Sunday, December 28, 2014

159. Bookstores Used and Rare

     Used-book stores used to cluster along what was called Book Row, the stretch of Fourth Avenue between East 9th and East 14th Streets in Manhattan, most of them small stores staffed by the proprietor and one or two friends who viewed their stores as more hobby than business, prompted by a love of books.  The books were usually a jumble in no apparent order, obliging you to poke and poke about in hopes of finding something of interest.  There were old prints too – usually from the nineteenth century – and on occasion I bought one.  Somewhere I still have a picture of a dainty Victorian maiden celebrating May Day, so charming in its insipidity that I couldn’t resist.  And once I was looking for a print of a Putnam County mansion belonging to Wall Street financier Daniel Drew’s son, which I wanted for an illustration for my biography of Drew, and -- wonder of wonders! – I found it at the Pageant Book and Print Shop.

     The proprietor of the Pageant came to know my interest in nineteenth-century New York and, the moment I entered, pointed me to the relevant counters and bins.  Also from Pageant, and added to the “clothing” folder in my file of background material for my historical fiction, were two French fashion prints, one from the Journal des Demoiselles showing two supremely elegant young women in voluminous hoopskirts, and the other from Les Modes Parisiennes showing two more young ladies in elaborately decorated hoops.  Never was the female form adorned so lavishly and hidden so amply.  And of course there were the items I should have bought and didn’t, to my later vast regret, as for instance, also at Pageant, a dictionary of Homeric Greek.  Later, when I undertook to read Homer in the original (yes, I actually did!), it would have helped me hugely; without it, I had to poke through my lexicon of Greek to find the Homeric terms, which was frustrating and time-consuming. 

File:1857Le Journal des Demoiselles.png
Le Journal des Demoiselles, 1857.  Voluminous skirts, lacy finery, faces blandly identical.

     But the day of the Fourth Avenue bookstores is long since gone.  From the 1960s on, one by one they were forced out by rising rents, as the neighborhood was invaded by antique warehouses, art supply stores, and pricey coop apartments.  And forced out as well by mortality, as the aging dealers retired or died off.  But the old Pageant, my favorite, has survived; in 1999 it went virtual and is now housed in a website sponsored by the daughters of one of the original founders.  They boast of offering worldwide access to items formerly found by patient book and print seekers crawling up ten-foot ladders or sprawling on dusty floors flipping through drawers and boxes.  True enough, but the crawling and sprawling were part of the adventure of the old stores. 

Back to Homepage

     In 1957 one of the old Fourth Avenue bookstores moved to another location and is a thriving enterprise today: the Strand Bookstore at Broadway and East 12th Street, which, founded in 1927 and run successively by three generations of the same family, claims to have 18 miles of new, used, and rare books, some on site and some in a warehouse.  No cozy little bookstore, this, but a modern enterprise with over 240 unionized employees and 2.5 million books on every conceivable subject, plus an array of gifts including coffee mugs, calendars, tote bags, souvenirs, and gift cards virtual and real.  And you don’t have to come to the store, since you can shop online.  As for rent increases, no problem: it owns the building.

Beyond My Ken

     I’ve often browsed there in the past, glancing at the outdoor stands of cheapies before pressing in to explore the tables and floor-to-ceiling shelves of books on three floors: fiction old and new, comic books, cookbooks, travel books, art books, science books, biographies and memoirs, rare and unrare books, bestsellers, children’s books, staff picks, recent arrivals and dusty old classics.  And a public restroom.  On the wall today, so the website indicates, is a sign: “IF  YOU  GO  HOME  WITH  SOMEBODY,  &  THEY  DON’T  HAVE  BOOKS,  DON’T  F**CK  ’EM.”  And they even hold weddings there: two confessed book nerds report online that it was the wedding of their dreams.  Most of the online reviews are raves, with one recent negative: “Horrible.  I went in there today and I was kicked out without being told why.”  There’s a story there, but who knows what it is.    In the reviews two small negatives recur: the store tends to be crowded, and there aren’t many places to sit.  My own experience there is, at best, mixed; more of that anon.

File:Strand basement jeh.jpg
The Strand basement.

