The Best Goldman Apology Yet
So you can see why Goldman alums sometimes don’t do very impressively once they leave Goldman. They find themselves in positions where no one questions their premises and it’s hard to get good feedback and pushback. (This is why Paulson employed telephone banks of analysts to call Wall Street to solicit opinions.) Outside of the Goldman womb of debate and ideas, bankers and traders lack perspective. You might say that no Goldman is an island.
via Will Everyone Please Shut Up About Goldman Sachs? | The Big Money.
And the winner of this month’s Most Retarded Horseshit Written In Defense of Goldman Sachs award goes to… Heidi Moore at Big Money! Come on down, Heidi!
This stuff is just getting funnier and funnier. Now that both Michael Lewis and Joe Hagan at New York have piled on and hammered the “magical” Wall Street bank’s reputation, the tearful, wounded apologies on the bank’s behalf are trickling in with some more urgency, especially now that, as Moore puts it, the bank faces the specter of “disastrously populist” hearings in the Senate for (and Moore left out this part) selling crap mortgages while shorting them at the same time.
This latest effort by Moore over at the Slate-run “Big Money” column is absolutely hilarious. She manages to write a fairly lengthy three-page article defending Goldman without addressing a single one of the main criticisms recently leveled at the bank. The piece is a protracted exercise in goalpost-moving, as her premise is that what Goldman’s critics accuse it of is not using the power of the state to bail itself out and enrich itself at the expense of others, but of having “designed the kind of hive mind that controls anything it touches.” According to Moore, the defense against the charge that Goldman executives have “the kind of hive mind that can control everything that it touches” is the fact that they fared so badly in their attempts at “controlling” government and popular opinion. She actually writes the following:
If you believe that Goldman Sachs has designed the kind of devastating hive mind that can control any institution it touches, including the U.S. government, you also have to explain why Goldman Sachs alums have a history of not functioning terribly well outside of Goldman. Why, for instance, did Henry Paulson, by all accounts a brilliant man, flounder about in the politics of the Treasury so desperately that he was forced at one point to plead with Nancy Pelosi on bended knee? Why did the first TARP overseer, Neel Kashkari, get yelled at by Congress while performing the thankless job of managing the $700 billion kitty of the government? Why did Edward Liddy, former Goldman board member who served as the new CEO of AIG (AIG), quit in a huff over bonuses?
Moore here is arguing that because Hank Paulson actually had to beg the House majority leader for $700 billion in no-strings-attached money to bail out his buddies, and because Neel Kashkari got “yelled at” for unilaterally changing the TARP mission in defiance of congressional orders (and for refusing to provide congress with information about where TARP money went and how he chose whom to give it to), and because former Goldman banker Ed Liddy evoked popular anger for using public money to shell out bonuses to the very department of AIG that bet $450 billion without having a dime to cover it (“necessitating” the bailout), that all of this somehow is proof that Goldman does not “have the kind of hive mind that conrols everything.”
In Moore’s mind, (or, as a friend of mine would put it, “in what passes for Moore’s mind”) this is a defense of Goldman because, if Goldman was as powerful as we all say, Goldman would have just zapped its “hive mind” at Nancy Pelosi, congress, and the public, and none of those parties would have bothered to criticize the bank. Logically put! Let’s put this argument into the form of a syllogism:
All all-powerful hive-mind institutions can make themselves immune to criticism,
But, Goldman Sachs failed to prevent absolutely everyone from complaining about its behavior.
Therefore, Goldman Sachs did not use public money and influence with the state to make itself billions in profits.
It gets better. Steaming ahead from there, Moore blows off the question of how Goldman made its profits this year, and simply assumes that the rest of us are not aware that Goldman has a wonderful corporate culture that is the root of its success. Among other things, the bank apparently encourages openness and disagreement (it’s funny how those of us on the outside of the bank do not notice these qualities too much)! Here she explains:
It’s not that Goldman doesn’t have its egos—it surely does—but as a matter of management, the firm also has several safeguards in place to keep rampant egos from destroying decision-making. Another thing that makes Goldman different from other firms is not that all Goldman bankers agree but that they are free—and, in fact, encouraged—to disagree.
So, gosh, I stand corrected, I guess. Because I thought that Goldman made a ton of money this year because it got a special waiver (fast-forwarding through the usual five-day antitrust waiting period, thanks to their buddies in the Fed) to instantly switch to bank holding company status and make itself eligible for $28 billion in FDIC-backed lending. I thought it got $13 billion in public money via the AIG bailout and hundreds millions more in extra underwriting fees through its work underwriting stock for banks repaying TARP money. I didn’t know that it made all that money because it had internal safeguards in place to rein in egos. I feel foolish now. Moore proceeds with a touching story:
John Thain once presented a case for Goldman’s IPO to the management committee, and several of his fellow partners disagreed. Thain’s reply to his vehement colleagues, according to Bloomberg: “Would it hurt you to suck up to me once in a while?” CFO David Viniar is a dragonlike protector of the firm’s balance sheet, known to shoot down trading ideas and expansion plans day in and day out. Viniar’s default answer, according to Goldman bankers, is “No,” and he is known for his even-handed rejection of expensive schemes.
Yeah, David Viniar, he’s really a demon when it comes to rejecting “expensive” schemes, isn’t he? Like the time he green-lighted that $20 billion in counterparty risk to that knucklehead Joe Cassano over at AIG, or the time he flinched when Blankfein wanted to jack the firm’s debt-to-equity ratio to 24-1 (oh, wait, he didn’t flinch. That was some other universe). And John Thain, I can see how great all of that famed Goldman humility culture has been for him. Dude only ordered a $1.2 million office renovation for himself while at Merrill (including a $1400 waste basket and the infamous $87,000 area rug) despite the fact that the firm had just seen $8.4 billion in write-downs under his management and laid off 3,300 people. Guess that ego really was reined in!
