{"blocks":[{"type":"paragraph","data":{"text":"The hype around artificial intelligence, according to Lloyd Blankfein, misreads the history. The former Goldman Sachs chairman and chief executive sees AI not as a rupture but as a continuation of something Wall Street began doing decades ago."}},{"type":"paragraph","data":{"text":"Algorithmic trading came first"}},{"type":"paragraph","data":{"text":"In the 1990s, the industry shifted from narrative-driven investing to algorithmic trading. Machines began analysing data and executing decisions based on technical signals. The human story gave way to the model. Blankfein, speaking to Bloomberg, views AI as the same trajectory, extended."}},{"type":"paragraph","data":{"text":"The goal then and now is the same: remove emotion from investment decisions and make the process systematic. AI does more of it, with more variables, and with better tools. The principle is not new."}},{"type":"paragraph","data":{"text":"Where AI falls short"}},{"type":"paragraph","data":{"text":"Blankfein is direct about the limitations. AI can produce a coherent essay. It cannot reliably provide the depth, context, or sourcing that serious analysis requires. His preference, in those cases, is a bibliography, something to follow rather than a conclusion to accept."}},{"type":"paragraph","data":{"text":"On headcount, he is sceptical of immediate displacement. Firms adopting AI will need to run old and new systems side by side while reliability is established. Which parts of the business are actually being replaced is not yet clear."}},{"type":"paragraph","data":{"text":"Not every bet will pay off"}},{"type":"paragraph","data":{"text":"Hyperscale technology companies are spending close to $100 billion a year on research and development. Blankfein's view is that not every company committing that capital will come out ahead. Some of those investments will, in retrospect, be regretted."}},{"type":"paragraph","data":{"text":"He draws a distinction worth noting. The founders of these companies have most of their own wealth tied up in the outcome. They are not allocating other people's money. That gives them, he argues, at least as much reason to be right as anyone external assessing the wager from a distance."}},{"type":"paragraph","data":{"text":"Private credit and the risks building in retirement portfolios"}},{"type":"paragraph","data":{"text":"From AI, Blankfein moved to a more immediate concern: the push to put private equity and private credit into retirement portfolios."}},{"type":"paragraph","data":{"text":"He is worried. The assets are opaque. They are illiquid. Marking them to market is difficult, which means investors often do not know what they hold until something goes wrong. Figures including Jamie Dimon and Bruce Richards have warned publicly about potential defaults in direct lending, and Blankfein told Bloomberg he shares the underlying concern."}},{"type":"paragraph","data":{"text":"The consequences of losses fall differently depending on who holds the assets. Institutional investors and high-net-worth individuals can absorb a bad cycle. Retirees cannot. When individual investors lose money on products they did not fully understand, the politics follow quickly. Regulators arrive. Governments intervene. The firms that sold the products face scrutiny they could have avoided."}},{"type":"paragraph","data":{"text":"Blankfein drew a direct line to 2008. At its core, that was a real estate collapse. It became a political catastrophe when ordinary people were seen to be on the losing end. Firms that are now moving institutional products into mutual funds and affiliated insurance companies are, in his view, one step away from that same dynamic."}},{"type":"paragraph","data":{"text":"The market cycle is late"}},{"type":"paragraph","data":{"text":"The broader context, as Blankfein laid it out to Bloomberg, is a market that has been calm for too long."}},{"type":"paragraph","data":{"text":"Long periods of stability breed complacency. Investors take on more risk. Discipline erodes. Crashes, when they come, serve a function: they reset behaviour and clear out what he called, with a nod to The Godfather, the bad blood that accumulates during good times. The current cycle, he said, is nearing its end. Opaque and illiquid credit is among the assets he considers most vulnerable when it turns."}},{"type":"paragraph","data":{"text":"He stopped short of endorsing Jamie Dimon's comparison to 2005 and 2006. But he did not dispute the direction of travel. Late cycle, he said, with a reckoning becoming more likely the longer stability holds."}},{"type":"paragraph","data":{"text":"Goldman's culture and the partnership legacy"}},{"type":"paragraph","data":{"text":"Blankfein also reflected on what made Goldman Sachs distinct and how much of it survived the firm's 1999 IPO."}},{"type":"paragraph","data":{"text":"The partnership model created something specific. Employees were paid on the firm's overall performance, not just their own. They held capital accounts they expected to grow over 20 to 30 years. They behaved, in his description, like co-owners: expecting transparency, aware of how their actions affected the whole firm, and inclined to be consulted on decisions that affected them. That culture slowed things down sometimes. It also built something durable."}},{"type":"paragraph","data":{"text":"The surprise, Blankfein told Bloomberg, is how much of it survived. More than 25 years after going public, Goldman employees still act like partners in a way that employees at conventional public companies do not. David Solomon, he said, has pushed the transition further by moving investing activities off the balance sheet, reducing volatility and making the firm more legible to public shareholders. But the underlying culture has held."}},{"type":"paragraph","data":{"text":"On standing by people when it is uncomfortable"}},{"type":"paragraph","data":{"text":"The interview also covered Goldman's alumni network, its reputation as a launchpad for public service careers, and Blankfein's view on how firms should handle employees under pressure."}},{"type":"paragraph","data":{"text":"His position is consistent: cutting ties with someone who is being unfairly targeted sends the wrong signal to everyone watching. During the mortgage crisis, he said, the right move was for the CEO to take responsibility for the firm's actions rather than direct blame at individuals. Firms that hedge appropriately and do not lose money should not lose their people either."}},{"type":"paragraph","data":{"text":"He applied the same logic to the current climate. The tendency to treat every mistake as a capital offence, to reach for zero tolerance as a default, is, in his view, a failure of judgment rather than an expression of it. Context matters. The specifics of each situation matter. A polarised world, he said, has made nuanced decision-making harder, not easier."}},{"type":"paragraph","data":{"text":"On CEOs, politics, and where companies should draw the line"}},{"type":"paragraph","data":{"text":"On the question of corporate political engagement, Blankfein was precise about where he thinks the line sits."}},{"type":"paragraph","data":{"text":"CEOs can hold personal views and express them as individuals. When speaking for their company, the test is different. The company's position should serve the company's interests and fall within its genuine area of expertise. Goldman Sachs commenting on the consequences of a government shutdown is legitimate. A consumer company selling toothpaste weighing in on contested social questions is not. The economy, he told Bloomberg, does not benefit from companies being sorted into red and blue columns."}},{"type":"paragraph","data":{"text":"On government's role more broadly, his view is that the US economy's strength comes from the scale of its decentralised decision-making. Millions of actors responding to signals, correcting mistakes quickly, reallocating capital without waiting for permission. Government intervention can distort that. There are cases where it is justified: the Tennessee Valley electrification in the 1930s, orphan drug development, infrastructure with national security implications. Outside those cases, he is cautious about what centralised direction actually delivers."}},{"type":"paragraph","data":{"text":"He retired from Goldman in 2018. He swims. He watches podcasts. He follows the markets without having to do anything about them. But the views, as this interview made clear, have not softened."}}]}

AI is not a revolution. It's the next step in a process that began in the 1990s

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