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Stop Blaming Goldman Sachs
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A recent Rolling Stone article attacked the powerful Wall Street firm for bursting America’s financial bubble. Charlie Gasparino on why the story is dead wrong.
I'm sure Matt Taibbi is a nice guy, and I know he's a good writer, but it's making me ill to watch his recent Rolling Stone hit job on Goldman Sachs gain increasing credibility. (Though for what it’s worth, it’s a hell of a good read.) It's not that Goldman doesn't deserve to be blasted for getting bailed out by the government for losses tied to high-risk trading back in 2008, or for its manifold ties to the last three presidential administrations (including the current one), or for now profiting through the government's subsidy of its recent risk taking; I have done as much on these pages.
Thank God Paulson and Bernanke turned to Blankfein and not the editors at Rolling Stone for help.
But Taibbi has elevated a combination of half-truths, superstitions, and a lack of understanding about the financial crisis to what is fast becoming established as "fact”: that Goldman Sachs was the main culprit for the financial crisis and is now unfairly profiting from the various bailouts the crisis caused.
No rational person can deny the fact that Goldman is benefiting from its status as a government protected bank, as it makes big bucks ($3 billion in just the second quarter alone), acting like a hedge fund just after getting bailed out by the feds, and using its status as a commercial bank to borrow cheaply and make huge bond market bets. In fact, all of the banks are— Morgan Stanley is at the top of that list—it’s just that some, like Goldman, are doing it better than others.
It's the other part of Taibbi’s story that I have a real problem with—that Goldman either single-handedly or with very little help, was responsible for the financial crisis and committed fraud along the way. And then when it bet wrong, when the markets turned against the firm in a way its rocket-scientist traders didn't foresee, Goldman used its pull in Washington to get a bailout.
That storyline isn't just wrong, it's pretty naïve. But it's gaining credibility following Taibbi's Rolling Stone piece, first in the blogosphere and now with a growing number of what is commonly referred to as the mainstream media. It's one thing to watch half-literate bloggers in desperate need of attention jump on the Goldman is the root of all evil story; it's quite another to see respected news organizations with experienced reporters and presumably more experienced editors do it and in the process obscure the fact that Goldman, for all of its sins during the bubble years, was probably the least culpable for the system's eventual collapse. And maybe more importantly, that Goldman and all the other banks are now overtly protected by the federal government and can still roll the dice and take risk only this time under the explicit protection of the American taxpayer.
All of which brings me back to Taibbi, who is usually a really good reporter, and a provocative storyteller. In addition to his Rolling Stone piece on Goldman, I watched his performance on WNYC. What's interesting to me is (particularly after the WNYC appearance) is how much of what Taibbi is stating as fact or suggesting is probably true, is actually wrong.
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The Best Job No One Wants
Charles Gasparino is CNBC's On-Air Editor and appears as a daily member of CNBC's ensemble. He is a columnist for the Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications. His forthcoming book about the financial crisis, The Sellout, is scheduled to be published later in 2009.
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Charles Gasparino is CNBC's On-Air Editor and appears as a daily member of CNBC's ensemble. He is a columnist for the Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications. His forthcoming book about the financial crisis, The Sellout, is scheduled to be published later in 2009.
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Charles Gasparino is CNBC's On-Air Editor and appears as a daily member of CNBC's ensemble. He is a columnist for the Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications. His forthcoming book about the financial crisis, The Sellout, is scheduled to be published later in 2009.
Matt always gets a bit carried away with his articles.
Particularly when it related to Bush or Palin,or for that matter any thing Republican.
I find him to be outright mean and cruel at times.And inaccurate.
But do you think Jan Werner would ever call him out on an article on a Republican ?? Ever ??
I have never written in before to complain on him.
But everything here in this article describes him to a T.
I think that a writer can get a point across without being mean.
It's so obvious when a reader encounters it. I find it harder to give an article any merit when it seems so lopsided.
But the thing that troubles me the most is this.
Werner lets him just go on and on and you don't find many if any articles from a Republican's point of view to at least balance out the magazine a little bit.
I realize it's his magazine,but if you really love politics,its healthy to see both sides,particularly youth.
I am 61 and have read Rolling Stone since a young teen.
