Goldman used to be a dream, now it’s just a bank

Plus: RIP baby penguins, revenge travel and more. [Bloomberg]( This is Bloomberg Opinion Today, a crucial component of the food chain of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - [Goldman Sachs]( needs a [bonus]( bash. - [Baby penguins]( are gone in a flash. - Students don't need a [smaller class](. - [Revenge travel]( is running out of gas. Sins at Sachs Sometimes I wonder what it would be like to start working at Goldman Sachs *right now.* At the time of writing, the firm is hiring for 244 New York-based positions, so somebody is doing it. And if that person were to, say, write a diary entry after their first day, maybe it’d look like this: Normally, it’d take a new employee years to get wind of this much internal drama. But with Goldman Sachs, all it takes is a few minutes browsing the internet — reading the [New York Times](, [Wall Street Journal](, [New York Magazine]( or [The Economist](, take your pick — to learn that the bank’s morale has taken a nosedive. The turbulence around its CEO, David Solomon, has reportedly caused many people to [depart]( from the storied firm. “Solomon’s waning popularity coincides with declining staff compensation — in 2022, it was down nearly a quarter on the prior year to $312,000 per employee — coupled with accumulated losses linked to his expansion into consumer banking,” Marc Rubinstein [writes](. Can Solomon survive the bad press? Perhaps, if he focuses on fundamentals. His “greatest sin isn’t being too gruff, his DJ side hustle, or personal use of company planes … it was leading Goldman into a big bet with no easy exit or downside protection,” Paul J. Davies [explains](. That big bet being Goldman’s misadventure into consumer banking. Now, Solomon is faced with no good options. “Replenishing bonus pots could help quiet dissent, even as Goldman cracks down on staff who are being stubborn about turning up to the office full time,” Paul writes. But big bonuses can only happen if there’s enough money to go around. In 1970, Marc says, a similar episode occurred under Gus Levy, who was senior partner at the time. Goldman “became embroiled in a crisis following the bankruptcy of Penn Central, the country’s sixth-largest company at the time,” he notes. Levy’s authority and leadership were thrown into question, and his position grew even more precarious after a sharp downturn in profits. By 1973, there wasn’t any money in the pot for bonuses at Goldman. This time around, Paul says, the Goldman chief may “have to make some hard decisions about whether he can pay bankers more at the expense of shareholder returns.” Either way, someone is going to end up unhappy. “Money talks, as they say. In investment banking, lack of money complains bitterly about the CEO,” he concludes. Arctic Chicks Back in college, I took a creative writing class where we had to write a long-form story that was to be workshopped by our peers. Being the unhinged adolescent that I evidently was, I had the perverse inclination to have my main character attempt to murder her neighbor’s dog. I’ll never forget the look on my professor’s face when he realized the dog in my story might die, and not in a Marley & Me-type-way. In the confines of his office, he told me: “Jessica, perhaps the most important thing you’ll learn in this class is to never, ever kill the dog. You can kill the baby; you can kill the cat. But the dog?? The dog is off limits.” It has now come to my attention that we may need to add an addendum to my professor’s rule: Never, ever kill the baby penguin — in fiction, yes, but also in real life. I have the extreme displeasure of informing you that our addiction to fossil fuels is causing the offspring of emperor penguins [to die]( horrible deaths. “These iconic birds depend on sea ice as a platform for breeding and raising chicks, but as the globe is warming, the ice is melting too early. The chicks, too young to swim, [are drowning](,” F.D. Flam writes. In rather grotesque instances, the babies — whose feathers are not mature enough to insulate them — become drenched in cold water and are turned into baby penguin ice cubes — NOT [the kind]( you see on [TikTok](. Entire colonies of emperor penguins have lost their broods this way, and last year, the bird [became]( an endangered species. Most people hear about penguins dying and think: Ugh, that is tragic. Humans are the worst. I want off this ride … yada, yada, yada. Then they carry on with their lives and kinda forget about the whole thing because, deep down, people operate under the assumption that disappearing species have little impact on their actual lives. But that assumption is wrong. If we lose the Antarctic, we lose a crucial component of the food chain: krill, which are vital to life for fish, which are vital to life for humans. And beyond that, argues F.D., “creatures don’t have to harbor the cure for