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Jan. 27 2010 - 1:50 pm | 120,467 views | 41 recommendations | 305 comments

Populism: Just Like Racism!

It’s easy to see why politicians would be drawn to the populist pose. First, it makes everything so simple. The economic crisis was caused by a complex web of factors, including global imbalances caused by the rise of China. But with the populist narrative, you can just blame Goldman Sachs.

via Op-Ed Columnist – The Populist Addiction – NYTimes.com.

Normally one would have to be in the grip of a narcissistic psychosis to think that a columnist for the New York Times has written an article for your personal benefit. But after his latest article in the Times, in which he compares the “populism” of people who “blame Goldman Sachs” with exactly the sort of racist elitism I ripped him for last week, I think David Brooks might be trying to talk to me.

I think that’s at least part of what’s going on in his latest column, which is odd. If I were in his position, I probably would have punched me in the nose for the shot I took at him last week, but the response of David Brooks to being called out as a racist weenie is to write a passionate defense of the rich, one that includes the admonition that while blaming the wealthy is easy and feels fun, truly wise men should “tolerate the excesses of traders.”

I don’t want to get into the position of fixating on one guy for personal reasons. Obviously I’ve done too much of that with Brooks already, and I absolutely promise to give that part of it a rest for a good long while after this.

But leaving aside any discussion of Brooks the human being, this latest column of his is something that has to be discussed. The propagandistic argument he makes about the dangers of “populism”  is spelled out here as clearly as you’ll ever see it expressed in print, and this exact thing is a key reason why so much of the corruption that went on on Wall Street in the past few decades was allowed to spread unchecked.

That’s because this argument is tacitly accepted by almost everyone in our business, and most particularly is internalized in the thinking of most newspaper editors and TV news producers, who over time develop an ingrained habitual fear of publishing material that seems hysterical or angry.

This certainly has an effect on the content of news reporting, but perhaps even more importantly, it impacts the tone of news coverage, where outrages are covered without outrage, and stories that are not particularly “balanced” in reality — stories that for instance are quite plainly about one group of people screwing another group of people — become transformed into cool, “objective” news stories in which both the plainly bogus version of events and the real and infuriating version are given equal weight.

Brooks lays out the crux of his case his case in his first three grafs of his article:

Politics, some believe, is the organization of hatreds. The people who try to divide society on the basis of ethnicity we call racists. The people who try to divide it on the basis of religion we call sectarians. The people who try to divide it on the basis of social class we call either populists or elitists.

These two attitudes — populism and elitism — seem different, but they’re really mirror images of one another. They both assume a country fundamentally divided. They both describe politics as a class struggle between the enlightened and the corrupt, the pure and the betrayers.

Both attitudes will always be with us, but these days populism is in vogue. The Republicans have their populists. Sarah Palin has been known to divide the country between the real Americans and the cultural elites. And the Democrats have their populists. Since the defeat in Massachusetts, many Democrats have apparently decided that their party has to mimic the rhetoric of John Edwards’s presidential campaign. They’ve taken to dividing the country into two supposedly separate groups — real Americans who live on Main Street and the insidious interests of Wall Street.

Now, there’s bullshit all up and down this lede. The first lie he tells involves describing everyone who is a critic of Wall Street as a populist. It’s sort of a syllogism he’s getting into here:

All people who criticize Wall Street are populists.

All populists think of themselves as enlightened and pure, and are primarily interested in dividing society, the same way racists do.

Therefore, all people who criticize Wall Street are primarily interested in dividing society, just like racists.

This is obnoxious on so many levels it’s almost difficult to know where to start. As for the populism label, let me quote the Alison Porchnik character from Annie Hall (Woody’s first wife, in the movie): “I love being reduced to a cultural stereotype.”

Brooks here is trying to say that by criticizing, say, Goldman Sachs for mass thievery — criticizing a bank for selling billions of dollars worth of worthless subprime mortgage-backed securities mismarked as investment grade deals, for getting the taxpayer to pay them 100 cents on the dollar for their billions in crap investments with AIG, for forcing hundreds of millions of people to pay inflated gas and food prices when they manipulated the commodities market and helped  push oil to a preposterous $149 a barrel, and for paying massive bonuses after receiving billions upon billions in public support even beyond the TARP — that in criticizing the bank for doing these things, people like me are primarily interested in being divisive and “organizing hatreds.”

He is also saying that by making these criticisms, people like me are by implication making statements about our own moral purity and enlightenment relative to others. He goes on:

It’s easy to see why politicians would be drawn to the populist pose. First, it makes everything so simple. The economic crisis was caused by a complex web of factors, including global imbalances caused by the rise of China. But with the populist narrative, you can just blame Goldman Sachs.

Second, it absolves voters of responsibility for their problems. Over the past few years, many investment bankers behaved like idiots, but so did average Americans, racking up unprecedented levels of personal debt. With the populist narrative, you can accuse the former and absolve the latter.

Stuff like this makes me want to scream. If I’m writing about a bank that took a half-billion worth of mortgages where the average amount of equity in the home was less than 1%, and where 58% of the mortgages had no documentation, and then sold those mortgage-backed securities as investment-grade opportunities to pensions and other suckers — and then bet against the same kind of stuff they were enthusiastically selling to other people — is Brooks seriously suggesting that I also have to point out that the Chinese economy was doing well at the time?

