
In response to dakine01 @ 12

Goldman actually almost went out of business many times in its history; it is very good at getting into trouble — and also very good at getting out of trouble

William D. Cohan December 17th, 2011 at 2:12 pm
In response to Elliott @ 14

well, they would be horrified by the number of ethical and moral lapses the firm has suffered but my goodness they would have to be impressed by how big the firm has become and how much money it is able to make year in and year out — and how powerful it has become

eCAHNomics December 17th, 2011 at 2:12 pm
In response to Mauimom @ 13

So for you or Cohen, how has GS pulled the wool over so many peeps eyes (including my own to a limited degree) in the years bet 1929 & 2008?

Jeff Madrick December 17th, 2011 at 2:12 pm

would be nice to discuss the difference between golman the parntership and goldman the public company on incentives…

eCAHNomics December 17th, 2011 at 2:13 pm
In response to Jeff Madrick @ 16

Yes, I thought of posing them one at a time, but they just came rushing out.

William D. Cohan December 17th, 2011 at 2:13 pm
In response to Mauimom @ 13

it really is, isn’t it? and the complexity of their frauds is equally astounding — as is it’s ability to deny that it does anything improper

dakine01 December 17th, 2011 at 2:13 pm
In response to Jeff Madrick @ 7

Well, in this video, I guess he does caveat that only most of the actions were not against the law.

But it is showing the WH press conference from October where Jake Tapper(!) asked the question.

Mauimom December 17th, 2011 at 2:14 pm

I must admit, however, that when you said, in the first few pages of your book

the firm no longer appears to have sympathetic high-level relationships in Washington. Goldman’s friends in high places, so crucial to the firm’s extraordinary success, are abandoning it.

and then quoted stooge and Obama suck-up Jonthan Alter as a “source” for Obama’s “anger” [at the firm which was his biggest contributer in 2008], I wondered if we were living on different planets.

Care to explain? Goldman looks to me like it’s got PLENTY of “friends in high places” [including the White House].

William D. Cohan December 17th, 2011 at 2:14 pm
In response to eCAHNomics @ 19

because the crime is not what’s illegal; it’s what’s legal…so by supposedly playing by the rule, Goldman is able to repeatedly screw its customers and make a bundle of money doing it but without technically breaking any laws

cocktailhag December 17th, 2011 at 2:15 pm

It seems that when times demanded it, they were able to curb their appetites somewhat. Their current endeavors seem to be making sure times demand it again. This wouldn’t have happened when they were a partnership. I look forward to reading your book.

William D. Cohan December 17th, 2011 at 2:16 pm
In response to Jeff Madrick @ 20

jeff
this is when things on wall street began going terribly wrong, beginning in 1970 with the IPO of DLJ, wall street slowly but surely put its own interests ahead of its clients and then changed the incentive system to encourage people
to take risks with other people’s money. gone are days of prudent risk taking because individual partners’ money was on the line

eCAHNomics December 17th, 2011 at 2:17 pm
In response to Jeff Madrick @ 20

That is one of the fave explanations for the dramatic change on Wall st in the 90s & 00s.

But here’s my (not well thought out critique). These firms would have gotten just as big as partnerships as corps, owing to their political influence. When I was at GS, we got memos about PACS, contributions to both political parties.

GS was a partnership in 1920s & still managed the same frauds as in the 00s.

Is the form of ownership (partnership vs. corp) just an intellectual dry hole?

And would benefit from the exactly the same kind of moral hazard no matter what their biz structure is.

Elliott December 17th, 2011 at 2:19 pm

Are there any Goldmans or Sachs active in the firm today?

emptywheel December 17th, 2011 at 2:19 pm

William

Welcome.

I was listening to this book on Audible and got to your description of how out of control Corzine was in the Corzine/Paulson era just as the MF Global stuff was breaking. You brought more to coverage of that conflict than others before you had, and I was just struck how validated your description seems to have been given what we see in the MF Global stuff.

While it’s not technically in your book, I’m bummed I haven’t seen you more as a commentator on the MF Global stuff. What would you have to say about what we’ve seen so far?

Jeff Madrick December 17th, 2011 at 2:19 pm
In response to dakine01 @ 23

does look like obama as naive as many others here. he of course had the caveat you mentioned. but legality issues because of loosness of white collar law are real… interesting he calls practices immoral but not illegal… that is perhaps something we should explore

William D. Cohan December 17th, 2011 at 2:19 pm
In response to Mauimom @ 24

well let’s just calm down here. Alter is not a “stooge” of the Obama administration for starters but anyway Goldman does not have nearly the friends in Washington as it did during the second term of the Bush administration or in the Clinton administration. i think i can name on only one hand those with a goldman pedigree in washington now– europe is a different matter

William D. Cohan December 17th, 2011 at 2:20 pm
In response to Elliott @ 29

not a one

Jeff Madrick December 17th, 2011 at 2:21 pm
In response to eCAHNomics @ 28

good historical point, but i tend to think it is not entirely a dry hole. i don’t think they owuld have taken all the trading risk with their own money. the frauds, as far as i can tell, were not quite sure things–like madoff’s. that is probably partly why they don’t get hung out to dry legally. i think we need some legal changes about gross or egregious neglicence as criminal…

eCAHNomics December 17th, 2011 at 2:22 pm

Good point. Understand that.

But that’s too easy an answer. GS has done plenty that’s illegal and not gotten prosecuted. Blaming ‘not enough laws’ is the easy way out.

I don’t believe for a moment that GS has lost political influence in D.C. Witness Blankfein’s FU testimony, that they are the largest O contributor, and scads of other evidence to the contrary, including what I typed in my last sentence in comment 9.

Mauimom December 17th, 2011 at 2:22 pm

Goldman is able to repeatedly screw its customers and make a bundle of money doing it but without technically breaking any laws

Well, then I suppose the next question is “how do we get some laws that WILL make what it does illegal?”

I was struck, for instance, that Representative Oxley, who issued a damning report back in the 90s, about Goldman’s granting shares of “hot” IPOs at low issue prices to the executives of companies it wanted as clients [these executives could then sell the shares for huge profits], was a REPUBLICAN from Ohio.

Do you see anyone out there, on either side of the aisle, willing to bring forth some legislation to rein in this monster?