     The Strand is a super modern enterprise and as such has survived.  But in this huge, sprawling city are there no small independent used-book stores such as those once found on Fourth Avenue?  Yes, but they aren’t clustered together.  You’ll find them at scattered locations especially on the Lower East Side of Manhattan and in Brooklyn.  The reviews of these places praise the books to the skies, and savor the atmosphere of books crammed in all over the place, so that even in this age of chain stores and the Internet, you can see, touch, and smell old books.  Some patrons complain of the utter disorganization of some of the stores, but others enjoy the serendipity effect, not knowing what buried treasure they may find.  Here, if anywhere, you can experience again the rich clutter of the old Fourth Avenue stores.

     But there is a catch: while some reviews praise the staff, others are resentful and caustic.  Consider these selections from online Yelp reviews of Spoonbill & Sugartown in Brooklyn, East Village Books and Mast Books on the Lower East Side, and Westsider Rare and Used Books on the Upper West Side.

Stood for almost two minutes in front of the girl at the cashier who was NOT in the mood to help me find a book. In short, great store for browsing but don't expect any service here. They lost my patronage.

The woman working behind the counter should stick to working with books and not with people.  The moment I walked in, I felt as though she was convinced I was going to steal something.  When I explained I was looking for something by Baurdrillard [Baudrillard], she corrected my pronunciation. I know how to speak French, bitch, but I'm not in France, I'm in Brooklyn: so cut me some slack.   Not that she had any books by him in stock, anyway, so a simple "no" would have sufficed…. Despite the mothball stuffed biddy behind the counter, this bookstore had a really great selection of harder to find books: new, used, first editions, etc.

The guy working here was incredibly and unnecessarily rude to us. They have a nice selection of books, but we walked away on principle. 

If I could give it zero I would, but one star for the cat.

Sometimes, the bored ex-hippie working the register is super helpful, and sometimes it's the bored current-hipster who doesn't like that you're interrupting his “inspiration time.”

Staff is sullen and unhelpful…. Books listed via their Amazon site are nowhere to be found. And better yet, their staff have no clue about that -- they're too busy surfing the web ... or something. 

I've been to many used bookstores in many places. This is the only one I would make a point of avoiding.

Completely inattentive employees--which seems to be the standard for NY establishments, in my experience--no greeting, no asking if I needed help, no "good-bye."  The one guy I saw working literally never looked up from his computer the entire time I came in.  Crappy/non-existent customer service aside the store is totally disorganized.

I came by to sell back some books about New York City history that I had. The man who worked there ignored me for about 5 minutes, and finally I got him to help out. He only wanted one of the books, one that was brand new and I probably paid $20 for originally. He took forever to look at them and then offered me $1. Even though I shouldn't have, I gave him the book because he was so weird and creepy that I just wanted to get out of there. I never leave reviews for places, but there was a hand-written note on the door asking customers to write a review on Yelp. So here's your review, jerk!

Today I bought a few books and I thought I was going to have to get the paddles on the guy who was working there, jump-start his heart. But at least he charged me correctly.

I typically have good experiences in this store, but I just left and am still feeling shaken up by the way I was treated by the saleswoman.  From the moment my friend and I walked in, she told us she couldn't help us find what we were looking for several times, and similarly told other customers in a rude tone of voice that she couldn't help them, couldn't take large bills, didn't know where anything was located, etc. After she rang up my purchase, I presented a 30% off coupon and she scoffed at me and condescendingly said, "Seriously?! You can't pay $4.36?!" When I smiled and told her that every penny counts, she said, "Yeah, for us too," rolled her eyes, and muttered expletives under her breath about me. I will have to be desperate to return here.

     To his credit, the owner of Westsider Rare and Used Books reads the reviews and sometimes comments on both positive and negative ones.  Responding to one negative one, he noted that many of the negative reviews were from disgruntled people trying to sell books that Westsider simply can’t use.  He also conceded that he and his staff, assailed constantly by would-be sellers, can be brusque, and understands the frustration of someone lugging books all the way across town only to have them rejected.  Finally, he pledged to be gentler with sellers from now on.  All of which may explain a lot of the unpleasant interactions in all the stores.  And to be fair, his store gets more positive than negative reviews.

     And now I’ll add my two cents about the legendary Strand.  Though it garners good reviews, I have to take exception regarding the staff.  I have bought and sold books there over the years, but only once in all that time did anyone thank me.  One young squirt had to be persuaded that it was acceptable to give a receipt for a sale, and then did so with thinly veiled hostility.  And the book buyers have always been joyless and soulless automatons, spitting out prices for the books without a trace of human feeling.  Worse still, one once suggested that I was trying to sell him one of Strand’s own books that I had just snatched from the shelves.  By calling to witness the guard at the entrance, who saw me come in with the book, I proved him wrong, but did the creep then apologize?  No, he just bought the book.  This was a while back, so maybe things are better today.  At least, they now have a separate entrance for anyone wanting to sell them a book, which might eliminate the problem I encountered.

