“I wouldn’t go to war again as I have done to protect some lousy investment of the bankers. There are only two things we should fight for. One is the defense of our homes and the other is the Bill of Rights. War for any other reason is simply a racket.”
Major General Smedley Butler
Butler, 1861-1940, a highly decorated Marine, wrote War is a Racket.
I don’t know why Mr. Smith took so long to figure out his company was this corrupted. But he deserves credit for exposing its true nature. President Obama, are you listening?
Why I Am Leaving Goldman Sachs
by Greg Smith/ New York Times/ 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. (Continued)
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.
The Difference Between Private and Public Morality
by Robert Reich/ March 13, 2012
Republicans have morality upside down. Santorum, Gingrich, and even Romney are barnstorming across the land condemning gay marriage, abortion, out-of-wedlock births, access to contraception, and the wall separating church and state.
But America’s problem isn’t a breakdown in private morality. It’s a breakdown in public morality. What Americans do in their bedrooms is their own business. What corporate executives and Wall Street financiers do in boardrooms and executive suites affects all of us.
There is moral rot in America but it’s not found in the private behavior of ordinary people. It’s located in the public behavior of people who control our economy and are turning our democracy into a financial slush pump. It’s found in Wall Street fraud, exorbitant pay of top executives, financial conflicts of interest, insider trading, and the outright bribery of public officials through unlimited campaign “donations.”
Political scientist James Q. Wilson, who died last week, noted that a broken window left unattended signals that no one cares if windows are broken. It becomes an ongoing invitation to throw more stones at more windows, ultimately undermining moral standards of the entire community
The windows Wall Street broke in the years leading up to the crash of 2008 remain broken. Despite financial fraud on a scale not seen in this country for more than eighty years, not a single executive of a major Wall Street bank has been charged with a crime.
Since 2009, the Securities and Exchange Commission has filed 25 cases against mortgage originators and securities firms. A few are still being litigated but most have been settled. They’ve generated almost $2 billion in penalties and other forms of monetary relief, according to the Commission. But almost none of this money has come out of the pockets of CEOs or other company officials; it has come out of the companies — or, more accurately, their shareholders. Federal prosecutors are now signaling they won’t even bring charges in the brazen case of MF Global, which lost billions of dollars that were supposed to be kept safe.
Nor have any of the lawyers, accountants, auditors, or top executives of credit-rating agencies who aided and abetted Wall Street financiers been charged with doing anything wrong.
And the new Dodd-Frank law that was supposed to prevent this from happening again is now so riddled with loopholes, courtesy of Wall Street lobbyists, that it’s almost a sham. The Street prevented the Glass-Steagall Act from being resurrected, and successfully fought against limits on the size of the largest banks.
Windows started breaking years ago. Enron’s court-appointed trustee reported that bankers from Citigroup and JP Morgan Chase didn’t merely look the other way; they dreamed up and sold Enron financial schemes specifically designed to allow Enron to commit fraud. Arthur Andersen, Enron’s auditor, was convicted of obstructing justice by shredding Enron documents, yet most of the Andersen partners who aided and abetted Enron were never punished.
Americans are entitled to their own religious views about gay marriage, contraception, out-of-wedlock births, abortion, and God. We can be truly free only if we’re confident we can go about our private lives without being monitored or intruded upon by government, and can practice whatever faith (or lack of faith) we wish regardless of the religious beliefs of others. A society where one set of religious views is imposed on a large number of citizens who disagree with them is not a democracy. It’s a theocracy.
But abuses of public trust such as we’ve witnessed for years on the Street and in the executive suites of our largest corporations are not matters of private morality. They’re violations of public morality. They undermine the integrity of our economy and democracy. They’ve led millions of Americans to conclude the game is rigged.
Regressive Republicans have no problem hurling the epithets “shameful,” “disgraceful,” and “contemptible” at private moral decisions they disagree with. Rush Limbaugh calls a young woman a “slut” just for standing up for her beliefs about private morality.