Moore goes on. It turns out — and this is another thing us critics of Goldman were not aware of — that there is a strong Attaboy! culture at Goldman, Sachs. It’s not the the firm sold crap $500-million mortgage deals with equity-to-value ratios of 99.21% as AAA-rated securities, then bet against those same securities; no, that’s not how they made their money. They made their money because management makes sure it feels just so darn good to work hard and do well there! Moore recounts:
Also, Goldman bankers and traders use the voice-mail system to give colleagues frequent snaps for a job well done. I was once in the office of a Goldman partner when he left a voice mail for a junior banker thanking her for introducing him to her client. Goldman won the piece of business. The implication, as well, was that it would be remembered at her year-end review. At most other firms, that’s a rare gesture.
But that isn’t all. It turns out there’s more to the secret of Goldman’s success: clothes! You see, while the executives of other companies needlessly waste their money on fancy suits, the highly-focused men of Goldman Sachs put all their effort into the job:
Goldman bankers also don’t look like other bankers on Wall Street. (And I don’t mean that they’re all bald and went to Dartmouth.) The firm has a reputation for producing menschy, nebbishy types who physically betray none of the intellectual magic ascribed to them; frayed cuffs, baggy suits, and lost buttons regularly adorn even the firm’s highest-earning millionaires and are worn as a source of pride. Goldman Sachs is suspicious of flashiness in an industry in which the most prominent bankers are beautifully dressed in snowy collars and suits so precisely tailored and finely woven that the wool fabric reflects light.
Moore wrote that passage at the bottom of page 2 in her piece. I expected the “point” to be in whatever paragraph began the next page. I clicked and read, instead:
At a financial conference at the New York Stock Exchange in 2006, I saw Lloyd Blankfein waiting his turn to go onstage while standing in a crowded room of reporters. Journalists, standing three-deep, surrounded bank executives at the conference. But not one reporter in the room seemed to recognize or approach the unassuming Blankfein, who was in shirtsleeves and wearing a baggyish suit—and also, at the time, was the chief executive of one of the largest investment banks. Byron Trott, the Goldman Warren Buffett, lacks flash; he looks more like a prosperous Midwestern architect than a millionaire Master of the Universe.
Again, apologies are in order! It’s not that Goldman cooked its first-quarter profit numbers, or was using a computer program that by its own admission could be used to manipulate the New York Stock Exchange, or that it got a special waiver for the entirety of 2009 to ditch traditional accounting to make its risk appetite look lower, or that it gorged itself on public money for a year and turned almost all of that money into bonuses for its employees, in the middle of a crisis in which vast numbers of Americans are literally going hungry and losing their homes. All of that is an error of perception. Why, just look at Lloyd Blankfein! Would a man wearing a suit that baggy be guilty of such things?
This is really what Moore is saying! It’s that stupid! Enjoy it while you can, folks, because one doesn’t often see p.r. flacking this entertainingly ham-handed and idiotic. The ones who are capable of it, they usually don’t survive to adulthood; they get clipped from the herd by predators.
Moore concludes with the following passage:
So you can see why Goldman alums sometimes don’t do very impressively once they leave Goldman. They find themselves in positions where no one questions their premises and it’s hard to get good feedback and pushback. (This is why Paulson employed telephone banks of analysts to call Wall Street to solicit opinions.) Outside of the Goldman womb of debate and ideas, bankers and traders lack perspective.
So let me get this straight. Goldman Sachs employees are so used to criticism and the free exchange of ideas that they flounder once they’re in public office, where “no one questions their premises” and “it’s hard to get good feedback”? Am I having an acid flashback, or is this the same Heidi Moore who 360 words ago was bitching about how Paulson, Kashkari, and Liddy faced such heated resistance to their “premises” after leaving Goldman?
This Moore piece, it shows how desperate the game has gotten for Goldman. They and their shills are reduced now to arguing that they make their money because their employees pat each other on the back and do trust-falls to instill mutual confidence in each other. The whole world is throwing heavy subpoenas and damning stacks of numbers at them, and they’re coming back with, “We succeed because we let a smile be our umbrella.” This shit is literally as weak as it gets.
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Nice. So when are you going to smack down McArdle already?
Yeah Matt, you promised! Or did Megan call you and cry like a girl?
In response to another comment. See in context »Matt’s jihad continues. Think of how dangerous MT would be if he actually took a capital markets class.
Next, MT needs to do a smack down of the Fed and its antiquated 12 bank structure, its arrogant economists and fat 9-5 bureaucrats who actually get paid better than 75% of Goldman Sachs (yes, not every one at GS gets a peanut butter spread of $700,000 bonus despite what the press claims).
What I don’t get is this.
So Goldman sold shitty, repackaged mortgages as AAA products. They themselves knew it was crap, but the people they were selling it to, didn’t. Then they bet against those products being any good (I still find it baffling that this is such a large part of ‘banking’ these days, I thought casinos and unprotected sex were the places in life where you gamble). How is that different from insider trading?
@richardf. A few things stand true in modern capital markets (whether it sucks or not):
In response to another comment. See in context »1.) Buyer beware (as long as it is legal)
2.) GS was hedging its own books because they are accountable to their shareholders
3.) They were selling mortgage stuff (not originating) because there was a market for them. Did they know for sure it was crap? Who knows? They certainly thought it was alarming enough to cause them to clean their own books. But in 2007, nobody was sure of anything and we were all riding the bubble. Even the Fed didn’t know for sure.
@ika If they were betting against their own products and made a killing off that, doesn’t that implicitly prove they knew they were peddling worthless crap?
Again, if they don’t tell the people they sell to that they know these products to be ‘risky’ to say the least, how is that different from insider trading?
In response to another comment. See in context »@richardf
The ratings agencies grade the assets. If they are AAA, there was probably demand for some of this stuff.
Then, GS was going on their own well educated hunch (and the fact that they mark-to-market and probably had trouble pricing this stuff)that some of this stuff was crap. They probably shared their opinions with their clients but many of the trades are with counterparties (the flow business vs. the client business); some was packaged in other types of funds–the beast was so deep that it becomes really hard to separate and withdraw.
But to be clear, I completely understand your sentiments–just trying to make the point that our legal system didnt make what they were doing illegal.
