Up until, say, the beginning of 2008 this question of "Whither Capitalism?" might have seemed appropriate in a dry academic classroom. No more.
A few statitics to start the day. 9 major banks, including Goldman Sachs and Morgan Stanley, in the US received $175 billion in bailout money from Joe Public, so far. They have repaid $50 billion. The same 9 banks are to pay out $32.6 billion bonuses to their staffs with the senior executives receiving disproportionately larger shares.
During August 2008 when a number of banks could fold due to a collapse in confidence as well as in their over-leveraged balance sheets, then Secretary of Treasury, Hank Paulson, former chairman of Goldman Sachs had over 2 dozen conversations with his successor at Goldman, Mr Lloyd Blankfein.
This fact by itself should have been considered perfectly "normal". The top financial official should have his fingers on the pulse on Wall Street. Goldman Sachs was and remains a most important player.
Wait. During the same month, he talked only 4 times with Jamie Dimon, Chairman of JPMorgan Chase, 2 times with John Thain, then chairman of Merrill Lynch and 6 times with Fuld, then chairman of Lehman Brothers the collapse of which nearly brought down the entire financial industry of the US.
So why was Goldman Sachs receiving, at least on surface, more TLC, then others, one could legitimately ask.
Actually, silly question. Anyone familiar with the culture of Wall Street, especially at a firm like Goldman where "team work", "corporate loyalty" followed by multimillion bonuses know if there ever arose a conflict between private and public interest, barring blatant criminal acts, private (read Goldman) interest would take precedence. Paulson was a product of Goldman which made him not only Chairman but also one of the richest men on this planet. Few men, especially those from the money industry where money is the be-all-and-end-all objective, could rise above private concerns.
And that is at the heart of the question as to whether Capitalism can survive consistent partisan and parochial manipulation that is a by-product of maximizing private profit, the ultimate goal of the Wall Street culture.
Today's column in NY Times by Frank Rich points out a much larger issue regarding how the political process in DC is now increasingly in the hands of Money. Read here.
I will be writing on this and related political issues in due time.