Why Greg Smith, Former Goldman Sachs Executive, Has Quit His Job

[Disco Pickle]

http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html?pagewanted=1&_r=1

Not going to re post body of OpEd, don't want to get the board in hot water or anything.  Definitely worth a visit and a read.

Basically, the same things Jim Rogers, Nasim Taleb, etc. have been saying is wrong with the "youth" culture coming up in the major investment banks.  It'll be their eventual downfall.

<ETA> For some reason it reminds me of Glegarry Glen Ross, the scene with Alec Baldwin -

"we're adding a little something to this month's sales contest. As you all know first prize is a Cadillac El Dorado. Anyone wanna see second prize? Second prize is a set of steak knives. Third prize is you're fired. Get the picture?"

Only the salesmen are driving Lamborghini's already

[Oysters Rockefeller]

Hmmm...impressive. If more people did things based on whats right, we might have a legitimate chance.

[Q. G. Pennyworth]

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.

Worth highlighting. I wonder sometimes if my writing style is a lot more formal than I think, or if everyone else is just slowly wandering towards the casual.

[LMNO]

When it's an Op-Ed, getting colorful is almost a requirement.

[LMNO]

Also, rebuttal: http://www.slate.com/blogs/moneybox/2012/03/14/goldman_sachs_and_the_rise_of_the_trader.html

Basically, the piece says what Greg Smith doesn't get is that the GS business model is moving away from financial advising and more towards trading.

Once upon a time Goldman was a firm that was pretty overwhelmingly in the business of advising clients. It's hard to succeed in the client-advising business unless clients feel that you're giving good advice. But over the time span Smith is describing, this whole portion of the business has shrunk relative to trading. This means that whether or not the advice is good or clients are happy or there's a perception of ethical behavior is all just less and less relevant to the operation of the enterprise.

[Oysters Rockefeller]

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.

Worth highlighting. I wonder sometimes if my writing style is a lot more formal than I think, or if everyone else is just slowly wandering towards the casual.

Contemporary writing styles are getting really casual. I mean, read Dostoevsky, Wells, Kerouac, then Charles Yu or Tao Lin. Those are all fiction, but...I think it still holds up.

[Oysters Rockefeller]

Also, rebuttal: http://www.slate.com/blogs/moneybox/2012/03/14/goldman_sachs_and_the_rise_of_the_trader.html

Basically, the piece says what Greg Smith doesn't get is that the GS business model is moving away from financial advising and more towards trading.

Once upon a time Goldman was a firm that was pretty overwhelmingly in the business of advising clients. It's hard to succeed in the client-advising business unless clients feel that you're giving good advice. But over the time span Smith is describing, this whole portion of the business has shrunk relative to trading. This means that whether or not the advice is good or clients are happy or there's a perception of ethical behavior is all just less and less relevant to the operation of the enterprise.

That's a pretty good rebuttal. As someone who knows almost nothing whatsoever about trading, this doesn't seem to necessarily prove or disprove Smith's argument, but highlight a massive bias.

[Cain]

On the one hand, Slate would argue pretty much any point in order to look contrary.  I fully expect a Slate op-ed entitled "Oxygen: Overrated?" in the near future.

On the other hand, there is probably a kernel of a point buried in that article about changing business practices.

[Richter]

Bunch of Johnny - come - latelys to the morality party.

[LMNO]

On the one hand, Slate would argue pretty much any point in order to look contrary.  I fully expect a Slate op-ed entitled "Oxygen: Overrated?" in the near future.

On the other hand, there is probably a kernel of a point buried in that article about changing business practices.

I totally agree, but I kind of like eternal contrarians (sounds familiar for some reason...).

I do see the "changing business model" angle, but that doesn't mean you have to treat your clients like shit.

[Cain]

My main problem is that:

a) the article is almost entirely about him, and
b) Yves Smith talked about the same change of culture in Goldman Sachs, only, IIRC, she worked for them in the 1980s.

[LMNO]

   No shit?  I was not aware of that.   

[Cain]

Pretty sure, yeah.  She's the one who runs the Naked Capitalism blog - which, along with Zero Hedge, should be daily reading.  I believe she worked for their Japan division in the 80s or so - and according to her, it was very different when she first started working them, rather reminscent of the "gentlemanly capitalism" ethos of British banks and companies in the 60s and 70s.  But, as deregulation rolled forward, and international markets grew in size, the opportunities for making massive, short-term profits increased.  And as they did, conditions favoured aggressive traders rather than cautious investment advisors. 

You have to remember, when this guy is talking about, year 2000, is the same year Goldman Sachs were cooking the books for the Greek government - probably with the tacit approval of the German one.  It's also a year after Glass-Steagall was repealed.  I suspect there is more than a bit of rose-tinted views of the recent past going on here.

[navkat]

I believe it's possible that for Smith, the game didn't change, but rather, his position in the company, and therefore, other employee's level of candor around him did.