William D. Cohan December 17th, 2011 at 2:22 pm
In response to Jeff Madrick @ 10

in my opinion, the abacus case was a farce. gs did nothing any different in constructing that synthetic CDO than did any other firm. but goldman was made the target for political reasons and then email traffic of fab tourre did the firm no favors. but there is plenty of documentary evidence that both sides in that trade knew exactly what they were getting themselves in to. gs just became a useful prop for the politicians looking to pass dodd-frank. had it gone to trial, the SEC would have lost

William D. Cohan December 17th, 2011 at 2:24 pm
In response to emptywheel @ 30

i have been a commentator on lots of MF Global stuff recently, especially in my recent Bloomberg columns and on Bloomberg TV and radio. i also have a big piece on Corzine coming in the next issue of Vanity Fair…this could be seen coming from a mile away

Mauimom December 17th, 2011 at 2:25 pm

I just used those terms because in my opinion Alter is all too willing to say flattering things about Obama and never question him. He’s supposed to be a JOURNALIST, not someone out in the backyard of the White House having a beer with the Pres.

William D. Cohan December 17th, 2011 at 2:26 pm
In response to Mauimom @ 36

honestly i don’t…not even barney frank or chris dodd tried to do it…goldman has put enough of its money into the pockets of politicians on both sides of the aisle that nothing will change in washington viz a viz wall street

Jeff Madrick December 17th, 2011 at 2:26 pm
In response to eCAHNomics @ 35

I think the Justice Dept is afraid to push the current law enough to see where it wil fall out on these things. but that’s partly because the laww rquires state of mind type evidence. there are the NYC laws spitzer used, of course. but even spitzer didn’t bring any criminal charges. i think the jsutice dept should be more gutsy. this administration is not strong on guts, i don’t think…

William D. Cohan December 17th, 2011 at 2:27 pm
In response to Mauimom @ 39

well he probably likes him personally and don’t forget he got extraordinary access to write his book but he is also a hardened journalist who would not shy away from writing what really happens/ or happened but then again i have known jon since high school

eCAHNomics December 17th, 2011 at 2:28 pm
In response to Jeff Madrick @ 34

You ignore the influence of deregulation, which lowered risk-free returns. And the bubble-crash monetary policy of Greenspan-Bernanke.

So one of the ways GSs could “earn” more profits is by greater leverage. Buying pols made this risky biz risk free bc they knew they would be bailed out. (LOL for Corzine who didn’t realize this depended on buying pols instead of being an iron-clad rule.)

emptywheel December 17th, 2011 at 2:28 pm
In response to Jeff Madrick @ 41

Under SarbOx that’s not entirely true anymore, is it?

Tammany Tiger December 17th, 2011 at 2:28 pm

What baffles me about the whole subprime mess is the fact that sophisticated investors bought huge quantities of the subprime horsemeat that Wall Street repackaged and relabeled as filet mignon. I’ve come to expect regulatory inaction, no matter which party is in power, but I thought that the marketplace would be the last line of defense against the bunko artists like GS.

Jeff Madrick December 17th, 2011 at 2:29 pm

i find it more than a little odd, bill, that the only major executives cited individually are those in the new sec suits regarding fannie and freddie. maybe i missed omeone. i suppose mozilo. but of major wall street firms, no one. any thoughts on the fannie, freddie issue?

Mauimom December 17th, 2011 at 2:30 pm

How about any Republicans? Goldman is by now pretty well identified as a Democratic firm [support of Obama and other Dems]. Are there any Repubs who might seek to claim a populist mantle and go after them?

Or, as you say, is everyone just too “bought off”?

I also found it interesting that when Spitzer tried to go after Goldman on the IPO issue, Mary Shapiro, now Chrm. of the SEC, wouldn’t back him.

What do you think of the likelihood of getting anything out of the SEC under her reign?

William D. Cohan December 17th, 2011 at 2:31 pm
In response to Jeff Madrick @ 41

yes more guts are needed. even if a case is not won, bringing it would send a powerful message and expose to the light if day any number of poor judgments and outright bad behavior. that would be a very healthy thing for the system. and above all DONT SETTLE…let the thing come to trial and then see what happens

Jeff Madrick December 17th, 2011 at 2:31 pm
In response to eCAHNomics @ 43

are you talking about fraud here or dereg? i sure have write a lot about dereg and leverage… as has almsot everyone else, no?

William D. Cohan December 17th, 2011 at 2:33 pm
In response to tammanytiger @ 45

people got lazy and didnt do any homework. instead the just relied on the credit ratings — AAA blah blah — and probably didn’t realize that the ratings agencies were paid by wall street underwriters for those ratings and had lost their souls long ago. whole system was corrupted

Tammany Tiger December 17th, 2011 at 2:33 pm
In response to Jeff Madrick @ 46

Maybe the SEC was too busy going after small fry like Daniel “Rudy” Ruettiger, who ran a pump-and-dump operation to promote shares in a company that sold sports drinks.

Jeff Madrick December 17th, 2011 at 2:33 pm

agree wholeheartedly. i think without such actions, americans re left with no real esplantion of what happened unless theyr ead books like yours. are they to think that it was just a bunch of people who did excessive things, not malicious, self-aggrandizing things? this stuff needs full exposure…

eCAHNomics December 17th, 2011 at 2:33 pm
In response to Mauimom @ 47

My short version of Spitzer is that he was no more than a political whore who bullied meaningless (i.e. too small to matter) settlements out of Wall St to advance his political career. In the process, stepped on too many toes, so had to be marginalized. Nothing to do with the substance of the matter.

Knox December 17th, 2011 at 2:33 pm

Goldman is able to repeatedly screw its customers and make a bundle of money doing it but without technically breaking any laws

In other words, government has failed to do what government has to do if a capitalist society is going to A) serve the common good while enabling individuals to profit from the good products they produce and/or good services they provide, and B) survive.

Mauimom December 17th, 2011 at 2:35 pm

For those who haven’t yet read the book, could you provide a capsule summary of some of Corzine’s actions at GS that foreshadow his reckless behavior at MF Global?

I think folks would find it interesting.

William D. Cohan December 17th, 2011 at 2:35 pm
In response to Mauimom @ 47

SEC is a totally totally corrupt regulator. as i have written in my bloomberg columns, it should be torched to the ground and a new regulator with real teeth established in its stead. before she walked out the door to the sec, she was paid $9 million by FINRA where she had been — wall street’s self-regulatory organization. why would Obama appoint this woman????

William D. Cohan December 17th, 2011 at 2:37 pm
In response to Jeff Madrick @ 52

yes this is disgraceful. people dont understand what really happened unless they read my books and a few others…honestly even michael lewis’ books, which are fun to read, don’t get any where near the explanation that is needed to describe what happened and why

Mauimom December 17th, 2011 at 2:37 pm

why would Obama appoint this woman????