     One bookstore that gets mostly rave reviews is Argosy Books at 116 East 59th Street on the Upper East Side of Manhattan.  Founded in 1925 (two years before the Strand) and now, like the Strand, in its third generation of family ownership, it has a six-floor building in midtown and a large warehouse in Brooklyn.  Even older than the Strand, Argosy specializes in old and rare books, prints, and maps, and therefore differs from the Strand, which offers a much wider selection.  

     Argosy also offers “books by the foot” for interior decorators, architects, model homes, TV and theater sets, and individuals in need of an instant library.  Their price for this item?  $30 and up per foot for cloth-bound books, and $250 and up for antique leather.  So for folks who want books around for atmosphere but can’t be bothered to read them, here is the solution. 

     Yet even Argosy gets an occasional bad review triggered not by the books but the staff, as for instance:

Have dealt with them in the past and my family has bought many books from them.  I called to get a second opinion on a first edition book we had an offer from Baumann Rare Books on, when I mentioned that to the older woman buyer she said that "We wouldn't be interested then." This is the second time I have spoken with her over the phone, she is very rude and condescending. I will never deal with them again!

With old rare books outside my price range and huffy and reluctantly helpful middle aged female staff, Argosy boasts the rude personnel, narrowish shelves, old New Yorkers browsing, and stuffy book smell of a true New York bookstore.

If there's anything off-putting about Argosy it might be the indifference of the people working there, but that's part of the experience. You don't go to a place like this for customer service, you come here to dream, gamble, and lose yourself. What treasures you find depend on the amount of digging you're willing to do.

     In fairness to all the stores, I’ll grant that everyone has good days and bad.  And since there are some positive reviews about staff as well, maybe it depends on who you happen to encounter.  And my one contact with Argosy, when they turned down an e-mail offer of three rare books, was not unpleasant; their reply, in fact, was courteous and considerate.  But the negative reviews of all the stores show real verve and spirit, and also prove that even in the age of ubiquitous chain stores and the Internet, there are readers who are happy browsing in little independent stores by the minute or the hour.

     And who exactly are these browsers, who come in to kill time or take shelter from the rain, or to look for some hard-to-find item, or simply for the fun of poking about among acres of old books?  Bookworms, no doubt, like myself.  From an early age I had my nose in a book, while other boys were out scrimmaging in vacant lots, or indulging in the raucous jubilance of baseball.  And for that preference – or should I say obsession? – I paid a heavy price, since the oddball reaps insults and scorn.  But we persist, we bookworms, and find our refuge, our fulfillment, our paradise in those grubby little stores crammed with musty, dusty books. 

     And of course we end up with too many books: shelves and shelves of them, and sometimes boxes and bins as well, and even that last resort, the oven.  No, I and my partner Bob haven’t appropriated the oven, but we are so overloaded with books that we’ve agreed to sell some 250 to 300 of them, which will still leave us with hundreds more.  And to whom will we sell them?  To the used-book stores, if they're interested (so far, they aren't).  And what they don’t take, we’ll donate.

     Bookstores like Argosy that specialize in rare books constitute a category all their own, and the king of the trade in New York is surely Bauman Rare Books at 535 Madison Avenue, with branches in Philadelphia and (do people really read there?) Las Vegas.  Founded in 1973 by Natalie and David Bauman, the store offers highly personalized service by experienced professionals, and over 4,000 books, maps, and prints from the fifteenth through the twentieth centuries, all of them thoroughly researched, so that collectors can purchase with confidence.  Their website photographs show a spacious, elegantly appointed interior with dark wood-panel walls and shelves housing beautifully bound old books behind glass – a striking contrast with the cluttered little bookstores mentioned earlier.  And among the offerings are first editions of Chaucer or a Shakespeare folio.  I contacted them once about three rare books I wanted to sell – the same three I offered to Argosy, and admittedly a long shot.  The books weren’t right for them, but they answered in a courteous and helpful letter, suggesting where I might learn the books' current value and sell them.  The gentleman – or gentlewoman – of the trade.