In response to another comment. See in context »Ika,
Except that when you short something you’ve already sold, it’s not hedging, it’s the opposite of hedging. But you’d know that, since you’ve taken capital markets classes.
In response to another comment. See in context »Nice one MT. As you know from your buddies at GS, back when we lived in Russia, the prop books/traders are pretty isolated from the public side. True the higher ups have a 360 degree view but by then,….
In response to another comment. See in context »Again, I agree with your sentiment…their influence is unparalleled. I just want Congress to legislate for the next storm not the last one.
Actually, Ika, they’re not isolated at all, they all sit on the same floor, basically right next to each other.
In response to another comment. See in context »Charlie Gasparino on CNBC just now saying you suggested in either the RS article or an interview that Goldman might have security fraud concerns after shorting the CDO’s they were also selling to customers. He claimed again it was hedging. I’m with you: it’s the opposite of hedging. I’d call it doubling down.
In response to another comment. See in context »Matt — That was an excellent rebuttal to Moore’s “horseshit.” You pointed out every non sequitur statment she made and reminded people of the facts with your sarcasm:
- “It’s not that Goldman made a ton of money this year because it got a special waiver (fast-forwarding through the usual five-day antitrust waiting period, thanks to their buddies in the Fed) to instantly switch to bank holding company status and make itself eligible for $28 billion in FDIC-backed lending.”
-“I thought it got $13 billion in public money via the AIG bailout and hundreds millions more in extra underwriting fees through its work underwriting stock for banks repaying TARP money.”
-“It’s not that Goldman cooked its first-quarter profit numbers, or was using a computer program that by its own admission could be used to manipulate the New York Stock Exchange, or that it got a special waiver for the entirety of 2009 to ditch traditional accounting to make its risk appetite look lower, or that it gorged itself on public money for a year and turned almost all of that money into bonuses for its employees…”
- “It’s not that the firm sold crap $500-million mortgage deals with equity-to-value ratios of 99.21% as AAA-rated securities, then bet against those same securities; no, that’s not how they made their money.”
Good stuff. Keep calling these Goldman apologists out!
I don’t understand the culture of Wallstreet or for that matter those who report on it. However, it is quite suspicious for someone in media to come to the rescue and try to help with their public relations. Goldman Sachs has got so much money. I got to think that some of that is ready and waiting to bolster their imagine by any means necessary. As a financial reporter wouldn’t it be nice to get on that gravy train too, on the inside or on the outside. How tempting it must be to try to get on their good side and get part of the GS bounty? One thing that really annoys me is the assertion of how “hard” the employees at GS work. Please… there are people, who earn far less in this country that work harder both physically and mentally in a tangible value-added fashion. If you work at Goldman Sachs you work “hard” to steal the value that this person just created.
I am glad they dress down at GS, this will make it easier to put on striped pajamas in prison.
Keep up the pressure! …and sell all Goldman Sachs stock now, it will be worthless by the end of the year.
no shit Shark… i want to wretch every time i hear about GS employees working “Hard”. those jerkwads don’t know what it is to work hard. Working hard is putting in 75 hours a week at the ghetto 7/11 making $6.25/hr so that you can afford your share of the section 8 housing and still have enough left to buy diapers for your autistic child that screams all night. For so many Americans, working hard is just getting up and going on every day and not laying down on the train tracks for the sweet release of oblivion. Those succubi retire at 40 to an estate in the Hamptons and a full staff of servants. And anyone that tells me they just work ’smarter’ and not ‘harder’ might as well fart because they will just sound like an asshole.
In response to another comment. See in context »Brilliant!…well written and finally a “breath of fresh clean air” in the otherwise stifling, morose, disgusting, greedy and foul world these creatures have created for themselves at everyone else’s expense.
When they are released from their “cocoon of Lizardom” they flounder and twitch like an eel out of water.
The real world awaits these creatures and will not suffer their actions gladly!
My head hurts from all the high finance, so let me just say this: Moore’s piece (which you have correctly described as major doo-doo) is an example of a common and yet incredibly dangerous insularity of thinking. In the United States today, we act as though the corporate culture is the default Perfect Way of Being. People operate as though the values of the corporation–bottom line, making profits, winning, politically positioning oneself within the organization through the sharing or withholding of information, more more more–are just plain human values, to which we all subscribe. No where in the conversation is there room for distinctions like “morality” or “social justice” or even “a reasonable and fair distribution of national wealth.” It’s not even that there’s a difference of opinion on those subjects; it is that they don’t even exist in that universe.
The fact that Moore sees Goldman people high-fiving over a “score” (via voicemail) as a virtue shows just how divorced she is from the real life that the majority of Americans live,
I’m supporting two kids, putting them through college, on less than $35K a year. I’ve got maybe $20K in my retirement account, which is nice, except that I’m never going to be able to afford to retire. Hell, I’m not even going to be able to afford my condo for long. And I’m supposed to feel sorry for these jerkoffs? Could we be serious for a minute? More to the point, can we all get pitchforks and torches and just storm the place and get it over with?
Sorry to go on so long, Matt, but the combination of bafflement and outrage leaves me sputtering.
Well said. You are obviously articulate, thoughtful, and probably very productive in what you do in the world. Right now there is a 25 year old working at Wallstreet, reading this site, and can’t believe how little you have saved. They are so insulated, much like those who govern this complex of massive extortion. The creation of all the complex financial gimmickry is only for self-enrichment. Beyond pooling capital to make it available for real productive businesses and endeavors, Wallstreet is obsolete and should be replaced by an autonomous computer system. Then this great talent pool at Goldman Sachs perhaps could do worth while for a living.
In response to another comment. See in context »Lets not throw the baby out with the bathwater. These computing systems do need rethinking so we are not just playing with paper and gambling instead of creating things of real value.
In response to another comment. See in context »However, lets remember that banks and capital marks play a part in the global economy and in fueling growth too. At this moment, there are no great alternatives. Let’s just get to a better more equitable alternative.
As far as our children and the next generation go, let’s make sure they get the best education they possibly can so they are prepared for massive changes. I know a lot of folks at GS that are “pull themselves up by the bootstraps” kind of people; they dont gamble or play with computer games that screw people over; they did bother to get an education; their parents are not rich etc.
