Allen Lane £25

Money and Power: How Goldman Sachs Came to Rule the World, By William D Cohan

The bank that likes to say 'Yes' – to both sides

In the 1860s, when the clothing merchant Marcus Goldman offered cash, at a suitable discount, for bills yet to be paid by others, he used to stuff the accumulated IOUs under his top hat.

Goldman's clients could tell how busy Marcus was by the tilt of his headgear, a degree of transparency that would not always be displayed in the decades that followed.

The surprising thing revealed by William Cohan in his history of Goldman Sachs is not so much that the "giant vampire squid" made so much money, but that it often lost vast sums. Less a vampire squid, in fact; more a lucky black cat, one that has crossed the path of every major financial meltdown, from the 1929 Great Crash through Robert Maxwell to hedge funds and the credit crunch. Plus its own stupid mergers, court cases and official investigations, charges of racism, sex scandals, and deals that were – as only a Jewish boss of Goldmans could get away with describing them – a little "too Jewish". If communism is "permanent revolution" then, on this basis, capitalism is "permanent crisis".

Yet Goldmans has survived, with a rare feline agility. Part of that is its reputation – the power of "brand". No matter what scrapes it gets into, the cleverest want to join it, even if that means 30 individual interviews and waiting for five hours for a boss to turn up to meet you on your first day (a final test of humility, apparently). When the largest share offering in history arrived – the Ford flotation of 1953 – Goldman was the choice, despite old Henry's notorious anti-Semitism. The Sumitomo Bank of Japan offered $500m in 1987 just to be a "sleeping partner, with no votes and just to learn". At its darkest hour in 2008, Warren Buffet, the richest man on the planet, had sufficient faith in Goldmans to put $5bn into it.

If it has one abiding habit, Goldmans has always tried to be on both sides of a deal. At an early stage in its history, it perfected the "block trade", wherein it would advise a company on issuing shares or bonds, but would also ensure it advised the pension funds who bought those shares. Playing both sides went wrong when it was marketing "toxic" assets to clients while at the same time "shorting" or selling those securities – backed by mortgages that it knew were rapidly going bad in the US.

When this huge bet that the American property market would crash came good, it made Goldmans billions – but busted its biggest clients, such as AIG, Bear Stearns and Lehman Brothers. It busted the global financial system so badly that Goldman itself had to be rescued, partly by Buffet and partly by the US taxpayer. When the firm's current boss, Lloyd Blankfein, denied that they ever needed state aid, President Obama privately exploded that "these guys want to be paid like rock stars when all they're doing is lip-synching capitalism".

So they are, but you'd never know that these cool cats can't sing.

Sean O'Grady is the economics editor of The Independent

News

literature

News
Dermot O'Leary attends the X Factor Wembley Arena auditions at Wembley on August 1, 2014 in London, England.

television

News
news
Arts and Entertainment
At this year's SXSW festival in Austin, Texas

Music Why this music festival is still the place to spot the next big thing

Arts and Entertainment
Russell Tovey, Myanna Buring and Julian Rhind Tutt star in Banished
tvReview: The latest episode was a smidgen less depressing... but it’s hardly a bonza beach party
Arts and Entertainment
‘The Royals’ – a ‘twisted, soapy take on England’s first family’
tv Some of the characters appear to have clear real-life counterparts
News
Brooks is among a dozen show-business professionals ever to have achieved Egot status
people
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment

ebooksNow available in paperback
Arts and Entertainment

ebooks
Arts and Entertainment
A cut above: Sean Penn is outclassed by Mark Rylance in The Gunman
film review
Arts and Entertainment
arts + ents
Arts and Entertainment
James Franco and Zachary Quinto in I Am Michael

Film review Michael Glatze biopic isn't about a self-hating gay man gone straight

Arts and Entertainment
A scene from the movie 'Get Hard'
tvWill Ferrell’s new film Get Hard receives its first reviews
Arts and Entertainment
Left to right: David Cameron (Mark Dexter), Nick Clegg (Bertie Carvel) and Gordon Brown (Ian Grieve)
tvReview: Ian Grieve gets another chance to play Gordon Brown... this is the kinder version
Arts and Entertainment
Benedict Cumberbatch and Martin Freeman in the first look picture from next year's Sherlock special

TV
Arts and Entertainment
Because it wouldn’t be Glastonbury without people kicking off about the headline acts, a petition has already been launched to stop Kanye West performing on the Saturday night

music
Arts and Entertainment
Molly Risker, Helen Monks, Caden-Ellis Wall, Rebekah Staton, Erin Freeman, Philip Jackson and Alexa Davies in ‘Raised by Wolves’

TV review
Arts and Entertainment

TV
Arts and Entertainment
James May, Jeremy Clarkson and Richard Hammond in the Top Gear Patagonia Special

TV
Arts and Entertainment
Game of Thrones will run for ten years if HBO gets its way but showrunners have mentioned ending it after seven

Game of Thrones
Arts and Entertainment
Mans Zelmerlow will perform 'Heroes' for Sweden at the Eurovision Song Contest 2015

music
Arts and Entertainment
Elizabeth (Heida Reed) and Ross Poldark (Aiden Turner) in the BBC's remake of their 1975 original Poldark

Poldark review
Arts and Entertainment
Daniel Craig as James Bond in Skyfall

Mexican government reportedly paying Bond producers for positive portrayal in new filmfilm
Arts and Entertainment
Disney’s flying baby elephant is set to return in live-action format
filmWith sequels, prequels and spin-offs, Disney plays it safe... and makes a pachyderm
Arts and Entertainment
Nazrin with Syf, Camden
photography
News
The QI Elves photographed at the Soho Theatre. They are part of a team of researchers who find facts for the television programme 'QI'.
people
Arts and Entertainment
‘The Royals’ – a ‘twisted, soapy take on England’s first family’
tv0-star review: Sean O'Grady gives it his best shot anyway
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

ES Rentals

    Independent Dating
    and  

    By clicking 'Search' you
    are agreeing to our
    Terms of Use.

    The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

    The saffron censorship that governs India

    Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
    Prince Charles' 'black spider' letters to be published 'within weeks'

    Prince Charles' 'black spider' letters to be published 'within weeks'

    Supreme Court rules Dominic Grieve's ministerial veto was invalid
    Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

    How did fandom get so dark?

    Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
    The galaxy collisions that shed light on unseen parallel Universe

    The cosmic collisions that have shed light on unseen parallel Universe

    Dark matter study gives scientists insight into mystery of space
    The Swedes are adding a gender-neutral pronoun to their dictionary

    Swedes introduce gender-neutral pronoun

    Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
    Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

    Disney's mega money-making formula

    'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
    Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

    Lobster has gone mainstream

    Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
    Easter 2015: 14 best decorations

    14 best Easter decorations

    Get into the Easter spirit with our pick of accessories, ornaments and tableware
    Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

    Paul Scholes column

    Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
    Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

    The future of GM

    The greenhouses where Monsanto 'plays God' with the future of the planet
    Britain's mild winters could be numbered: why global warming is leaving UK chillier

    Britain's mild winters could be numbered

    Gulf Stream is slowing down faster than ever, scientists say
    Government gives £250,000 to Independent appeal

    Government gives £250,000 to Independent appeal

    Donation brings total raised by Homeless Veterans campaign to at least £1.25m
    Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

    The most borrowed book at Bank of England library? Oh dear

    The book's fifth edition is used for Edexcel exams
    Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

    Cowslips vs honeysuckle

    It's the hunt for UK’s favourite wildflower
    Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

    Did a botched blackmail attempt help Cyril Smith escape justice?

    A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss