22 October 2012

Greg Smith And Goldman Sachs

"Ad hominem (also called personal abuse or personal attacks) usually involves insulting or belittling one's opponents in order to attack their claims or invalidate their arguments, but can also involve pointing out true character flaws or actions that are irrelevant to the opponent's argument. This is logically fallacious because it relates to the opponent's personal character, which has nothing to do with the logical merit of the opponent's argument."

I have not been following the Greg Smith story closely, although I was aware he had resigned from Goldman quite publicly, and had read the op-ed which he wrote as his fare thee well. There is nothing in there that was surprising to those who follow the financial fraud on Wall Street.   It was actually fairly mild compared to the widely ignored information obtained by the Levin committee.

What was new was that a Goldman employee was saying it, and Goldman is the most highly politically connected of Wall Street Banks, in the US and in Europe.

But the absolute trashing and personal attacks on Greg Smith in the past week that were orchestrated by Goldman and supported, heavily, by the US financial networks got my attention. Generally ad hominem attacks are used by those who consider the facts of the case to be dangerous ground, and wish to do anything that they can to avoid discussing them. So instead they seek to discuss the person bringing them to light.

The 'news channels' do have not spent much time discussing what Greg Smith is saying, but instead turn their focus to discrediting Greg Smith personally as a loser, a fool, a person who was naive to be surprised by the ruthless predatory culture on Wall Street.  He was disgruntled because he did not get a raise, and so has an ax to grind.

The media are working from the talking points memos released by Goldman, and a growing cultural disposition against whistleblowers as being inherently disloyal malcontents.

The rationales in favor of Goldman quickly take on the character of the schoolyard.  Everyone does it on Wall Street, and singling out Goldman isn't fair.  And what was Greg Smith expecting?  Everyone knows Wall Street is predatory and will do whatever it takes, even abuse their customers and make millions out of it. And if the customers are dumb enough to fall for it, they deserve it.  Don't be a fool like him, be a sophisticate and move along.

What people do not realize is that the fraud cuts so deep and wide that it hard to escape it, even if one has no dealings personally with any of these firms.   These Wall Street financiers have their hands in everyone's pocket through the manipulation of the financial system, the price discovery mechanisms, and the money supply.  And if you do not understand this by now, you understand nothing.

For me the takeaway, that gets lost in the color coverage, is that the efficient markets theory is nonsense, and that self-regulation does not work when such enormous sums of money are at stake.  The answer is ultra-transparency and effective regulation, particularly to rein in the financial cowboys who can use money to game and control the political, judicial, and analytical processes of society. 

And I do not see any way to accomplish this except to separate commercial and investment banking, and ring fence the activities of the investment banks and speculators, and prohibit them from selling anything except exchange vetted products to any public institution such as a retirement fund.

I was amused by the comparisons of Greg Smith to a 'rat' who breaks the laws of omerta in the Mafia.

This is the theater that passes for 'news' in the corporate media who are live streaming the American Hunger Games.  May the odds be ever in your favor, especially when you are constantly rigging the game.

Here is Greg Smith's first public interview on US television.