If i were still that young teen today and read Werners magazine today,I would get a very narrow unbalanced view of politics. That to me is the most dangerous thing. Let an opposing view be heard once in awhile.
Rolling Stone is not nearly as good of a magazine as it used to be.I love the reviews of music and movies and they usually have a very good lead story such as the drug war story.
Matt,lighten up..
Do you have kids ?
I would suspect you would tell your kids there is always two sides of the story. You are a very good writer,but you don't have to destroy people to tell a good story.
I have read all your articles in the R.S. mags and at least every article I will end the article shaking my head and saying to no one in particular,there he goes again.
Peace-
It's a mistake
To assume there are two
credible sides to
EVERY story.
Sometimes the truth
Is simply the truth.
Rita, you "half-literate blogger in desperate need of attention",
Why
How dare you?
How dare you
Use a word like
The
Truth?
If Gasparino wants to talk about the truth, he really would not have to go much beyond the words "Henry Paulson" and his bullying style, and his conflict of interest. The rest is just a bunch of details.
Having recognized myself as one of those little people, those "half-literate bloggers in desperate need of attention", I must admit to a fiendish fantasy of meeting Charlie and Henry somewhere for a private discussion. They think Sarah Palin was a bad combination of hockey mom and pit bull dog.
And, like GPatton signs his entries "George Patton", I herewith sign this entry:
Snarling Hockeydog
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Hockeydoggie-
I do declare-
I've never seen you
Quite so fired up.
You obviously have not read his books. He is suspect of American politics in general, and all political parties specifically. His book "Spanking the Donkey: Dispatches from the Dumb Season" mainly focused on the democratic side politics. If it seems like he is harder on the (R)'s than on the (D)'s, I'd guess its cuz right now the (R)'s are acting like loons and that makes it easier to poke fun at them.
He has an acerbic writing style. That might not appeal to everyone. He writes the way many of us are thinking. I, for one, enjoy his wry sometimes college frat type humor. After his having spent 10 years in Russia, I think he has the unique view of an outsider observing our political system while at the same time being a citizen of this country.
I agree its healthy to see both sides of a story/politics, but to ascribe that responsibility to any single writer is akin to the "fairness doctrine"... doesn't work well.
But I also think there is a penchant to in the media to think that there ARE two sides to EVERY story... I disagree... I mean, how many sides to the fictional birther story are there? There is ONE... and it is the truth. The truth doesn't always have two sides to it. I'm not saying Taibbi is 100% documenting the truth... but I think his article was good and made an important point. That the LARGER point to this whole thing about the fed and the gov't and the banks and investment giants is this: They win, we lose. They get bailed out, we get a "cash for clunkers" program that was so popular it ran out of money in 4 days. Gee thanks for the bailout. I'm all better now.
If you want balance, you'll need to read more than one mag, watch more than one tv channel and read more than one web news site.
cheers!
Please.....where were you when we needed you. It seems to me you Gasp. like to stand by the side lines and then talk down the facts. You knew that Goldman was creating wealth out of think air, and would have gone broke had the Feds not stepped up. Why did you not project your theory before the collaspe. Everyone had the same information yet you said nothing while many lost all of their savings. Where were you!!
You know, Gasparino... it annoys me to know end to see you come on here and defend a stinking racket like Goldman. Matt Taibbi wrote a scathing expose, - yes, with emphasis added, as has Michael Lewis, as have countless others. It was factual and fascinating. You are a slithering insider, a Lou Dobbs "birther" conspirator. A CNBC hack like Jim Cramer or Larry Kudlow. Please stick to blowing smoke up the pipes of your inside sources. You now stuck your arab looking muy into mid-America and I cast you in the same rancid pile of fish. Say high to your dunk-buddy Rick Santelli for us will you, and your next tea party. Goldman is going DOWN, I don't know how or when yet, but they are the next bubble that is going to burst. I hope your yapping arse is right in there with them. You lousy liar.
Meanwhile, it annoys me to NO end when people don't understand that difference between the homonyms "know" and "no".
Get a dictionary.
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Up the revolution! Where is my pitchfork?
Seriously, so many word with so little to say..