Its ok to have a service economy and a financial system but we have to make sure the populace isn’t suffering because of it. Let’s find a solution other than killing and destroying everything.
Uhm… I’m not sure where you get your info, but the populace of the United States is indeed suffering most assuredly… due in no small part to the financial system.
I’d wager that your average American, who, unlike you, doesn’t have 6 figures in mixed securities sitting around for a rainy day, would most certainly be ready to “kill and destroy everything”. I certainly would in a heartbeat.
In response to another comment. See in context »I dont own any securities. I only borrow what I can pay back (no weird ARMs on my mortgage). I agreed with you that populace is hurting. Also know that we need a financial system unless we plan on living in Afghanistan or Mongolia (oh, wait, the Mongols have a fin system too).
In response to another comment. See in context »Good thing you weren’t in charge of truth and reconcialiation in South Africa or Rwanda. There would be a lot of bloodshed.
ya know Ika, i haven’t felt this pwned since my unfortunate youth… when my alcoholic father used to beat me still wearing his Fudgie the Whale costume… i mean, he was hitting me with a flipper, but there was still a hand inside… i’m sorry.
In response to another comment. See in context »I acknowledge the need for banks and capital markets in the global economy. The standard and traditional bank services would be sufficient. All the leverage and maniputlation that occurs beyond that serves only those who own or work for these financial conglomerates. Just the other day there was something in the news about some guy deserving the $100 million paycheck because he brought in “billions of dollars”. That billions of dollars of value did not occur because he or Goldman Sachs grace the earth. It is because lots of real people do real incremental work that add value to something tangible that is coagulated to something of significant value. This turns out to be a big pile of money that Wallstreet has special access to. They take from the top, leverage the value, and trade with persistent insider information. Yes, I am following this story, because it is interesting, important, and there seems to be a fissure openning up to alter the dark side of capitalism once and for all. And yes I do want to see Wallstreet destroyed in its current construct.
In response to another comment. See in context »@sharkdb,
In response to another comment. See in context »Here is the root of the problem:
“That billions of dollars of value did not occur because he or Goldman Sachs grace the earth. It is because lots of real people do real incremental work that add value to something tangible that is coagulated to something of significant value”
Unfortunately, that is not true – the dirty truth behind our financial system is that there is *no* value behind the billions of dollars that GS plays with, there is only “leverage”. And what Matt is exposing is that our government has given the keys to the money printing press to GS to even a greater degree than the other insiders. So real people are at a significant disadvantage in this economy in that they have to do tangible work, they don’t get to operate their own private printing press.
misterb,
Point conceded. However, in the big picture, for leverage to work, for an equilbrium to set in, money has to be stolen from somewhere else where real value is created. Then maybe it is just a matter of the value of the dollar dropping as we print more money to pay GS bonuses.
In response to another comment. See in context »Moore asks us to “please shut up”. Well, she may be a Goldman sicko-funt, she may be a plant, she may have written the article so it can be included in the Goldman yearbook, she may be looking for a MOTU (Master of the Universe) boyfriend (and/or girlfriend, not that there’s anything wrong with that). She may be all of those things; I can’t be sure, but at least I know she’s polite.
Unfortunately, trying to identify and chase down all of the propaganda and nonsense, and then parsing the illogic, is like trying to count grains of sand on the beach or “put the shit back in the horse”.
I think we see where this is going, and it’s not going to end well. So, I think the question is: “How do “populists” take down an Oligarchy without being forced to go hunting with Dick Cheney?”.
Total loss of dignity is the new bankruptcy.
[...] “Goldman’s integrity and cohesiveness certainly makes it admirable in my eyes. But that does not necessarily mean it is not evil.” (Epicurean Dealmaker also True/Slant) [...]
Great article by a former Goldman Sachs managing director at Mothers Jones – a must read!
http://www.motherjones.com/politics/2009/07/how-you-finance-goldman-sachs%E2%80%99-profits
Yes, great article. Thanks for sharing!
In response to another comment. See in context »excellent companion piece; thanks!
In response to another comment. See in context »This is a good summary of what we should expect from those in deep denial about GS and, on top of that, have access to express their dimwitted thoughts/analyses through writing a piece demonstrating that denial. The reference claiming that Goldmanites are dressing down is hilarious. Moving on, I noticed that you referred to subpoenas heading to GS can you put up an article on that or as much as you know about it? I’m beginning to rely, in the main, on T/S for my news (most trustworthy and best written articles). Is there any chance that we can expect hearings on GS’ dirty deeds to begin this year? Or, will it take so long that there will be no one left in this country to attend?
I remember when I 1st came across your commentary and others’s comparison of you to Hunter S. Thompson. Maybe it’s what I know, but the more I read, the more I relate you to a political Bill Bryson or Nicholas Slonimsky. Important articles on subjects to which we be paying attention, with colorful writing and checked facts. I’d comment about Moore’s fact checking, but from this example, there doesn’t appear to be any fact, figure, or even story to confirm. If i hadn’t heard of her before, i’d think “Will Everybody Please Shut Up” was an Onion piece. (There’s a parallel universe Heidi Moore writing in satire, isn’t there?)
@azimuth79 – funny that you mention Moore’s call of “horseshit” at the beginning of your comment and end with “Great stuff” for Matt. A friend recently informed me of the origin of the word stuff..
And can I get a $1400 area rug if i promise to keep my next wastebasket under a grand?
Yeah Matt, Yeah!!! F#@k yeah!!! I am sharpening my pitchfork. Just tell me which one of these bitches to stab in the thigh. I will try not to hit the femoral artery, or maybe I will…
Those ill-fitting, poorly tailored, and cheap looking fabric suits that so impressed Moore could in fact be very high priced threads. Some men can make $10,000 suits and Hermes ties look like something picked up from a bargain rack or K-Mart. (I’ve known such successful businessmen.) The reverse is true for people that wear clothes well.
Or, the GS guys behave like most druggies in their lack of interest in grooming.
