Friday, February 19, 2010

Goldman Sachs Versus The Euro

Quatremer:
je vous annonçais que la Grèce était victime d’attaques Goldman-sachs spéculatives de la part d’une grande banque d’affaires américaine et de « hedge funds »

[...]

Je peux donc vous confirmer que, selon des sources concordantes, Goldman Sachs et le fonds spéculatif dirigé par John Paulson seraient les deux principaux acteurs des attaques contre la Grèce et l’euro.

Rough translation:
I announced to you that Greece was victim of speculative attacks by Goldman Sachs and hedge funds.

[...]

I can therefore confirm that, according to several sources, Goldman Sachs and a hedge fund directed by John Paulson would be the two principal actors attacking Greece and the euro.

The post goes on to detail some shady sounding arrangements that Goldman Sachs is involved in, such as it is also advising the Greek government. Nevertheless, and I've mentioned this before, I always find blaming the bankers somewhat stupid.

The root of the problem, the reason that there is room for an attack in the first place, is that serious problems exist in Greece. This isn't some coordinated attack on Greece for ideological or political reasons. Greece fucked itself. Blaming the bankers is blaming the messenger.

Yet, Greece isn't the only time this narrative comes up. Whatever the crisis, there's the narrative of the powerful, rich bankers picking on either supposedly less powerful and innocent developing nations or Left of center governments who are ideologically opposed to evil capitalists.

Almost always, as it is in this case, the reason for the speculation is that the governments in question undertook questionable policies. In fairness, much of the contagion in the Asian financial crisis in the 90s was probably largely unwarranted, but the bankers don't pick countries for political purposes and then strong arm them.

If there's one place where I agree with the critics is that I assume bankers are greedy. They are out to make money. Therefore, they aren't going to short a currency without some reason. There has to be some fundamental economic weakness already existing and these fundamental economic weaknesses are almost without exception caused by poor, and oftentimes irresponsible, domestic policies.

Placing blame on the bankers does make sense to me from a political and psychological perspective. First, I think the critics feel attacked because they are invested in political policies that led to the problem. Within their own mind the policies can't really be wrong. Second, many of the people are, as I just mentioned, political. They don't really understand economics. So, they project their political understanding and motivations onto other actors. Therefore, bankers must be making a political statement.

Granted, Goldman Sachs is on multiple sides of a lot of transactions and I think it does demand some more scrutiny. But, again, Greece fucked itself. Don't blame the messengers.

Now, this is rather silly, paranoid stuff in my opinion. But the combination of committed political ideology with a lack of economic understanding has, for my money, caused more suffering than any other in human history. And this isn't a modern problem, but goes all they way back to Rome and probably earlier.

2 comments:

Withywindle said...

Don't forget "rich Jewish bankers" is the not so subtle subtext.

FLG said...

Exactly. Goes back to my theory that at the root of all conspiracy theories, even alien ones, when you dig deep enough it is always the Jews.

 
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