Um, same reason he appointed Geithner and the laundry list of other “non-regulating regulators”? Because he doesn’t WANT any change or regulation.

Just my guess.

eCAHNomics December 17th, 2011 at 2:38 pm
In response to Jeff Madrick @ 49

Fruad & dereg intertwined.

Short version of Yves Smith (Econned): 1930s regs bribed Wall St execs in the sense of creating gigantic profits for doing nothing (the 3-martini lunch era), but which also limited the temptations of predatory practices & leverage.

Worked like a charm for decades, but for some unknown reason, Wall St preferred the predatory days of yesteryear.

William D. Cohan December 17th, 2011 at 2:38 pm
In response to Knox @ 54

exactly, when it comes to wall street, the whole regulation apparatus has been corrupted and has been for 100 years

Jeff Madrick December 17th, 2011 at 2:38 pm
In response to tammanytiger @ 45

there is an awfuly lot of exaggeration how competition in the market is supposed to make it efficient, even honest. too many people were making big bucks ignoring risks or not analyzing them appropriately. remember, pension fund managers weren’t ivnesting their own money, they were investing public employees or widows and orphasn. why should they really care? they were making very good money playing the game. there were swerious principal-agency problems, as economsits call them. regulators were nowhere to be found in any case. neither were big-time economsits complaning……

William D. Cohan December 17th, 2011 at 2:38 pm
In response to Mauimom @ 58

what happened to “change we can believe in”? is one of my major unanswered questions

William D. Cohan December 17th, 2011 at 2:39 pm
In response to Jeff Madrick @ 61

this is correct

Knox December 17th, 2011 at 2:40 pm

not just the regulators. what you describe starts with the lawmakers, no?

Jeff Madrick December 17th, 2011 at 2:40 pm

again, bill, any thoughts on SEC suits against fannie, freddie

Elliott December 17th, 2011 at 2:41 pm

since 2008, Goldman’s influence in Washington has dropped dramatically

why is that?

Mauimom December 17th, 2011 at 2:41 pm

what happened to “change we can believe in”?

Drowned in the creek.

And I think Obama’s going to find a lot of voters both wonder about that, and “won’t get fooled again,” despite the full-on clown car of crazy Republican candidates.

William D. Cohan December 17th, 2011 at 2:42 pm
In response to Mauimom @ 55

1. corzine was trained on taking too many risks
2. in 1986, he organized a trade that almost bankrupted goldman and then pulled the firm out of its nosedive
3. in 1993, he engineered a trade that made Goldman billions and then in 1994 he engineered a trade that almost bankrupted the firm again. that same year, steve friedman retired as senior partner and somehow corzine was selected as senior partner — in effect rewarding him for his bad behavior.
4. then he went off as an unguided missile for much of the next four years until paulson took an opening to get rid of him

William D. Cohan December 17th, 2011 at 2:43 pm
In response to Knox @ 64

of course you are right. we should have public financing of elections. you get X amount of money per race, per candidate and that’s it….no outside influences permitted

Knox December 17th, 2011 at 2:43 pm
In response to Mauimom @ 67

But the rigged system means that we’ll just get stuck with 4 years of Romney followed by the next Democrat who will promise to fix what’s been badly broken.

William D. Cohan December 17th, 2011 at 2:44 pm
In response to Mauimom @ 67

my bet is he gets reelected because of the republican nuts

Jeff Madrick December 17th, 2011 at 2:45 pm

herb allison, former head of merrill and tiaa-cref, and temporary head of fannie and freddie under conservaotrship, has said he thinks not major trading oeprations have made money over the years. they always get tagged with giantic losses. any thoughts?

William D. Cohan December 17th, 2011 at 2:46 pm
In response to Elliott @ 66

well in 2008, the treasury secretary was a goldman alumn as was the WH chief of staff as well as the head of the world bank as well as half of the people around the treasury secretary. now the head of the CFTC is a goldman alum, as is an undersecretary of state as is the chief of staff at treausry but basically goldman is a bad word around washington these days

Elliott December 17th, 2011 at 2:46 pm

is Corzine a pathological gambler?

William D. Cohan December 17th, 2011 at 2:47 pm
In response to Jeff Madrick @ 72

herb may well be right, depending on the year you are talking about. things started going down hill in 2010 from a trading perspective

William D. Cohan December 17th, 2011 at 2:48 pm
In response to Elliott @ 74

i described him as a rogue trader but pathological gambler works for me too

Knox December 17th, 2011 at 2:50 pm

I think what’s changed over the last decade or so is the degree of the corruption and the rapidity of the damage being caused by the corruption.

If political leaders don’t step up to establish better rules and make sure they’re enforced, I don’t see how the system can make it for more than 20 years or so without collapsing.

Jeff Madrick December 17th, 2011 at 2:50 pm

let’s talk about regulation, then, bill. how can we stop all the rogue trading?

William D. Cohan December 17th, 2011 at 2:50 pm
In response to Jeff Madrick @ 65

why now? and how about all the other wall street firms that had a hand in this crisis. where are those lawsuits?

juliania December 17th, 2011 at 2:51 pm

In light of corporate influence including that of Goldman Sachs in the previous eight years, do you not think it likely that given Obama’s refusal to go the route of a publicly financed campaign when he was elected, that sends us a strong signal that he not only has decided to operate within the money system but also might well have been groomed to do so? I am thinking of Elliot’s question, as well as of a recent Tom Englehardt piece describing the 1% election as the election of 2012. Isn’t it going to be even bigger in terms of money raised than was the previous one?

Mauimom December 17th, 2011 at 2:51 pm

I completely agree, and thank you for this book. [You too, Jeff.]

One thing I’d also like to see is a “road not taken” re the 2008 bailout. I recall Paulson coming in with his three-page “give all the money to me and I’ll distribute it” proposal, and the wailings of everyone from Bush to Congress to Wall Street about how it would be the end of “financial life as we know it” if the bailout money wasn’t forthcoming. [And NOW!!!!]

I fear another such scenario could happen [same hysteria], and it would be useful to explore what would have happened if the money hadn’t been poured down Wall Street’s gullet in 2008.

Not a list of the controls and checks that should have accompanied the pouring, or a listing of how they failed to do what was intended [lend to businesses] but an actual “here’s what it would have happened if we didn’t do a bailout.” I think, like in many past scenarios, what Bush, Obama, Congress and Wall Street were really scared of was the destruction of their firms, not the grinding to a halt of America’s businesses.

