The Taibbi debate, in 140 characters or less

By Felix Salmon
July 1, 2009

“About 1 hour ago”, in the language of Twitter, Heidi Moore tweeted this, on the subject of the Matt Taibbi article about Goldman Sachs:

For the record, I don’t think any article that contains the line “vampire squid sucking the face of humanity” is real journalism.

Which sparked the following debate between me and her on Twitter. It turns out that trying to recreate a stream of tweets in blog-entry form is non-trivial; I’ve tried to make this as easy to follow as I can by moving a few things around a little. But in any case, this is debate in 140 characters or less:

HM: For the record, I don’t think any article that contains the line “vampire squid sucking the face of humanity” is real journalism.
That’s self-righteous editorializing. If Taibbi wanted to make his point, he would have done great to dig up some, like, “facts.”
I mean, if you court controversy, you’ll win — you’ll get controversy. But controversy is not credibility.
The main problem with Taibbi’s article was this: how was GS exceptional in creating bubbles compared to other firms? All Wall Street did it.
Someone could easily blame Bear’s fall on the CDS market, which was created by J.P. Morgan in ’94.
Or blame the mortgage meltdown on Larry Fink at BlackRock, who helped create mortgage securitizations.
And yet, “JPM and BLK caused the meltdown” lacks a certain conspiracy appeal and accuracy. The creation of instruments didn’t cause bubbles.
What causes bubbles are mass hysteria/subscription. And one firm –or two or three — can’t do it alone. That was what was missing in story.

FS: Of course the Taibbi piece was real journalism, even if it was also self-righteous editorializing. And yes it had lots of facts  

HM: lots of facts don’t matter if they’re not the relevant ones. What the piece had was “this happened” and “this firm was there.”
i.e., what was the proof of causation? Lots of other firms did what he accused GS of doing: changing underwriting standards
as well as benefitting from cap-and-trade bill, dismissing orphan month of December, and shorting mtg mkt in 2006. Widespread.
So the question then is why is ONE firm “vampire squid”? GS can’t sell if no one’s buying. Hedge funds, ibanks, all did same.
A better article would have represented phenomena in context instead of making it look like GS exceptionalism in every sense.

FS: OK, now you’re taking substantive issue with Taibbi’s piece. Which makes more sense than dismissing it as “not journalism”.

HM: But those substantive issues are what make it not journalism. Journalism is the art of accurate representation.
i.e., the article was neither news nor analysis. It was theory and not contextualized and not well-supported. Not journalism.
to put it more directly: just because someone has access to a printing press does not make it journalism. Journalism is rigor.

FS: So would you say that the WSJ editorial page is also “not journalism”, since it fails so often in “accurate representation”?

HM: There is a reason there is a strict, impenetrable Chinese wall between news and editorial.
and I think that’s a valuable distinction and should be maintained. Columnists/editorial writers also have burden of proof.

FS: You’re not answering the question. Does the WSJ edit page count as journalism or not?

HM: Like pornography, you know it when you see it. Compare Rolling Stone’s piece with a Helyar/Burroughs analysis. Night and day.

FS: Taibbi’s piece, to me, was clearly polemical journalism — and good polemical journalism at that.

HM: Also, would RS piece have appeared in any reputable financial publication? No.
I’m sure Taibbi would say that’s bc financial press all bought and paid for, too close to that world.
But mostly it’s not in reputable financial press bc it couldn’t be supported. Sometimes it’s just not true.

FS: You mean Goldman doesn’t *literally* eat planets?
Taibbi’s piece was not written for people like us who know GS’s business and care about distinctions with eg JPM or BLK

HM: just bc Taibbi’s piece was not written for sophisticates makes it worse, not better. Higher burden to write accurately

FS: I don’t think Taibbi particularly cares whether GS is more or less evil than say Morgan Stanley. That’s not the point.

HM: Pffft. That’s the WHOLE point. His article is entirely how Goldman is more evil than any other financial entity.  
Which, you must admit, is a hell of a task. There’s a lot of evil, blame, greed out there. Why give credit to one firm?

FS: Because Hank Paulson looks like Benito Mussolini, of course.

HM: See, I would read a polemic on THAT. Who doesn’t like to read analysis of aesthetic choices of bald men?

FS: There is a long and noble tradition of crusading polemical journalism. And there is more to journalism than the financial press

HM: i don’t buy it. Just because it’s a diatribe doesn’t mean it’s “polemical journalism” What is he against? Existence of Goldman?
I mean, what is he crusading against? One firm? Polemical journalism is abt corrupt policy, not “I don’t like cut of their jib”
also, sorry to say polemical journalism more of a tradition in Europe. Big difference with U.S. journos.

FS: Of course the Aussies do polemical journalism very well too. (See eg John Pilger.) Maybe Rupert should hire Taibbi for the WSJ!
There is a strong case that Wall St in general and Goldman in particular has captured the policymaking apparatus.
So yes it’s reasonable to rail against the plutocracy. Why not?

HM: if there is a strong case for it, it wasn’t in RS piece. Just pointing out that GS alums work in govt is old news for 100 yrs
Railing against the plutocracy means against plutocracy. Not one person/firm as cause of all of fncl system’s troubles
Railing against plutocracy means going back to JPM and BLK and Salomon/Citi roles in financial innovation.

FS: I think you’ve just pitched yourself a Rolling Stone feature!

HM: That would certainly be something.
The joke of it is, GS never innovated instruments. They waited for others to do it, then played the system more effectively.

FS: Right, GS has second-mover advantage, like MSFT

HM: Exactly. Which puts them at the scene of bubbles, but doesn’t prove means or motive. Also other i-banks do same.
I.E., Goldman’s “watch and wait” style goes directly against bubble creation Taibbi claims. They may have exploited bubbles.

FS: the act of exploiting bubbles by its nature exacerbates their inflation and profits from their popping

HM: Yes, but EVERY firm exacerbates bubble inflation and profits from popping. It is mass participation that makes it bubble.
…but exceedingly hard to prove they “created” them, if, indeed, any firm can take credit for “creating” bubbles.  
A polemical piece against the incentives for “the Wall St. system” in bubble creation would have been excellent to read.
if we say that participating in bubbles is bad and NOT participating in bubbles is bad, who wins, exactly? Is winning possible?

FS: Who wins? People who live on their own labor rather than on other people’s money.
OK, you feel Taibbi’s polemicism would have been better aimed elsewhere. But let him aim where he likes! You can take aim too!

HM: doesn’t work that way! We’re talking media crit and argument flaws. Not concerned about his “right” to write polemics, or mine.

FS: My point is that “this other polemic would have been better” is a pretty weak criticism. Taibbi’s was cutting and funny.

HM: In fact, there’s an excellent argument that predicting and exploiting bubble pops is great financial judgement.
I mean, when did sheep-like following of bubble trends become the heroic and morally justifiable route?

FS: Your “great financial judgement” is Taibbi’s profiteering. It’s 2 ways of looking at the same $$$

HM: Not same! big difference between “making profit on sound judgement” and “profiteering.”
And that’s what I would have liked to see explored and discussed in that piece.

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