As the set warmed up this morning and a picture filled the screen my first thought was, “nice suits.” CNBC’s on the TV and Goldman Sachs executives are on the grill with the Senate Permanent Subcommittee of Investigations. Think of it as nerd court.
It’s a Maalox moment for the nice suits. There’s a lot to be defensive about.
You know it’s a good hearing when not one, but two Senators have said “shitty.” Carl Levin said it at least twice. Claire McCaskill, senator and Missouri grandmother, used it too and then expertly explained sports betting and “the vig!”
The Goldman guys are doing everything possible not to answer questions. They are stone faced and dispassionate. Every word is measured. Think weasel. They are coming off as weasels.
The real question is whether this hearing is looking for substance and preparing for action or this is just kabuki? Even if the stuff Goldman and the others did wasn’t illegal it was certainly against the best interests of our economy–against the world’s economy. These markets that Goldman and others participated in encouraged unsustainable borrowing leading to the burst of the housing bubble.
There’s also economic pain when businesses borrow so much they have to sacrifice their product and/or employees to pay it back. Simmons Mattress is a textbook example of how legal policies work against the common good. When the New York Times wrote about it last October their story was headlined: “Profits for Buyout Firms as Company Debt Soared”
The one piece of this puzzle I haven’t heard discussed is how profits on these complex financial transactions are taxed? Is this regular income? Is it favored income with lower tax rates as many investments are?
Maybe investments and investment profits that are nothing more than bets with no underlying benefit to our economy and a great deal of downside to all of us should be taxed heavily to discourage the practice?
Did I mention how nice their suits were?