Yeah, okay, the rise of China is a factor in the overall decline of the American economy, but it has nothing to do with the Goldman story, which is a specific crime story about a specific bank. If I’m writing about a gang of car thieves, what, we’re supposed to also mention that the endive crop was weak in that part of the country that year? What the fuck? And this whole business about how criticizing Goldman absolves voters — Jesus, how primitive can you get? Using that logic, criticizing anyone for anything is invalid:

ME: Well, Ike Turner was sort of a dick because he used to get high and punch his wife in the face all the time…

BROOKS: But it’s so easy to say that.

ME: It’s easy to say that a guy who punches his wife in the face is a jerk? (Scratching head) Well… I guess you’re right about that. Would you like me to say it while juggling three chainsaws? Would it be harder to say then, and would you have less of a problem with it?

BROOKS: But by criticizing Ike Turner, you’re absolving all the people who do other bad things. Like purse-snatchers in Central Park, and those kids who keyed my Lexus, and all those baseball players who took steroids! Rafael Palmeiro lied to congress! What about them?

ME: Dude, are you okay? Your pupils look dilated.

BROOKS: You’re absolving Mark McGwire! The single-season home run record is a fraud!

ME: (backing away slowly toward the door) Okay, yeah, sure. Listen, I’ll catch up with you later, okay? I’ve got to return some videotapes.

And so on. The entire argument is literally this nonsensical. If Brooks disagrees with criticism of banks like Goldman, he has a fantastic platform to point out where those criticisms are incorrect. The best platform there is, in fact. But not only does he not go in that direction, he does just the opposite — he concedes that these criticisms are basically true, and chooses instead to argue against the wisdom of making those criticisms, apparently because “bashing the rich” will make them less inclined to “channel opportunity to new groups.” The emphasis in this next excerpt is mine:

So it’s easy to see the seductiveness of populism. Nonetheless, it nearly always fails. The history of populism, going back to William Jennings Bryan, is generally a history of defeat.

That’s because voters aren’t as stupid as the populists imagine. Voters are capable of holding two ideas in their heads at one time: First, that the rich and the powerful do rig the game in their own favor; and second, that simply bashing the rich and the powerful will still not solve the country’s problems.

Political populists never get that second point. They can’t seem to grasp that a politics based on punishing the elites won’t produce a better-educated work force, more investment, more innovation or any of the other things required for progress and growth.

In fact, this country was built by anti-populists. It was built by people like Alexander Hamilton and Abraham Lincoln who rejected the idea that the national economy is fundamentally divided along class lines. They rejected the zero-sum mentality that is at the heart of populism, the belief that economics is a struggle over finite spoils. Instead, they believed in a united national economy — one interlocking system of labor, trade and investment.

Hamilton championed capital markets and Lincoln championed banks, not because they loved traders and bankers. They did it because they knew a vibrant capitalist economy would maximize opportunity for poor boys like themselves. They were willing to tolerate the excesses of traders because they understood that no institution is more likely to channel opportunity to new groups and new people than vigorous financial markets.

What’s so ironic about this is that Brooks, in arguing against class warfare, and trying to present himself as someone who is above making class distinctions, is making an argument based entirely on the notion that there is an lower class and an upper class and that the one should go easy on the other because the best hope for collective prosperity is the rich creating wealth for all. This is the same Randian bullshit that we’ve been hearing from people like Brooks for ages and its entire premise is really revolting and insulting — this idea that the way society works is that the productive ” rich” feed the needy “poor,” and that any attempt by the latter to punish the former for “excesses” might inspire Atlas to Shrug his way out of town and leave the helpless poor on their own to starve.

That’s basically Brooks’s entire argument here. Yes, the rich and powerful do rig the game in their own favor, and yes, they are guilty of “excesses” — but fucking deal with it, if you want to eat.

And the really funny thing about Brooks’s take on populists… I mean, I’m a member of the same Yuppie upper class that Brooks belongs to. I can’t speak for the other “populists” that Brooks might be referring to, but in my case for sure, my attitude toward the likes of Lloyd Blankfein and Hank Paulson has nothing to do with class anger.

I don’t hate these guys because they’re rich and went to fancy private schools. Hell, I’m rich and went to a fancy private school. I look at these people as my cultural peers and what angers me about them is that, with many coming from backgrounds similar to mine, these guys chose to go into a life of crime and did so in a way that is going to fuck things up for everyone, rich and poor, for a generation.

Their decision to rig the markets for their own benefit is going to cause other countries to completely lose confidence in the American economy, it will impact the dollar, and ultimately will make all of us involuntary debtors to whichever state we end up having to borrow from to bail these crimes out.

And from my perspective, what makes these guys more compelling as a journalistic subject than, say, the individual homeowner who took on too much debt is a thing that has nothing to do with class, not directly, anyway. It’s that their “excesses” exist in a nexus of political and economic connections that makes them very difficult to police.

We have at least some way of dealing with the average guy who doesn’t pay his debts — in fact our government has shown remarkable efficiency in passing laws like the bankruptcy bill that attack that particular problem, and of course certain banks always have the option of not lending that money (and I won’t even get into the many different ways that the banks themselves bear responsibility for all the easy credit that was handed out in recent years).

But the kinds of things that went on at Goldman and other investment banks, in many cases there are not even laws on the books to deal with these things. In some cases what we’re talking about is the highly complicated merger of crime and policy, of stealing and government, which is both fascinating from a journalistic point of view and ought to be terrifying from the point of view of any citizen, rich or poor.