Somehow, while Wall Street’s scary tales are one option, I think there are other, less scary [and less expensive] ones.

And perhaps change “too big to fail” to “so big they OUGHT to fail.”

Could we disarm this scary, scary bogey man before the next panic hits?

William D. Cohan December 17th, 2011 at 2:52 pm
In response to Jeff Madrick @ 78

jeff

my view is the until the incentive system on wall street changes, behavior wont change. as long as traders are rewarded to take huge risks with other people’s money, nothing will change. these guys have to have huge swaths of their own money on the line or else nothing will change

Jeff Madrick December 17th, 2011 at 2:52 pm

yes, exactly, why noa dn all those resources. you say they are corrupt. but they surely seem to be incompetent…

Mauimom December 17th, 2011 at 2:53 pm
In response to Knox @ 70

we’ll just get stuck with 4 years of Romney

But at least under Romney we’d have a chance of some Democratic opposition. Under Obama, none is allowed.

spocko December 17th, 2011 at 2:53 pm
In response to Jeff Madrick @ 78

Yes, lets. We can understand the situation perfectly, but if there is no regulation for the laws on the books what’s the point?

How does someone go about “burning the SEC to the ground” and starting over? Be specific please.

Look at what kind of pain Elizabeth Warren has gone though. I can’t imagine what it would take to start over.

William D. Cohan December 17th, 2011 at 2:53 pm
In response to juliania @ 80

there is no question obama got elected on a mandate for change and then didn’t do a damn thing to change anything…i knew it was over when he hired summers and geithner… not that they are bad people but just that they have nothing to do with change

Jeff Madrick December 17th, 2011 at 2:53 pm

agree but what about serious capital and liqudidty requirments?

Knox December 17th, 2011 at 2:54 pm
In response to Elliott @ 74

I’ve made investments in the stock market based on little more than Corzine’s reasoning for putting money in Greece. The difference is that I was betting a few thousand dollars and all of it was my own money. He’s supposed to be a CEO genius, no?

Elliott December 17th, 2011 at 2:54 pm

hard to get anyone in the media to champion publicly financed elections since it takes in quite a good size chunk of the money spent on campaigns.

Mauimom December 17th, 2011 at 2:54 pm

Thanks. I do urge everyone to read your book, because the extended tale of these shenanigans is enlightening. You’re a great writer.

econobuzz December 17th, 2011 at 2:54 pm

Regulation will not work when tens of billions of dollars are involved.

juliania December 17th, 2011 at 2:56 pm

Thank you. I have asked my local library (small one) to purchase your book and look forward to reading it.

William D. Cohan December 17th, 2011 at 2:56 pm
In response to Mauimom @ 81

this is wise. i have come around to the view that as painful as it may have been in the short run in the long run we would have all been better off if all these wall street firms melted down and were liquidated. in their place, new more social and fiscally responsible firms would rise from their ashes and we would all be better off. instead, we just did our best to preserve the status quo.big mistake in my opinion

Knox December 17th, 2011 at 2:56 pm
In response to Mauimom @ 84

During Romney’s term, the base of the Democratic Party should focus on fighting/fixing/replacing the leadership of the Democratic Party, so that we don’t get stuck with Blue Dogs and other enablers when the Democratic Party returns to power.

But instead the base of the Democratic Party will just do what it did during the Bush years: complain about the wacky Republicans.

Jeff Madrick December 17th, 2011 at 2:57 pm
In response to spocko @ 85

i think a strong president could remake the SEC. john kennedy’s dad, joe, was a strong first chairman, we could have another. granted, that is, if the republicans right wing doesn’t control every appt…

Tammany Tiger December 17th, 2011 at 2:57 pm

I’m currently reading Ron Suskind’s Confidence Men. He wrote that at one point, people in the Obama administration considered requiring that exotic financial instruments be sold on exchanges where, in theory, investors would be have access to information about them. Assuming that Congress imposed such a requirement, would it even be workable?

William D. Cohan December 17th, 2011 at 2:58 pm
In response to Elliott @ 89

but that would be money very well spent for the long term health of our democracy…and it doesnt have to be alot of money. for instance a congressional race — $1 million each; senate race — $5 million each; presidential race $50 million — just making these numbers up — and that’s it!!!!

Mauimom December 17th, 2011 at 2:58 pm

If we’re not going to regulate and change their bad behavior, could we at least make a little money for the Treasury via a financial transactions tax?

William D. Cohan December 17th, 2011 at 2:59 pm
In response to Jeff Madrick @ 95

and john shad was a strong head of the SEC as was bill casey and even harvey pitt and arthur levitt weren’t half bad but donaldson, surfer boy and schapiro have been embarrassments

Jeff Madrick December 17th, 2011 at 3:00 pm
In response to tammanytiger @ 96

they are trying to put deriviatives into clearing houses to make trading transparent but wall street lobbying wwtering down many of the proposals…

William D. Cohan December 17th, 2011 at 3:00 pm
In response to tammanytiger @ 96

this is not only doable; it is underway to happening. the problem is that wall street has lobbied (successfully) against putting many of these derivatives on an exchange

Mauimom December 17th, 2011 at 3:01 pm

I really do think it would be useful to have this laid out in an article, book, whatever. Just to take away the power of fear that these clowns were able to utilize last time.

Because you KNOW they will be on our doorstep again [wielding its axe to break in, a la Jack Nicholson in The Shining.]

Elliott December 17th, 2011 at 3:01 pm
In response to Knox @ 88

apparently not :(

William D. Cohan December 17th, 2011 at 3:01 pm
In response to Jeff Madrick @ 100

hah jeff…i just wrote the same thing

spocko December 17th, 2011 at 3:01 pm
In response to econobuzz @ 91

Congress recently created new whistleblower programs for securities law violations, including insider trading, money laundering and other violations. One thing that might give “the common folk” a way to get in on this corruption are these new Qui Tam laws where the whistle blowers get “a piece of the action”
Any thoughts on these laws?

econobuzz December 17th, 2011 at 3:02 pm
In response to Jeff Madrick @ 100

IMO, this is like putting child porn into clearing houses.

eCAHNomics December 17th, 2011 at 3:02 pm

Ad-tested slogan designed to deceive.

Jeff Madrick December 17th, 2011 at 3:03 pm

yep

William D. Cohan December 17th, 2011 at 3:03 pm
In response to Mauimom @ 102

i did write this up in my first column for the NYT in january 2010. and i have written it again since. but like many things, you can never stop making the arguments to break through the chatter

Elliott December 17th, 2011 at 3:03 pm
In response to Mauimom @ 98

Amen Sister MMom!

