Opinion

Felix Salmon

Thursday links spell it out

By Felix Salmon
July 17, 2009

TED on how bankers’ obsession with growth caused the mess we’re currently in. (He doesn’t use the word “mess”.)

Now that’s a cool new Goldman Sachs logo.

Denton: “They take the slickest lofts, the hottest gold-diggers – and leave us with the bill. It’s time for Goldman to pay.”

A violated neckline and retested right shoulder, check, but is there such a thing as two right shoulders?

A sensible proposal for how HuffPo might pay some of its bloggers a relatively modest amount of money, occasionally

Jim Cramer is now an internet hack shill

Taibbi on Goldman’s earnings: Possibly even better than his Rolling Stone piece. (But no squid, unfortunately.)

Treasury should hire James Kwak to explain the CFPA. He does a much better job than they’re doing.

Which unemployment numbers to look at? And how much of the pain is being borne by men?

Is there anything in the WSJ’s econoblogosphere article which couldn’t have been written a year ago?

Ben Goldacre on why the Telegraph’s rape correction is insufficient

Choire eviscerates the NY Post’s idiotic story on the healthcare surcharge

Bailing out CIT would benefit strip-and-flips, not mom-and-pops

“Cabernet costs more than any other wine, even if it tastes like a dead seagull spewing maggots

Yet more wars between US and Antiguan authorities over Stanford. Lawyers always win.

Comments
11 comments so far | RSS Comments RSS

You know that every time you praise Matt Taibbi’s “analysis” of GS, you lose more respect from anyone who has ever actually worked on Wall Street, right? You may have thought it was fun to read, but it was fictional. It also showed that Taibbi has an embarrassingly poor grasp of basic financial concepts, like “hedging.” Maybe Taibbi is the coolest kid in blogland, but putting yourself on his level doesn’t bode well for your future as a financial blogger.

And if you can’t see that Taibbi’s piece was utterly delusional, then, well, I feel bad for you.

Posted by Mark | Report as abusive
 

@Mark

I suspect that Felix doesn’t depend on page views from “from anyone who has ever actually worked on Wall Street” … LOL

Seriously though, Mark, it doesn’t have to be the truth. It only had to make the metaphor stick.

It did. Well done.

Posted by Benedict@Large | Report as abusive
 

I’m still trying to figure out what to think about Taibbi – on one hand, I appreciate his high-profile hatred of Wall Street and his willingness to go after the biggest fishes in the sea. Society is better off approaching these institutions with paranoia, not respect or admiration, and he facilitates that with funny, accessible writing. But then I open up his article and I immediately see a sentence like “the entire rationale not only for TARP… was that Wall Street, once rescued, would pump money back into the economy, create jobs, and initiate a widespread recovery” and my brain starts screaming “NOT TRUE NOT TRUE NOT TRUE” and I have a hard time taking him seriously after that.

It comes down to a much bigger question about whether or not hyperbolic reporting is acceptable in pursuit of a positive end. I see the point of the Taibbists, but his work unnerves me anyway – not because I find railing against Goldman particularly objectionable, but because once you become unwilling to deconstruct and think critically about your conclusions, you’ve already become capable of harmful demagoguery. Ultimately, it’s much easier to just make sure that your reporting is factually accurate than it is to be sure you’re on the right side of every debate.

The Michael Lewis AIG article really is the perfect counterpoint to Taibbi’s. He constructs the whole thing on the premise of understanding the actions of men who have been rendered completely incomprehensible by conventional reporting; he takes something that seemed black and white, and fills in the grays that thinking adults must know are there. And needless the say, it’ll never have anywhere near the impact of, say, comparing Goldman Sachs to a blood-sucking cephalopod.

Posted by WHS | Report as abusive
 

So Mark and Benedict, I take it you guys have no problem with the government making Goldman whole on their exposure (if you want to call it that) to AIG’s loss of collateral? The debt that GS had bought swaps from AIG on had not defaulted, yet the government gave (that’s right, they GAVE) GS $12.9 Billion. Why? What was so great about that? What was fair about that? Why should the government have given GS so much money?

Posted by KenG | Report as abusive
 

Choire debunks the tax surcharge story by arguing that no one really pays taxes at the rate they are supposed to. If so, how does the surcharge raise the money necessary to subsidize health care? I guess the CBO is right, it won’t come close.

Posted by Gil Franco | Report as abusive
 

I think Taibbi’s second piece was better than the first.

WHS – You’re right, Lewis is the best. I think Taibbi’s second piece was better than the first. I will read Taibbi carefully but I wish you guys would express this kind of condemnation for the sycophantic financial press like most of CNBC. To your criticism, the whole selling point of the financial rescue was to save Wall Street in order to protect Main Street. Maybe the rationale was not to save jobs that would have been lost in a regular recession but it was certainly to make the banks healthy enough to prevent additional job losses that would occur due to the financial crisis (that was of their own making). We expected that the banks would be taking losses in an orderly fashion and they would cooperate with rule changes to prevent future socialization of losses while they profit from huge risk taking that really does not benefit the economy as a whole. What we are finding is one sweetheart deal after another, particularly for GS, and GS and JP are at the front in efforts to stymie any financial regulation.

I have never heard anyone explain why Goldman was made whole through the rescue of AIG. I have contempt for them and they are making investment bankers look like used car salesmen.

Posted by Tom | Report as abusive
 

Felix, I don’t get why you’re not willing to call Taibbi on his bullshit like you will with others.

To take just one example, Taibbi still believes the AIG bailout saved Goldman. You, on the other hand, have made the case that this just isn’t true:

“But there’s no real evidence supporting the NYT’s implication that Tim Geithner bailed out AIG because he wanted to do a special favor for Lloyd Blankfein.”

(see http://seekingalpha.com/article/111026-d id-geithner-bail-out-goldman-sachs)

There are a lot of solid criticisms you can make, but Taibbi’s style of ranting and obfuscation is not helpful.

Posted by ab | Report as abusive
 

ab, if the government didn’t give GS $12.9B because AIG’s collateral allegedly lost too much value, do you think they would have avoided bankruptcy? Where would GS be today if they had $12.9B less in cash?

I don’t understand why people keep calling it the “AIG bailout”. AIG wasn’t bailed out, it’s counterparties were. AIG’s shareholders lost (at least) 80% of their equity, while their counterparties (like GS) lost nothing.

Several posters on this blog have taken exception to Taibbi’s writing style. He’s just writing as if he were having a conversation with the reader about a fairly complex subject. It’s not the WSJ or the NYT, but so what? It’s a lot better than a bunch of tweets.

Posted by KenG | Report as abusive
 

As if anyone who ever worked on Wall Street deserves respect…

 

And the problem with “filling in the grays” is that is how you get on the slippery slope from financial necessity to outright greed in the first place. Finance should be a way to fuel productive opportunity, not a means to extract profit from anything that moves.

 

Ken, the question is whether they actually needed that money. At least according to GS (as well as Felix and others), the company was fully hedged. In that case, the $13bn was a gift, but not vital to their survival.

I agree in general that it was a bailout for counterparties (though I’m sure the Fed would argue that if those counterparties weren’t bailed out, we’d face a systemic collapse). But there were a lot of other banks there too, many (especially the Euros) who likely weren’t well-hedged.

My problem isn’t so much with his style (though I’m not a huge fan of that). It’s that he’s vastly oversimplifying a complex discussion. It’s easier to say Goldman is evil and runs the world, but it’s also not nearly as useful.

Posted by ab | Report as abusive
 

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