There is an article, and I use that term loosely, in the current issue of Rolling Stone on Goldman Sachs. It’s certainly not a publication I normally read, in fact I think this may be the first copy I have ever owned, but the the Goldman piece has gotten a little buzz going and one of my commenters told me to read it. (The full thing is not available on-line in authorized form. Google and you can find bootlegs. Legal excerpts here.)
Admittedly, I expected little from an issue whose cover story was "Boys to Men: Inside the World of the Jonas Brothers." But Matt Taibbi’s Goldman diatribe, "The Bailout: How Goldman Sachs Runs Washington" is truly nauseatingly horrible.
The first thing you need to know about Goldman Sachs is that it is everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who’s Who of Goldman Sachs graduates.
If that opening paragraph does not make your hair stand on end and your heart rate quicken, permit me to edit it a little.
The first thing you need to know about [Jewish bankers] is that [they are] everywhere. The world’s most powerful [race] is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who’s Who of [Jews].
How do you feel now?
I want to be very very clear that I do not for a moment think that Taibbi or Rolling Stone intended any anti-Semitism. For all I know Taibbi is a member of the tribe himself. On the contrary, I think they are entirely too ignorant, too young, and just plain too utterly clueless to know what they are saying. For Wall Street denizens of a certain age, Goldman is not the leading investment bank so much as it is the leading Jewish investment bank. And there are still in America those that think that the names Rubin, Cramer, Greenspan, Summers, Levitt, Bernanke, and Weinberg have something more obvious in common than that they all belong to conspirators in Goldman’s plot to suck blood from ordinary Americans.
There was a time, and I am glad that it is gone, in which the editors of Rolling Stone would have made Taibbi rewrite this screed to reduce the number of Jewish names mentioned. They might also have redone the accompanying cartoons to make the chubby pig representing Goldman a little more Anglo-Saxon in appearance. Come to think of it, in those days the editors would have rejected the story entirely, as it has nothing to do with sex, drugs, or rock and roll.
Here in 2009, I am certain that not only was this not intended as anti-Semitism, I doubt that it occurred to anybody involved that it might be taken as such. That does not say much for the level of professionalism at Rolling Stone, but we can all be thankful we live in a world in which it could happen.
But this is hate mongering vitriol nevertheless. Taibbi may define the protagonists of his paranoid rant in a socially acceptable way, but in form and substance he echoes theories from darker chapters in our history that centered on groups ranging from Catholic immigrants to communists. And his choice of villain isn’t even terribly original. New York bankers have been recurring characters in fantasized plots to cheat wholesome middle America since the days of Hamilton.
Nearly everything Taibbi says is, in fact, a repetition of populist hysteria from at least a hundred years ago. He alleges that Goldman rigged the market for oil and uses as supporting evidence that an average barrel of crude is traded dozens of times before being delivered and consumed. That’s not really how the futures markets work, but it is exactly the same evidence as was given by progressive muckrakers making the case that evil capitalists rigged the wheat markets in the 1880s and 1890s.
Taibbi’s main thesis, if it can be called that, is that Goldman was at the center of everything that has gone wrong in the financial markets since and including the Great Depression. After a brief, confusing, and not particularly factual account of Goldman’s evil doings in 1929, Taibbi picks up the narrative in the late 1990s to tell us of Goldman’s involvement in dot com IPOs. Then we hear about housing, oil, the recent financial bailout, and the yet-to-be scandal of trading carbon credits.
Thus, Taibbi’s history of Goldman is largely limited to the last decade or so. But, and especially with regard to that period, "The first thing you need to know about Goldman Sachs is that it is everywhere." Of course it was involved in all the bits of the financial world that went bad. It was involved in all the bits of the financial world good, bad, or indifferent. That was its business plan, and the business plan of a dozen other banks around the globe who could just as reasonably be blamed for all that went wrong. Goldman’s main distinction from those others being that it turned out to be the most successful of the bunch. One of them had to be.
This is awfully similar to the conspiracy theories popular in the early days of the 20th Century about the Money Trust. Back then the epicenter of evil was J.P. Morgan & Co., but the story and the faulty logic are the same. The most successful bank of the time was, by definition, in some way involved in all that went wrong in the financial world over the past decade or two, just as it did, by definition, generally make a profit over the same period.
Even by the standards of the mainstream media, Taibbi’s command of his material is shockingly poor. Granted, he presumably only feels that he needs to know more about finance than the typical Rolling Stone reader, but at times his ignorance seems like a willful insult to the better informed. To cite a single example, he spends about a page explaining how Goldman did very bad things in the tech IPO boom by "spinning" and methodically demonstrates he has no idea what spinning is or how it worked. An accurate description would have been no less damming for Goldman, but Taibbi evidently didn’t bother to research that sort of uninteresting detail.
Of course, the tech boom and bust was ten years ago now. But the comparatively recent events of the financial bailout are no more clear to Taibbi. He twice states that Goldman was the beneficiary of $13 billion from the AIG bailout. Goldman has stated that its net exposure to AIG was "rounding error." If Taibbi has evidence to the contrary he should provide it.
Overall, It’s a piece rather short on evidence. Not many numbers, no citations, and only a few quotes, many from anonymous people we are told are in the know. What few facts that are in the article are bent into service to support Taibbi’s hate-filled views, logically or not. We are told that Goldman is bad because it touted mortgage securities while not owning them itself. Then we are told it is bad because it touted a bullish stance on oil while owning a lot of the stuff itself. And the tiny size of the fines Goldman paid for various infractions are not evidence of the minor nature of those infractions but of Goldman’s pervasive power over government, just as the fact that it was fined at all is clear evidence of guilt, but not that its power in comparison to the government’s is small.
A reader may wonder why I have written what turns out to be a rather long post on something that is, at best, only tangentially related to personal finance. Partly, I have a compulsion to defend the unpopular, and Goldman certainly qualifies right now. (And, for the record, I have never worked there and have no realistic prospects of ever working there.) But in a larger sense, this is exactly the sort of ignorance, and widespread tolerance of same, that has gotten our personal finance culture into the mess that it is in. Taibbi isn’t telling a story that fits with facts, he is spinning a tale that fits with how he and his readers feel. That may be okay if you are writing about music, but not about money.
My daughter liked the article on the Jonas Brothers.