5 ms·

The Great American Bubble Machine (Goldman Sachs exposé)

17 points by zackattack 16y ago

adrianwaj 16y ago
I posted this 5 days ago but no upvotes or comments. It might be the plaintext format that makes this version more appealing, because it is a large read.
tptacek 16y ago
Dupe: http://searchyc.com/bubble+machine http://searchyc.com/bubble+machine Incidentally, Megan McArdle's takedown of the article is more interesting than the article itself (and I actually like Taibbi, when he's not writing about finance): http://www.theatlantic.com/business/archive/2009/07/matt-taibbi-gets-his-sarah-palin-on/21084/ http://www.theatlantic.com/business/archive/2009/07/matt-tai...
- madair 16y ago
  I think most people except those who are compromised by Wall St. influence consider Megan McArdle more of an apologist for Wall St. and laissez faire in general than as someone who did any sort of "takedown". Read closely, it's a pretty weak article, it's whole premise rests on criticisms of the delivery and attempts to bring reasonable doubt to a debate that has very little reasonable doubt about systemic abuse of public good faith by the big financial players.
  - tptacek 16y ago
    I'm a liberal regs-enthusiast cap-D Democrat who's been reading McArdle since she landed at the Atlantic (so: awhile) and I just don't agree with your assessment of her. She's going to sound like an apologist because she's a UofC-trained conservative-leaning libertarian. That doesn't make her an actual apologist. In fact, when you read the article, you probably saw that she concluded it by saying that GS deserves the populist outrage (she hasn't been talking down the recent SEC suit, either). I think it's hard to argue that she's criticizing Taibbi because of ideology. No, her problem with Taibbi is that he doesn't appear to know what he's talking about. These aren't critiques on "delivery". Taibbi's article is premised on the idea that GS orchestrates calamities to profit from them. He appears to have drawn that conclusion from the fact that GS has survived many calamities. But McArdle appears to be correct: GS survives calamities because they don't go all-in the way firms like Lehman, Bear, and (it's alleged) Merrill did. If GS is no worse than Lehman, Merrill, Morgan, or Citi, Taibbi's argument is damaged. If GS comes out ahead of them because it acted more carefully and less irresponsibly than those banks, Taibbi's argument is more or less destroyed. The fact that Taibbi doesn't seem to know the difference between a CDO and an IRS is amusing but besides the point.
chasingsparks 16y ago
This article has been submitted probably a dozen times, each time failing to spark a discussion. I assume in the context of what's going on with the SEC, it's more appealing now. That being said, this article -- like most of Taibbi's -- is a well-written, entertaining narrative that sews together selective elements to construct something plausible. Go one step further by looking at the environments of each "bubble" to get a less filtered context -- what other companies were doing, what economic forecasters were saying, etc -- and it falls apart quickly. Goldman Sachs is a company comprised of smart people. Sometimes elements of the company get involved in shaddy things. That happens everywhere -- finance, government, gumball manufacturers. Interestingly, John Galbraith's chronicle of the crash of '29, did detail perhaps the most egregious of the young company's offenses. He also said: Our political tradition sets great store by the generalized symbol of evil. This is the wrongdoer whose wrongdoing will be taken by the public to be the secret propensity of a whole community or class. We search avidly for such people, not so much because we wish to see them exposed and punished as individuals, but because we cherish the resulting political discomfort of their friends. To uncover an evil man among the friends of one's foes had long been a recognized method of advancing one's political fortunes. However, in recent times the technique has been greatly improved and refined by the added firmness with which the evil of the evildoer is now attributed to friends, acquaintances, and all who share his way of life.
gorm 16y ago
Definitive worth the read if economy is your cup of tea. Thanks for posting.

17 points by zackattack 16y ago

I posted this 5 days ago but no upvotes or comments. It might be the plaintext format that makes this version more appealing, because it is a large read.

tptacek 16y ago

Dupe: http://searchyc.com/bubble+machine http://searchyc.com/bubble+machine Incidentally, Megan McArdle's takedown of the article is more interesting than the article itself (and I actually like Taibbi, when he's not writing about finance): http://www.theatlantic.com/business/archive/2009/07/matt-taibbi-gets-his-sarah-palin-on/21084/ http://www.theatlantic.com/business/archive/2009/07/matt-tai...

madair 16y ago
I think most people except those who are compromised by Wall St. influence consider Megan McArdle more of an apologist for Wall St. and laissez faire in general than as someone who did any sort of "takedown". Read closely, it's a pretty weak article, it's whole premise rests on criticisms of the delivery and attempts to bring reasonable doubt to a debate that has very little reasonable doubt about systemic abuse of public good faith by the big financial players.
- tptacek 16y ago
  I'm a liberal regs-enthusiast cap-D Democrat who's been reading McArdle since she landed at the Atlantic (so: awhile) and I just don't agree with your assessment of her. She's going to sound like an apologist because she's a UofC-trained conservative-leaning libertarian. That doesn't make her an actual apologist. In fact, when you read the article, you probably saw that she concluded it by saying that GS deserves the populist outrage (she hasn't been talking down the recent SEC suit, either). I think it's hard to argue that she's criticizing Taibbi because of ideology. No, her problem with Taibbi is that he doesn't appear to know what he's talking about. These aren't critiques on "delivery". Taibbi's article is premised on the idea that GS orchestrates calamities to profit from them. He appears to have drawn that conclusion from the fact that GS has survived many calamities. But McArdle appears to be correct: GS survives calamities because they don't go all-in the way firms like Lehman, Bear, and (it's alleged) Merrill did. If GS is no worse than Lehman, Merrill, Morgan, or Citi, Taibbi's argument is damaged. If GS comes out ahead of them because it acted more carefully and less irresponsibly than those banks, Taibbi's argument is more or less destroyed. The fact that Taibbi doesn't seem to know the difference between a CDO and an IRS is amusing but besides the point.

chasingsparks 16y ago

This article has been submitted probably a dozen times, each time failing to spark a discussion. I assume in the context of what's going on with the SEC, it's more appealing now. That being said, this article -- like most of Taibbi's -- is a well-written, entertaining narrative that sews together selective elements to construct something plausible. Go one step further by looking at the environments of each "bubble" to get a less filtered context -- what other companies were doing, what economic forecasters were saying, etc -- and it falls apart quickly. Goldman Sachs is a company comprised of smart people. Sometimes elements of the company get involved in shaddy things. That happens everywhere -- finance, government, gumball manufacturers. Interestingly, John Galbraith's chronicle of the crash of '29, did detail perhaps the most egregious of the young company's offenses. He also said: Our political tradition sets great store by the generalized symbol of evil. This is the wrongdoer whose wrongdoing will be taken by the public to be the secret propensity of a whole community or class. We search avidly for such people, not so much because we wish to see them exposed and punished as individuals, but because we cherish the resulting political discomfort of their friends. To uncover an evil man among the friends of one's foes had long been a recognized method of advancing one's political fortunes. However, in recent times the technique has been greatly improved and refined by the added firmness with which the evil of the evildoer is now attributed to friends, acquaintances, and all who share his way of life.

gorm 16y ago

Definitive worth the read if economy is your cup of tea. Thanks for posting.