cancer” to be worth protecting — “they enhance life on earth in a way that’s less tangible but every bit as important, and sometimes it can be hard to appreciate that until they’re gone.” It’s [a lesson]( I should have learned well before I was an undergraduate. Bonus Bird Reading: Keep your political fingers out of my [foie gras](, please. — Bobby Ghosh The Small Class Myth The next time an elected official tries to win you over with a grand speech about how they’re going to “make school class sizes smaller so that our kids can get the quality education they deserve,” just send them [this link]( and thank me later. Michael R. Bloomberg, founder and majority owner of Bloomberg LP, writes that contrary to popular belief, class-size reduction is “the least cost-effective way to improve student learning.” Despite that, the ill-advised policy is coming to New York next year. While teachers’ unions may consider the new rules a win, the data says otherwise. Under the new rules, kindergarten through third grade will be capped at 20 students, grades four through eight will be capped at 23 and high school is 25. In order to meet those requirements, the city will need to bring in 17,700 new teachers by 2028 and spend as much as $1.9 billion annually on additional salaries. But Mike, the city’s former mayor, warns that “capping class sizes across the board is unlikely to help the city’s most disadvantaged students and may even hurt them.” If you closely examine which schools will experience the most class-size shrinkage under the new rules, it’s not the ones with the highest poverty rates; it’s those in affluent neighborhoods. “Only 38% of the highest-poverty schools would see class sizes shrink, compared to nearly 70% of medium- to low-poverty schools,” he writes. In other words, “funding that might otherwise be targeted toward the neediest students will flow to the relatively well off.” There are far better methods to aid academic recovery, which you can learn about by reading the [whole thing](, which is free from the paywall. Telltale Charts Last year I went skiing and stayed at a hotel in Vermont. When I arrived, the receptionist at check-in was lovely. She then turned into the bellhop, schlepping up all the bags. As she dropped them off in our room, she quipped, “Ha! I made these beds this morning,” because yes, she was the housekeeper that day, too. Covid-era “staffing bottlenecks remain patently unsolved, as anyone who’s faced a receptionist doubling as lobby bartender can attest,” Lionel Laurent [writes](, noting that “more than 80% of hotels the American Hotel & Lodging Association surveyed this year reported worker shortages.” And it’s not just the US: 11% of European tourism jobs are likely to go unfilled. “Revenge travel faces a reckoning as service fails to match soaring prices,” he warns. Things are changing over at Toyota: “Though famed for its lean operations, the company’s stockpiles have grown substantially. Measured in days, inventories ballooned 50% over the past decade and are almost three times the level of 30 years ago,” Tim Culpan [writes](. Hoarding inventory might sound like a bad thing, but it’s better than losing a customer because you don’t have a certain part available. “Lean is no longer the mantra at the world’s largest carmaker. Now it’s about preparedness,” he writes. Maybe they should change their slogan to: “Let’s go places, but make sure to pack lunch.” Further Reading FREE READ: How will [the war]( end? Ukraine’s future isn’t German or Israeli but Korean. — Andreas Kluth It’s still too early to call Grayscale’s [court win]( a watershed moment for crypto. — Aaron Brown Actually, China would do well to have [Japan's problems](. — Gearoid Reidy and Daniel Moss Voting is [a privilege]( that Singaporeans can’t afford to lose. — Karishma Vaswani Our [piggy banks]( may be low on funds, but our debt is down, too. — Claudia Sahm To drill, or not to drill? That is [the question]( for Latin America. — Eduardo Porter CNN is changing its tune, and its [new sound]( seems promising. — Paul Hardart ICYMI stocks are [popping off](. [Deepfakes]( are coming for your bank balance. The SEC sees through Elon Musk’s [glass house](. Russians are [cutting back]( on basics. Vladimir Putin and Kim Jong Un are [pen pals](. Kickers “[Barbie Botox](” is booming. The [#TradWife life]( is not for me. Subway has a [blimp]( and Chanel has a [diner](. [Poppy seeds]( are bad for drug tests. Coco Gauff has [fashion rizz](. Gray wolves [reappear]( after 100 years. Notes: Please send [poppy seed bagels]( and feedback to Jessica Karl at jkarl9@bloomberg.net. [Sign up here]( and follow us on [Threads](, [TikTok](, [Twitter](, [Instagram]( and [Facebook](. Follow Us You received this message because you are subscribed to Bloomberg's Opinion Today newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. 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