There are times, like this morning, when the air is crisp, the sky is clear and I can see the Catskill mountains in all their glory, that I feel extremely blessed to have escaped the financial industry.
I could, I remind myself, be on a New Jersey Transit train en route to Manhattan, or on some 14 hour flight between London and Singapore, or just sitting in my office watching prices tic up and down with rapt fascination, oblivious to the outside world. Instead, I'm sipping coffee, breathing the clean air and enjoying the relative quiet of rural life.
There are times when other stimuli evoke the same sense of being extremely blessed to have escaped the financial industry- such as reading the Goldman Sachs letter.
In a musing from earlier this week I compared economics and finance to religion. Both industries, if you will, (by industry I mean the financial component of religious institutions, such as the sellers of offerings at the Temple of Artemis in Ephesus, one of the Seven Wonders of the Ancient World) thrive when faith in returns are high.
This faith might be in eternal salvation, such as the Catholic Church sold in the form of Indulgences to finance, inter alia, the Renaissance rebuilding of Rome, or it might be a comfy retirement in the material plane, free from worry over procuring necessities.
Of the two, the tougher sell over the long term, is a comfy retirement. After all, it is only after death that one would discover whether the indulgence was worth the paper on which it was printed, and upon making the discovery, to whom would you complain.
A comfy retirement is something that needs to be delivered within the buyer's life, and therein lies the risk for those who have raised this faith.
I don't know who wrote the letter to Goldman. It might be a disgruntled employee or a terrorist. Given Goldman's stock price, I doubt it's a griping shareholder, but, to me, the letter is a reminder of the thin veneer of civilization that covers all men and the perilous tight rope on which the financial industry balances.
Never before in US history has such a large segment of the population bet so much of a slice of their income in the markets. The financial industry has been nothing short of superb in raising the hopes and dreams of many. Starting in the next decade, it will become time to deliver and large scale failure has severe risks, both to those who promised the returns, as the Goldman letter should remind, and to all who make use of the great virtues of sound intermediation.
The more I think about it, the more I think we in the US wasted a tremendous opportunity to reinvest in our infrastructure to better prepare for a world wherein even if Peak Oil is not true, at least we know we will be importing more than we produce. It will be a real tragedy if we finally come to the view that we need to reinvest, right at the time when faith in the financial industry, which is crucial to capital formation and mobility, ebbs.
The financial industry has fought hard to recover credibility from the Great Depression, to cast off the shackles, as they saw it, of government oversight, to become, as Tom Wolfe put it, Master's of the Universe.
They have succeeded.
Be careful what you ask for, you might get it.
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