WAY OF THE WORLD
sides of the market to maximise its own profit, while giving secondary attention to the interests of its clients – though it has never run short of clients, so it must do something right for them.
Playing both sides is certainly what it appeared to do in the Abacus case in 2007. Abacus was the name given to a ‘synthetic collateralised debt obligation’, essentially a big bundle of subprime mortgages turned into a bond to be sold to investors. On one side, advising Goldman what to put into the bundle, was the New York hedge-fund manager John Paulson. He believed the mortgage market was about to collapse, but in order to bet that way he needed securities like Abacus to be bought by investors who took the opposite view, so that he could ‘go short’ against them. The bigger the wipeout of Abacus, the more Paulson would make from it. But on the ‘long’ side were the likes of ABN AMRO, the Dutch bank that had been bought by a consortium led by Royal Bank of Scotland. Goldman sold Abacus to them without revealing Paulson’s position.
Goldman itself eventually lost $100 million on the deal because it got stuck with a piece of Abacus it could not sell. But the most telling sentence in Cohan’s account is: ‘On August 7, 2008, RBS paid Goldman $840.9 million, much of which Goldman paid over to Paulson.’ That’s another bill the British taxpayer eventually had to pick up, but the official Goldman reaction was no more than an amoral shrug: if clients want to
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take different market views, we’re here to serve them all.
That is the substance behind the Goldman legend, and Cohan writes about it very well. His technique combines mastery of financial detail with extensive use of quotes to catch the authentic Wall Street voice. He offers a fluent retelling of the whole history of Goldman Sachs, starting with German Jewish immigrant Marcus Goldman in 1869. This has been done before, by Lisa Endlich in Goldman Sachs: The Culture of Success (1999), but perhaps too respectfully; Cohan is more warts-andall, particularly in unravelling the struggles between clashing Goldman egos over the past thirty years.
But the people must have been the toughest part of the task. When he wrote about Lazard, Cohan knew many of the characters as former colleagues: he could describe the cigar habit of the firm’s proprietor, Michel David-Weill, and the icy stare of its leading dealmaker, Felix Rohatyn. When he wrote about Bear Stearns, the Runyonesque card-players who ran the firm into the ground all seem to have been eager to talk to him in order to bad-mouth each other, their competitors and the New York regulators in the foulest terms. But at Goldman, even longretired former partners seem to have taken a blood oath of silence, or at least of blandness, in what they say about anything connected with the firm: ‘they maintain that discipline in a kind of eerily successful way’.
Cohan does his best to conjure up the human portraits that a book like this needs, but one senses that he has had to rely much more on archive material and less on face-to-face interviews than in his previous outings. The last leader of the firm who sounds like a relatively normal human being and concer ned citizen was John Whitehead, co-chairman from 1976 to 1984, who went on to be Reagan’s deputy secretary of state, setting the pattern for his successors to glide effortlessly into government or politics. There are entertaining accounts of the debate over going public or remaining a pr ivate partnership in the 1990s, and of the power struggle in which Hank Paulson defeated his co-chief executive Jon Corzine, who left to become a senator and governor of New Jersey. All the Goldman players are here, up to and including current chairman Lloyd Blankfein, famous for saying that he was just ‘doing God’s work’.
And there are plenty of verbatim utterances for authenticity: ‘You know, I think, you know, I wish, you know, I hadn’t sent those,’ says one executive, challenged at a Congressional hear ing about some controversial emails. But most of the character sketches are painted in watercolour. Cohan has done a comprehensive and highly professional job. No fact or nuance of the known Goldman story has escaped him. But the blood oath prevails: Goldman folk have closed ranks to prevent even this inexhaustible investigative author from finding their innermost tribal secrets. To order this book for £20, see LR bookshop on page 22
LITERARY REVIEW May 2011
I T TAKES A V I LLAGE… COLLECTIVE KILLINGS IN RURAL CHINA DURING THE CULTURAL REVOLUTION
By Yang Su
(Cambridge University Press 320pp £55 hbk/£17.99 pbk)
WHEN YANG SU was a boy, growing up in a Hakka village in Guangdong, he once watched buffalos being butchered. After one of the animals was trapped in the fields, a group of men with large hammers moved in and struck the buffalo until it sank to its haunches and finally collapsed, covered in blood. The term used in Hakka dialect to describe the killing was bol, meaning ‘strikes that produce a dull sound’. The same word was used to convey how victims were bludgeoned to death with hardwood clubs in the villages of south China during the Cultural Revolution. Even when rifles were available, local farmers were reluctant to waste bullets, so they resorted to primitive farming tools instead.