And even if I were to accept the Brooksian view of an upper class that must be looked to to fix things and take care of the lower classes and create the needed wealth to help us escape our economic crisis, the whole point is that this upper class he is talking about has abdicated that very responsibility — and, perhaps having reached the cynical conclusion that our society is not worth saving, has taken on a new mission that involves not creating wealth for all but simply absconding with whatever wealth is remaining.

It’s not pessimism or “combative divisiveness” to talk about these problems and insist that they get fixed. On the contrary, it’s a very positive view of what citizenship is to believe that everyone has a real role in fixing his country’s problems, and that when we identify problems, we should try to do something about them because we might actually succeed.

On the other hand, telling oneself that when powerful people “rig the game” one should just tolerate it, because one’s best hope for seeing the situation fixed rests in hoping those same powerful people fix it themselves — I would describe that as pessimism, or something worse than pessimism. The whole point of America is that we are all supposed to be our own masters, never viewing anyone as being by birth or situation inherently better or more capable than ourselves, and so the notion of relying upon some nebulous class of investment bankers to “channel opportunity” from on high strikes me as being un-American.

And besides, the fact that a lot of these guys have made a lot of money recently doesn’t make them “upper class.” They’re the same assholes we all were in high school and college, except that they made some very particular moral choices in adulthood, and became criminals, and have now arranged things so that they’re going to be tough as hell to catch. And when they fall, which a lot of them will… I mean a lot of these guys are ten seconds from losing it all and spending the next ten years working the laundry room at Danbury or pushing shopping carts under the FDR expressway. And they know it. These people aren’t the nobility. They’re people just like us, only stupider and less ashamed of themselves.

That’s not a class story. It’s a crime story, and it doesn’t have a damn thing to do with China.


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  1. collapse expand

    I would called it “Rovian Bullshit”, not Randian. The primary antagonists in Atlas were rich, powerful elites who manipulated the political system to cannibalize those who simply “wanted to be their own masters”, rich and poor. This is exactly the situation today, and what you rail against. Powerful philosophies have been co-opted for heinous purposes since clay tablets, and current corporatist “values” are no different.

    Nice piece.

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    Matt, You’re missing a trick, I suggest – making it too complicated.

    The simple response to “you’re a populist” – is “YES I am – I care about the people – the people of this country having trillions stolen from them… You obviously don’t care about the people and are prepared to assist in the greatest heist in history…”

    Don’t deny; accept and ram it down their throats. They’re calling people “populists” because psychologically they know they are ripping the people off.

    Call them the ANTI-POPULISTS – the ANTI-PEOPLE.

    Sorta basic marketing here.

    Many thanks for all your great reporting.

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    At least he didn’t try to brand them POPOs and write a book about it, which would have been entertaining on multiple levels.

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    Hey Matt. While I probably would have taken Brooks column personally too, just remember, he DOES have a bigger agenda here. Populism–especially the left version of historical Populism, really does pose a threat to Brooks and his class. Money has always been partially a confidence game and a well-formed Populist critique threatens this game. So what Brooks is doing here is simple preemptive name-calling. Unfortunately he got caught telling that truth which is, the opposite of Populism is elitelism.

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    There is nothing I could add to this excellent post,so I’m going to go off topic to say RIP Howard Zinn.

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    Whenever Brooks speaks or writes I think of two things:

    1. Noblesse Oblige
    2. This guy would have done well in King Louis’ court.

    Everyone should read Thomas Paine’s “Common Sense”, and hear the rich and the nobility have their asses handed to them. Although written in 1775, it’s easy to read and you’ll be chuckling and shaking your head in agreement. Thomas Paine would have ripped Brooks a new one.

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    morningbell24 – the reason the media refuses to criticize the corporations is because they are owned by said corporations, and all who would do investigative reporting have been fired.

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    Matt, great article. Heard a rumor that the UBS tax cheats went free and the whistleblower got prison. Made me go to wikileaks, which is still closed down “accepting donations”. Googled “list: whistleblower sites” and got a link with a compilation of such. None of them were active links anymore? Gave me the creeps.
    Keep fighting the good fight, Matt. I love it that you write from the heart and say exactly what you think. It’s good to know there are still some people out there who can’t be bought off.

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    Matt has it emphatically right again. I’d just highlight his point that these banking (and other) elites have quite apparently decided that this country is not worth investing in. And they’re not just absconding with what they can while the getting is good but also investing elsewhere, where the fields are pre-industrially greener.

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    right on, Matt

    shades of my Opednews.com article from Jan 2008

    The “Populist” Epithet – On Smearing The Majority


    Kent Welton,

  11. collapse expand

    “And even if I were to accept the Brooksian view of an upper class that must be looked to to fix things and take care of the lower classes and create the needed wealth to help us escape our economic crisis, the whole point is that this upper class he is talking about has abdicated that very responsibility — and, perhaps having reached the cynical conclusion that our society is not worth saving, has taken on a new mission that involves not creating wealth for all but simply absconding with whatever wealth is remaining.”


    Twelve years on the Street (prior to deregulation) and the last twenty years protecting my Corporate and Institutional clients from the adversarial abuse of specialized expertise, now morphed into “legalized theft” and the disappearance of ethical, Fiduciary Responsibility, inescapably leads me to the very same conclusion that Mr. Taibbi puts forward herewith.

    JT Easthill

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    Great job…funny and observant.

    Aside from the value of calling these people out, I am not sure what to do except vote for 3rd party candidates.