You were dead wrong in your Rolling Stone piece, Matt, and you miss the point once again. Your critics have it dead right – you do need to take a capital markets class. I suggest a lesson in manners while you’re at it, by the way.
Oh, and by the way, the prop desks are not on the same floor as the MBS trading desks at GS.
Pdrh…
I’m always surprised at how snooty GOldman defenders are. When you, joe weisenthal, megan mccardle, heidi and others say that other journalists need to take a class, it’s demonstrates that you’ve drunk the kool aid.
To be fair, we all did.
That’s how the system failed. We let it ride based on false assumptions about markets, regulation and risk.
The Goldman mystique suggest that the organization is better at it than everyone else–when it’s really just better at gaming the system than everyone else. In reality, an olagopolistic “Goldie Mac” weakens markets. It doesn’t strengthen them.
Let’s hope that the “new normal” on Wall Street and the economy at large is more pro-market, as opposed to pro-business.
In response to another comment. See in context »So, you’re 1)unable to address any of Mr. Taibbi’s specific assertions, as Mr. Taibbi repeatedly emphasizes his critics cannot, 2)personally affiliated with GS, as you are aware of the physical layout of their offices. Hmm. And with that massive Goldman-affiliated brain, you can’t manage any better than “you’ve got it all wrong,” to buttress a feeble little apparatchik’s brochure for attracting “top talent” to GS? Sad. If you had a leg to stand on–even if you didn’t have a leg to stand on–you could still have some guy implying Taibbi’s an imbecile, taking his arguments apart. That nobody can muster even that speaks volumes about how far heads are wedged up asses. Hey, Goldmanites! Howzabout you go home tonight, maybe head out to Barnes & Noble (free wifi now!), register an anonymous account, and issue some commentary clearly making an ass of Taibbi’s unschooled ignorance. You could even hussy it up with confusing acronyms! Or maybe when you try to, all that comes out is “you’ve got it all wrong,” which is the kind of mental flatulence humans in the throes of cognitive dissonance would be expected to emit.
Also, the holy market has spoken, and people like to read rude abuse.
In response to another comment. See in context »Sadly, I only have a few minutes to post. Taking Taibbi’s RS article apart would take all day. And besides, other people have already done it. Look around and you’ll see. As for personal knowledge of the layout of GS various trading operations, yes, I’ve been in the building, many times. But I’ve never worked there.
In response to another comment. See in context »Sadly, I only have a few minutes to post. Demonstrating your unhealthy affection for the backsides of GS staffers would take all day. And besides, other people have already done it. Look around and you’ll see.
In response to another comment. See in context »Lucky for you, my bus is late, so I have a few mins to spare. Found this one to get you started.
In response to another comment. See in context »http://www.businessinsider.com/matt-taibbis-goldman-sachs-story-is-a-joke-2009-7
I never discerned “cartoonish villainy,” in Taibbi’s account, more a lethally reptilian combination of incompetence, high IQ and institutional/personal self-interest, variously manifested.
I’ll admit Taibbi may be overly committed to a villainous narrative when general, unsexy incompetence or folly might better explain unfortunate events. But also consider Nassim Taleb is working on accounts of how the medical profession caused more harm than help, up until the 20th century. Up until the 20th century! Those 19th century doctors were likely smart fellows. But try telling a 1840 Viennese doctor convention they should actually all not exist, sort of, despite their personal intelligence and promising research. At least DO NO HARM!
I wrote this article about the financial crisis, could be half-nonsense, but it has its interesting points, anyway:
http://bit.ly/4bTuYV
In response to another comment. See in context »Thanks pdrh, someone asked in that article’s comments section: “Why don’t you challenge him to a debate on it Joe?”
Joe Weisenthal said: Jul 13, 10:12 AM
“I’m sure Taibbi is a much better rhetoritician than me. I’d probably lose.”
i think Sleazenthal has confused the meanings of rhetoritician and fact-finder.
In response to another comment. See in context »Goldman has an uncommon grasp of the joystick.
Here is its letter of appreciation, —-
http://pacificgatepost.blogspot.com/2009/07/goldman-sachs-thank-you-mr-president.html
….. And Obama’s “favorable” numbers will resemble Bush’s.
Separately, nice work Taibbi. It’s terrific that you responded to this longwinded, tepid apologia. (And with yet another great lede.) It was enough to get me to actually join T/S.
Good god.
..the true telltale of the moron-wanna-be- trader/businessgrad is the call card reference “you need to have taken (capital market) classes bla bla” .. “to understand” (the “complexity”)..et al
I took these classes and more, and what I remember from those days were the alarming ignorance of the rest of the soulless nimbwits, alumni as well as professors fumbling in darkness. Don’t think it gets better on the floors. Any of the super traders in the bizniz, for that matter the top dogs of the board rooms, pratice a game of expecting mediocre expectations. There are no intellectuals there. It’s NOT about capital market theory, black scholes and kiss-my-ass theories that have all proven to be wrong all the same (valuating crap securities is a dice game..).
It is basically like understanding the phenomena nothing – and all the country praising the invisible clothes the emperor has on. It’s all an advanced pyramid game and when hyperinflation starts trucking, stockbrokers will come tumbling down like summer rain.
PS
pointing out the obvious farce ongoing (also in politics right now) gets punitively more and more futile as their comedy turns into tragedy. They aren’t even trying hard to defend anything anymore in their haliburton survival balls…
What’s your solution? Not everyone can afford to be a libertarian slash and burn theorist. As you and your erudite self know, political economy is about trading in one set of problems for a lesser set of problems. Nothing ever gets solved.
In response to another comment. See in context »Matt has a fierce intellect–we all know that. But architecting where we go from here….much much harder proposition.
MT, I want to buy you a beer. Good work.
Now that Heidi’s written the script for a LEAVE GOLDMAN ALONE! (modeled after Leave Britney Alone!), who’s gonna step up and make it?
http://www.youtube.com/watch?v=kHmvkRoEowc
Keep up the “rabble rousing” Matt.
