Gasparino’s bizarre defense of Goldman Sachs (and Ben Stein)
Charlie Gasparino knows that a well-argued print column is a much better tool for building credibility than any number of high-volume television appearances. Unfortunately, he seems to have a problem with the “well-argued” bit:
If AIG is imploding and you’re the government and you need help restructuring the company or figuring out ways the government can fix the problem, Goldman is a good place to start. Of course the firm had conflicts of interest—given its exposure to AIG insured debt and all its connections in government—but so did just about everyone else in this sordid mess, and at least the guys at Goldman are smart as hell. … (Ben Stein, it should be pointed out, once made a far more reasoned and persuasive attack against the firm in a column suggesting that Goldman had used its research to drive down the subprime market when it put on the short sale).
First, Goldman’s exposure/conflict when it came to AIG was a lot bigger than anybody else’s. The Goldman chaps may or may not have been “smart as hell”, but they were in a pretty pickle when it came to their $13 billion AIG exposure, and they really should have been barred from advising the government on AIG. Instead, as Joe Hagan puts it, they were “on every side of the large conference table, with triple the number of representatives as other banks” when the decision to bail out AIG was made. Yes, the other banks might have been conflicted, but they weren’t as conflicted as Goldman. And they weren’t nearly as zealous as Goldman when it came to lobbying the government to get what they wanted, either.
Second, just because its partners are “smart as hell”, in the words of TED, “doesn’t mean that Goldman Sachs isn’t out to get you.” Indeed, quite the opposite. That’s how they make their billions.
And most importantly, anybody who calls Ben Stein’s December 2007 column “reasoned and persuasive” is on crack. Obviously, I didn’t think much of it. But don’t take my word for it: ask Paul Krugman, Dean Baker, Yves Smith, Roger Ehrenberg, Brad DeLong, Calculated Risk, Chew Your Grouse, Ryan Avent, Talking Biz News, John Gapper, Mark Thoma, Herb Greenberg, or any of many others, including pretty much everybody at DealBreaker including John Carney (1, 2, 3, 4, 5, 6).
One of the more notable aspects of Matt Taibbi’s attack on Goldman Sachs is that although at first glance it looked as though he was taking an everything-and-the-kitchen-sink approach, in fact he stopped short of reiterating the craziest conspiracy theories, such as those of Ben Stein. If Gasparino chooses to take aim at Taibbi while defending Stein, he’s doomed to be considered as a blowhard at best, and a laughingstock at worst.