”In a series of damaging emails released yesterday, Tourre also compared the products to a “Frankenstein” monster that had “turned against his own inventor”. Other emails that emerged yesterday showed Lloyd Blankfein, Goldman’s chief executive, boasting about the money the bank made from the housing market collapse. “Of course we didn’t dodge the mortgage mess,” Blankfein wrote in November 2007. “We lost money, then made more than we lost because of shorts (bets against housing).”
It was a short run on broadway. Enron-the Musical is closing after only sixteen critically mixed performances, in which investors in the production practiced their own version of short selling to cover their losses.The play was a form of derivative trading in itself, a licensed product from a new form of industry based on the suffering of others. Conceptually, like many of the Goldman-Sachs products difficult to place, but the play does represent a certain inflection point regarding our relation to money.In this sense, it’s a shame Goldman Sachs continues to position itself as the world’s most hated vessel of greed these days. Because, really, it makes us forget just how terrible Enron was.
The full-fledged Enron theatre production tracks the rise and fall of ex-bosses Jeffrey Skilling, now jailed and Kenneth Lay, now deceased, as well as their dealings with ex-CFO Andy Fastow, the mastermind of the company’s shady accounting practices.In the end the Enrons,was exposed as a house of cards, much like Madoff , AIG, Fannie-Mae, and perhaps Goldman-Sachs. Who knows, it might extend all the way to the Federal Reserve System. maybe we will know one day if all roads do lead to Rome. Perhaps there will there be public monuments commerorating these melt-downs in the future; even a form of poppy day to commemorate the millions of ruined lives caused by these frauds which appear endemic and deeply rooted.
Stories about finance and fraud are always timely; for every Goldman that steps up to the plate, many are vying to be in the on-deck circle. Goldman is just a variation the theme; but the public persona and performance of Goldman-Sachs CEO Lloyd Blankfein shows that the world of finance and accounting shows that a world of business and accounting that has not traditionally inspired much in the way of song and dance routines appears to be changing; given the surplus of capable understudies that this craft seems to be producing.
Blankfein’s blessing of financial products that are designed to fail, instruments with built in obsolescence has some resemblence to a scene in Enron where a trader recounts a frightening day when his trades lost millions, then proudly recalls how Skilling applauded his courage, telling him “Only people who are prepared to lose are ever gonna win.” Its you win when you lose; a surrealistic world where synthetic and purely conceptual products, unlinked to any tangible assets are traded like marbles in a school yard. No tangible assets are produced, yet we have come to the point, as a society, to treat this type of activity as a ”primary industry” and not the quasi- money laundering scheme it most closely resembles. Like the pyramid on the American dollar bill, one cannot help but wonder if all these forms of arcane, conceptual manouvers are not part of a pyramid scandal of which the Bernard Madoff case, may be the proverbial tip of the iceberg.
The ”racial profiling” of this race that is seen in the Blankfeins, Ken Lewis’s etc. show some portent towards people who are extremely clever, yet not that bright; numbers men disconnected with most reality. This focus on quantitative skills is evident too in Mr. Fabrice Tourre’s e-mails. Even as he seems aware that he has created a financial instrument that could come crashing down, he marvels at its conceptual applications.
”In one e-mail he calls the product “pure intellectual masturbation” and “something absolutely conceptual and highly theoretical.”Tourre’s emails described the products he created as “a ‘thing’, which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price”.He also predicted the collapse of the market, writing that “the poor little sub-prime borrowers will not last so long!!!”. “It’s like Frankenstein turning against his own inventor,” he writes of the products he was selling.”