LOL while i didn’t make it more than 20 seconds into that, think i just peed a little…
In response to another comment. See in context »thanks!
oh my vote is for pdrh or ika1
Matt, are you referring to the Michael Lewis who produced a frivolous piece of propaganda for the most recent issue of Vanity Fair – the one with Heath Ledger on the cover, which caught my eye when I went to purchase the Rolling Stone issue with your kick-ass Goldman Sachs-Giant Vampire Squid exposé? (Even though I’d already read it online, I liked it so much I wanted to thank RS for publishing it, thus I bought the hard copy. I may even subscribe, if they promise to keep publishing the TRUTH.)
If “The Man Who Sank the World’s Economy” piece relates to the Michael Lewis you refer to, then you need to re-read his story. It’s a story: get it? He’s merely trying to legitimize the hoax that’s been perpetrated by Goldman, and federal officials.
Here’s a few observations:
- “DeSantis turned out to be a friend of a friend . . . . . (he) had no taste for company politics or public exposure”
Ha! No taste for public exposure? This is the guy who managed to get his “Resignation” letter published by NYT? Lewis drops the ball from the start.
- “Even more oddly, the public explanation of AIG’s failure focused on the credit-default swaps sold by traders . .”
Matt, and anyone else who wants to think about this: AIG never “SOLD” credit default swaps. Read their 10-K annual reports. They entered into default swap agreements, but you can’t “sell” something like that. How would you price it?
You’d be selling an instrument that says you’re already screwed! Who would buy a “default” swap?
Think about it . . .
Lewis also says that the AIGFP traders would never compromise themselves for short-term profits, because they were required to defer half their pay into long-term incentive programs. Then he goes on to later argue that the AIGFP traders “selling credit-default swaps on subprime-mortgage bonds” sold so many because they were greedy, and they were able to reap huge bonuses by doing so.
Can you see the problem here? He’s clearly contradicted himself; not to mention there was never any such thing as a “subprime-mortgage bond”.
A “bond” suggests some assurance that the debt will be repaid. There was never any such suggestion implied in any of the toxic debt instruments spewed out by Goldman; Merrill; Lehman; Bear, etc., etc., ad nauseam.
If you don’t believe this, go to the SEC website and Search filings for companies containing “GSAA”. This will bring up all the Goldman Sach’s GSAA Home Equity Trust Asset Backed Securities filings. Pick any one. Then read the prospectus, and you will find all sorts of conditions and contingencies and disclosures about the hazards of purchasing Certificates of ownership in a trust which are illiquid, and have no secondary market in which to sell them, and had multiple to the 10th power probability of default. They knew that stuff was junk.
Lewis goes on to discuss all the brilliant mathematicians, who created these sophisticated predictive models for determining how to allocate risk. He’s full of it. Those loans were shit, and the guys writing them knew it. That’s why they removed the “underwriter” from the equation, and let a computer make the decisions. Who would want some reasonable person asking, “Why are we writing this shit? It’s destined to default!”
Read the story. See how many times Lewis repeats his assertion that AIGFP, and Joe Cassano, were “selling” credit-default swaps. He states this over, and over, and over again.
Look at the 10-K AIG filed for 2005. It states on page 127 that as of “December 31, 2005, the aggregate notional principal amount of AIGFP’s outstanding swap transactions approximated $1,225 billion, primarily related to interest rate swaps of approximately $837.4 billion.” They reported a derivatives portfolio consisting of Currency Swaps, Swaptions, equity and commodity swaps. No credit-default swaps are mentioned.
The same can be said about AIG’s 2006 10-K. It states on page 166 that as of “December 31, 2006, the aggregate notional amount of AIGFP’s outstanding swap transactions approximated $1,456 billion, primarily related to interest rate swaps of approximately $1,058 billion.” Like they reported in the prior year, most of the derivatives are stated to be Currency Swaps, and Swaptions, equity and commodity swaps.
Credit Default Swaps do not appear anywhere in AIG’s SEC filings until 2007, at which time the mortgage market was already in meltdown, and the Wall Street firms writing the toxic debt obviously needed someplace to offload their crap.
These guys made a deal: to swap their trash for cash, and stick us with the bill. Wake up: we’ve been had.
I didn’t verify all your facts but at least you’ve laid them out for anyone who is so inclined. I do agree with your overriding conclusion though which, if I read it correctly, is that in the big picture Goldman, AIG et al and the Fed, Treasury, Congress and mainstream media are all just players in the same play produced for the diversion and distraction of those few members of the public educated enough to care but still ignorant enough not to be in on the joke. MT is the critic concerned with the acting of one of the characters but doesn’t seem to realize that Goldman is just playing it’s part as written. If you want Goldman to be more humble or less transparent in its portrayal of avarice you don’t understand the genre. Or, as they used to say back in the day…don’t blame the player, blame the game.
In response to another comment. See in context »mutex, thanks for reading and your comments. As you note, I do source my information, and I do so in opposition to the propaganda-monger “journalists” like Michael Lewis and this Heidi Moore, who I don’t have the stomach yet to bother with. I wish more people would start asking for facts and evidence, and quit pandering to hyperbole and anecdote.
I actually have a more alarming conclusion than where I’ve left off: but I don’t think the general public will be ready to hear it until they start to absorb the fact that our federal officials completely misrepresented all of the facts related to this act of financial terrorism. I think we are in grave danger by allowing these same individuals to continue wrecking our economy.
I suspect Matt thinks so as well, which is probably why he continues to educate the public about the unsavory Goldman alumnus who are being propelled into positions of power in the current administration.
In response to another comment. See in context »Good piece! Lots of good snarking out there too. The wall street crowd definitely needs to be educated on real life and human values. 120 yrs ago these same people would have beaten and abused their slaves. Several hundred yr ago they would have lived in the castle and put an uppity peasant in the stocks or worse. To me the question is how do we change the cultural attitude that allows people to get by with this kind of inhumane self-indulgent crap. The internet gives me hope, people like most of those commenting here will slowly spread their thinking around. Even hollywood and popular TV is getting into the act of making fun of the ignorant rich selfish bastards. Awfully slow though, look how many centuries it took to get democracy the feeble foothold it has, the pathetically top centric system we have doesn’t really qualify that’s for sure. What’s sad is that in the late sixties we were starting to move that direction and somehow we lost it. When Reagan’s right-wing overlord’s got him into power it was all over and it’s been falling off a cliff ever since. I pray to the god of sanity (R.A. Heinlein in my uneducated view) every day that this ‘recession’ will wake up a few more people and we can start using the power we do have to fix this mess of a country/world/species. For one thing, why we don’t have more boycotting using the power of the internet I don’t understand, sometimes it would help. Keep up the good work Matt, ika1, sharkdb, andy geiger, jimbog and others, here and many other sites. Our children depend on it…
PS.