Sha Kaichu, for instance, was rounded up in 1967 and denounced at a rally in the local town square. His father had been killed dur ing the land reform of 1952 for being a landlord; Sha left the village that same year and volunteered to fight in the Korean War. After his discharge from the army he came home to work as a tractor driver. His only crime was that he was the son of a landlord. The morning after the rally Sha and several other descendants of landlords were marched to the militia headquarters, but they never reached their destination. The militia decided to kill all of them by a dusty roadside. Sha Kaichu was hammered to death by Zheng Mengxu. The Shas and the Zhengs had been next-door neighbours since the land refor m, when landlord Sha’s house had been confiscated and handed over to Zheng, a drifter from another village. Zheng was delighted with the murder, joyfully yelling out ‘Tai hao le! Tai hao le!’ (‘This is great! This is great!’) as he returned to the village.
As Yang Su explains in his important study, there were many similar stor ies of collective murder all over the countryside during the Cultural Revolution, as villagers turned against villagers, slaughtering each other in the hundreds of thousands. The highest figure the author ventures is three million violent deaths. His estimates lack precision because the government has buried most of the evidence about the depth and the scale of violence during the Cultural Revolution. But although he was prevented from gaining access to the relevant files in county archives, he did manage to obtain several unpublished documents that describe the atrocities in great detail, including details of the victims, locations and perpetrators, as well as the manner in which people were killed. In all cases the violence was communal. In Daoxian county, Hunan, where 4,950 people were eliminated within two months, participants voted to decide who should be killed. In a meeting that lasted hours, the names of potential victims were read out, one by one, and tallied.
Su also interviewed some of the key protagonists of these pogroms. When asked why villagers could inflict such violence on each other, the answer was always the same: if you beat someone in a struggle rally and the victim survived, he would know exactly where you lived. ‘That is why when you beat someone, you better kill him; even if you kill him, his brothers or sons may come at you another time in a different campaign.’ So children were killed too. In Quanzhou county, Guangxi, militia l eader Huang Tianhui took the l ead on 3 October 1967 in a massacre of seventy-six people, most of them former landlords, rich farmers and their children: all were pushed off a cliff into a canyon. Even babies were eliminated. In Scarlet Memorial, a horrific account of Cultural Revolution violence published in 1996, Zheng Yi explained how in parts of Guangxi the killers identified infant boys for murder by first touching their crotch.
As Collective Killings in Rural China during the Cultural Revolution shows, a divide ran between perpetrators and victims, one which was entirely created by the communist regime after 1949. Its name was ‘class’, and it was new to ordinar y people who more often than not defined relationships in ter ms of clan and l ineage. Revolution was not only about land redistribution, it was also a political project in which designated landlords and r ich peasants were labelled as ‘class enemies’. Although most of them were killed in the first few years of communism, their descendants were constantly exposed to discr imination, abuse and violence. They eked out a marginal existence under tight surveillance. They became the scapegoats of the reg ime, a focal point for every subsequent political campaign. Their miserable fate served as a yardstick and a mirror to all the other villagers.
Time and again, these outcasts were blamed for everything that went wrong on the road to communism. Al t hough t he au t hor’s f ocus i s on t he Cultural Revolution, historians have recently started to unearth archival evidence that shows how during Mao’s Great Famine from 1958 to 1962, hundreds of thousands of ‘class enemies’ were routinely tortured and beaten to death. Millions more were banned from the collective canteens and deliberately starved to death. As the head of Chishui county, Guizhou, warned in 1959: ‘Poor and Rich Peasants, This Struggle is to the Death!’ In the following seven months, 24,000 people died – more than
LITERARY REVIEW May 2011