Wall Street's Ego Bubble

Last week, we got more proof of Wall Street's utter disconnect from the rest of the world when Goldman Sachs's chief executive Lloyd Blankfein was quoted as saying he's doing "God's work." Apparently, he's also a "blue-collar guy" and "everybody should be happy" that he and his peers are on track to take home billions in bonuses this year. Blankfein's hubris generated disbelief among the foreign CEOs and government officials attending a Chinese business conference, put on by a Swiss outfit called Horasis, in Lisbon last week. "Do you think those quotes might be made up?" one Latin American participant asked.

Sadly, no (though Goldman says the God comment was "ironic"). At the same conference last year, right after the start of the financial crisis, there was a surprising lack of ire at the U.S. for causing this mess. Now, with emerging markets surging ahead while rich countries face a low-growth decade, everyone felt emboldened to say what they'd been thinking all along: America is useless. Not only has the U.S. stashed financial bombs under everyone's beds, it's doing a terrible job of cleaning up the mess--and it's certainly not in any position to give economic advice. As Hong Kong real-estate tycoon Ronnie Chan put it: "If we listen to America, we're doomed. Leaders there are pushing aside all the rational voices [calling for greater regulation], and the next crisis is already brewing."

His comments were made during a session on "recapitalizing the world," which quickly turned into a discussion on China. Goldman Sachs itself is now predicting that Chinese GDP will overtake America's by 2027. But already this year, China surpassed the U.S. as the world's largest generator of investment capital, with around $2 trillion to America's $1.4 trillion, according to John Ross, a visiting professor at Shanghai Jiao Tong University. Much of that money is pouring in to markets like Africa and Latin America. Trade deals are often now done in renminbi, and huge commodities buys in such places help China hedge the weakening dollar. 

While plenty of financiers in Lisbon were careful to say that the U.S. is still an innovation center, it's clear that BRIC business leaders are looking to each other for future prosperity. China's still-strong growth is the reason that Latin America and Africa, for the first time in modern history, haven't been worst hit by a global downturn. In Lisbon, one Chinese entrepreneur was asked to offer advice to Obama on the eve of his visit to Beijing. His answer: read more about the Middle Kingdom--and get your daughters a Mandarin tutor.

Join the Discussion