    For example, I recently ran into a “leading” member of my community (village councilman, ex-village attorney, etc) who in repsonse to the “how’s business” question)started complaining about how Congress was making the estate planning business difficult. When I started laughing and said “what are you talking about? That’s exactly what you want as a estate planning attorney!”

    After this comment, the conversation ended as the village leader turned and walked away.


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    Brooks and Friedman always write in such a way that I can follow along with their logic, and by the end of the piece I end up with a feeling of agreement but not really a comprehension of how I just got from point A to point B. Its perfect propaganda. You have a gift for taking their logic and putting it into the context of reality to show that nothing they wrote has any merit and doesn’t make any sense. Thank you

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    Strange that Brooks would accuse Edwards of encouraging class division. It seemed perfectly clear to me that the reason Edwards gained the national stage in 2004 was that he said over and over again that he believed in “one America”–it’s probably what made him popular then, until he overdid it so much one was left thinking he had just one idea.

    Brooks is being the elitist, and I think I have some insight into the sexual psychology of elitism, which I think is what you most need to improve your understanding about. You make out in your Rolling Stone articles like rich elitists are a bunch of nasty fuckers, but I’m inclined to think that’s off, and that in fact mostly the rich are too anti-fuck, which of course aligns with their selfish interests since rich males are better (than their competitors) at attracting females by giving them money (and marriage commitment), but not necessarily so as regards attracting them by sexually pleasing them. The non-rich and those who have not suffered themselves to be brainwashed by believing psychology (the modern word for the official-institution-sanctioned dogma as regards what human nature is like, which at any time is doomed to be very wrong compared with what a halfway reasonable person using common sense and just a little time can come up with) tend to have a clue that paranoia, when it is appropriate, is a defense against nastiness corrupting sexual pleasure and love. Since the rich tend to think that the strong emotions of love, sexual pleasure, and depravity are mostly just for plebeians too uneducated and unrefined to mate for money, and that (since in their minds all fucking is plebeian) how to keep fucking emotions clean is an issue of no more interest than how poor people prepare grits, they can have an alternative view of what makes a screwed-up person. To the rich, not being exposed to the right schools, classical music, country clubs, etc., is what makes a screwed-up person, a person who mates from vulgar emotion. Since the rich have mostly experienced this cultivation, nay even partly from their own “wisdom” having sought it out notwithstanding its frequent dullness, How could they view themselves otherwise than as inspired benevolent geniuses (the “best and brightest”, to use Obama’s phrase), and what would be the point in self-doubt (beyond admitting that they can occasionally make mistakes)? Certainly they would be loath to view the occupation of the most of the richest of them (banking) as mostly very harmfully parasitical, useful mainly just for storing money and for making a minimal amount of loans to keep loan sharks at bay, and quite harmful beyond that.

    Unlike what the tone of your Rolling Stone articles somewhat suggest, the rich (except perhaps for a few mostly hidden non-influential ones who have become so exclusive as to almost never have opportunity to mate outside their group, who probably tend to become so nasty and against the prevailing spirit among the wealthy that they end up becoming exclusive more from necessity than choice) are actually much less nasty than the poor. Why wouldn’t they be? Sodomy is cheap. Even a poor person can afford to sodomize a girl. Nastiness is not something a rich person can do more potently than a poor person. The typical sexual sin of the rich is not nastiness but mating excessively for money rather than from either love or (in females) sexual pleasure.

    The irony is that the problem is that in philosophical outlook, the rich have become like the original socialists, full of the belief that lack of money and the advantages it can afford is almost exclusively what causes people to become brutish, the very opinion that set the pietists to start the movement against the first socialist, Robert Owen (unlike Owen, the pietists thought that church is also important in avoiding brutishness). (For a readable history of the matter, I suggest googling the excellent book, Some Thing Went Wrong A Summation of Modern History, by Lewis Browne.)

    Not that there might not be more than a little nastiness in finance, as one would expect merely from the natural association between corruption and nastiness (maybe more in the city? maybe more among the young?). But I have been some places where investment bankers live, and mostly my impression is that people there are too worried about crazy things like keeping their children from getting screwed when they don’t get into the right kindergarten to have time or energy for actual screwing. Even if they wanted to be sexually wild, they’d be too stupid to be able to do so without unusually great danger. Hang around rich people enough, and you’ll get so stupid fuckwise the best you’ll be able to do may be just to buy sleazy escorts; look at Tiger Woods—a famous athlete like that and apparently he couldn’t find anyone better to fuck with—doubtless if the gossip is accurate in describing his behavior, he’s been around rich people too much. The response of rich people to Tiger Woods’ alleged fucking behavior is already revealing. The simplest explanation is that he has lost his advertising contracts (in a way that a basketball fucker probably wouldn’t) because rich people have contempt for fuckers, and golf is a sport mainly for rich people.

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    God, you’re good. One of the clearest thinkers / writers in the U.S., political or otherwise. Can’t say how good it feels to have you voice so articulately many of the things so many of us feel but can’t express as well. If truth can really set us free, you alone are doing America far more good than anyone in Washington ever will. Kudos, Mr. Taibbi.

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    I like watching you man, but you seriously need a fucking reality check.

    Your whole premise for criticizing Brook’s article is based on your own belief that you know what “really” happened during the financial crisis and at Goldman Sachs in particular. The problem with people like you is that you REALLY don’t have any clue what Goldman Sachs does. You are a dime a dozen; a guy who reads articles and other people’s analysis and chooses to regurgitate whatever supports your own particular bias.

