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Must Read: Michael Lewis' Latest Memo To Lloyd Blankfein
Blaming Merrill Might Set Goldman Sachs Free, by Michael Lewis, originally posted in Bloomberg
To: Lloyd Blankfein
Re: Winning at Ethics, the Goldman Way
I have reviewed no less than seven times your entire
episode on Charlie Rose.
Your artful simplicity, studied humility and former
hairline all positively radiated against the set’s dark
background.
As one of my lesser colleagues on the desk marveled,
“Lloyd seemed almost human: Why?” To which I replied, evenly:
“because he finally read my last memo.”
Of course there was no reason you should look to one of
your own traders for advice. But now that you have, we must
proceed quickly. American public opinion is volatile; our
exposure to it is peaking, and it will be more difficult than
usual to create the illusion for American mortals (or as we like
to call them, “The Morts”) that our business is in their
interest, much less that we share anything in common.
This time, please, do not wait five months to internalize
my new action items. They are:
No. 1: Implicate the rest of Wall Street, as quickly as
possible.
It’s always unnatural to hear the name of Goldman Sachs in
the same sentence as Deutsche Bank, much less Merrill Lynch. We
must put aside our revulsion. The American people might enjoy
seeing one firm being driven out of business by a criminal
investigation. They’re less likely to allow for the destruction
of every big Wall Street firm. They just forked over trillions
to keep them afloat.
Delicate Decency
This job of putting our behavior in a new context --
comparing it not to some broad universal standard of “decency”
but to Wall Street standards -- must be done delicately.
For example I was once hauled before a second-grade teacher
and simply shouted, “You ill-paid, third-rate moron! I did
nothing worse than what every other kid was doing! It is
illogical not to punish them, too!”
The outburst did nothing to alleviate my situation, and
probably made it more difficult than it needed to be for me to
gain entry to Princeton. But the episode taught me one of the
central tenets of the Goldman Way: far better to rig a system
than to fight it.
Helpful Walks
Our public relations staff might quietly and helpfully walk
even hostile reporters through some of the deals created by
these other firms. Ditto our lawyers in their meetings with the
Securities and Exchange Commission.
No. 2: Continue to use Warren Buffett, but don’t forget to
pay him.
When Warren said that stuff the other day about wishing
you had a twin brother so he could employ you both, he didn’t
mean it as a sign of his undying admiration for you.
Remember: He said almost exactly the same sort of things
about John Gutfreund, after Gutfreund had given him a sweet deal
to rescue Salomon Brothers from oblivion. The moment Warren was
forced to choose between Gutfreund and his money, he chose his
money.
Don’t force him to make that choice. If you want more loud
character references from Warren Buffett (you do) you must
insure that he continues to think of you as profitable.
I don’t know if there are ways Goldman Sachs might simply
give money to Berkshire Hathaway for free, but we should explore
the possibility.
Hide the Props
No. 3: Hide, and hide from, the prop group.
If you must be seen in public with Goldman employees, make
sure they are bankers and brokers, and not our proprietary
traders. You did an excellent job on Charlie Rose of making it
seem the prop group didn’t even exist.
We were mere “market makers” who helped our customers
“get the risk they wanted.”
At the same time, but for different reasons, you should
limit your private interaction with the prop traders, especially
Jonathan Egol.
The SEC’s complaint focused on one of Jonathan’s Abacus
deals and yet failed even to mention Jonathan. Instead they
fingered the French guy.
At first I took it as just another sign of Mort stupidity.
But now that the Justice Department has gotten involved, and is
combing through all the Abacus deals, I wonder. Why is no one
yet talking about Jonathan? Why is no one making noises about
the deals structured for Jonathan -- and not John Paulson -- to
short them? Is it possible that Jonathan has been helping them
to understand our business? Just saying...
Our French Problem
No. 4: You need to address our French problem.
In a matter of weeks Fabrice Tourre has gone from non-
entity to a potential asset (a “rogue trader” who might have
gone quietly so that the firm might survive) to a huge liability
(hero on Wall Street, who somehow has managed to portray himself
as both a religious martyr and a mere cog in our machine.)
Going forward I suggest that our personnel department
reexamine the French male’s ability to subordinate himself. In
English there is no “I” in team. It turns out that the French
use a different word: equipe.
Our international people should have known this. At the
very least they should have been queasy about hiring guys who
look as if they’d rather be wearing espadrilles.
‘Things Like Ethics’
No. 5: Be careful not to say or do anything now that will
constrain our ability, after this crisis has passed, to do
whatever we want.
The other day, on your emergency conference call with our
customers, you said that you wanted Goldman to be seen as a
“leader in things like ethics.”
I couldn’t have put it better myself. If in the future we
fail to be a leader in ethics we can point to your statement as
evidence that we never intended to be a leader in ethics, merely
in “things like ethics.”
To that end, I intend to compile a list of things like
ethics, in which we might strive to be a leader, without risk to
our profitability.
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Ba-dump-bump psssssshhhhhhhhhh.....
Correct me if I am wrong people but I seem to remember Micheal Lewis as a cheerleader for the madness just a few short years ago.