     One might assume you don’t go to Bauman just to browse, unless ready to spend a small fortune on books, which is why, to date, I have never set foot on the premises.  But the online reviews prove me wrong, for book lovers of modest means tell of visiting Bauman’s hushed interior the way one goes to a museum, and even having the glass doors unlocked so they can touch the treasures within, while being well received by a friendly and well-informed staff.  Still, I’m not tempted; my focus has always been on a book’s content, not its packaging – that is, not on the binding, the date, the edition, and all the other things that make a book rare or unique.  I want a book to be an old friend that I can handle with ease, not a treasure to be enshrined on a shelf and rarely touched.

Beautiful to look at, but I wouldn't buy.

You never know what you may find inside an old binding.
     Finally I’ll mention another store that I just discovered in my neighborhood: Left Bank Books at 17 Eighth Avenue, a short ten-minute walk from my apartment.  It specializes in hardcover literary first editions, especially fiction, poetry, drama, and literary nonfiction, but offers quality used books, mostly hardcover, on many subjects, in what one reviewer calls “an organized sprawl.”  Why first editions?  Because, the owner explains, they give you a feeling of being there when the book was new.  It’s a small store where four or five people browsing are almost the limit, but a chair in back offers refuge to a browser with time to kill.  You don’t get the musty smell of old books so beloved of bibliophiles, since the books tend to be of fairly recent vintage, but there are treasures to discover.  Often seated near the entrance is the owner, Kim Herzinger, who fields queries and buys books in a courteous and knowledgeable way, and with a sense of humor.  Thanks to him, I suspect, Left Bank Books gets uniformly good Yelp reviews, in contrast to so many of other stores where the staff leaves much to be desired.  I have browsed there recently and sold him two books, and hope to be back soon, delighted to find such a store within easy walking distance.

    Left Bank Books NY
    Left Bank Books
  • Left Bank Books NY
  • Left Bank Books NY
    Cozy, but crowded.
    Left Bank Books
     Note on me and WNYC:  The holiday season is a time for giving ... and for soliciting givers.  As viewers of this blog know, in my modest way I help support two listener-supported local radio stations, WBAI and WNYC.  WBAI is in the throes of yet another financial crisis and, as a result, is constantly changing its programs, for better and for worse.  When in need of calm and stability, I take refuge with WNYC.  But when their most recent plea for donations came, it occurred to me to ask if they take money from Monsanto or Goldman Sachs, two outfits I don't approve of.   So far, no response.  And therefore, so far, no donation.  So it goes in the world of nonprofits.

     Coming soon:  Divorce, New York style.

     ©  2014  Clifford Browder

Sunday, December 21, 2014

158. Goldman Sachs: Vampire Squid or Martyred Innocent?

     “It’s everywhere.  The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

File:Vampire des abysses.jpg
A vampire squid.

Mouth of a vampire squid.

     So wrote journalist Matt Taibbi in a memorable article of July 9, 2009, in Rolling Stone magazine, presenting an image that resonated then and still resonates.  His target was the multinational investment banking firm Goldman Sachs, now headquartered in a soaring 44-story tower at 200 West Street in Lower Manhattan.  Certainly this ultra-modern edifice proclaims its occupant a major player in the global world of finance, and one not to be trifled with.  So why has it inspired such venom?  I know nothing of vampire squids, but I’m sure I wouldn’t care to meet one.  And why, when I utter the words “Goldman Sachs” to friends and acquaintances unversed in the world of finance, do they reply with phrases like “big investment firm … dubious practices … cheating”?  What’s the story with this alleged blood-sucking predator?  Does it really merit such censure?  Bear with me as I, a layman with no special knowledge of finance, poke into the story and try to find some inklings of the truth.

File:Goldman Sachs Tower 200 West Street Battery Park City.jpg
The Goldman Sachs Tower at 200 West Street.
Beyond My Ken

     First, a little history.  Who was Goldman and who was Sachs?  The firm was founded by Marcus Goldman, a Jewish German immigrant from Bavaria who began as a peddler with a horse-drawn cart in Philadelphia, became a shopkeeper, and later removed to New York, where in 1869 he opened an office dealing in IOUs.  (If you don't quite grasp that, neither do I, but it sure paid off.)  In 1882 his son-in-law Samuel Sachs joined the firm, which from then on was known as Goldman Sachs.  The firm prospered, turning over $30 million in commercial paper a year, and in 1896 joined the New York Stock Exchange.  No longer controlled by the Goldman family, in the twentieth century the firm survived the 1929 crash and became involved in investment banking as well as trading.  Today its stock is publicly traded, much of it owned by institutions like pension funds and banks.  It has a global presence, and its former employees have served on the White House staff and headed the New York Stock Exchange, the World Bank, the U.S. Treasury Department, the New York Federal Reserve, Citigroup, and Merrill Lynch.  Rare is the financial pie it doesn’t have its finger in.  So it is indeed everywhere, but is it a vampire squid?