    You are a journalist, and an interesting one i’ll admit, but you don’t know shit about the complexities of finance. You have no experience in investments, and i can only speculate about your understanding of macroeconomics. Your problem is that you think you KNOW exactly what happened that lead to the financial crisis and much of the fallout that resulted. You base your criticism of Brooks and others on the assumption that you know that Goldman Sachs is evil and everyone else is just in on the scam, or ignorant.

    I actually like your style of commentary, but you might come off as more credible if you showed a little humility in admitting what you DON’T know. I’m curious; You have many posts that discuss Credit Default Swaps and other derivatives. Do you even know how a swap works mathematically? I’d bet no

    It is so important to really have an understanding of what the fuck you’re talking about before you try to put it in the appropriate context. I know everyone loves it when things are simple, but some shit (global finance) can’t always be dumbed down for the masses. Everyone hates the bankers, but Obama has plenty of them in his administration, and do you know why? Because they don’t teach this shit in Political Science 101. Go spend a few years studying and working in finance and them come back and take your sanctimonious tone about Goldman Sachs and David Brooks.

    • collapse expand

      I think you should spend an hour or two reading Matt’s deeply researched and acclaimed analysis of Goldman Sachs’ role in our current economy and then tell us your version, if you think you understand it better. Seriously doubt it, fella. You sound like more bluster than brains.

      In response to another comment. See in context »
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        Haha, Fella

        Unlike Matt, I freely admit that I have no idea how much blame lies with Goldman Sachs, the Fed, Subprime Borrowers, or any of the other parties that had involvement in this mess. I don’t think anyone knows. I’m not saying that Goldman Sachs is some virtuous organization, but I do think a lot of what they did was perfectly legitimate…

        One example everyone loves to bring up is Goldman pushing and shorting subprime securities simultaneously. Goldman is a market maker. They securitized the mortgages and sold them to INSTITUTIONAL clients. This is what Investment Banks do as market makers. They facilitate access to capital. They weren’t selling these things like war bonds in the 40’s to Mom and Pop. They sold them to institutions (sophisticated professional investors) who had a reasonable basis for purchasing them. It is not Goldman’s responsibility to coddle its clients and protect them from what it thinks are bad investment decisions (hence simultaneously shorting them). The responsibility lies with client. Maybe they got a little lazy and didn’t do much more than look at the ratings from S&P? Like it or not, thats the reality and its legal. What else do you expect? You think that Goldman had some sort of moral obligation to protect institutional investors from their own poor analysis? No. This is capitalism fella. Seek profit, maximize shareholder wealth, stay within the law.

        If you have a problem with what they did, change the legislation. What you can’t do is complain “We didn’t think to make that illegal! You should have told us when you thought that shit up!” Its a firm in a competitive marketplace doing exactly what we would expect them to do, and you know what? That competitive model has been our meal ticket as a nation (historically speaking). Don’t bite the hand that feeds you.

        In response to another comment. See in context »
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          You finally got it right when you said “I freely admit that I have no idea.”

          In response to another comment. See in context »
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          It seems to me that you just described your understanding of what you think happened and how markets work, money moves, etc. Sounds like you DO think you know enough to speak instead of just listen. Which is fine, but please don’t pretend otherwise.

          Also, just because you don’t understand something doesn’t mean that other people don’t.

          I do what can be described as forensic financial research, and yes, there are a lot of details, but the general principals aren’t very hard to understand or explain. Kind of like how you wouldn’t need to know what each tooth of each gear does to understand the basic principle of how a watch works.

          In response to another comment. See in context »
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            Its not reasonable to assume that is all that i think happened. I explained one isolated complaint that Matt and a lot of other people make, and how i view that one issue.

            I understand your analogy to the watch, but i don’t think its entirely accurate. Perhaps a better analogy would be to say that the watch broke, and all the master watchmakers can’t agree on what caused the watch to break, but I, knowing only the general concept of how watches work, claim to know exactly which gear is responsible for the entire mess…

            See my point?

            Like I said before, I can’t tell you EXACTLY what caused this mess and who is responsible. I do know enough to realize that Goldman Sachs is not the simple villain in all of this, and I think its hacky for Matt to lay it all on bankers and one company in particular.

            Also, I think its important to understand the details before we go passing judgment because you’re talking about “right” vs “wrong”. I think most people would agree that securitization and derivatives have increased access to capital generally and allowed more flexibility in managing risk. They aren’t just roulette bets. Understanding how these things are used in a way that is productive for the companies and the economy as a whole is important when trying to understand what their role was in the crisis.

            In response to another comment. See in context »
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          You may need to look at what Matt is trying to tell from these words.

          ‘what we’re talking about is the highly complicated merger of crime and policy, of stealing and government, which is both fascinating from a journalistic point of view and ought to be terrifying from the point of view of any citizen, rich or poor.’

          In response to another comment. See in context »
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          “Goldman is a market maker. They securitized the mortgages and sold them to INSTITUTIONAL clients. This is what Investment Banks do as market makers. They facilitate access to capital.”

          What you’re describing is actually what investment banks do as ORIGINATORS, in the PRIMARY market. It’s not market making, which takes place after a security as been created and sold to the initial (primary market) buyers. A market maker commits to always provide a price at which he/she will either buy or sell a security in the SECONDARY market. A market maker doesn’t create securities. A market maker provides liquidity, not access to capital (that’s the primary market).

