Health Spectator

You may recall that approximately a year ago the nation was in the throes of a severe financial collapse and that the government—then the Bush administration—had taken upon itself to dole out billions in taxpayer monies to those deemed deserving: by which we mean giant corporations, not our taxpaying individual citizens. Among those recipients was Goldman Sachs, which was selected as among those “too big to fail” and given, in round figures, approximately $70 billion. Forgive us if we err by a few billion in either direction—we’re using round numbers here as the government or Goldman executives would—as though a few billion either way is, well—chicken feed.

You may or may not be aware that Goldman has since enjoyed its best-ever quarterly profits, after a down quarter that coincided with the payouts and a pretty respectable first quarter this year, which was followed, as we say, by a couple of blowouts. Since words don’t really do it justice, we refer you to the chart below right, which was lifted from no less a source than the Washington Post, though we borrowed it in turn from Glenn Greenwald’s excellent blog.

Goldman has its best-quarter ever

You must understand that the figure depicted for the second quarter was the best quarter ever for Goldman Sachs. A mere $3.4 billion in earnings. (That’s in three months, in case you weren’t paying attention.) And the quarter that just ended—the third quarter—was no slouch either. In fact, it just happened to be Goldman’s second-best quarter ever. How’s that for coming back like bandits after a mere $70 billion loan, which—did we mention?—had no strings attached, so Goldman is not obligated in any way to share its outsized profits with those of us who contributed our share but may have continued to fall upon hard times—losing jobs, businesses, houses and so on—despite Goldman’s rather spectacular windfall. Those profits occurred, we’d be remiss not to add, at the same time the unemployment rate went to 9.8%, the highest in 26 years.

You get the picture.

This is a company, you must remember, that were it not for the American taxpayer, would have gone bankrupt a year ago. We repeat: Goldman Sachs was going out of business before we, the taxpayers, intervened. (Okay, our leaders intervented on our collective behalf—had it been up to many of us, Goldman might well have joined the likes of Lehman Brothers, Merrill Lynch, Bankers Trust, and Salomon Bros as footnotes in history.)

Indeed, as other firms on Wall Street failed, Goldman—as one of the privileged bailed-out bankers—was able to quadruple earnings year over year. No small feat, we can assure you. And the scary part is that since the money they used was essentially free in terms of any moral hazard involved, their bailout acted as an encouragement for further risky behavior. (The worst that could happen was that they would still go bankrupt despite raking in billions in government money. But it was our money—not theirs—so they had nothing to lose.)

Mind you, we don’t think Goldman took on undue risk and just got lucky. As seasoned traders, they had every reason to believe that they were trading at or near the bottom of the market, so the bargains they picked up—knowing full well that hardly anyone else was in a position to do so—were likely to remain great bargains a year or so later.

So after skidding over to the brink and looking down, Goldman has managed to land right back on top. And the employees are anticipating record bonuses. Yes. We’re not kidding. Record bonuses for bonusable Goldman employees. Again.

How could all this happen, you might ask? Well, there are legions of Goldman alumni in the Federal government, which is mostly what Greenwald’s column is about. Indeed, those Goldman alums are particularly concentrated in the Treasury Department (which, to paraphrase Willie Sutton, is where the money is).

Dylan Ratigan has a pretty good explanation of it all in this video.

But what does all this have to do with health care or even just plain health? you should be asking. Glad you got around to it.

The point is, we’re pussyfooting around health care because of the great cost, isn’t that right? The Republicans especially love to point out that all this health care could get terribly expensive.

But look at the difference. We paid out $70 billion so that a few hundred or so Goldman employees could get multimillion-dollar bonuses. We paid out over $700 billion just to bail out Wall Street in general and over $2 trillion as of November, 2008¹. The CBO puts the cost of the current healthcare bill around $1 trillion. What’s so bad about paying out half what we paid out to mismanaged, failing companies so that every citizen in America gets (and will continue to get) good health care?

Think about it.

Dylan Ratigan explores that old Goldman magic.

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