William D. Cohan December 17th, 2011 at 3:03 pm
In response to eCAHNomics @ 107

sadly you are right
except i believed him

econobuzz December 17th, 2011 at 3:05 pm
In response to spocko @ 105

IMO, we just went through a case study on whether such laws and regulations will work. We know they don’t — no matter who is POTUS and who controls Congress.

Mauimom December 17th, 2011 at 3:05 pm

Thanks. I’ll go back & find your article and send a link out to my “vast list of internet pals.”

Seriously, the more we can spread this wisdom, the better.

Thanks again, and apologies for my ignorance of your work.

Jeff Madrick December 17th, 2011 at 3:05 pm

Bill. In Bill Clinton’s new book he argues that ending glass steagall didn’t cause the crisis. of course, GS had been whittle down long before 1999. and his way out seems to be technical. but it did open the door to the massive financila giants and conflicts of interest galore. what would be your answer to him?

William D. Cohan December 17th, 2011 at 3:05 pm
In response to Mauimom @ 90

thank you. you are most kind to say

eCAHNomics December 17th, 2011 at 3:06 pm

Sorry.

I had O’s number from the beginning, even before there was any evidence. Only he turned out to be much worse than even I thought.

William D. Cohan December 17th, 2011 at 3:06 pm
In response to Mauimom @ 113

no apologies required; people are plenty busy these days. who can keep up with it all?

Mauimom December 17th, 2011 at 3:07 pm

Don’t take this the wrong way, but perhaps you could get your pal Jonathan to write about it? [Or ghostwrite/guest-write a column for him?] He’s got an audience that needs to be reached.

William D. Cohan December 17th, 2011 at 3:08 pm
In response to Jeff Madrick @ 114

of course clinton would say that…it was under his watch that rubin and summers dismantled g-s, even though yes it had been whittled down over the years. there is no question the elimination of g-s played a role in this and now i think something like it should be re-established, and fast

econobuzz December 17th, 2011 at 3:08 pm

In Bill Clinton’s new book he argues that ending glass steagall didn’t cause the crisis.

And oral sex isn’t sex.

William D. Cohan December 17th, 2011 at 3:08 pm
In response to Mauimom @ 118

alter? you mean. he is a fellow bloomberg columnist

Jeff Madrick December 17th, 2011 at 3:09 pm
In response to econobuzz @ 112

I dsiagree. I think if well-enforced, rgs can work. The last thirty years or so has seen a cultural shift. It is completely acceptable to skirt the rules. That is a lack of culutral shame. Began with Reagan and a little earlier. Culture matters. If people are generally lawless, hard to stop. Now, Wall Street has often been alwless, as Bill suggests, but i do think there are different dollops of it. He may disagree.

William D. Cohan December 17th, 2011 at 3:09 pm
In response to eCAHNomics @ 116

well after Bush i just couldnt take it any more

Mauimom December 17th, 2011 at 3:09 pm

i think something like it should be re-established, and fast

Are there any folks out there who see this & might be likely to do it?

William D. Cohan December 17th, 2011 at 3:10 pm
In response to Jeff Madrick @ 122

i agree actually. i would say the cultural shift probably began on november 22, 1963

Mauimom December 17th, 2011 at 3:11 pm

Yup. So he could just cede his space to you!

William D. Cohan December 17th, 2011 at 3:11 pm
In response to Mauimom @ 124

maybe ron paul but he seems to be off in kook land too…who can stand up to wall street?

William D. Cohan December 17th, 2011 at 3:11 pm
In response to Mauimom @ 126

hah. i’ll ask him

Jeff Madrick December 17th, 2011 at 3:13 pm

any sense, bill, the banks are more vulnerable to europe crisis than we know about?

econobuzz December 17th, 2011 at 3:13 pm
In response to Jeff Madrick @ 122

I think if well-enforced, rgs can work.

With all due respect, the problem is that if billions of dollars are involved they won’t be enforced. Hell, they won’t even be put in effect in the first place.

FinReg is the best test that we could ever have. It is a full life cycle model of the futility of passing laws and implementing regs — when stuff that should be illegal is not.

Jeff Madrick December 17th, 2011 at 3:15 pm
In response to eCAHNomics @ 116

by the weay, roseann, bill wolman, former chief economist of BW, died recently. great guy, great fun, and smart, anyway… sad

Elliott December 17th, 2011 at 3:15 pm

What is Mr Paulson doing now besides birding?

Mauimom December 17th, 2011 at 3:15 pm

In the book you talk about Jim Cramer @ GS, particularly with regard to laddering.

Now he’s a “respected” face on CNBC, loud, rather crazy, but as I recall he’s spoken out re Wall Street’s over-reaching. Has there really been a transformation here?

Are there any other GS alums who’ve seen how destructive GS is?

William D. Cohan December 17th, 2011 at 3:16 pm
In response to Jeff Madrick @ 129

it’s hard to say jeff. as you know, banks’ accounting, balance sheets and income statements are black holes. they always claim they are hedged and their long exposure is minimal…until the sh-t hits the fan and they want a bailout. i suspect yes it is worse than we think but not so bad as to make sure that a bailout is put in place to save them. i can assure you if goldman sachs was in danger of going down because of its europe exposure there would be a solution by now

juliania December 17th, 2011 at 3:16 pm

As an oldie, I would very much agree with you.

Jeff Madrick December 17th, 2011 at 3:17 pm
In response to Elliott @ 132

complaining that Occupy Wall Street doesn’t repect the American dream! they surrounded his house one day

William D. Cohan December 17th, 2011 at 3:17 pm
In response to Elliott @ 132

he has started a China institute at the University of Chicago; he may be in China right now actually and he also travels alot to rare and exotic nature preserves

eCAHNomics December 17th, 2011 at 3:17 pm
In response to Jeff Madrick @ 131

Sorry to hear that Jeff. I liked Bill. If you are in touch with any of his relatives/friends, please pass along my condolences.

William D. Cohan December 17th, 2011 at 3:18 pm
In response to juliania @ 135

i have wanted to write a book called “1963″ for a long time and just trace our decline from there

econobuzz December 17th, 2011 at 3:19 pm

With all due respect, blaming this on a “cultural shift” is a cop-out. Once institutions — like commercial banking — are transformed and activities with no productive purpose — like the casino betting on Wall Street — are made “legal,” blaming the results on a “cultural shift” seems idiotic.