          Apologies for a bit of long-windedness, but I thought sufficient detail was necessary before I could say that not only do you not know shit about the complexities of finance, it appears you do not know shit about the basics either. And it is so important to really have an understanding of what the fuck you’re talking about.

          In response to another comment. See in context »
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      Donopj2, are you kidding me? Are you really saying that only you brillant Wall Street types understand finances and swaps? Stop the bullsh*t. Finance is not that complicated, neither is derivatives or swaps.

      Your implication that the peasants are just too stupid to understand the complicated nature of running the Kingdom is laughable. And, btw, those brillant Wall Street Types (you know the ones with the MBA’s and MIT degree) were wrong about nearly everything — so if there is anyone who should get a clue, it would be you and those that you defend.

      In response to another comment. See in context »
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      dono, I think you missed the point of the article. It was about the faulty logic Brooks used in writing his editorial. It was about Brooks’ use of the term “populism.” The Goldman comments were incidental to that discussion.

      As for your claim that only Hawking-smart bankers can understand credit default swaps, I disagree. Modeling can be complex, sure, but that’s not pertinent to understanding what went on. Your claim is analogous to a lawyer seeking to discredit a witness who saw his client shoot another person in the stomach: “But the witness knows nothing about the digestive system!”

      In response to another comment. See in context »
  17. collapse expand

    “They only call it class war when we fight back.” In the past decade there has been a systematic transfer of wealth, mostly by looting, to a few elites from the rest of the country.

    While class isn’t as obvious in the US as elsewhere, it certainly exists. Currently, there’s a populist storm gathering strength, and that’s a good thing.

    Hey, the Populist Party of the 1890’s had real power for a while, was formed by Midwest farmers who were getting screwed by banks. Among other things, they strongly opposed the adoption of the noxious concept of corporate personhood, because they knew what was coming.

    I went to fancy prep schools too. But in times of stress like ours now, the elites always whine about deeply divisive it is for the rabble to be targeting them as a class. Like their plunder didn’t start the whole thing

  18. collapse expand

    The interesting thing about this debate whether you believe GS is evil and we should tax/regulate the hell out of the banking system, when populism moves beyond rhetoric and into proposed legislation as we saw last week with the bank tax, it zaps confidence out of the markets. We’ve fallen 6% since those comments, and probably half of that can be blamed directly on Obama. That’s over a trillion in wealth destruction, so over $150billion in lost capital gains tax revenues, much larger than the amount Obama is wanting to squeeze out of the banking system, not even counting the negative wealth effect. We saw that last Feb/Mar when the pitchfork crowd was at their influential peak.

    Basically no matter how good intentioned Matt and others espousing similar views are, those in DC falling into his ideology when it comes to bank bashing produces more harm than good for the American economy. Frustrating and seemingly unfair, but a reality.

  19. collapse expand

    I just wanted to thank you for perfectly capturing the sentiments that I feel so deeply, but am unable to express during conversation regarding class division. I hope you continue to write about this issue. I’d love to see you explore this in book form someday. This post makes me feel so damn hopeful because it reassures me that there are (a few) journalists out there who get it.

  20. collapse expand

    “These two attitudes — populism and elitism — seem different, but they’re really mirror images of one another. They both assume a country fundamentally divided. They both describe politics as a class struggle between the enlightened and the corrupt, the pure and the betrayers.”

    Notice that Brooks describes the Republican verison of populism, not the Democratic. And he doesn’t understand anything about Democratic populism, which has always been rooted in every person getting a fair shake, and improving everyone’s lives. And that Democratic populism is generally for the underprivileged, working to make the overprivileged less so. He wouldn’t know Democratic populism if it bit him on the ass.

  21. collapse expand

    Nice takedown and I hesitate to add anything to what was one of your best posts recently, imo. Still, the thing in Brooks’s column that jumped out most for me was this part:

    “That’s because voters aren’t as stupid as the populists imagine. Voters are capable of holding two ideas in their heads at one time: First, that the rich and the powerful do rig the game in their own favor; and second, that simply bashing the rich and the powerful will still not solve the country’s problems.”

    I basically agree with his two points here (although the latter is arguable, populism has had its successes) but Brooks seems completely oblivious to the nature of the connection between the two. Populism typically fails to solve the problem, precisely because the wealthy have rigged the game in a way that largely immunizes them from it. Examples are many, including your points about the way the MSM so willingly gives equal weight to two completing explanations of a story even as one is clearly bullshit.

  22. collapse expand

    Matt, you are very smart and a great writer. :)
    I luvs ya.
    Bet Brooks is (temporarily) speechless.

  23. collapse expand

    I have to get this out of the way. Twice you used the word “impact” as a verb. I know it’s too late to stem the tide, but et tu?

    Okay, on to the Brooks thing. There’s another very bizarre stream in all of this. His entire argument is based on an -ist-ism. The rich are one way, the rest of another. It’s the natural order of things that this priveleged group should be in charge of the controls and the resources, probably to save us shiftless types from ourselves. Except in the case of buying financial products, apparently. That we’re equally qualified to do. Or, it’s the natural order of things that they run the ship except for when they crash, in which case we need to take responsibility for sitting in the seats they clearly marked, “Sit here!”

    Imagine replacing descriptions of classes with any other social signifier: white & black, women & men, Jews & Christians. Seriously, go back and throw those words into his sentences.