Here is Obama's Kenyan birth certificate. read it & weep.
http://www.wnd.com/index.php?fa=PAGE.view&pageId=105764
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Taibbi is mostly right on target and you are mostly not. This is not a bailout program - it is a bail-in program. I predicted this would happen and how it would happen and wrote about it in my book: Hidden Treuhand: How Corporations and Individuals Hide Assets and Money. The root of the problem is legal. On the American side, deregulation of derivatives, on the European side, factor in Hidden Treuhand (German law) and bank secrecy. Put them together and you have the perfect storm. The financial crisis is not exclusively about homes and bad loans, but rather how a trader can package and sell bad investments and then bet against the worthiness of them (short sell) offshore with Hidden Treuhand and bank secrecy to obviate transparency and taxation. I even explain how to make a Hidden Treuhand and use it in business in my book, just to let the genie out of the bottle. Americans suffer from regional myopia. Stop talking about globalization and thinking so provincial! It is easy to pump money out of the American system with Hidden Treuhand, and once in Europe the paper trail will all but disappear. Congress will investigate? Oh shiver-me-timbers! Another tragic comedy in the making - let me get popcorn and a coke so I can enjoy the next show. Google Hidden Treuhand.
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"Goldman did all this--it shorted and hedged its position in the subprime market when some public research started to build that the housing market was coming unglued"
Actually Charlie, Goldman put their short position on way before the public research came out. They had some very astute traders who started seeing the numbers and running scenarios and convinced the higher ups to drastically change the firm's risk profile. I think clients have an absolute point when they ask why this talent is used to better the firm's results and their own bonuses but not for client benefit. Goldman Sachs (and all of wall street) is a cruel joke to the rest of America that blindingly bought the b.s. that has been peddled for years. Most informed people aren't taking Taibbi's article literally -- they're substituting Wall Street for GS for most of his article -- but people are starting realize that Goldman was/is the most prolific and skilled operator of a game designed to swindle pennies from every average American. The game would've kept going if it had stayed at pennies, but the financial crisis will cost every man, woman and child thousands of dollars; an amount that finally gets the attention of the sheep that have been led to slaughter for so many years. It will be interesting to see if the outrage rises to a level that will actually drive meaningful change. I doubt it. Especially when former boxer cum journalists who have misappropriated credibility keep doing their best to sooth the masses.
Charlie, the WSJ has a great article detailing Goldman's bet against mortgage bonds. Here's a key quote:
"Last December [in 2006], David Viniar, Goldman's chief financial officer, gave the group a big push, suggesting that it adopt a more-bearish posture on the subprime market, according to people familiar with his instructions. During a discussion with Mr. Sparks and others, Mr. Viniar noted that Goldman had big exposure to the subprime mortgage market because of CDOs and other complex securities it was holding, these people say. Emerging signs of weakness in the market, meant that Goldman needed to hedge its bets, the group concluded, these people say."
http://online.wsj.com/article/SB119759714037228585.html?mod=hps_us_what s_news
It would be interesting to correlate Goldman's bearish stance began in Dec. 2006 with its public research, positions for client portfolios and cessation of sales of toxic mortgage-backed securities. I'm betting you're wrong and Goldman actually is a bunch of lying thieves.
Gasparino's articles, especially this one, reek of classic payola "journalism." It's no wonder the University of Missouri paper is going under if this kind of "reporting" is the result of being educated in that program. What a shill.
Laika30--you've hit the nail on the head! Gasparino as "investigative journalist is ludicrous." He apparently has very little inside, indepth information on what goes on at GS OR on Wall Street or, if he does know what's going on, he's so in bed with the WS "movers and shakers" he can't write a straight and balanced article.
Gasparino and his ilk are why CNBC is a joke when it comes to real indepth coverage and understanding of business and particularly the financial services industry. Those guys are all shills, unwilling or unable to look beyond what the CEO du jour is spewing during their "exclusive interview" to find out what is really going on--and who it will benefit.
Derivative short selling Hidden Treuhand bank secrecy = financial meltdown. It is that simple! Gasparino and Taibbi, both have a lot to offer to the discussion concerning the financial meltdown, but both lack an understanding of the role offshore tax havens play. As an expat living in banking secrecy paradise, I have a more global and legalistic view of what is possible using Hidden Treuhand to hide ones identity in any business transaction including short selling. A red thread runs through the problem that besets American fiscal health to European banking secrecy; think Senate investigation concerning the role of the Deutsche bank to whom bailout money was transferred to because of debt obligations, as Tim Geithner puts it, and the role of the UBS bank in hiding 52,000 American accounts with an estimated US$15 billion in bunkered assets. Now factor in short selling and then come to an understanding of Hidden Treuhand. Without this understanding your intellect is foundering and your brilliant battle as to which best understands the crisis will resemble two kids fighting in the dark. Now Google Hidden Treuhand and get a grasp.