What Joe Cassano sold was a bunch of ETFs traded on the London Stock Exchange. Those ETF’s melted down starting in mid-summer, 2008, and by Sept. they were plummeting.
As a result, trading was halted on AIG’s ETFs on September 16, 2008, and resumed on September 22, concurrent with the announcement that our gracious Federal Reserve had granted AIG an $85 Billion credit line.
The London Exchange ETFs resumed trade after AIG posted sufficient collateral to assure payment of their obligations. That’s why they needed a bailout: not because of the US subprime meltdown, but because of the UK ETF collapse.
It will happen again. They own everyting now. Including the Credit Default Swaps, which they can choose to flush simultaneously at any moment now, again. Wake up people: we’ve been had.
Y’all know what’s the worst part about all this mess?
That they made us totally immune to the sound of “billions” or “trillions” of dollars. As if they are chump change. Think about it. Before the meltdown last September, did you ever hear of such large amounts of money handed out overnight like it was candy? I mean, for fuck’s sake, 50 billion dollars just don’t mean much anymore. Or a 100 or 700. Hell, I am not sure if a trillion even ruffles my feathers. These fuckers even screwed arithmetic for me and made me loose any sort of sense of scale. And I have an engineering Phd for crying out loud.
[...] The best Goldman apology yet. [Matt Taibbi] [...]
“Let me issue and control a nation’s money, and I care not who writes its laws” – Meyer Amchel Rothschild, 1838
Keep up the good work, Matt. Oh, and hire a bodyguard or two, just in case.
Great article matt. Bob Steele humped me on Wachovia. I never liked those people, and I go back 25 years with them. GS is E-V-I-L! Shouldn’t somebody investigate them for RICO?
Hey Matt, I believe you might have touched a nerve with Ms. Moore, if her ‘tweet’ from July 30th is any indication.
“Writing new piece about Taibbi’s rambling Rolling Stone article, I am reminded why Meg McArdle called him Sarah Palin of journalism.”
Matt, et al:
I just listened to Michael Lewis interviewed by Terrence McNally.
I strongly recomment the interview for the discussion on Wall Street.
Matt, and others who write, there’s also a great discussion of how to tell a story, and how to decide if a story’s worth telling.
Thanks for your work, Matt.
Robert Henry Eller
Milan, Italy
Moore must be easy to find. Just look where you know her lips are firmly wrapped.
Bashing Goldman Sachs Is Simply a Game for Fools
Commentary by Michael Lewis
July 28 (Bloomberg) — From the moment I left Yale and started working for Goldman Sachs, I’ve felt uneasy interacting with those who don’t.
It’s not that I think less of Goldman outsiders than I did while I remained among you. It’s just that I feel your envy, and know that nothing I can do or say will ever persuade you that I am no more than human.
Thus, like many of my colleagues, I have adopted a strategy of never leaving Goldman Sachs, apart from a few brief, spasmodic attempts to make what you outsiders call “love” or “the beast with two backs.” Goldman recognizes how important it is for its people to replicate themselves. We bill no performance fees for the service.
Today, the sheer volume of irresponsible media commentary has forced us to reconsider our public-relations strategy. With every uptick in our share price it’s grown clearer that we who are inside Goldman Sachs must open a dialogue with you who are not. Not for our benefit, but for yours.
America stands at a crossroads, and Goldman Sachs now owns both of them. In choosing which road to take, ordinary Americans must not be distracted by unproductive resentment toward the toll-takers. To that end we at Goldman Sachs would like to dispel several false and insidious rumors.
Rumor No. 1: “Goldman Sachs controls the U.S. government.”
Every time we hear the phrase “the United States of Goldman Sachs” we shake our heads in wonder. Every ninth-grader knows that the U.S. government consists of three branches. Goldman owns just one of these outright; the second we simply rent, and the third we have no interest in at all. (Note there isn’t a single former Goldman employee on the Supreme Court.)
What small interest we maintain in the U.S. government is, we feel, in the public interest. Our current financial crisis has its roots in a single easily identifiable source: the envy others felt toward Goldman Sachs.
The bozos at Merrill Lynch, the dimwits at Citigroup, the nimrods at Lehman Brothers, the louts at Bear Stearns, even that momentarily useful lunatic Joe Cassano at AIG — all of these people took risks that no non-Goldman person should ever take, in a pathetic attempt to replicate Goldman’s financial returns.
For too long we have allowed others to emulate us. Now we are working productively with Treasury Secretary Tim Geithner and the Congress to ensure that we alone are allowed to take the sort of risks that might destroy the financial system.
Rumor No. 2: “When the U.S. government bailed out AIG, and paid off its gambling debts, it saved not AIG but Goldman Sachs.”
The charge isn’t merely insulting but ignorant. Less responsible journalists continue to bring up the $12.9 billion we received from AIG, as if that was some kind of big deal to us. But as our CFO David Viniar explained back in March, we were hedged. Our profits from AIG “rounded to zero.”
People who don’t work at Goldman Sachs, of course, find this implausible: How could $12.9 billion round to zero? Easy, but you just need to understand the mathematics.
Let’s assume AIG transferred $12,880,560,250.34 of taxpayer money to Goldman Sachs. A Goldman outsider, asked to round this number, might call it $12,880,560,250.00. That’s not how we look at it; at Goldman we always round to the nearest $50 billion, so anything less than $25 billion rounds to zero.
Think of it that way and you can see that $12,880,560,250.34 isn’t even close to not rounding to zero.