    It’s also completely disengenous of him to say that “populist” action is merely “bashing” the rich. Does he mean it’s merely rhetoric? If so, maybe his next column will be on fat bashing. If it’s not merely rhetoric then what specific policies is he discussing? Why do those constitute “bashing” instead of sound economic policy? What does that even mean? I don’t even know to what he’s referring.

    He also contradicts himself wildly. He says that Hamilton and Lincoln approved of a system rigged to benefit the rich because… it gave poor boys a leg up.

    I always come to the same conclusion when reading him: he’s just not very bright. Every so often he comes up with an interesting insight, in that stopped clock kind of way.

  24. collapse expand

    Matt, excellent, well crafted post. You are such a skilled writer. I am in lockstep with you on this subject and with the relentless pursuit of these criminals. Keep up the good fight. Perhaps justice and reason will prevail eventually. I had an argument with a colleague just yesterday about GS and said as you say this is an issue of criminality and ethics, not an issue of whether the “best and brightest” deserve the money or not… or populism as Brooks defines it.

  25. collapse expand

    I’m another rich, privately-schooled (if you count non-fancy Catholic schools as private)Middle-aged UPPIE, and I share your outrage at the looting of the economy by the elite. Class war has been going on as long as I can remember, but only the elite have been aware of it and actively in the fight. It’s about time the regular people wised-up and got into the game. Keep up the excellent rants!

  26. collapse expand

    Matt, I don’t have time to go through all 100 plus comments, but I do hope that someone pointed out that Lincoln pointed out the division of labor and capital several times and in fact sided with labor in what could easily be considered populist rhetoric. Lincoln never rejected the idea that we were divided by class. In fact he said that between labor and capital that labor is superior.
    This is why I am not a true populist by the way. You would think that those who read the Times are among some of the most educated citizens in the country and the fact that one of their staff writers knows that he can say something as stupid as Lincoln did not divide the classes and get away with it just goes to show how little those who are considered more intellectual actually know about American history. Now consider that the median IQ is 100 and that explains the popularity of Fox News. Do you really think that average people have any business commenting on complex problems.
    What is even more disheartening is that the Republicans I have heard cover this topic blame the Community Reinvestment Act for all of these problems. That is right a couple of tens of thousands of poor people buying $80,000 homes over the last 30 years is responsible for all of our financial woes and not new investment vehicles that took the risk out of financing $500,000 Miami condos that no one ever planned on moving into in the first place.
    Seriously this kind of stuff really pisses me off.

  27. collapse expand

    It has been my observation that most, if not all, of the problems that face this country and that originate in the conflict between our society’s rich and poor, are the result of the rich simply taking the ball and going home.

    What is the credit crunch if not the unwillingness of those with the money to help those without keep their businesses and homes afloat? If the rich don’t get their pet policies enacted, or if a populist force emerges to actually challenge their philosophies, they simply engineer a drawback in the economy. It’s their way of flexing their muscles.

    Populism, meanwhile, has its roots in genuine concerns for fairness and human empathy, notions that are ridiculed by the moneyed elite.

    I’m not sure when it happens, and perhaps parentage has a lot to do with it, but I can trace my personal left-libertarian populist ideals to growing up a part of the post-punk DIY movement that rejected racism, sexism, hollow patriotism, greed and avarice.

    Populism, in fact, is the opposite of racism, for the simple reason that it puts people ahead of factors like greed, race, sect or whatever else Brooks imagines it to resemble.

    I’m content to make my own way, but my (quaint) belief that our government is the expression of our willingness and ability to work together to solve our shared problems, rather than some deceptive and criminal Other, tells me we can and should do more for each other, the rich be damned. The idea that our futures and prosperity depend on the crumbfalls of the rich is the problematic point of view, not mine.

  28. collapse expand

    Wow! What an amazing piece! My sentiments exactly! What really galls me is that this widespread tacit acceptance of criminality extends through pundits all the way to the President. Of all of the disappointments we are having to endure with Obama, the worst has to be his off-hand assertion that he wants to “look forward” rather than deal with crimes committed in the recent past. How does a constitutional lawyer shirk his responsibility to uphold the law? How do you prosecute crimes committed in the future?

  29. collapse expand

    Give me an aging skeptic with nothing to lose, like Paul Volcker. You think he puts bankers on a pedestal? Not when he applauds the ATM as the only banking innovation he can think of in the last thirty years that is worth anything. He’s worked with these thieves and doesn’t trust them.

    What is it about (us) boomers like Brooks that sees the country club as the finishing school for character? My club is filled with morons, psychopaths and mental defectives.

  30. collapse expand

    Good points Matt. Populism = Racism. Nice touch by Mr. Brooks. Also on your store’s bookshelf by David Brooks. Conspiracy Theories = kook. “How it is not possible for wealthy, powerful people to collude with one another for their mutual benefit.”

  31. collapse expand

    The American voters have a legitimate beef with what Washington and Wall Street have done. Instead of trying to do right by them, Brooks, like almost all the political elites, attacks the voter calling them populists.

    It amazes me how all the so called professionals label the voters. Liberal, conservative, centrist, elite, populist. But amazingly, they never use the word moral.

    What Goldman Sachs did was immoral. Can anyone at the NYT defend GS without putting GS critics in one group or another?

    Obama promised changed and didn’t deliver. That is why Mass. happened. Is promising something and not delivering it somehow solely a populist virtue? Is that the tenant of the angry voter?

    When I read George Steph. interview with Obama after the Mass. election, I thought George S. made a great point. Obama admitted he made mistakes, but George S. cornered him and made the comment that he only admitted mistakes with delivery not substance.