File:Cifrão symbol.svg

    For me, in the 1990s the face of Goldman Sachs was that of Abby Joseph Cohen, the firm’s chief investment strategist, who often appeared with one or two other women in the semiannual Barron’s roundtables, where a dozen or so financial experts were assembled to forecast the near-term developments of the economy and the markets.  (Yes, in those days I was actually reading, or at least scanning, Barron’s.)  Abby had reaped renown by predicting the bull market of the 1990s, and there was something about her that won you over.  New York-born, she looked unpretentious in photos,  nothing glitzy, little or no jewelry, her hair short, with the warmest smile: a Jewish momma from Queens who had made good in the hard-slugging male world of finance.  You simply wanted to believe her and wish her well.  And she was indeed a momma, having two teen-age daughters.  You couldn’t imagine her arriving at the office in a chauffeured limousine (though maybe she did), or jetting about the world to attend exclusive financial gatherings or advise clients (though in fact she did).  Abby was one of us.

Abby Joseph Cohen

     So influential was she in the 1990s that when a rumor hit Wall street in 1996 that she was switching from bull to bear, the Dow Jones Industrial Average plunged 60 points; then, when she got on the firm’s worldwide communications system to refute the rumor, it bounced back up again.  Power was hers.

     Alas, like many other experts, Abby failed to predict the brutal bear market of 2000 and was ridiculed for her persistent bullishness as stocks plummeted.  Worse still, again like most experts, she failed to foresee the  brutal bear market of 2008, and in March of that year was replaced as Goldman Sachs’s chief forecaster.  And today?  As Goldman Sachs’s senior investment strategist, she still appears in Barron’s roundtables and – you guessed it – she is resolutely bullish.  And so far she’s been right.

      In the 2007-2008 mortgage crisis that caught so many investment firms by surprise, Goldman Sachs sold subprime mortgage-backed securities short, so while other outfits faced catastrophic losses, it was reaping billions in profit.  In my eyes, nothing wrong with that; it was just smarter than the rest of the boys.  (No gender bias intended; this was a boys’ game primarily.)  No wonder the New York Times proclaimed Goldman Sachs without a peer in the world of finance.

     But then the picture darkened.  In October 2007 a Fortune magazine senior editor noted that Goldman Sachs had sold a $494 million issue backed by risky second-mortgage loans, the very kind of transaction that had facilitated the housing bubble, and the resulting bust that triggered the financial crisis then under way.  Was Goldman Sachs too shrewd for its own good?  Not in this instance.  Many borrowers defaulted on these junk mortgage loans, and investors who bought the issue suffered heavy losses, but not Goldman Sachs, since it had shorted the junk mortgage market, betting that prices would drop.

File:Cifrão symbol.svg

     Even so, Goldman Sachs was not immune as the financial crisis developed.  Chaos followed when Lehman Brothers went into bankruptcy, triggering panic throughout the world.  Then in September 2008 Goldman Sachs became a traditional bank holding company, ending the era of wild investment banking on Wall Street.  Why did it do this?  To get aboard the federal gravy train, of course.  The change in its status meant that it would henceforth be regulated by the Federal Reserve, so that it qualified for a $10 million investment from the U.S. Treasury as part of the Troubled Asset Relief Program (TARP), a government program to purchase assets from troubled financial institutions in hopes of stabilizing a very shaky financial system.  In other words, the government used taxpayers’ money to bail out Goldman Sachs and other big financial institutions endangered by their risky speculative investments.  Big Brother was rescuing the bad boys when their misdeeds came home to roost.  (Pardon the inept image.)  To be sure, the firm repaid the Treasury’s TARP investment with 23% interest in June 2009, so the government was not suckered in the deal. 

