How often do you read two utterly opposing viewpoints — and find yourself agreeing with both of them?
I had that very same “Hmmmm moment” when reading both Matt Taibbi’s Inside The Great American Bubble Machine and Charlie Gasparino’s Stop Blaming Goldman Sachs. They couldn’t be more polar opposites, and yet each is — more or less — correct.
A brief explanation is in order:
Back in June of this year, Rolling Stone published Taibbi’s article on Goldman Sachs. It was a epic take-down, full of righteous anger and blustery fury over Goldman’s role in, well pretty much every major bubble over the past century. The hyperbole-laden piece, its indignant tone, and the frustrated fury felt by Taibbi captured the zeitgeist of the moment perfectly. It crystallized a growing discontent over the outsized influence of Goldman Sachs — in government, on Wall Street, and especially, regarding the bailouts.
Gasparino –whom I have on occasion clashed with (see below) — correctly points out several things at his Daily Beast column: He assumes Matt Taibbi is a nice guy (I can tell you he is) points out he is “a good writer, a really good reporter, and a provocative storyteller.” Check, check and check.
Where Charlie takes issue with the RS piece is Matt’s statement that Goldman either “single-handedly or with very little help, was responsible for the financial crisis.” And I have to agree with Charlie on that point — as I have pointed out in painful detail, there is lots and lots of blame to go around. Goldman was but one party to the debacle.
How to reconcile the two articles?
I suspect Gasparino is reading Taibbi’s piece literally — perhaps too literally. The best way to enjoy it is to think of it as the culmination of frustration by the public, with the struggling masses infuriated at Goldman’s role in this crisis — their CEO requesting a special exemption for more leverage from the SEC (and getting it for themselves and 4 other firms), that same CEO becoming Treasury Secretary, and then doling out trillions of dollars to inept and insolvent financial companies, and finally, Goldman Sachs hoovering up billions. We know they sucked out $12.9 billion dollars via from AIG direct pass thru of bailout monies — must be nice to get 100 cents on the dollar! Most people are probbly unaware that Goldman also grabbed $5.9 billion dollars just before AIG collapsed — a treansfer that if AIG went thru the bankruptcy processs, most likely would not have been permitted to stand.
Add in Goldman’s record profits, its enormous bonus pool, and you have an ideal recipe for a massive GS backlash.
Did they cause the crash themselves? Certainly not, but their role in it, and their uncanny ability to profit/squeeze/steal billions in unsavory and perhaps borderline legal ways — while everyone else is suffering — is why Taibbi’s piece still has resonance months later . . .
UPDATE: August 5, 2009, 10:57am
Charlie Gasparino adds:
“You make at least one bizarre point: You say I take what Taibbi says too literally. Oh really? Can you imagine if CNBC or any major media used that excuse when we get criticized? Maybe you have two standards; CNBC and everyone else . . .
When I say Charlie is responding literally — I meant rationally on a causation basis. The reason why Taibbi seems to be dominating the Goldman meme is he resonates on an emotional level; Perhaps that is why I gave his hyperbole the literary benefit of the doubt . . .
DealBreaker, Charlie Gasparino & Me (June 9th, 2009)
Gasparino vs Einhorn, Kohn & Ritholtz (June 5th, 2008)
Financial Sector: Beware LEH, CIT (June 2008)
Inside The Great American Bubble Machine
How Goldman Sachs has engineered every major market manipulation since the Great Depression
Rolling Stone, Jul 02
Stop Blaming Goldman Sachs
Daily Beast, August 2, 2009
Matt Taibbi: Goldman Would Have Gone Bust But For TARP (July 31st, 2009)
New York, 8/3/09