Wednesday, November 14, 2012

Lloyd Blankfein: Doing God’s Work, Once Again

Lloyd Blankfein, Chairman and CEO of Goldman Sachs, is out with an editorial as regards the challenges currently facing America.  Let’s take a peek, shall we?

Four years ago, it was said that the incoming Obama administration aspired to the dynamic that existed in Abraham Lincoln's cabinet, where former competitors and antagonists came together to help the country through the Civil War.

A war of Abe’s choosing – the most devastating event on American soil.  There is something to aspire to.

If Doris Kearns Goodwin's "Team of Rivals" was the historical aspiration then, the model to emulate after this election is her earlier book, "No Ordinary Time," about Franklin Roosevelt's domestic policies during the latter years of the Great Depression and into World War II.

Roosevelt implemented the most socialist and draconian economic plans seen on American soil up to that time, while turning what could have been a short sharp recession (with Hoover’s help), into a 16 year depression.  He then lied the country into war, and did everything he could to get first Germany, then Japan, to fire the first shot.  He then did nothing to protect those in the line of that first shot.  There is something to aspire to.

Is Lloyd suggesting that unless Obama and Washington and business come together, we are facing war as the solution?

The 1930s were a period of extreme bitterness between the business community and the Roosevelt administration. Many executives deplored the president's policies and refused to even utter his name, referring to him as "that man in the White House."

They hadn’t yet seen the benefits of having muscle on their side. 

Yet, well before the bombing of Pearl Harbor, these adversaries made common cause to defeat Germany and Japan.

They now see the benefits of having muscle on their side.  War is the health of the state…and the health of big business / crony capitalists. 

The result was an unprecedented surge in industrial production that would crush the Axis powers and lift the American economy out of the Great Depression. Roosevelt showed leadership, and business answered the call.

The war only prolonged the great depression – to say nothing of the permanent depression suffered by those who died in Roosevelt’s folly.  For this, Lloyd wants business and government to come together?

Relations between the Obama administration and large segments of the business community have been strained and unproductive.

For some perhaps.  But not those on the receiving end of fiscal and monetary stimulus, and not for those who did not get prosecuted for mortgage fraud.  So I guess the “large segments of the business community” don’t include the banks.  It is nice for Lloyd to speak out on behalf of others, though.

By electing a divided government, Americans didn't choose two years of squabbling and inaction until the next election…

First of all, over 40% of Americans didn’t choose anyone – they didn’t bother to vote.  As to those who voted, who is Lloyd to say what they voted for?  Did he ask them all?  Does he think he is God that he can read the mind of over 100 million people?

Many believe gridlock is the least bad outcome, I suspect.  So “squabbling and inaction” would suit this group just fine.

A spirit of compromise and reconciliation would do wonders for the economy if government and business resolved together to address the following priorities:

Government and business working together is fascism by another name.

Remove the risk of a double-dip recession and give the economy a stimulative jolt.

More fiscal and monetary stimulus, just like Obama and Bernanke did in the first 4 years.  That has worked well (well for those businessmen that work closely with government, at least.  You know, like bankers.).

Restore confidence in public finances….A grand fiscal bargain—perhaps using the Simpson-Bowles plan as a starting point—should include spending cuts, entitlement reform and revenue increases. Some of the reforms should be enacted now but implemented later to avoid the risk of recession.

Lloyd suggests to please cut the budget, five or six or ten years from now when the Congress and President at that time won’t care what you have agreed to do.  Just don’t do it now while his bonus and stock options are at risk.  Government stimulus is very, very good to him!

The business community vigorously supports efforts to conclude a bipartisan fiscal accord. I believe that tax increases, especially for the wealthiest, are appropriate, but only if they are joined by serious cuts in discretionary spending and entitlements.

Consider that those in banking (among other industries) earn an outsized income almost completely because of the actions of government.  How often would Lloyd make hundreds of millions of dollars if not for the Fed and the Treasury?  Therefore, his advocacy to pay higher tax rates is hollow – he pays NO taxes, because he would have nowhere near his income if not for government intervention.  His gross income, instead of in the eight figures would be not much more than that of the bank president of an independent small-town bank – maybe $100K?

In any case, Lloyd and his friends can voluntarily pay as much tax as they like – the Treasury will not refuse the money.

Act like we need to compete and win—because we do. For the first time in several generations, it has become clear that abundant domestic energy resources are within our reach, and that we have the technology to responsibly and safely extract it. The government needs to work with the private sector to implement effective and far-reaching policies to develop these resources….Energy policy is crucial:

Central planning: it works well for the politically connected in banking, it can work well for the politically connected in energy as well.

America has a long tradition of talented and experienced people who have gone to work for the government after a successful business career.

In other words: “Thank you Hank Paulson; if not for you I would be peddling ice-cream sandwiches on the boardwalk.”

No comments:

Post a Comment