File:Henry M. Paulson, Jr.jpg
Henry M. Paulson, Jr.
     And who was Treasury Secretary during all these tumultuous events?  Henry M. Paulson, Jr., a former Goldman Sachs CEO.  And who were his assistants at Treasury?  A clutch of other Goldman alumni, all of them talented, but still, it makes one wonder.  Goldman insisted that, in a time of dire crisis, they were serving their country by making their expertise available in Washington.  Though unaware that patriotism raged on Wall Street, I’ll grant that in this assertion there may be a grain, a tiny grain, of truth.  And in Washington one makes so many useful contacts…

     These complicated financial doings can only baffle the layman.  Is Goldman Sachs a good guy or a bad guy?  If only it were that simple.  To even have a clue, you have to understand at least a little what these complex financial transactions involved.  Here is what this layman has grasped.  Derivatives, it should be noted, are contracts deriving their value from some underlying entity such as an index or an interest rate or an asset, in this case subprime mortgages (sometimes endearingly termed “junk mortgages”).

1.    Back in 2000 Congress, in its infinite wisdom, passed something called the Commodities Futures Modernization Act, which, inserted at the last minute into an 11,000-page spending bill with almost no debate, “modernized” derivatives trading by freeing it from most existing federal regulations.  In this shadowy sector of the market, then, banks like Goldman Sachs were free to do as they wanted.
2.    Eager home buyers were encouraged to take out a mortgage, even though their shaky finances made it unlikely that they could make the periodic payments required.
3.    These subprime mortgages were bundled into packages of risky mortgage-backed securities (a form of derivative) and sold by Goldman Sachs and other banks to unsuspecting pension funds and insurance companies.
4.    Even as it was doing this, Goldman Sachs was betting that the value of these mortgage-backed securities would decline, which it did.
5.    The buyers of these securities suffered a whopping big loss.
6.    Goldman Sachs raked in a whopping big profit.
7.    Meanwhile lots of homeowners were defaulting on their mortgage payments and facing foreclosure, meaning they would lose their homes.

File:Subprime Mortgage Offer.jpeg
The enticement: a subprime mortgage offering, 2008.  But God help those who were enticed.
The Truth About
     What is one to make of all this?  The home buyers acted unwisely, but they were encouraged to do so, and all they wanted was to own their own home.  The buyers of the securities failed to do their homework, didn’t grasp how risky their investment was; they paid the price of their negligence.  Goldman Sachs, by selling risky securities that it wanted to see decline in value, may or may not have been committing securities fraud (it depends on who you talk to), but this was hardly ethical.  And why were these risky securities, backed by junk mortgages, on the market anyway?  Because too much money was looking for too few investments; in the absence of sound investments, investors were offered junk, which they eagerly snapped up.  Permeating the whole scene was ignorance on the part of some, and feverish greed and wild speculation on the part of others – a formula for disaster.  And disaster came.

File:Cifrão symbol.svg

     If you’re still baffled by all this, don’t be concerned.  These are complex and esoteric financial matters best understood only by seasoned traders and analysts, which makes these markets just that much harder to regulate.  Laymen could just ignore the whole shebang, except that this unregulated market provoked a financial crisis that engulfed us all, and whose repercussions are still being felt.  Ask anyone who can’t find a job, or has to hold two or three jobs to support themselves, or is about to lose their home through foreclosure, or has lost it already.

     It is interesting to note that, in the crisis year of 2008, Goldman Sachs paid $14 million in taxes.  Does that sound like a lot?  Its profit that year was $2.3 billion, and in 2009 it paid its CEO $42.9 million.  But how could it pay a mere 1% in taxes?  Because it shifted its earnings to subsidiaries in low-tax or no-tax countries, a manipulation beloved of multinational corporations and quite legal; it had 15 subsidiaries in the Cayman Islands alone.  Said one Democratic Representative from Texas, “With the right hand out begging for bailout money, the left is hiding it offshore.”  Ah, clever Goldman, it doesn’t miss a trick.

     Other matters worthy of note:

·      To settle a lawsuit by the SEC alleging securities fraud linked to mortgage investments, in 2010 Goldman agreed to pay $550 million.
·      In 2009, in the midst of the financial crisis, it set aside $11.4 billion for employee bonuses.
·      In 2010 it came to light that a Goldman director had tipped off a hedge-fund manager about a substantial investment in Goldman by the legendary investor Warren Buffett before news of the investment reached the public, which amounted to illegal insider information.
·      Goldman has been accused of helping the Greek government hide the size of its debt from 1998 to 2009.
·      In 2011 the Washington Examiner reported that Goldman was the company that raised the most money for Obama in 2008, and that its CEO had visited the White House ten times.
·      After ex-director Stephen Friedman became chairman of the Federal Reserve Bank of New York, which regulated Goldman, he held on to his Goldman stock and bought more, prompting charges of conflict of interest that led to his resignation in 2009.
·      In 2009 Goldman agreed to pay up to $60 million to end an investigation by the Massachusetts attorney general into its involvement in alleged predatory mortgage lending practices.
·      In 2010 the SEC charged Goldman and one of its vice presidents with securities fraud, leading to a settlement in which Goldman paid $550 million.