But YMMV.

hackworth1 December 17th, 2011 at 3:19 pm

Mr. Cohan,
You sad that Obama lacks guts. You defended Alter when it was said that he is an Obama apologist, yet you implied that you were conned like the rest of us with the “Change You Can Believe In” that never happened.

What evidence do you have to the contrary that Obama is not also corrupt and complict in the greatest economic crash since 1929?

IOW, how can a President make so many goofs (errors) by accident? (time after time after time)

William D. Cohan December 17th, 2011 at 3:20 pm
In response to Mauimom @ 133

jim cramer has never admitted his role in laddering but he is definitely outspoken now about goldman’s bad behavior. i have met many goldman alums who
are very bothered by the way goldman has been behaving lately. of course this is easy to do from outside the firm that made you rich

blackbeary December 17th, 2011 at 3:20 pm

What does GS stand to gain/lose with respect to Europe?

William D. Cohan December 17th, 2011 at 3:20 pm
In response to econobuzz @ 140

YMMV?

eCAHNomics December 17th, 2011 at 3:21 pm

I’ve watched as much of the Corzine testimony as I have stomach for between 1 & 2 hours. Short version: we were following all the rules, auditors never flagged anything, reducing leverage.

It was all a problem of the loss of confidence, and the confusion of the last several days after the rating agency down grade.

Sgt Schultz: I see nothing. I hear nothing. I know nothing.

William D. Cohan December 17th, 2011 at 3:21 pm
In response to blackbeary @ 143

i am not sure actually. who could know unless you are inside and seeing their trades?

William D. Cohan December 17th, 2011 at 3:22 pm
In response to eCAHNomics @ 145

and pathetically cowardly and just plain wrong. corzine and his buddy chris flowers made this happen proactively. they knew better and did it anyway and did not have to happen

Jeff Madrick December 17th, 2011 at 3:22 pm
In response to blackbeary @ 143

they both borrow from and lend to europe… borrowing dries up, loans don’t get paid..

Mauimom December 17th, 2011 at 3:22 pm
In response to Jeff Madrick @ 122

I agree, Jeff. I think it started with Reagan and his diatribes against [fictional] “welfare queens.” These folks were “breaking the rules,” having kids so they could get more welfare payments, driving Cadillacs and buying liquor with their food stamps, while all the rest of us who “obeyed the rules” got suckered.

So we might as well break the rules too.

And then there’s the glorification of the wealth that the current robber barons got. How cool would it be if the Met or Museum of Modern Art said, “nope, not taking that money that you got through evil exploitative means. Not putting your name on a gallery.” Kind of like blood diamonds.

Shoot, if everyone’s going to be amazed at your wealth, feature your excessive Hamptons home or palacial Park Avenue apartment in Architectural Digest, include your spouse on the “best dressed” list, without ever noting that your money comes from screwing school teachers out of their pensions, why wouldn’t you “break the rules.”

And hey, you could get appointed Treasury Secretary as well, without a peep as to those transgressions.

eCAHNomics December 17th, 2011 at 3:24 pm
In response to hackworth1 @ 141

I’ll make your point even stronger by asserting that if there’s anything that O lacks, it isn’t guts. O puts the most egregious lawlessness right in front of your eyes and rubs your nose in it.

Then runs for reelection under the slogan: We suck less.

Seems pretty gutsy to me.

William D. Cohan December 17th, 2011 at 3:24 pm
In response to hackworth1 @ 141

well obama inherited the financial crisis. he had nothing to do with creating it. under the circumstances he inherited it hasn’t been all bad but that is a long way from making the wholesale changes that needed to happen. instead of change he just resurrected the status quo

Jeff Madrick December 17th, 2011 at 3:24 pm

yes, culture of this now goes deep–and unreognized by the media too often..

Mauimom December 17th, 2011 at 3:24 pm

YMMV

Your Mileage May Vary

Just a blogger way of saying “perhaps you see it differently.”

William D. Cohan December 17th, 2011 at 3:25 pm
In response to Mauimom @ 149

this is exactly right and exactly the problem — i call this a cultural shift
where the breakdown of morals and morality and ethics has been legion

Jeff Madrick December 17th, 2011 at 3:26 pm

if i took it bakc to 1963, bill, i mighrt begin with alter wriston’s neogitable CD…(as you probably know, City Bank took the biggest losses on commerical paper in the penn Central debacle)…

William D. Cohan December 17th, 2011 at 3:26 pm
In response to Mauimom @ 153

funny

juliania December 17th, 2011 at 3:26 pm

That would be wonderful. I would equate the idealism that got Obama elected with that promising era – I was just out of college then, actually did a stint as a “Kelly Girl” for Clark Clifford – the closest I’ve ever been to power. (He patted me on the head.) :)

eCAHNomics December 17th, 2011 at 3:26 pm

Testimony was also kabuki in the sense that Corzine’s congressional colleagues covered for him. One trick: filibustered meaninglessly on “Where is the money” after Corzine made it perfectly clear he wasn’t going to A that Q.

William D. Cohan December 17th, 2011 at 3:26 pm
In response to Jeff Madrick @ 155

which was 1970

William D. Cohan December 17th, 2011 at 3:27 pm
In response to eCAHNomics @ 158

and gets media points for not taking the fifth as most cowards do

William D. Cohan December 17th, 2011 at 3:28 pm
In response to juliania @ 157

so my whole life has been one downhill slide

Jane Hamsher December 17th, 2011 at 3:28 pm

Thanks so much for being here today William, and thanks for hosting Jeff.

Someone who is Wall Street connected told me that the reason Goldman has less media insulation than other financial entities is because they don’t buy TV advertising. So they become the media sin eater for the banks. Not that they aren’t deserving, mind you, but the theory was that this was why they took more heat than say Citi.

Any thoughts on whether this might be true?

Jeff Madrick December 17th, 2011 at 3:28 pm

yea, penn central, but negotiable CD, which enabled them to skirt REg Q, was about 1963. that’s more or less where i start my Age of Greed, in book

Jane Hamsher December 17th, 2011 at 3:28 pm

Your mileage may vary.

William D. Cohan December 17th, 2011 at 3:29 pm
In response to Mauimom @ 153

and a nice of way of saying that too

William D. Cohan December 17th, 2011 at 3:29 pm
In response to Jeff Madrick @ 163

interesting. i agree with your Age of Greed thesis wholeheartedly

Siun December 17th, 2011 at 3:31 pm

So sorry to come in late as I think William’s book – and other work – so informative (and always fascinating to read as well!). This comment at the beginning of the discussion is very important I think.