Republicans have staked out the moral low ground. It’s time for Democrats and progressives to stake out the moral high ground, condemning the abuses of economic power and privilege that characterize this new Gilded Age – business deals that are technically legal but wrong because they exploit the trust that investors or employees have place in those businesses, pay packages that are ludicrously high compared with the pay of average workers, political donations so large as to breed cynicism about the ability of their recipients to represent the public as a whole.
An economy is built on a foundation of shared morality. Adam Smith never called himself an economist. The separate field of economics didn’t exist in the eighteenth century. He called himself a moral philosopher. And the book he was proudest of wasn’t “The Wealth of Nations,” but his “Theory of Moral Sentiments” – about the ties that bind people together into societies.
Twice before progressive have saved capitalism from its own excesses by appealing to public morality and common sense. First in the early 1900s, when the captains for American industry had monopolized the economy into giant trusts, American politics had sunk into a swamp of patronage and corruption, and many factory jobs were unsafe – entailing long hours of work at meager pay and often exploiting children. In response, we enacted antitrust, civil service reforms, and labor protections.
And then again in 1930s after the stock market collapsed and a large portion of American workforce was unemployed. Then we regulated banks and insured deposits, cleaned up stock market, and provided social insurance to the destitute.
It’s time once again to save capitalism from its own excesses — and to base a new era of reform on public morality and common sense.
Supreme Court Likely to Endorse Obama’s War on Whistle-Blowers
by Chris Hedges/ Truthdig/ March 12, 2012
Totalitarian systems disempower an unsuspecting population by gradually making legal what was once illegal. They incrementally corrupt and distort law to exclusively serve the goals of the inner sanctums of power and strip protection from the citizen. Law soon becomes the primary tool to advance the crimes of the elite and punish those who tell the truth. The state saturates the airwaves with official propaganda to replace news. Fear, and finally terror, creates an intellectual and moral void.
We have very little space left to maneuver. The iron doors of the corporate state are slamming shut. And a conviction of Bradley Manning, or any of the five others charged by the Obama administration under the Espionage Act of 1917 with passing government secrets to the press, would effectively terminate public knowledge of the internal workings of the corporate state. What we live under cannot be called democracy. What we will live under if the Supreme Court upholds the use of the Espionage Act to punish those who expose war crimes and state lies will be a species of corporate fascism. And this closed society is, perhaps, only a few weeks or months away.
Few other Americans are as acutely aware of our descent into corporate totalitarianism as Daniel Ellsberg, who leaked the Pentagon Papers in 1971 to The New York Times and is one of Manning’s most ardent and vocal defenders. Ellsberg, who was charged under the Espionage Act, faced 12 felony counts and a possible sentence of 115 years. He says that if he provided the Pentagon Papers today to news organizations, he would most likely never see his case dismissed on grounds of government misconduct against him as it was in 1973. The government tactics employed to discredit Ellsberg, which included burglarizing his psychoanalyst’s office and illegal wiretaps, were subjects of the impeachment hearings against President Richard Nixon. But that was then.
“Everything that Richard Nixon did to me, for which he faced impeachment and prosecution, which led to his resignation, is now legal under the Patriot Act, the FISA [Foreign Intelligence Surveillance Act] amendment act, the National Defense Authorization Act,” Ellsberg told me late Friday afternoon when we met in Princeton, N.J.
Manning, whose trial is likely to begin in early August, is being held in a medium-security facility at Fort Leavenworth, Kan. He allegedly gave WikiLeaks more than 700,000 documents and video clips. One clip showed the 2007 Apache helicopter attack in which U.S. military personnel killed more than a dozen people in the Iraqi suburb of New Baghdad, including a Reuters news photographer and his driver. Manning faces 22 charges under the Espionage Act, including aiding the enemy, wrongfully causing intelligence to be published on the Internet, theft of public property or records, transmitting defense information, and fraud and related activity in connection with computers. If he is found guilty he could spend the rest of his life in prison without the possibility of parole. Juan Ernesto Mendez, the U.N. torture rapporteur, has described Manning’s treatment by the U.S. government as “cruel, inhuman and degrading,” especially “the excessive and prolonged isolation he was put in during the eight months he was in Quantico.”