File:Cifrão symbol.svg

     And so on and so on.  More potentially damning, in 2012 Greg Smith, the former head of the Goldman Sachs equity derivatives business in Europe, the Middle East, and Africa, resigned his position, saying in a letter made public in the New York Times that Goldman had a “toxic and destructive” environment in which “the interests of the client continue to be sidelined.”  This caused quite a stir, even though his account was found to be wanting in specific details.

          On the positive side:

·      The Goldman Sachs Foundation has given $114 million in grants to promote youth education worldwide.
·      Goldman has been on Fortune magazine’s 100 Best Companies to Work For list since 1998, with emphasis on its support for employee philanthropy.
·      In 2008 it initiated the 10,000 Women program to train women from developing countries in business and management.
·      In 2008 it pledged $500 million to help small businesses in business and management education and philanthropy.
·      In 2012 it offered a loan of $9.6 million to deliver therapeutic services to teenage inmates on Rikers Island.

And so on and so on.

     So is Goldman Sachs a great vampire squid, as alleged in the Rolling Stone article?  How is a layman to say?  But a Forbes magazine article of August 8, 2013, entitled “The Great Vampire Squid Keeps on Sucking” said the following:

Goldman Sachs, the vampire squid, and its Wall Street cohorts see money everywhere.  They will attempt to squeeze a deal even if it’s not a banking project.  Like street thugs, Wall Street banks are manipulating prices, such as aluminum, to profit.  The result is higher prices for consumers.

If even the financial press condemns Goldman Sachs, the basic charges of the Rolling Stone article would seem to be confirmed.

File:Cifrão symbol.svg

     Does Goldman Sachs then supplant Monsanto as the company I most love to hate?  No, because it poses no immediate threat to me, whereas Monsanto tampers with the very food I eat.  Also, to understand such tampering requires grasping only a term or two such as “bovine growth hormone” and “genetically modified organism” or “GMO,” whereas getting a fix on Goldman Sachs’s shenanigans requires mastering a whole battery of esoteric terms:

·      Derivative
·      Mortgage-backed security
·      Credit default swap
·      Collateralized debt obligation
·      Hedging
·      Arbitrage
·      Option

When these and other terms burst upon the public consciousness with the financial convulsion of 2008-2009, many on Wall Street confessed that some of these terms baffled even them.

File:Monsanto Company.jpg

     Ah, how one misses those simpler days of the 1990s, when a bull market was raging, and Abby Joseph Cohen, unpretentious and benign, presented the face of Goldman Sachs!  And what of Abby today?  In a 2011 interview with Deborah Solomon of the New York Times, she sidestepped some pointed questions about Goldman Sachs or gave rather vague answers.  Asked if it was ethically justifiable for some bankers to earn $50 or $60 million a year, when unemployment was nearly 10% and income inequality was widening, she noted that such inequality was apparent in many sectors and mentioned athletes, entertainers, and chief executives.  And when asked if she felt any responsibility for the economic meltdown of 2008, she said that the causes were multiple and mentioned “bad decisions made by many different entities.” 

     Clearly, through thick and thin, Abby is loyal to her firm.  And how is that firm doing today?  In October of this year it reported net earnings of $2.24 billion (yes, billion, not million) for the third quarter of 2014, with assets under supervision increasing to a record $1.15 trillion (yes, trillion, not billion).  If vampire squid it is, it is getting on swimmingly.

     The New York Times of December 11, 2014, reported the results of a recent poll asking opinions on a wide range of economic and financial issues.  Among the questions and answers were these:

How much confidence do you have in Wall Street bankers and brokers?
·      A lot, 4%
·      Some, 31%
·      Not much, 29%
·      None, 32%

How much confidence do you have in the federal government’s ability to regulate financial institutions?
·      A lot, 9%
·      Some, 31%
·      Not much, 34%
·      None, 24%

If any further confirmation were needed, as a part of the compromise to keep the government running, on December 11, 2014, the House of Representatives voted to loosen the regulations for derivatives trading.  The gravy train rolls on.

