Opinion

Felix Salmon

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.

Comments
19 comments so far | RSS Comments RSS

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

And is an insult to all vampire squid, just as “Citibank is pond scum” would be an insult to pond scum, however apt the comparison.

 

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

You can’t honestly believe this. And if Taibbi doesn’t actually believe that Goldman is more evil than the others then his article is even worse.

Posted by Ledbury | Report as abusive
 

I’m going to have to score this debate in favour of Hedi.

Its very obvious that Goldman has been found at the scene of the crime of many historic bubbles. Its also very obvious that Goldman has made a lot of money exploiting the rise and fall of those bubbles.

All that being said, Goldman was hardly the only firm profiting from these bubbles and there is almost zero evidence that they created any of them.

I find the arguments in the RS article weak and intellectually dishonest. It is an attempt to demonize a single firm to an audience that cant be expected to recognize the numerous holes in his argument that Goldman and Goldman alone is the blame for several financial crises.

This is tabloid journalism at best.

Posted by recent grad | Report as abusive
 

Its also worth noting that this type of journalism is exactly in line with Taibbi’s style.
Lets not forget this is the same guy that relished in working “out of the reach of American libel law” while writing for The eXile.

Personally I find his writing amusing because I understand the realities and intricacies of the issues he covers. I especially enjoyed his coverage of the 2004 election.

However i find it worrying when somebody like Mr. Taibbi writes a piece for the interested layman that is seriously misleading.

Posted by recent grad | Report as abusive
 

“His article is entirely how Goldman is more evil than any other financial entity.”

She’s right about that, GS is not more evil than any other financial entity, they are just exceptional at what financial companies do, much better than all the rest.

Since financial companies like GS exist only to make money from brokering deals (this is not a judgment, just an assessment), some people may view them as evil when the financial system starts hurting a lot more people than it benefits, because their only role was to profit from the mass losses suffered by the public – they didn’t make huge profits selling unnecessary weapons to a government that thought they needed them, but they still made huge profits for providing no benefits to the rest of society.

I understand Heidi’s dismissal of Taibbi’s work, that she doesn’t believe it should be considered journalism, but the definition of journalism has undergone massive changes over the past decade. Are opinions and editorials journalism? Is anything from Fox News or CNBC journalism? Are Felix’s blog posts journalism? what about Heidi’s tweets?

So maybe Taibbi did not provide facts like Fox journalists or CNBC commentators do(huh?), but he did explain Goldman’s role in the financial world, and its relationship with government, to an audience that may not have previously known those things. If the takeaway of those readers is that GS is evil, that’s not going to add value to society, but if now more people are more aware of how the financial world works, and how it intersects with public policy, well, that can’t be bad.

Posted by KenG | Report as abusive
 

And what have the traditional players in financial journalism brought to the table at any time in the recent past? Could HM possibly enlighten us to how investigative reporters at the WSJ or CNBC uncovered the Madoff or Sanford schemes? Or maybe their crusade to inform investors that it has been demonstrated to the point where to believe otherwise borders on insanity that the performance of the actively managed investment funds available to us poor folk is worse than investing in index funds after accounting for differences in fees? Too busy trying to explain why the DJIA went up/down by X points on any given day, is that it?

Despite everything they have been saying publicly, GS would have been in deep if not for the Treasury and FDIC, yet all I seem to see in the financial press is how peachy keen everything is for Lloyd B and company and how it’s all due to their superior skills and hard work. Maybe this, along with the above, is why I have no faith whatsoever that traditional sources of financial news such as the WSJ, Barron’s, or CNBC will ever rise above the level of porn fluffer to the industry.

As for Reuters content and this blog, it seems a fair piece better. Thanks for your efforts.

Posted by framed | Report as abusive
 

I haven’t read the piece (the vampire squid sentence makes me want to).

However, Heidi easily won the debate. Technical KO. Love you Felix, but you didn’t really address her argument.

 

First of all, Hank Paulson looks more like the grim reaper than Mussolini. Second, it’s not clear Goldman Sachs was a follower when Paulson and the heads of Morgan Stanley, Lehman, Bear Stearns, and Merrill all courted William McDonough in 2004, then head of the SEC, to increase the debt leverage ratios from 12/1 to 40/1 for just those five firms. Goldman had the same first mover advantage as the rest, if it was not, indeed, the chief architect of the ill-fated scheme. Does anyone think McDonough would have gone along with this if Paulson was not present. Certainly, Goldman played it better than the rest, because they exported more of their toxic assets than anyone else. Today, the grim reaper is reaping the benefits of the global financial catastrophe he helped create, with his distressed toxic assets fund. Take another bow Will McDonough.

 

beaucoup twittering. brevity is the soul of twit?

