I have a real bee in my bonnet these days about Goldman Sachs. Yes, they are good at what they do, and technically speaking, I can’t say that I’m aware of them having done anything illegal during the buildup to our current crisis. However, in my book, they are the poster child for all that should be purged from the financial markets. Having Goldman running amok in our financial system is like having wild pigs in your back yard. No one really dislikes wild pigs, but there's absolutely no upside to having them in your back yard. Even worse, they can do a fair amount of damage. Ditto for having Goldman in our financial system.
Goldman’s bread and butter is trading and investment banking, the latter of which is on hiatus for who knows how long. So, its shareholders essentially just own an interest in a big trading desk. Goldman takes shareholder capital and speculatively trades in stocks, options, bonds, foreign currencies, interest rates, credit default swaps, etc. Name a derivative, and they probably trade it. As I said, it’s all speculative. They do nothing to create value. They just trade. However, what they do is different from just going to Vegas and rolling the dice. How so? Because their very act of placing a bet can actually have an influence on the outcome of that bet; for example, when they choose to short a stock. They can relentlessly drive a stock into the ground, and those on the losing side of the trade are the public, who were lulled into believing that buy-and-hold is a viable investment strategy, and that the SEC is ready and able to protect their interests.
I’d like someone in government who is allowing this to happen to explain why it’s in the public’s interest to let Goldman ride roughshod over the financial markets. How do we benefit? Clearly, we don’t, and that’s precisely why the realm in which Goldman plays—what some people call the shadow market—needs to be regulated into oblivion. Simply put, we need to purge the financial system of the casino activities that have done so much harm in recent years, and we need to make an example of Goldman, precisely because it is the much-envied “gold standard” among firms that engage in these activities. The financial markets need to be returned to long-term investors, and made safe with rules that are clear and enforced.
It is a tragedy that the public has been denied the right to participate in the capitalist system without it being corrupted and manipulated. Investors with good intentions have been completely thwarted by the likes of Goldman and countless other hedge funds and institutional trading desks for too many years now. Enough is enough. The stock market wasn’t created with the intention of using the public as pawns in trading schemes that only benefit the rich. Goldman and other market manipulators must be shown the door if we are to ever restore trust in the financial markets.