More proof that the free market has little regard for ethics or morals.
The title of this piece comes from the Albert Cossery novel “A Splendid Conspiracy.” Cossery was African by birth and wrote in French about Alexandria from cafés in Paris. He knew something about Egyptian autocrats, which is to say, he knew something about African autocrats.
Cossery was a dandy and thus well-practiced in the ways of that fine art form. Gaddafi believes he’s something of a dandy, but he’s far more pro-active and very much an autocrat.
In the novel “A Splendid Conspiracy,” the character Medhat proclaims, “I venture to affirm that only people of leisure can attain a way of thinking that is truly civilized.” It thus goes without saying that the busy little bees are rather uncivilized by comparison. Gaddafi was and is a busy little bee and Goldman Sachs is very busy, indeed. They have their fingers inserted into a variety of honey pots, including Facebook, sub-prime mortgages, commodities and as we’ve latterly learned: Libya.
Pardon the pop-cultural digression, but such was the fear in the ’80s that Libyan terrorists were a major plot point of Robert Zemekis’ “Back to the Future.” Neither of the film’s two Libyans looks Libyan, but therein lies the magic of Hollywood. Since 9/11, the image of the Libyan has cooled a bit, to the point that even the US government collaborated with Gaddafi’s government in routing Al Qaeda.
Then, of course, Goldman Sachs came along and accepted $1.3 billion of Libya’s money (through Libyan Investment Authority) and promptly squandered 98% of it, according to the Wall Street Journal. This is not typical behavior for the investment bank. They are not losers; they always make their money. One has to wonder if it were not some clever ruse to destabilize Gaddafi’s regime financially, either for their own selfish reasons, or under the directive of then current President George W. Bush. Remember, the Secretary of the Treasury in 2008 was Hank Paulson, who was a former executive at Goldman Sachs—it wouldn’t have been too hard for W to ask Paulson to push for a little corporate sabotage.
Losing over $1.2 billion of $1.3 billion is far too absurd a figure when viewed beside all of Goldman Sachs’ financial success. The world might have been forever changed when all of the sub-prime mortgage crimes and credit default swaps became public, but Goldman Sachs came out of the privy smelling like a rose.
Even stranger is that Goldman executives offered the LIA $3.7 billion in financial stake in the investment bank to offset the loss. Imagine the firestorm that would have engulfed the news if a journalist had discovered Libya had billions of dollars invested in an American investment bank during the “Back to the Future” years. Whatever the case, the $3.7 billion offer was never finalized and as The Wall Street Journal article noted, some Goldman Sachs executives almost lost their lives. (In hindsight, I’m not sure that many Americans would have complained.)
And it’s no surprise that the LIA has now been sanctioned in recent months by the UN in order to force Gaddafi out of power. Was the 98% loss all part of the plan in some Machievellian way? Undoubtedly, the US government stands to benefit from Gaddafi’s loss of power. But what of Goldman Sachs? If it wasn’t Machievellian sabotage (whether a corporate or presidential directive), then one must conclude that Goldman Sachs truly has no scruples in dealing with autocratic or nominally communist regimes. This, of course, isn’t unusual for free market democracies, who need a villain like a communist regime or autocrat to keep citizens suckling at the teat of power.
In due time, when Gaddfai’s regime has finally folded or been ousted, we must look for any investments made by Goldman Sachs in Libya. As always, follow the money when it comes to investment banks, especially with Goldman Sachs.