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I am registered.
get thee to an editor...I stopped after the first page; too many errors in spelling, syntax, etc.
it weakens your credibility, sir.
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Wow...that's a mighty thin coat of whitewash good ole Charlie coated GS with. The Beast needs to dump Charlie and get some one not part of the cabal if it's to have any credibility on this subject. .
Let me see . . . here's a CNBC guy (and his Wall Street shill network directly feeding off revenues from people like GS) explaining to us there are technical flaws in Taibbi's expose of this monster. Get this message Charlie: these pathologic people, aided and abetted by people like you and your stool pidgeon network, seized control of the greatest gov't system ever conceived in political history, turned it into one giant casino, drained it dry, and walked away. In my opinion, every dime of their ill gotten gains should be disgorged. And, I and a whole bushel basket of other US citizens really don't give a shit if Taibbi made some technical errors in exposing them; if there were errors, you and your shill network would be the last people on earth I'd trust and listen to about that.
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Charlie has it right. Desperate times call for desperate measures, and choices needed to be made to save the system. Charlie does point out that it was easy to see conflicting interests. The haters here have enough problems balancing their own check book. Understanding the banking crisis with credit default swaps, short positions and mortgage bonds is just too complex for most of us.
Um, the New York magazine article detailed at length the "scandal no one seems to want to talk about," "that the American taxpayer is right this very moment subsidizing Goldman's risk taking." I guess Charlie couldn't be bothered to read it. Too busy whipping up an empty, belated counterpoint to the prevailing news narrative, two weeks after tarring GS in another column. Whichever way the wind blows, I guess.
Hey, whenever a bankster does anything, he profits; his firm profits, and two client???? Well, two out of three is pretty good, isn't it? That's the way the capitalist system works. Just ask Ayn Rand, or her acolyte, Alan Greenspan! Stop the whining; profits are good. George Patton
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My 82 year old mother bought me a subscription to Rolling Stone recently. She has taken to giving subscriptions as gifts since she can't get around very well anymore and she thought this was a publication about the Rolling Stones who she knows I like. (Of course, this is the same woman who in the 60's thought marijuana smelled like Brut cologne because our town's local "addict" wore brand, as did I and she tore my room apart looking for dope). I laughed my ass off at the article. I have used GS for both banking and personal wealth management for years and it occured to me reading the article that the guy simply was out of his depth trying to simplify a complex business. I love the part about "unsuspecting victims". Last time I checked, GS only takes not just "sophisticated" investors as clients, but very sophisticated investors. I believe I am correct in stating the minimum account threshold is $5 mil. As regular posters here know, I am no fan of all this green crap, but we did get a new recycling bin from our municpality over the weekend. I will be feeding it all the RS issues remaining on my subscription on my way back from the mail box.
GS's clients are privileged, "very sophisticated", investors as you say.. and takes, "min of 5 mil" to join. GS, who swoop into the new game they create with their washington appointed previous GS CEO cronies now helping to write the new regulations,there by taking the first winnings and are gone BEFORE, the "unsuspecting victims" investors, to you probably "commoners", not able to afford to bank GS, are even a loud to get in the game and invest. IPOs are just one example of this. In todays news, the super fast computer buys at GS, is another example.
You, Mr. Flyoverland,
Have only abetted the criminalmade legal behavior with your 5mil ability to get started in the first place. So next time you see the newly jobless, homeless, foreclosure announcements... you can proudly look at your self in the mirror and say.. I contributed to their demise, but LOOK how much money I made banking with GS.
How dare you be so wrongly uppity about all this, your ill gotten gained money, has only blinded you and the rest of you money mongers.
WE may be unable to change the tide since GS and others, are so entrenched in Govnt, but Karma, will take care of it. I would start cleaning yours up, were I unfortunate enough to be flush with cash, but empty of heart and soul.
you might just want to walkoverland for a while.
