Matt Taibbi On Goldman Sachs: The Great American Bubble Machine
From Rolling Stone:
In Rolling Stone Issue 1082-83, Matt Taibbi takes on "the Wall Street Bubble Mafia" — investment bank Goldman Sachs. The piece has generated controversy, with Goldman Sachs firing back that Taibbi's piece is "an hysterical compilation of conspiracy theories" and a spokesman adding, "We reject the assertion that we are inflators of bubbles and profiteers in busts, and we are painfully conscious of the importance in being a force for good." Taibbi shot back: "Goldman has its alumni pushing its views from the pulpit of the U.S. Treasury, the NYSE, the World Bank, and numerous other important posts; it also has former players fronting major TV shows. They have the ear of the president if they want it." Here, now, are excerpts from Matt Taibbi's piece and video of Taibbi exploring the key issues.
The rest of the story is below.
In a general sense Taibbi got things right, as long as you understand his caveat that all of the investment banks and even hedge funds created, encouraged and participated in the bubbles he discusses.
Illustration by Victor Juhasz
Simply as an example, the internet bubble was inflated and kept alive most egregiously by Mary Meeker at Morgan Stanley, Henry Blodget at Merrill Lynch Frank Quattrone at CS First Boston and Maria Bartiromo of CNBC, though Goldman bankers and analysts were the lead underwriters and syndicate for many of the biggest internet and tech IPOS and secondary offerings of that era. So their hands are stained from each of the bubbles he describes. (Full Disclosure: As a fund manager from 97'-02', I traded all 300 or so of these internet companies and most of them exclusively from the short side, and I can testify first hand that these 4 individuals completely lost their minds. But of these 4, only Blodget has redeemed himself [with his work on behalf of taxpayers at his blog], and he alone should be forgiven.)
He lays it on pretty thick in some spots, which to be fair, is not completely accurate. But 90% correct for a non-financial reporter is pretty impressive. And it's nice for a change to hear things a bit over-exaggerated, but in our favor. So we'll take it.
And since Rolling Stone readers tend to be young music and pop culture fans, they're not going to remember the intricate details of Goldman's blood-sucking escapades anyway. The fact that readers are left with the overall impression that Goldman is mostly evil, is all that matters.
Illustration by Victor JuhaszThe beauty of Taibbi's work is a blended trifecta: he's not a finance guy (which he readily admits and which makes his writing easier to understand for the lay person); he has a huge audience at Rolling Stone (so people hear what he says--especially young people...the importance of which can not be overstated); and lastly that he gets it...he understands the importance of blasting these facts into the public consciousness. It's nice to have him on our side.
Oh and one more thing---the guy can freaking write. Witness his handiwork below:
The first thing you need to know about Goldman Sachs is that it's 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.
Any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.
Winner by (IKO) Intellectual Knockout: Matt Taibbi
They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet.
Watch the Taibbi clips and see a few more cartoon illustrations (including an excellent Bob Rubin) by Victor Juhasz.
Go read the whole thing at Rolling Stone.
A follow-up from Taibbi, including Goldman's response.
Victor Juhasz 
Illustration by Victor Juhasz
Illustration by Victor Juhasz
Jul 6, 2009 at 3:44 AM
Reader Comments (11)
Who Is Most Heinous...Paulson, Lewis Or Bernanke?
http://dailybail.com/home/who-is-most-heinouspaulson-lewis-or-bernanke.html
The Bank Bailout Verdict: We Are A Nation Led By Idiots
http://dailybail.com/home/2009/2/23/the-bank-bailout-verdict-we-are-a-nation-led-by-idiots.html
Matt Taibbi Eviscerates Henry Paulson And The WSJ's Evan Newmark
http://dailybail.com/home/matt-taibbi-eviscerates-henry-paulson-and-the-wsjs-evan-newm.html
Your Tax Dollars At Work: Government Sachs To Pay Record Bonuses
http://dailybail.com/home/your-tax-dollars-at-work-government-sachs-to-pay-record-bonu.html
Lloyd Blankfein: "Sorry Seems To Be The Hardest Word"
http://dailybail.com/home/lloyd-blankfein-sorry-seems-to-be-the-hardest-word.html
Bailout Halleleuiah: We Praise Maxine Waters For Finally Asking The Goldman Question (Video)
http://dailybail.com/home/bailout-halleleuiah-we-praise-maxine-waters-for-finally-aski.html
Henry Paulson Breaks With Conventional Wisdom: "It Is Absolutely A Fiction That Lehman Was Anything More Than A Symptom"
http://dailybail.com/home/henry-paulson-breaks-with-conventional-wisdom-it-is-absolute.html
And if you can't get enough of Goldman and Paulson getting pummelled, see more stories here:
Paulson:
http://dailybail.com/display/Search?searchQuery=Paulson&moduleId=4094525&moduleFilter=&categoryFilter=&startAt=0
Goldman (several pages):
http://dailybail.com/display/Search?searchQuery=goldman&moduleId=4094525&moduleFilter=&categoryFilter=&startAt=0
I need to know if any of you still get the error message when attempting to load our pages using Internet Explorer.
This is important stuff, and I can't de-bug it on my own.
Thanks,
the mgmt.
These are still 2 of the best Daily Show clips ever. Paulson and Bernanke: Awkward $700 billion dollar loan interview with Stewart as the bank officer. And the 2nd clip might be better. Both clips are in the same link.
http://dailybail.com/home/the-daily-show-comedy-paulson-bernanke-loan-interview-with-j.html
And thanks for the kind words Puzo. I'm going to do a press junket in the Fall to get more publicity for the site and you'll see me railing just like Taibbi only even a bit more passionately. One of these days I will post the tape of my radio appearance in March. It was a hoot.
But where do we go from here as Obama pumps the prime for the carbon bubble, while stimulus dollars trickle to the employment sector at the speed of a sucrose drip?
Taking up the DB's offer to write a post that specifically addresses what I call the Sovereign States solution (otherwise known as the North Dakota solution) I think I have finally laid it out pretty succinctly here, though really Ellen Brown should get the original credit for the pieces and parts:
http://letthemfail.us/archives/1125
In the name of waking up and shaking up generation X and Y, I grant DB a full license to link to, quote or otherwise plagiarize the Bejeesus out of letthemfail.us as seen fit. -WM
Carmine 'Little Carmine' Lupertazzi: The Soprano family has always been a little pushy.
Carmine Lupertazzi: Family? They're a glorified crew!
John 'Johnny Sack' Sacrimoni: Whatever they are, Carmine, they make us a lot of money.
Great job. I will post it later this evening as a guest post from you...there will be a mention and link back to your blog at the beginning...do you want me to use your real name as the guest author? Or just the name of your blog...
Again, thanks a lot. It's a unique story that I haven't seen anywhere else. Extremely well done.
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