This Needs To Be Heard and Read In Full

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Perknose

Forum Director & Omnipotent Overlord
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Oct 9, 1999
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Greg Smith is resigning today as a Goldman Sachs executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa.

http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html

Why I Am Leaving Goldman Sachs
By GREG SMITH
Published: March 14, 2012

TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.

But this was not always the case. For more than a decade I recruited and mentored candidates through our grueling interview process. I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world. In 2006 I managed the summer intern program in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.

I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.

When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.

Over the course of my career I have had the privilege of advising two of the largest hedge funds on the planet, five of the largest asset managers in the United States, and three of the most prominent sovereign wealth funds in the Middle East and Asia. My clients have a total asset base of more than a trillion dollars. I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave.

How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.

What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.

Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.

It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.

These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.

When I was a first-year analyst I didn’t know where the bathroom was, or how to tie my shoelaces. I was taught to be concerned with learning the ropes, finding out what a derivative was, understanding finance, getting to know our clients and what motivated them, learning how they defined success and what we could do to help them get there.

My proudest moments in life — getting a full scholarship to go from South Africa to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics — have all come through hard work, with no shortcuts. Goldman Sachs today has become too much about shortcuts and not enough about achievement. It just doesn’t feel right to me anymore.

I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.

My comments:

Money is not free speech and greed is not good.

The idea that we should just stand back and "let the free market decide" is dangerous, econo-fundie bullcrap.

If we let our middle class continue to erode the true American Dream will die with it.
 

busydude

Diamond Member
Feb 5, 2010
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Hey Perky.. this has already been posted.

Can I be referred to as the Overlord of time warps ?
 

PokerGuy

Lifer
Jul 2, 2005
13,650
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I read Smiths' comments earlier and think they are probably spot on. His comments are great, but your comments to go with them are worthless, you're trying to turn his comments into something they are not (an indictment of free markets, money in politics or being free speech).

I'm amazed at how you could read such well written comments from Smith and come to such lousy conclusions from them.
 

Anarchist420

Diamond Member
Feb 13, 2010
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http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html



My comments:

Money is not free speech and greed is not good.

The idea that we should just stand back and "let the free market decide" is dangerous, econo-fundie bullcrap.

If we let our middle class continue to erode the true American Dream will die with it.
Greed works both ways in the free market. It doesn't with a government because the government can socialize losses and privatize profits. The most profit hungry people can more easily get to the top in a federal republic. Instead of cracking down on free speech, we need to limit war powers, if not abolish them. Only a government can create a central bank and Goldman Sachs couldn't have been even 1/3 as wealthy as it is if there was separation between state and credit. Goldman sachs would hate monometallism and a society in which private property rights were respected because they'd fall flat on their asses if they overextended credit like they actually do.

What we need is the Articles of Confederation or a totally stateless society so that the market can reward good greediness and make punish bad greediness.
 

sandorski

No Lifer
Oct 10, 1999
70,486
6,034
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I read Smiths' comments earlier and think they are probably spot on. His comments are great, but your comments to go with them are worthless, you're trying to turn his comments into something they are not (an indictment of free markets, money in politics or being free speech).

I'm amazed at how you could read such well written comments from Smith and come to such lousy conclusions from them.

He has not indicted Free Markets, just some peoples ideas of what they entail. On that point, he's 100% correct.
 

Lemon law

Lifer
Nov 6, 2005
20,984
3
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Hmm where have I heard this before? :D
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As GenX asks something, IMHO profoundly stupid.

If you heard it before, why didn't you learn anything before Genx87? Yes, Genx87, I think this forum requires a REAL answer from you!

As I say Perknose may not have gone much further here. As our financial and banking sector have sold the American people a giant myth, that the banking sector are the smartest people on the planet, and hence deserve compensation to match. As they alone can create money out of thin air. And when it turns out they are simply gambling addicts in a zero sum game, who irresponsibly cheated and bet money they don't own, thereby collapsing the world economy. And it still never occurs to us to regulate the damages those rat finks can cause.

So thank you Perknose for this thread.
 

busydude

Diamond Member
Feb 5, 2010
8,793
5
76
----------------------------------------------------------------------------------------
As GenX asks something, IMHO profoundly stupid.

If you heard it before, why didn't you learn anything before Genx87? Yes, Genx87, I think this forum requires a REAL answer from you!

As I say Perknose may not have gone much further here. As our financial and banking sector have sold the American people a giant myth, that the banking sector are the smartest people on the planet, and hence deserve compensation to match. As they alone can create money out of thin air. And when it turns out they are simply gambling addicts in a zero sum game, who irresponsibly cheated and bet money they don't own, thereby collapsing the world economy. And it still never occurs to us to regulate the damages those rat finks can cause.

So thank you Perknose for this thread.

Don't get all your panties in a bunch.. he is saying that this thread is a repost.
 

cubby1223

Lifer
May 24, 2004
13,518
42
86
If you heard it before, why didn't you learn anything before Genx87? Yes, Genx87, I think this forum requires a REAL answer from you!

Sorry all for my off-topic thread diversion, moderators please punish me appropriately.

The other day *you* once again made the claim here that Israel is equal to Nazi Germany and I asked you to prove your claim. You never did. And now you feel you have the right to demand "REAL answers" from anyone you decide to pick on?

Please...
 

bfdd

Lifer
Feb 3, 2007
13,312
1
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Perknose, we can't just "stand back and let the free markets decide" because there are no fucking free markets. Government is to big and has to much power that it is sought out by other large entities with money for purchase. With a smaller government these ass fucks can't or won't buy and sell it. It just wouldn't be worth it.
 

Lemon law

Lifer
Nov 6, 2005
20,984
3
0
Sorry all for my off-topic thread diversion, moderators please punish me appropriately.

The other day *you* once again made the claim here that Israel is equal to Nazi Germany and I asked you to prove your claim. You never did. And now you feel you have the right to demand "REAL answers" from anyone you decide to pick on?

Please...
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I don't want to thread deflect, but yes Cubby1223, I answered you and explained why what Nazi Germany did to Jews is highly similar to what Israel did to Palestinians. As Israel confiscated their land and property on the basis of religious hereditary and nothing more. Does it really matter that Israel that has not tossed them into gas ovens yet? Still something regarding Israel that stand foursquare against my American values. If you, cubby, believe in religious heredity as a determinant of human rights, that is your denial problem and not mine.

Now can we please get back to this thread that poses totally separate questions regarding financial chicanery. Somehow Hank the Crank Paulson sold us on Tarp in a panic, we are now beyond that now, but now what steps are we going to take to see it can't happen again? These in my mind are the questions this Perknose thread should be asking.
 

BoberFett

Lifer
Oct 9, 1999
37,562
9
81
^^^^^^^ Still doesn't understand that this thread is a repost.


RAGE ON GOOD LEFTIST SOLDIER!!!
 
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