File:Cifrão symbol.svg

     But that’s still not the end of it.  On December 12 Senator Elizabeth Warren of Massachusetts took the Senate floor to excoriate Citigroup for its exerting undue influence on federal legislation, and its work to loosen rules on risky derivatives trading, while noting how many Citigroup alumni hold significant posts in the federal government.  It was a heartfelt speech such as I have rarely heard a politician make, and thanks to WBAI I heard the heart of it.  She bitterly opposed the Senate’s following the House in voting to loosen derivatives regulation, which it then proceeded to do.  Her chief target was Citigroup, but Goldman Sachs could have been substituted and all her charges would have stood.  The speech has been hailed by many as electrifying and historic, and The Huffington Post calls it the speech that could make Warren the next President of the United States.  That’s going some, but I agree that it was historic.

     And there’s still more.  In the Times Business section of December 14, 2014, veteran financial journalist Gretchen Morgenson reported, under the caption At Big Banks, A Lesson Not Learned, that the government has fined ten big financial firms, Goldman Sachs among them, $43.5 million for violating regulations in 2010.  And many of the firms involved had been fined a total of $1.4 billion for violations back in 2003. 
     Yes indeed, a lesson not learned.  Even a layman like myself can see that Goldman Sachs, Citigroup, and our other big banks are still engaging in risky deals that sooner or later are bound to provoke a crisis, at which point they will expect us, the taxpayers, to bail them out once again.  To learn better, they will have to be kicked in the teeth.  And so, I’m afraid, will all of us, until we march in the streets, banging pots and pans or whatever, so as to make Congress impose penalties that cut the offending banks to the quick.  That day, I hope, will come.  I don’t know when, but it will, it must.

     Final thought:  Big financial institutions like Goldman Sachs have money and connections and power.  What they don’t have is respect.

File:Cifrão symbol.svg

     Dick Cheney, the man I love to hate:  In a previous post (#82, “Who makes money when America goes to war?”) I noted why ex-Vice President Dick Cheney had much to smile about.  Now he has resurfaced (though he never really went away) in the wake of the Senate report on the CIA’s use of torture, a use that, as Vice President under Bush #2 (Baby Bush, as opposed to Papa Bush), Cheney vigorously supported at the time.  “I would do it again in a minute,” he announced in an NBC “Meet the Press” TV interview.  Yes, even if it involved holding a prisoner in a coffin-sized box for 11 days, or handcuffing a prisoner’s wrists to an overhead bar for 22 hours a day.  As for “rectal feeding,” he believes it was done for medical reasons.  His views on the subject differ radically from those of fellow Republican John McCain, who was tortured while a prisoner of the North Vietnamese.  Mr. Cheney did not serve in the Vietnam War, having received four deferments as a student and a fifth as a new father.  He is now 73 and has had a heart transplant, though the new heart seems to be working much like the old one.  Baby Bush has had the good grace to admit a few mistakes (the Mission Accomplished show, his ill-timed “Bring ’em on” remark, so resented by U.S. soldiers in Iraq), but his no. 2 is fiercely consistent.  Often photographed as V.P. smiling against a backdrop of the Stars and Stripes, Dick Cheney is fast becoming the man I love to hate.

File:46 Dick Cheney 3x4.jpg
What a winning smile!  And a flag on his lapel as well.

     A note to Anonymous:  A viewer of this blog who calls himself (I assume it’s a “him”) Anonymous has added two fervent comments in response to my post on David Rockefeller (#89, Sept. 29, 2013).  He thinks me naïve, and I find his tirades, while interesting, intemperate and extreme.  We aren’t diametrically opposed; it’s a matter of degree.  I give the Rockefellers the benefit of a doubt, given their generosity in creating Rockefeller Center in the pit of the Depression, and their help in founding the Museum of Modern Art, whereas Anonymous denounces them with what strikes me as visceral hate.  So I now ask Anonymous, not to refrain from his comments (which are always welcome), but to stop masking himself with anonymity.  Have the guts to drop the name “Anonymous” and make your case under your own name.  If you do, your comments will have more weight with both me and others.

     Coming soon:  Used and rare-book bookstores, who patronize them, and why do they denounce the employees?  And what am I to do with 250-300 used books I need to get rid of?  And after that, maybe divorce New York style, from way back down to today.  (It wasn’t always easy; you had to fake adultery.)

     ©  2014  Clifford Browder