Rumor No. 3: “As the U.S. government will eat the losses if Goldman Sachs goes bust, Goldman Sachs shouldn’t be allowed to keep making these massive financial bets. At the very least the $11.4 billion Goldman Sachs already has set aside for employees in 2009 — $386,429 a head, just for the first six months — is unfair, as the U.S. taxpayer has borne so much of the risk of the wagers that generated the profits.”
Really, we don’t know where to begin with this one. It is wrong-headed in so many different ways!
Let’s begin with the idea that the taxpayer is running a bigger risk than we are. The billions he stands to lose are trivial; after all, they round to zero.
The real risk, when you think about it even for a minute, is the risk we take ourselves: that Goldman will cease to exist and we will cease to be Goldman employees. To flirt with such tragedy we obviously need to be paid.
Rumor No. 4: “Goldman employees all look alike.”
Several recent newspaper photos have revealed that a surprising number of Goldman Sachs workers are white, male and bald. That non-Goldman people glance at such photos and think “Holy crap, they even look alike!” just shows how deeply anti- Goldman bigotry runs in American life.
We at Goldman represent unique clusters of DNA; if we bear some faint surface resemblance to one another, and to creatures from the 24th century, it is only because our superior powers of reasoning lead us to hold in our minds exactly the same thoughts, at exactly the same time.
A shared disinterest in growing hair, for instance, isn’t a coincidence of nature but an expression of healthy like- mindedness.
“The world is a pool table,” our naked-headed CEO likes to tell us. “And all the people in it are either stripes or solids. You alone are the cue balls.”
Rumor No. 5: Goldman Sachs is “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
Those words are of course taken from a recent issue of Rolling Stone magazine and they are transparently false.
For starters, the vampire squid doesn’t feed on human flesh. Ergo, no vampire squid would ever wrap itself around the face of humanity, except by accident. And nothing that happens at Goldman Sachs — nothing that Goldman Sachs thinks, nothing that Goldman Sachs feels, nothing that Goldman Sachs does –ever happens by accident.
(Michael Lewis is a columnist for Bloomberg News and the author of “Liar’s Poker,” “Moneyball” and “The Blind Side,” soon to be a major motion picture. The opinions expressed are his own.)
http://www.bloomberg.com/apps/news?pid=20601039&sid=a2X3hNaWcbeg
“Finally I recalled the worst-recourse of a great princess to whom one said that the peasants had no bread, and who responded: “Let them eat cake…”
In response to another comment. See in context »I didn’t know Viagra could go straight to the head: I hope his brain doesn’t explode from the swelling.
He seems awfully impressed with himself, for landing on his feet after dropping out of Yale (I assume if he graduated, he would have said so.)
However, I haven’t read the piece yet, so maybe it will make up for the unfortunate Vanity Fair frivolity and nonsense that’s pre-prejudiced me to his name. Maybe he’ll deliver some real MEAT!
In response to another comment. See in context »[...] It might also create a new ranks of indentured servants, so we can shine the shoes of the new CEO class (aka “criminal”) in this country. But these Cancerian traits of anti-change [...]
@ Serena
It’s satire. Lewis went to Princeton and worked for Salomon Brothers. Check out Liar’s Poker for his time spent at Salomon.
No involvement with “Chain of Blaim”?
It’s interesting how the writing style is so similar to that of “The Man Who Sank the World’s Economy”.
Very similar, and entertaining.
In response to another comment. See in context »I mean Blame-
How vile that they don’t see fit to offer spell-check on these sites.
In response to another comment. See in context »And how would this be more recognizable as satire than the other Vanity Fair piece – which actually seems like satire?
Yet I get the impression Lewis thinks the Vanity Fair piece is real journalism.
Where does art imitate life, and life imitate art? I’m very confused with this guy.
In response to another comment. See in context »I’ve come to the conclusion that the Wall Street Industry Giants are like the Insurance Industry Giants, and the Military Industry Giants – in order to defend their outrageous conduct, they claim to take great risks but really they protect themselves by the huge premiums/ trading fees/costs of war/private contract fees/guaranteed right to exorbitant pay/bonuses – no matter the outcome of their own willful, deliberate decisions/ the losses they cause in life of others or quality of life/destruction of the planet/ what harm they do. They operate under the “IBG” theory – “I’ll be gone.” They are in a win-win situation fostered by our government and we (the rest of the universe) are in a lose-lose situation and not even represented at the bargaining table.
MT–tell me you are not debating Charlie Gas on Imus on Thursday. If you are, good luck and more power to you. Also, why did you take down yesterday’s blog?
Matt you have not mentioned the role of Warren Buffett and his pal Bryon Trott in this whole charade:
Not So Strange Bedfellows: The Warren Buffett – Goldman Sachs Love Affair
http://ptlia.com/forms/main/default.aspx?l=en-us&p=editorials13
Buffetts image was more important than his money in these “financial theatrics”.
[...] Heidi Moore get’s her head handed to her by Matt Taibbi after her silly Goldman Defense…(TrueSlant) [...]
[...] because they have less competition and more government leeway to do crazy stuff like this? And there not even sorry? My dad says housing prices are going up again on the west coast, so all must be [...]
Stuffy article but offers some hope…
(http://www.cjr.org/the_audit/taibbi_goldman.php?page=1)
Goldman: Please step away from the government. Put your hands up where we can see them. Ok, step away from the government. Now empty the cash from your wallets.
Separate the drug (government) from the addict (Goldman).
Come on Goldman, participate in a capitalist free market economy. Let’s see what you can do out here when you don’t have a direct line to Treasury Secretary and all your government power.
Matt, You made an excellent point in RS about how the next bubble inflated by GS is the cap & trade green energy bubble. CNBC, MSNBC, & NBC have all been cheerleading this issue and the politicians who are driving the bus, while parent company General Electric has more to gain financially from this political corruption than any corporation in America.
It goes back to the issue of access you mentioned in our interview. IMHO, there are a lot of reporters taking cues from Goldman’s PR staff in the hopes they will gain or maintain access to the mysterious geniuses at Goldman.
Another weak article with zero credible GS defenses is Megan McArdle’s at The Atlantic …