    And that is the problem with Brooks and all these pundits. They don’t get it. It’s not about appearance or presentation, right v. left, democrat v. republican, elitist v. populist. It is right versus wrong.

    The American electorate has had to get its nose into the political game because Washington and Wall Street have so badly screwed them. Times have changed. Mr. Brooks apparently has not.

  32. collapse expand

    Goldman Sachs’s management should be tried for the criminals they are.

    Another meme that Brooks is clinging to is the totally discredited “trickle down” Reagan b.s.

    The Big Banks committed the biggest financial theft from the U.S. treasury in U.S. history, PERIOD.

    We are not left with prosperity for the middle class, emanating from their wise banking and financial actions; we are left with a hollowed out middle class, and a nation rapidly becoming a banana republic ruled by a corrupt plutocracy, who may have looked around at the world and its problems and said to themselves immorally, I’m gonna get mine and more and find an island while the rest of the world self-destructs. There’s a special place in hell for these kinds of people.

  33. collapse expand

    I’m reposting an eloquent comment from Brooks’s column with attriubtion, I think it’s so good:

    Cdr. John Newlin
    Vista, Calif.
    January 26th, 2010
    7:37 am
    Actually, it has been the attacks by enterprise and capital against the people that have brought us to where we are today. And those attacks have been anything but random. They are fueled by greed and the belief that the power to rule the people and even attack them is a fundamental right of those who have found the means to acquire great wealth. In short, the plutocrats.

    The Republican Lieutenant-Governor of South Carolina is a shining example of attitude of enterprise and capital toward the less fortunate. He recently espoused a policy of starving poor people to prevent them from breeding. And it is clear that David Brooks subscribes to the same despicable principles.


  34. collapse expand

    One typo:

    “of his case his case”

  35. collapse expand


    I totally embrace your basic tenet, which is, wake up America! Citizenship is an active process. Don’t give in to power, and don’t let pessimism cause you to think that you can’t change things. We need to hear this message every day until we start taking action. I am grateful you have taken this call to action upon yourself, plus I think your writing is superb.

    Your attack on the investment banks is justified. They have operated exclusively for their own self interests. Their total recklessness has damaged the country. But you clearly have a chip on your shoulder, and it makes you go batshit. This can put you in the “crazy” column, and it can hurt your credibility. What’s important here is that your points, grounded in civic duty, is better than those mamby-pamby journalists, pundits, and pseudo-intellectual bow-tie guys who would be questioning you. You don’t want the likes of David Brooks to be your judge someday, do you?

    Goldman Sachs is an aggressive, ruthless operator. But you go too far on them. You seem to blame the entire mortgage crisis on them. This is actually poor research. Go back and check the annual mortgage underwriting rankings (Institutional Investor Magazine) for the past ten years. Goldman was not consistently a top underwriter of mortgages. That honor would go mainly to UBS, Bank of America, Citigroup, and Bear Stearns. Goldman was never the leader in this industry.

    The same is true for oil prices. Yes GS is huge in commodities. But to blame oil rising to 147 on GS goes too far (factual error in your piece, it didn’t go to 149) . A commodity as ubiquitous as oil is impacted by many market participants. But by far, the oil companies have the biggest impact. Reviewing the latest Commitment of Traders Report published by the CFTC (http://www.cftc.gov/dea/futures/petroleum_lf.htm) indicates 70% of all long positions and 84% of all short positions are oil producers and the like. The other market participants are chump change compared to these guys. Sure GS can play games in the markets, but to tag them with $147 oil, that is a little batshit.

    You are the most real journalist out there right now. Keep punching away, but don’t let the chinks in your armor create an opportunity for the foolish and the powerful. They will try and discredit you someday, and that is exactly what ‘we the people’ don’t need.

  36. collapse expand

    liked your response, and agree that you shouldn’t feel bad for having a foil in Brooks.

    Never mind Brooks’ crass rhetoric rests on agreeing that for capitalism to succeed it need be vibrant; for it to be vibrant, it shall be corrupt; for capitalism to succeed, we must accept corruption. (Or something along those lines. It’s unstated, but it’s there.)

    Hamilton, Lincoln, &…banks??? What are banks, the deadbeat dads of the founding fathers?

  37. collapse expand

    The rhetorical strategy that David Brooks uses, in his latest column, ‘The Populist Addiction’, is to establish by the use of a series of invidious comparisons, and a grand historical reductivism, the two Great Ghosts of American political life: Populism and Elitism. He then proceeds to put these two spirits through their paces. History of Populism is equivalent to the History of Defeat, Punishing the Elites begets negative consequences. It all becomes convoluted and intellectually messy. His statement ‘Anti-Populists built this country’, must mean that the ‘Elites’ built this country. Mr. Brooks becomes rather windy, almost Hegelian, at this point. Using his battery of false dichotomies he builds his case; the tropes metamorphose into straw men, as intellectual manipulator he is maladroit. Mr. Brooks’ strategy is to deflect criticism from himself: for he is complicit in the collapse of the American economy, by his advocacy of the Free Market Ideology as ultimate arbiter of all questions, political and economic. He has been an apologist for the looters of post Glass-Steagall America. He summons the ghost of Populism in the grand tradition of Republican hysteria mongering.

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    I'm a political reporter for Rolling Stone magazine, a sports columnist for Men's Journal, and I also write books for a Random House imprint called Spiegel and Grau.

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