Namaste,
t.
=)
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If anyone out there is on LSD and can tell me what this means, I would appreciate it.
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It's impossible to get people who don't know a thing about commerce, finances, and Wall Street, to actually admit that they don't know about these things. Matt Taibbi takes advantage of that and uses a populist theme in a story about a banking giant that many people know of (which is very different than "knowing about") and already associate with unpopular bailouts. That makes it easy for Taibbi to paint a company as "evil" rather than just "greedy", which is was Wall Street firms really are. We can't, as a society, strive for limitless wealth and then begin criticizing those who accumulate it best. I mean, we can, but that's just hypocrisy.
Where do you draw the line when it comes to building up that bank account of yours? Don't you want your stocks to do well? What limits would you place on the companies you own stock in, when it comes to what they do to keep the price of their stock up? Don't you want exploding iPods kept under wraps so that the price of all your Apple shares won't go down?
This bleating against Goldman Sachs is barely justifiable. Castigate them for the government bailout, but not for the efforts that went into doing there jobs, which was to generate wealth for the millions of Americans who invested in their programs.
Blarg. My home browser offers spell- and grammar-check within text boxes. This work version (MS, naturally) is not as helpful.
"which is WHAT Wall Street firms really are"
"doing THEIR jobs"
Millions of American?...wait, I thought the min. investment was $5 mil. as flyoverland boasted. The sheep love to be shorn.
Let me see,
Do you think our founding fathers of the USA would approve of the behaviors of these GSs and others, fleecing the nation for their own greedy gains.. I doubt it. "Free" in they're minds to do what you like in, A RESPONSIBLE MANNER FOR THE BETTER FOR ALL.. including our country that made it possible to begin with. There use to be a moral and ethical fiber to business dealings.. and a good for all altruistic attitude. NOW it is memeMe money moneyMONEY,minemineMINE to hell with everyone else. I just hope it doesnt take a total collapse of the USA et.al, BANKS, to get back a true sense of decisions based on true good for all senses like our Founding Fathers.( heh, your founding father maybe GS! ).
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Just keep drinking the GS kool-aid, Charlie.
I'm not buying this, and I won't be buying your book.
Gasparino, you're Wall Street's, and especially Goldman Sachs's, bitch. You have no credibility.
Nyu@9:01am - Love this: "Gasparino [is]. . . Wall Street's bitch." I get the distinct feeling from reading some of these comments supporting Gasparino, there may be a few Goldman ringers giving us their "insight" in the comments here.
o.k., i get it--it's unfair to pick on goldman.
but what i still don't understand is why "save" goldman sachs and not lehman bros.? if lehman had their alums in charge in D.C., do you think for a minute they would have been sacrificed?
AMEN!
Mr. Gasparino's argument is tantamount to looters, amidst a riot, saying "Well everyone else was doing it." These guys looted the system collected their massive bonuses and left the rest of us holding the bag. Whether the Fed and the and Paulson saved the system from a meltdown is something we will never know. There is a saying "Capitalism without Risk is like Religon without Sin." Government's actions essentially undermined to entire free market system. The message that was sent to future Masters of the Universe was if bust out, bust out big, then the forces that be have to bail you out.
Gasparino is a corporate apologist.
Goldman Sachs blatantly exposes the inherent corruption of Wall Street and the entire corporate system.
It is fundamentally broken and no amount of spinning will change that.
But cheer up Gasparino, the American public doesn't really seem to care.
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well Mr. Charles Gasparino at least Matt's article was a good read ...http://www.rollingstone.com/politics/story/28816321/inside_the_great_ame rican_bubble_machine
I agree stop blaming them. It's not their fault they were part of a government welfare bailout and then were able to show a profit. Ha! they just know how to work a deal.
"and we are not saved..."
Why don't you read all of Taibi's article before displaying your folly?
Felix Salmon has a great takedown of this article titled "Gasparino's bizarre defense of Goldman Sachs (and Ben Stein)" here:
http://blogs.reuters.com/felix-salmon/2009/08/03/gasparinos-bizarre-defe nse-of-goldman-sachs-and-ben-stein/
So this is the official "Devi's Advocated" blog of the moment here at The Beast?
Gasparino has escalated his career to financial trouble-maker. The Beast can't be far behind.
Thank you.
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