When exactly did this guy travel on the road to Damascus - I don't trust him one bit.
Lloyd is a good honest crook - hes with us still because of the nature of the anti justice system but this guy Lewis I like even less.
Read "Liar's Poker". He was one of the original voices from the 1980's talking about wall street greed, and pointing out the simple truth that "Wall Street is a Scam".
I stand corrected Popo - my apologies to M. Lewis
"The Big Short" is an excellent read as well.
double down on that, dawg. Bunch of fucking crooks.
maybe you were thinking of Ken Lewis, of BAC fame..........
No bbbilly - it is just a gut feeling - so I could be widely wrong about Lewis - but the guy seems to me deeply inside.
What little I have read and listened seems to suggest that he is a critic that supplies "constructive criticism" while not questioning the core of the machine.
Beware of these false prophets - they can steer a agenda much more effectively then obvious servants of the debt masters.
No..not really...
I was once told that Paul's letter to the Corinthians might be paraphrased with respect to the Imaginary and Mythical Lord Blankfiend as follows;
"When I was a thief I lied as a thief, stole as a thief and defrauded as a thief, but when I begat God's Work, I raped and pillaged with impunity provided under the very auspices of Pilate and Cesar, themselves."
Hey Lloyd, here's a song for you bitch.
Bullet In Your Head
http://www.youtube.com/watch?v=o_-QGNUYL5g
RATM
Tyler for SEC chief......imagine the possibilites!
Wow...Good find Tyler..
Reminds me of the song: 'What's That Smell..?'
When people ask me what books I recommend to understand the investment world, I always recommend the following books:
1) Reminiscences of a Stock Operator by Edwin Lefèvre
2) Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay
3) Liar's Poker by Michael Lewis
4) Fiasco: The Inside Story of a Wall Street Trader by Frank Partnoy
There are plenty of others, but those are my top four. Lewis is hit or miss. This latest article was a definite hit.
Great list. #1 = all time great. #3 all time humor. I'm going to buy #2 now, looks good
It's a big long read but worth it. Written in 1841.
At this point Leo.... How many books, how much education does one possibly need to understand that they are being raped and robbed? Does one really need to understand the crooked casino to see that? Realize that I'm not talking about the value of education, or the value of the books you've pointed to, some of which I've read and others I just put on my list.... but let us be real here. The people that want to know, at this point, know, and those that don't, don't.
It's time to do more than read. It's time to show the Muslims that Americans know a thing or two about jihad. We stop participating, and then they TPTB do what we want or we lay waste on a scale unimaginable.
Killing In The Name - RATM
http://www.youtube.com/watch?v=fkuOAY-S6OY&feature=related
Fuck you I won't do what you tell me!
(AKA DON'T TREAD ON ME)
Not with a name like Crab Cake you don't.
We want urban gurillas with names like Lung Remover, Chris Chaos, Septic Pump, and Harri Hitler.
Crab Cake sounds too much like Patty Cake, and it will confuse the hell out of the Tea Party. We finally have them showing up in the same place, at the same time. We can't have them playing paddy cake at a crucial moment such as linking themselves together so the rest of us can cross a river.
Great Choices....Would have 3 of those as well.....
Damn, I forgot another classic, When Genius Failed by Roger Lowenstein.
Sorry off-topic....
Did the DOW just finish negative? Or this is after-hours trading? If so, that was a big swing from green to red?
No. Futures, plenty of time left though to prime'em a little and then let the algos pimp'em.
"...a leader in things like ethics."
I just threw up in my espadrilles.
Is this Michael Lewis the same Michael Lewis who was employed as an obscure associate for two years over twenty years ago?
Well then he couldn't possibly understand the complex matters that you can!
The problem with Blankfiend is that he ALWAYS looks like the cat that ate the canary. He has the face that says "I just committed grand theft and got away with it". Paulson might have had the lazy eyes, but at least he could look serious when he needed to..sleep deprivation be damned. Blankfiend has no control over his facial expression that seems to scream: "Yeah, I did it, I'm doing it now and I will do it again, and again, and again..."
My favorite book on the Classics is When Genius Failed by Roger Lowenstein and Im reading Crisis Econimics by Nouriel Roubni right now!!!
Lewis to BlankBrain:
Get out of Dodge while you can. GETCO is coming.
Charlie Rose, now there's a real pussy.
DAMAGE CONTROL:
http://williambanzai7.blogspot.com/2010/05/damage-control.html
The cashflow SCAM is seen in the trading. More and more, people who do not understand this are reminded of past SCAM ARTISTS in former trading divisions.
To be sure, there are those who are catching up to this sick,twisted, truth.
This does not happen over night. It takes time.
It also takes insightful reporting based on the facts.
Such reporting is possible to see more and more every day.
One such report is found here...
Under, WE found this interesting...
http://bit.ly/1ax9Pw
The key is to support the reporters. This site deserves such consideration.
Updated DOW charts showing recent buying support:
http://www.zerohedge.com/forum/latest-market-outlook-0
http://stockmarket618.wordpress.com