William D. Cohan December 17th, 2011 at 3:31 pm
In response to Jane Hamsher @ 162

never heard this before but doesn’t make sense to me. for the first 140 of its 143 years, goldman had golden PR — and no ads were bought then either. now goldman is actually buying ads in magazines — new yorker, atlantic etc that i think has got these publications to tone down their criticisms

spocko December 17th, 2011 at 3:31 pm
In response to Jeff Madrick @ 122

I dsiagree. I think if well-enforced, rgs can work. The last thirty years or so has seen a cultural shift. It is completely acceptable to skirt the rules. That is a lack of culutral shame. Began with Reagan and a little earlier. Culture matters. If people are generally lawless, hard to stop. Now, Wall Street has often been alwless, as Bill suggests, but i do think there are different dollops of it. He may disagree.

This is an important point.

So often we look to legal constructs to rescue us, when there are also cultural and might I add “moral” matters.

So the key is to make a moral argument. The can retreat to a “well technically it is legal” and “we didn’t break the law” but
morally what are some of their violations. Lying. Stealing. Causing great harm to people and institutions by covering up actions.

Then their is the issue of “what are the consequences for there immorality”? Are they shunned by decent people? Spoken about in the same tones as muggers and grocery store armed robbers? Not lionized, but despised.

We need to acknowledge the worship of “winning” at all costs and the cult of “savvy” even if you are morally bankrupt. The people who say, “Well he might have screwed his partners, destroyed millions of lives, but gosh he’s smart – and he got rich doing it. Good for him.”

It’s like say what you will about Jerry Sandusky, he won foot ball games.
Say what you will about Michael Vick, he won foot ball games.
Say what you will about Goldman Sachs execs but they made a lot of money

William D. Cohan December 17th, 2011 at 3:32 pm
In response to Siun @ 167

thank you Siun…this is indeed the very heart of the problem

William D. Cohan December 17th, 2011 at 3:33 pm
In response to spocko @ 169

hence 1963 and the Age of Greed. shame on us for letting this happen to a great country

Jeff Madrick December 17th, 2011 at 3:34 pm
In response to spocko @ 169

very good points. thanks.

eCAHNomics December 17th, 2011 at 3:35 pm

You can date the “beginning” of the downhill slide from any point you care to pick. Camel’s nose under the tent, slippery slope, and other such cliches.

The point is that since the 1930s reforms, which Zinn argues FDR made to SAVE the “system” not to reform it, change has gone in only one direction. And change has accelerated during the last several decades.

With GS as O’s biggest campaign contributor, it was pretty obvious what would & wouldn’t happen during his admin.

Elliott December 17th, 2011 at 3:36 pm

What is your next project? MF Global?

William D. Cohan December 17th, 2011 at 3:37 pm
In response to eCAHNomics @ 173

sadly this is true…and it doesn’t take all that much money to have maximum influence

William D. Cohan December 17th, 2011 at 3:38 pm
In response to Elliott @ 174

have been writing a lot for VF and Bloomberg
am intrigued by the power and influence our “great” private universities have in our society these days. maybe time to peel one of those onions

juliania December 17th, 2011 at 3:39 pm
In response to spocko @ 169

Didn’t we have for a long time the fable about the frog in water that gradually increases in temperature until the frog dies – when it does seem from the conflagration of protests that the better fable is the straw which finally broke the camel’s back? In other words, to the point where we’re just not going to take it any more and the general impetus is back towards moral issues. I don’t think this way of doing business is going to be able to fly much longer. People are waking up.

Jeff Madrick December 17th, 2011 at 3:40 pm

hope you tackle universities, bill. haven’t been dedicated to eduation for so long. return on cost obviously way out of whack…

Elliott December 17th, 2011 at 3:40 pm

ooo!
this should be good

eCAHNomics December 17th, 2011 at 3:41 pm

I made a back of the envelop calc about a year ago. IIRC, it had to do with oil ind campaign contributions. The ROR is in the thousands of %s. IOW, corps donate hundreds of thousands & loot taxpayers for billions in return.

Mauimom December 17th, 2011 at 3:41 pm

Bill, as frequently happens at a FDL book salon, an author eloquently describes a problem, and he/she/we identify the barriers to solving it: Congress, Pres, media in the pockets of the “evil do-ers;” no public financing of elections; American voters too uninterested/overwhelmed/stupid to do anything, etc.

So we’re left with — and some will explicitly say — “we’re screwed. There is no hope.”

Many of us don’t feel good with that conclusion. Do you have any suggestions on what we can “do” to work towards a solution? [Other than buying your book and sending it to everyone we know.]

And, of course, supporting FDL.

Elliott December 17th, 2011 at 3:42 pm
In response to juliania @ 177

juliana, I hope you are right – I’m not sure we’ve turned the proverbial corner yet

William D. Cohan December 17th, 2011 at 3:42 pm
In response to Jeff Madrick @ 178

they are like the city-states during the italian renaissance — quite fascinating.

blackbeary December 17th, 2011 at 3:43 pm

If Goldman Sachs rules the world: (1)What is the result/consequences? What are their purposes and objectives? (2)Who runs Goldman Sachs? Interlocking directorates.

William D. Cohan December 17th, 2011 at 3:43 pm
In response to eCAHNomics @ 180

bingo!

RevBev December 17th, 2011 at 3:43 pm

And there has been a big dust-up and UTex. Law School…maybe a place to start.

eCAHNomics December 17th, 2011 at 3:44 pm

That’s an easy one. Great universities is where the chosen few go to make contacts & learn how to loot the system more effectively. I call them Poison Ivy League schools.

Have also been bought increasingly by right wing nuts like Kochs, Mellon-Scaifes & Coors, just like think tanks.

William D. Cohan December 17th, 2011 at 3:45 pm
In response to blackbeary @ 184

goldman is owned by its senior partners but mostly by big public institutions

it’s not so much that goldman “rules the world” but as Jeff has written it is engendered the Age of Greed and become at once the hero of it and the poster child for its downside. we have to break the cycle where our best and brightest want to go to these firms to make money

Jeff Madrick December 17th, 2011 at 3:45 pm

am waiting for them to produce giotto, donatello and michelangelo, etc.! not to mention dante… genious per capita pretty high in those city states, of course…

William D. Cohan December 17th, 2011 at 3:45 pm
In response to RevBev @ 186

not aware of that. will have do some googling

Jeff Madrick December 17th, 2011 at 3:46 pm
In response to eCAHNomics @ 187

now that’s pretty hear a howler, roseanne…

spocko December 17th, 2011 at 3:46 pm
In response to Jeff Madrick @ 172

You are welcome.

