SO GOLDMAN Sachs, the world's greatest and smuggest investment bank, has been sued for fraud by the American Securities and Exchange Commission. Legally, the case hangs on a technicality.
Morally, however, the case may turn into a final referendum on the greed-is-good ethos that conquered America in the '80s - and in the years since has aped other horrifying American trends in spreading across the Western world like a venereal disease.
When the globe was engulfed in the flood of defaults and derivative losses that emerged from the collapse of the US housing bubble two years ago, few understood that the crash had its roots in the lunatic greed-centred objectivist religion, fostered in the '50s and '60s by ponderous emigre novelist Ayn Rand.
Outside America, Russian-born Rand is probably best known for being the unfunniest person Western civilisation has seen since maybe Goebbels or Jack the Ripper, but inside America she is upheld as an intellectual giant. Her ideas are worshipped even by people who've never heard of her. The right-wing Tea Party movement is just one example of an entire demographic that has been inspired to mass protest by Rand without even knowing it.
Last year I wrote a brutally negative article about Goldman Sachs for Rolling Stone (I called the bank a ''great vampire squid wrapped around the face of humanity'') that sparked a heated debate. On one side were people who believed that Goldman is little better than a criminal enterprise that bilks the market, the government, and even its own clients in a bewildering variety of complex financial scams.
On the other were those who argued Goldman wasn't guilty of anything except being ''too smart'' and really good at making money. This was based almost entirely on the Randian belief system, under which the leaders of Goldman Sachs appear not as the cheap swindlers they look like to me, but idealised heroes, the saviours of society.
In the Randian ethos, called objectivism, the only real morality is self-interest, and society is divided into groups who are efficiently self-interested (the rich) and the ''parasites'' who wish to take their earnings through taxes. Rand believed government had virtually no natural role in society. She conceded police were necessary, but refused to accept any need for economic regulation.
Rand's fingerprints are all over the Goldman story. The case involves a hedge fund financier, John Paulson, who went to Goldman with the idea of a synthetic derivative package pegged to risky US mortgages, for use in betting against the mortgage market. Paulson would short the package and Goldman would then sell the deal to suckers. The SEC's contention is that Goldman committed a crime when they failed to tell the suckers about the vulture betting against them on the other side of the deal.
The instruments in question - collateralised debt obligations and credit default swaps - fall into the category of derivatives, which are virtually unregulated in the US thanks in large part to the effort of former Federal Reserve chairman Alan Greenspan, a staunch Randian. In the late '90s, Greenspan lobbied hard for a law that deregulated the sort of interest-rate swaps Goldman used in its now-infamous dealings with Greece.
In the Paulson deal the suckers were European banks such as ABN-Amro and IKB, which were never told the stuff Goldman was selling to them was, in effect, designed to implode; in the Greece deal, Goldman used exotic swaps to help the country mask its financial problems, then bet against Greece by shorting the debt.
Confronted with public outrage, the leaders of Goldman will often appear genuinely confused. It's not an act. There have been a lot of greedy financiers and banks in history, but what makes Goldman stand out is its truly bizarre cultist/religious belief in the rightness of what it does.
The point was driven home in England last year, when Goldman's international adviser, sounding exactly like a character in Atlas Shrugged, said ''The injunction of Jesus to love others as ourselves is an endorsement of self-interest.''
Even if he stands to make a buck at it, your average used-car salesman won't sell some working father a car with wobbly brakes, then buy life insurance policies on that customer and his kids. But this is done almost as a matter of routine in the financial services industry, where the attitude after the inevitable pileup would be that that family was dumb for getting into the car in the first place. Caveat emptor, dude!
This Randian mindset is now ingrained in the American character.
This debate is going to be crystallised in the Goldman case. Much of America is going to reflexively insist that Goldman's only crime was being better at making money than IKB and ABN-Amro, and that the meddling government (in the American narrative, always the bad guy) should get off Goldman's Armani-clad back. Another side is going to argue that Goldman winning this case would be a rebuke to the whole idea of civilisation - which, after all, is really just a collective decision by all of us not to screw each other over even when we can.
It's an important moment in the history of modern global capitalism: whether or not to move forward into a world of greed without limits.
GUARDIAN
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