The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails

Power

Wall Street’s power now rivals national government. Like government, Wall Street can even garner the support of taxpayers. If Wall Street fails, the federal government bails out Wall Street. Like government, Wall Street’s banks carry on foreign policy. The banks can spend decades engaged in diplomatic efforts to establish operations in foreign nations. Sometimes, even U.S. diplomats complain that they spend too much time arranging meetings for U.S. businesses. Goldman Sachs spent more than a decade establishing ties in China. When Hank Paulson, the former Goldman chief executive was U.S. treasury secretary, and dealing with the financial crisis, he flew to Beijing to meet with China’s Vice Premier. Paulson had first met Wang Qishan, a former mayor of Beijing, 15 years earlier when Paulson was a senior executive at Goldman Sachs. At any given time, Washington’s highest offices are filled with Wall Street’s executives. This protects Wall Street. Perhaps the most famous example of this paternalism is when Robert Rubin, a former Goldman Sachs CEO, joined forces with Alan Greenspan, the U.S. Federal Reserve chairman, to battle derivatives regulation. Parts of the unregulated derivatives industry exploded like a bomb in 2007, leading to the demise of Bear Stearns and Lehman Brothers and almost claimed Morgan Stanley and Goldman Sachs. Washington rescued Wall Street. After Treasury, Rubin joined Citigroup, the global investment bank, and Greenspan created a consulting firm and took ...