It is often hard for people in the media to talk in the language of morality, as if that is only for the right wing, yet the laws that are created are often done to reflect our overall values. It is wrong to lie to people and steal from them. There should be consequences for actions that harm people.

Spitzer was taken out of the equation using a “moral” violation. The WS people understood that they could not get him strongly in a technical legal way, so they went to a weakness that the public could understand.

The issue of “consent” among people who were ripped off in CDS always interests me. How much of this is ego? “Ha ha. we trick you suckers at Lehmann to hold the bag when the music stopped.”

I often thought that if you really wanted to have someone go after Goldman Sachs you would hire some of the Lehmann or Bears and Sterns people who screws them over. Give them an incentive. “Find the fraud and you get part of the cash.” Most are already rich nothing to lose and eager to force Goldman into some payback. Like the TV show, “It takes a thief”

But of course the SEC or DOJ would have to want to do something like that, and I don’t see it.

William D. Cohan December 17th, 2011 at 3:46 pm
In response to Jeff Madrick @ 189

well i am sure they would argue they have produced those kinds of artists

juliania December 17th, 2011 at 3:46 pm

Ooh, now that would be one you have to do another Book Salon on! I’m convinced from my own little liberal arts experience close to Washington, DC that as you say in the post Kennedy era the seeds were being sown – it was the start of the first think tanks right then. And of course, we all know about the Chicago Boys thanks to Naomi Klein. Oh boy. Strength and courage to you!

juliania December 17th, 2011 at 3:48 pm
In response to Elliott @ 182

Yes, I wouldn’t say we’ve turned the corner. There’s a lot of inertia out there still.

William D. Cohan December 17th, 2011 at 3:49 pm

courage and an unlisted phone number!

eCAHNomics December 17th, 2011 at 3:50 pm
In response to Jeff Madrick @ 189

Well, David H. Koch bought NYS Theater. Thankfully I had given up my 35 year subscription to NYC Ballet years before that happened.

In the Gilded Age, robber barons est Met Museum with staid historic painting, at same time as Russian princes were gobbling up Impressionists.

Would I be forgiven if I judged U.S. superrich as lacking in artistic muse?

juliania December 17th, 2011 at 3:50 pm

And what is so difficult to change is that so many good people have found their homes, pensions, jobs tied up in all of this tar, which was the intent so that everyone would be “invested” in greed when for many that was not their intention at all.

RevBev December 17th, 2011 at 3:51 pm

It’s recemt; Dean let go.

BevW December 17th, 2011 at 3:51 pm

As we come to the end of this Book Salon,

William, Thank you for stopping by the Lake and spending the afternoon with us discussing your new book and Wall Street.

Jeff, Thank you very much for Hosting this great Book Salon.

Everyone, if you would like more information:

William’s website and book

Jeff’s website and book

Thanks all, Have a great weekend.

Tomorrow: Robert H. Frank – The Darwin Economy: Liberty, Competition, and the Common Good; Hosted by – Mark Thoma

If you want to contact the FDL Book Salon: FiredoglakeBookSalon@gmail.com

eCAHNomics December 17th, 2011 at 3:52 pm
In response to juliania @ 194

Chicago law school (think Obama, Posner) is even worse than Chicago economics. Posner has est seminars to indoctrinate federal judges.

William D. Cohan December 17th, 2011 at 3:52 pm
In response to juliania @ 198

the tragedy is the people who worked their whole lives and then had their pension managers screw up where they invested the money. no way out of that one

William D. Cohan December 17th, 2011 at 3:53 pm
In response to RevBev @ 199

will definitely check that out

RevBev December 17th, 2011 at 3:54 pm
In response to eCAHNomics @ 201

EST? You jest….

Jeff Madrick December 17th, 2011 at 3:54 pm
In response to eCAHNomics @ 197

Thanks, bev for a great event. And of course thanks to Bill for his books. Look forward to the next… been a pleasure…Jeff

RevBev December 17th, 2011 at 3:55 pm

May be interesting…

juliania December 17th, 2011 at 3:55 pm

Thank you very much, Mr. Cohan.

Mauimom December 17th, 2011 at 3:55 pm

Thanks to both Jeff and Bill for your great contributions to this valuable discussion. Bill, I read your entire book, and it’s great. I encourage everyone to get it.

Jeff, I haven’t read yours yet, but it’s now #1 on my “to buy” list.

It was great “meeting” and “talking with” you. Thanks for your time.

And Bev, thanks for putting this together.

Either of you guys: any response to my question @ 181?

Siun December 17th, 2011 at 3:55 pm

What a great discussion – thank you Bill and Jeff … please write more books! soon!

And thank you Bev for arranging such great salons.

William D. Cohan December 17th, 2011 at 3:56 pm

thank you jeff. a great effort by all!

Elliott December 17th, 2011 at 3:56 pm

Thank you Bill, Jeff, Bev and everyone

Bill – best of luck on your book tour

spocko December 17th, 2011 at 3:56 pm
In response to juliania @ 198

So true. Many played on the greed, “Flip this house”

Of course the right wing look no further than that, “They bought too much house! Fannie Freddie! Yargle Bargle! Barney Frank!”

As if Credit default swaps, and 30-1 leverage were mandated by the government.

And those of us who were told that we were idiots for not getting into the market? Well I’d like to say that I was smart, but really just poor. I don’t have a house “underwater” but I also don’t have a house to live in.
I’m still “throwing my money down the renters hole”. I (and many like me) also paid the price for not getting on the bubble but didn’t get any of the benefits either, low interest home loans etc. deductions etc.

eCAHNomics December 17th, 2011 at 3:57 pm
In response to RevBev @ 204

est short for established

William D. Cohan December 17th, 2011 at 3:57 pm
In response to Mauimom @ 181

voting for congressmen, presidents and other elected officials who actually are honest and unlikely to be corrupted by the system!!!

Mauimom December 17th, 2011 at 3:59 pm

Help me figure out a way to get such individuals on the ballot!!!

William D. Cohan December 17th, 2011 at 4:01 pm
In response to Elliott @ 211

thank you elliott

of course there is no such thing as a book tour anymore for most authors

Elliott December 17th, 2011 at 4:01 pm

spocko’s up next
Dear Irena Briganti: Anyone Ever Fired for On-Screen Errors at Fox?

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