Posted by bdbd | Report as abusive
 

or maybe, brevity is the goal of twit

Posted by bdbd | Report as abusive
 

I think the key point that Heidi missed was that Taibbi’s article was written in the style of most “Rolling Stone” articles. If it had been written as a dry financial piece, it would have never reached the audience that Taibbi was trying to. Too often we see that the masses ignore financial issues because its not something that speaks to them. We have a legitimate issue here, not necessarily the evildoers at GS, but people blindly trusting corporations with their money and expecting firms to care for their money as the firm does its own. I think an important point was that GS directed CALpers to invest in a commodity purely to support their own agenda.

I think the other big issue here is that we need some level of public outrage to prevent the political officials from continuing to allow financial firms to get away with gaming the system as they have. If people keep pointing to wall street as some evil empire, the detractors can be waved off as easily as those still blaming “the man”. In order to stir the public, we need an enemy, we need a Darth Vader to embody evil and give us someone to direct our hate towards.

Posted by MMZ | Report as abusive
 

Taibbi’s piece was not meant to be fair, but the simple fact is that Goldman’s former CEO was Secretary of Treasury when the decision was taken not to nationalize the investment banks, but to turn the taxpayer into a dedicated host for financial system parasites.

These are the facts. Anyone who describes Goldman as “making profits on sound judgment” obviously hasn’t read the newspaper since September 16, 2008. The real question is why does HM think that as a reporter she had the right to ignore the basic facts of what happened in 2008?

Posted by Anon | Report as abusive
 

Heidi is of course welcome to raise the bar and point out how the system’s been captured. Until then, it’s whining about how rich people shouldn’t get so much grief for screwing the rest of society. Because Taibbi’s right about Goldman, even if he underplays how much the rest of the bastards are guilty.

Posted by david | Report as abusive
 

I find HM’s quickness to label the Taibbi piece “not journalism” petty and equivocal. There is a real story there of a Goldman that works at every turn to rig the game and screw as many people as possible. Their behavior in the oil bubble was especially reprehensible. You nailed it when you called it a case for the prosecution, which I think counts as journalism. His style of cutting away niceties and calling it like he sees it is refreshing and I’d like to see more of it.

But she is right that his case for “regulatory capture” doesn’t quite make it. Goldman or no Goldman, for more than 20 years the government was in full deregulation mode, which I think makes Simon Johnson’s descriptions of corruption by ideology more accurate. We don’t live in a society of outright graft; instead there is simply a culture of what’s good for Wall Street is good for the country – it’s backed up but by no means caused by campaign contributions and the revolving door between the private and public sectors.

Taibbi has made a real case before but I think in this case he kind of blew it.

 

Taibbi\’s contribution to humanity is overwhelming because he has THE COURAGE to make a point, and he makes it convincingly in language we \”non-financials\” understand. We now can join the dots and conclude that bail-outs and Obama\’s good intentions will go nowhere because the Golden Mafia and colleagues are in full control, to recover their lost wealth;- someone\’s gotta lose – maybe you and me -middle class readers of blogs -perhaps my childrens future has been securitized and collateralized to ensure the next Goldman bonus. Simon Johnson\’s Atlantic articles alerted us in a softer tone some time back – much appreciated Simon – taibii socks it to us in a way that is overwhelming – I believe in what he is saying – This guy\’s got guts.
Lets not quibble over detail – what are you, me, who? gonna do about this – our future is on the line. What can we do? — \”SAVE ? — INVEST ?? PANIC !!!

Posted by Joe Rutten | Report as abusive
 

wait till the next issue of Rolling Stone, when Heidi will presumably be pointing out that Bruce Springsteen is in fact not “The Boss” of any recognised organisation, and that although “R&B changed forever after the release of ‘Thriller’”, a causal link cannot be established.

Posted by dsquared | Report as abusive
 

The Goldman Sachs story is already adequately covered. Someone needs to sock them between the eyes, this is what Taibbi has done in spades. His talent is handing out a well deserved tongue lashing.

When you connect the factual dots, Goldman does not look very good, does it.

 

Taibbi was on mark. Professional market players like me are well aware of Goldman’s exploits. Some journalists like Heidi have no idea what they are talking about, they swallow the official line hook and sinkers.

Posted by Proton | Report as abusive
 

Goldman Sachs emerged from the crisis in much better shape than its peers, has massively opaque yet profitable trading operations, and even before the mortgage market soured had to contend with persistent allegations that it was trading against its clients. To which it replied that it had, in Moore’s words (used in a different contect) “strict, impenetrable Chinese walls” between these operations (BTW, the Chinese walls phrase needs a good kicking one day). Goldman Sachs needs much more criticism, the more colourful the better. And its impenetrability means that this will necessarily focus on its political connections. Moore’s and other US journalists’, obsession with making reporting as bloodless as possible will not serve US news media well in the long term. I’d make a case that the myth of the neutral media is a creation of the large press barons of the mid-20th century rather than any natural state of equilibirum, and tends to treat US news readers as hapless dupes. Rolling Stone readers aren’t idiots. It’s a sad outlook that the magazine produces the most compelling political journalism, not some kind of indictment of its journalistic standards.

 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •