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 It's the talk of the town: Goldman Sachs Group Inc. (NYSE:GS) versus Rolling Stone's contributing editor Matt Taibbi.Since earlier this week -- when our editor in chief Robert Teitelman reacted to Taibbi's article -- the discussion online has erupted into somewhat of a word-slinging wrestling match that has been debated in many mediums, ranging from magazines to blogs to newspapers to e-mails, as well as, interestingly enough, Twitter, as Felix Salmon points out. The debate is all based on a conspiracy theory that Goldman is successful in both good times and bad because it manipulates the markets and therefore is effectually ruining American society. Taibbi writes, "The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity." Though Taibbi is entertaining and his argument is actually intriguing with its better points, he discredits himself through editorializing to the point that the online conversation seemed to quickly devolve from Goldman conspiracy to balanced reporting. Lucas Van Praag, a spokesman at Goldman, told the New York Post via e-mail, the piece was: "an hysterical compilation of conspiracy theories. ... Notable ones missing are Goldman Sachs as the
third shooter [in John F. Kennedy's assassination] and faking the first
lunar landing. We reject the assertion that we are inflators of bubbles and
profiteers in busts, and we are painfully conscious of the importance
in being a force for good." Taibbi, who apparently did try to get in touch with Goldman prior to publishing the article, reacted to Goldman's statements on his blog: Given this, I tried to make that first list of questions as basic as possible. I asked if Goldman would have turned a profit in Q1 2009 if it hadn't orphaned the month of December 2008. Then I asked if Goldman had made changes to its underwriting standards during the internet boom years... you'd have to be absolutely crazy ... not to accept the notion that
Goldman shouldered a significant portion of the blame for the internet
mess. They were, after all, the leading underwriter of internet IPOs
during the internet boom years. So while they maybe weren't the biggest player, they were still a major player, and one can easily make the case that they were the most obnoxious player, given that they dove into this muck with their eyes wide open, unlike so many other idiots on Wall Street. As the Post points out and Heidi Moore twitters, several other banks on Wall Street take the same approach that Goldman does. The Post writes, "Indeed, sources point out that Lehman and Bear both used the same
strategy, despite the ultimate collapse, and others continue to do so
today, including Morgan Stanley." Goldman is just good at it. As The Deal's Teitelman points out, the bigger picture is how to reform the financial system: For Taibbi to make his case for Goldman's Oz-like power would be to suggest that the firm, which did achieve preeminence on Wall Street in the '90s, has been manipulating American geopolitical power relations since Roosevelt, through Nixon and Reagan and into the Bush years. That's clearly absurd, which is not to say Goldman (or any firm) was free of all responsibility. But the larger question that all these pieces raise is what exactly is the relationship between macroeconomics and microeconomics when it comes to cause -- and how should that affect reforms that are currently being debated. Truth is, it's easy to sling mud at Goldman, but at this point slinging mud at Goldman or any investment bank on Wall Street is cliche. The real story behind Taibbi's article seems to be that he wants to jump on the Wall-Street-bankers-are-villains bandwagon, which is easy to do and frankly at this point, passe: My feeling is that companies like Goldman Sachs have a virtual monopoly
on mainstream-news public relations; for every one reporter like me,
or like far more knowledgeable critics like Tyler Durden, there are a
thousand hacks out there willing to pimp Goldman's viewpoint on things
in the front pages and ledes of the major news organizations. And there
are probably another thousand poor working stiffs who are nudged into
pushing the Goldman party line by their editors and superiors (how many
political reporters with no experience reporting on financial issues
have swallowed whole the news cliche about Goldman being the "smart
guys" on Wall Street? A lot, for sure). Granted, sometimes responses from PR flaks can grab any reporter's goat, but Goldman is highly successful at what it does, and that has stirred up conspiracy theories about the bank for years. That is why, in fact, so many prominent dealmakers come from Goldman
and are now in government positions to help restructure the financial
system into one that will work for everyone -- not because there is
some greedy martini-drinking brotherhood fraternity that is plotting to
take over Wall Street or the world. Durden, over at Zero Hedge, has a bunch of theories concerning Goldman's strategies that are interesting and worth checking out. He sticks to the facts and doesn't claim that firms like Goldman are ruining the world with their existence. - Maria Woehr See Taibi's story about Goldman from Rolling Stone
CategoriesComments
From: Mark S. Devenow,
Rolling Stone is a GREAT (!!!!!!!!!!!!!!!!) place to go for critical (and otherwise unavailable) information on, well ......... Britanny Spears. How could any reader of the Deal.com even care what arrant nonsense gets published in Rolling Stone by some nutbag editor who probably flunked out of college while snorting/smoking dope?
Posted on:
July 2, 2009 9:51 AM
From: US consumer,
“Don’t purchase items you cant afford and save for a rainy day”. If the American consumer followed that simple saying Goldman or any other
Posted on:
July 8, 2009 4:39 PM
From: John Lauda,
@Mark S. Devenow How much more money do the Financial Expert Spastics need to rob from you till you stop trusting them?
Posted on:
July 10, 2009 1:18 PM
From: MasterPlan Capital LLC,
Goldman is today’s boogieman within conventional thinking.
Posted on:
August 24, 2009 3:09 PM
From: MasterPlan Capital LLC,
My feeling is that companies like Goldman Sachs have a virtual monopoly on mainstream-news public relations; for every one reporter like me, or like far more knowledgeable critics like Tyler Durden, there are a thousand hacks out there willing to pimp Goldman's viewpoint on things in the front pages and ledes of the major news organizations. How self serving can you get. “If only there were more brave independent voices in the media willing to speak truth to power…ya know more reporters like me...then we could have economic justice...why are other reporters and media outlets such hacks!?"
Posted on:
August 24, 2009 3:15 PM
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If the folks at Goldman are so smart, why is it a bank holding company? They must have decided they would have failed if they had not converted. Right?