The Espionage Act was used only three times before President Barack Obama took office. Ellsberg’s case was dismissed. The second use of the act saw Alfred Zehe, a German physicist, plead guilty to giving U.S. information to East Germany. The third case saw Samuel Morison, a onetime U.S. intelligence professional, convicted in federal court on two counts of espionage and two counts of theft of government property. He was sentenced to two years in prison on Dec. 4, 1985, for giving classified information to the press, and in 1988 the Supreme Court declined to hear his appeal. President Bill Clinton pardoned Morison on the last day of his presidency.
Obama, who serves the interests of the surveillance and security state with even more fervor than did George W. Bush, has used the Espionage Act to charge suspected leakers six times since he took office. The latest to be charged by the Obama administration under the act is John Kiriakou, a former CIA officer accused of disclosing classified information to journalists about the interrogation of Abu Zubaydah, an al-Qaida suspect. Julian Assange, the founder of WikiLeaks, which published the cables and video clips allegedly provided by Manning, is expected to be the seventh charged under the act.
The Supreme Court has yet to hear a case involving the Espionage Act. But one of these six cases will probably soon reach the court. If it, as expected, rules that the government is permitted to use the Espionage Act against whistle-blowers, the United States will have a de facto official secrets act. A ruling in favor of the government would instantly criminalize all disclosures of classified information to the public. It would shut down one of the most important functions of the press. And at that point any challenges to the official versions of events would dry up. (Continued)
Talk about flashbacks. New research suggests that LSD–a mind-altering drug known to cause recurrent hallucinations–may find new popularity not as a recreational drug but as a treatment for alcoholism.
For a study published in Journal of Psychopharmacology, researchers affiliated with the Norwegian University of Science and Technology and Harvard University looked at the results of six old studies of LSD that had been largely overlooked when they were first published. The researchers found “evidence for a clear and consistent beneficial effect of LSD for treating alcohol dependency,” according to a written statement released by the journal’s publisher.
The studies were undertaken in the 1960s and 1970s, decades after the 1938 discovery of LSD (lysergic acid diethylamide) and at a time when the drug was considered a possible treatment for medical problems including pain and anxiety as well as alcoholism.
Three views of the LSD molecule.
And sobering up wasn’t the only apparent benefit of LSD the vintage research showed, according to the statement. As the author of one of the studies wrote at the time, “It was not unusual for patients following their LSD experience to become much more self-accepting, to show greater openness and accessibility, and to adopt a more positive, optimistic view of their capacities to face future problems.”
Maybe that’s not surprising, given how LSD works. By affecting so-called “serotonin receptors” in the brain, the drug is known to alter imagination and perception. And if you want to know what that feels like, take a look at the black-and-white footage above–purportedly shot in Los Angeles in 1956–in which a woman recounts her own acid trip.
“I’ve never seen such infinite beauty in my life,” she says in the video. “It’s like a curtain or a spider web. Can you see it? Everything is so beautiful and lovely and alive.”
David Freeman is the senior science editor for HuffPost.
I’ve seen a lot of sick stuff in my career, but this was sick on a new level.
Here was the handwritten log kept by a senior engineer at the nuclear power plant:
Wiesel was very upset. He seemed very nervous. Very agitated. . . . In fact, the plant was riddled with problems that, no way on earth, could stand an earth- quake. The team of engineers sent in to inspect found that most of these components could “completely and utterly fail” during an earthquake.
“Utterly fail during an earthquake.” And here in Japan was the quake and here is the utter failure.
The warning was in what the investigations team called The Notebook, which I’m not supposed to have. Good thing I’ve kept a copy anyway, because the file cabinets went down with my office building ….
WORLD TRADE CENTER TOWER 1, FIFTY-SECOND FLOOR
NEW YORK, 1986
[This is an excerpt in FreePress.org from Vultures’ Picnic: In Pursuit of Petroleum Pigs, Power Pirates and High-Finance Fraudsters, to be released this Monday. Click here to get the videos and the book.]
Two senior nuclear plant engineers were spilling out their souls and files on our huge conference table, blowing away my government investigations team with the inside stuff about the construction of the Shoreham, New York, power station.
The meeting was secret. Very secret. Their courage could destroy their careers: No engineering firm wants to hire a snitch, even one who has saved thousands of lives. They could lose their jobs; they could lose everything. They did. That’s what happens. Have a nice day.
On March 12 this year, as I watched Fukushima melt, I knew: the “SQ” had been faked. Anderson Cooper said it would all be OK. He’d flown to Japan, to suck up the radiation and official company bullshit. The horror show was not the fault of Tokyo Electric, he said, because the plant was built to withstand only an 8.0 earthquake on the Richter scale, and this was 9.0. Anderson must have been in the gym when they handed out the facts. The 9.0 shake was in the middle of the Pacific Ocean, 90 miles away. It was barely a tenth of that power at Fukushima.
I was ready to vomit. Because I knew who had designed the plant, who had built it and whom Tokyo Electric Power was having rebuild it: Shaw Construction. The latest alias of Stone & Webster, the designated builder for every one of the four new nuclear plants that the Obama Administration has approved for billions in federal studies.
But I had The Notebook, the diaries of the earthquake inspector for the company. I’d squirreled it out sometime before the Trade Center went down. I shouldn’t have done that. Too bad.
All field engineers keep a diary. Gordon Dick, a supervisor, wasn’t supposed to show his to us. I asked him to show it to us and, reluctantly, he directed me to these notes about the “SQ” tests.
SQ is nuclear-speak for “Seismic Qualification.” A seismically qualified nuclear plant won’t melt down if you shake it. A “seismic event” can be an earthquake or a Christmas present from Al Qaeda. You can’t run a nuclear reactor in the USA or Europe or Japan without certified SQ.
This much is clear from his notebook: This nuclear plant will melt down in an earthquake. The plant dismally failed to meet the Seismic I (shaking) standards required by U.S. and international rules.
Here’s what we learned: Dick’s subordinate at the nuclear plant, Robert Wiesel, conducted the standard seismic review. Wiesel flunked his company. No good. Dick then ordered Wiesel to change his report to the Nuclear Regulatory Commission, change it from failed to passed. Dick didn’t want to make Wiesel do it, but Dick was under the gun himself, acting on direct command from corporate chiefs. From The Notebook:
Wiesel was very upset. He seemed very nervous. Very agitated. [He said,] “I believe these are bad results and I believe it’s reportable,” and then he took the volume of federal regulations from the shelf and went to section 50.55(e), which describes reportable deficiencies at a nuclear plant and [they] read the section together, with Wiesel pointing to the appropriate paragraphs that federal law clearly required [them and the company] to report the Category II, Seismic I deficiencies.
Wiesel then expressed his concern that he was afraid that if he [Wiesel] reported the deficiencies, he would be fired, but that if he didn’t report the deficiencies, he would be breaking a federal law. . . .
The law is clear. It is a crime not to report a safety failure. I could imagine Wiesel standing there with that big, thick rule book in his hands, The Law. It must have been heavy. So was his paycheck. He weighed the choices: Break the law, possibly a jail-time crime, or keep his job.
What did Wiesel do? What would you do?
Why the hell would his company make this man walk the line? Why did they put the gun to his head, to make him conceal mortal danger? It was the money. It’s always the money. Fixing the seismic problem would have cost the plant’s owner half a billion dollars easy. A guy from corporate told Dick, “Bob is a good man. He’ll do what’s right. Don’t worry about Bob.”
That is, they thought Bob would save his job and career rather than rat out the company to the feds.
But I think we should all worry about Bob. The company he worked for, Stone & Webster Engineering, built or designed about a third of the nuclear plants in the United States.
From the fifty-second floor we could look at the Statue of Liberty. She didn’t look back.
***
Greg Palast is the author of Vultures’ Picnic: In Pursuit of Petroleum Pigs, Power Pirates and High-Finance Carnivores.
SQ is nuclear-speak for “Seismic Qualification.” A seismically qualified nuclear plant won’t melt down if you shake it. A “seismic event” can be an earthquake or a Christmas present from Al Qaeda. You can’t run a nuclear reactor in the USA or Europe or Japan without certified SQ.
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