Matt Taibbi: Goldman Would Have Gone Bust But For TARP
By Barry Ritholtz - July 31st, 2009, 7:15PM
Goldman Sachs posted records profits in the second quarter of this year. Matt Taibbi, political reporter for Rolling Stone argues in “The Great American Bubble Machine” that the investment bank has been involved in every major market shift:
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Hat tip: Dealbreaker
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August 1st, 2009 at 5:42 am
I’m looking forward to hearing more and more from and about Matt Taibbi
August 1st, 2009 at 9:23 am
Taibbi is a rabble rouser. It would be much more constructive to focus energy on regulators and lawmakers. After every crisis, bureaucrats/lawmakers will look to find scapegoats to satisfy the mob but it doesn’t help solve the issues in the longer term. One shouldn’t get distracted by scapegoating. If AIG had failed GS would have gone down + MS and atleast a dozen other banks (some not in the US) as well. The focus should be on how did we get here and what should be done in the regulatory, Fed Reserve framework to prevent this from happening in future.
August 1st, 2009 at 2:23 pm
@jbr
“One shouldn’t get distracted by scapegoating. If AIG had failed GS would have gone down + MS and atleast a dozen other banks (some not in the US) as well”
Well – It’s comforting to know then that in the future, the ONLY way we can save ourselves from horrible pain and suffering is to make these bastards rich for free…
Personally, I’d rather welcome them all to my trench and hand em all a shovel!
August 1st, 2009 at 7:40 pm
@cvienne
Totally agree with you. The more people take positions like Taibbi and trumpet the weaknesses in our system, the better chance we have that our brain-dead politicians might just wake up and understand the reality of what is happening.
Uhhhh………the operative word is “might”. I guess there isn’t much chance of that happening, is there?
August 1st, 2009 at 10:25 pm
I saw an interview on CBN where he mentioned he won’t be covering business again for a long time….
It’s a shame. I wish I could sit down with this guy for one business day and really give him an education on the things that are really going on in the trading world….he has a great way of writing that I don’t possess….
August 2nd, 2009 at 12:59 am
cvienne,
You are right as usual. The bailouts are about far more than “saving the financial system.” So what if we save the financial system (not that it should be saved)? If, at the same time, we reveal in plain daylight that bankers get their bonuses at taxpayer expense, then that’s a serious problem in our political system. How are we going to “save” that?
It’s clear to me that the economic benefits of the bailouts are actually negative, but even if there were positive benefits, I would far rather see justice done, and injustice undone, regardless of the dollar cost. A year ago, I didn’t care how much money Blankfein or Lewis or Dimon swindled from their shareholders. Really. But I’ll be damned if I’m going to sit by while they rob me and my children blind. In all seriousness, we need to rebel. It’s not just TARP, as most readers know. It’s a whole host of taxpayer-funded liabilities that allow these people to even remain in business. And just think how they’re being allowed to “earn” their way out of their mess — at our expense and at the expense, potentially, our currency. The Fed loans THEM money for nothing, so they can charge us profitable interest rates, or so we can pay them interest on the Treasurys they purchase. That’s OUR currency, being manipulated precisely so that the people that caused this mess can make money at our expense. Unbelievable. I absolutely hate it.
August 2nd, 2009 at 4:54 am
@cvienne you missed my main point. How did we get to the point that the ONLY way was to bail out the banks? Don’t you rather want to fix the system – regulators/lawmakers/Fed Reserve? You can hand all the banks the shovel or whatever you please but do you think that will prevent another crisis in the future? Or do you think it will be done by fixing the laws, regulations and the Fed Reserve mandate?
August 2nd, 2009 at 7:15 am
jbr,
Why are fixing the system and meting out justice competing ends? I’d suggest they’re decidedly complimentary. The real danger here is that people like Taibbi aren’t successful enough.
August 2nd, 2009 at 8:29 am
@clawback I don’t understand what you want by means of justice? Please explain.
The bailout should have had much more stricter rules, firing of management, greater terms for the taxpayer monies. Who’s responsible for not having stricter terms in place?
August 2nd, 2009 at 9:51 am
Justice would mean stopping the bailouts, repealing them and clawing back ill-gotten gains. There is no way for the bailouts to be fair or just by any standard I know of. I’m not making sophisticated, philosophical claims here, just speaking what I take to be common sense.
I agree that the politicians are to blame.
August 2nd, 2009 at 10:25 am
I was interrupted before, but “justice” means letting people pay for their own mistakes, not the mistakes of others. If this means resolving Citi and letting their bondholders (and management) take their lumps, so be it. The bailouts mean that bondholders and management get windfall profits at my expense, and ultimately at my childrens’ expense. Yes, the politicians are the real culprits, but by drawing attention to the banks and bankers, Taibbi is helping to rouse the rabble against those same politicians. If J6P doesn’t know he’s getting screwed, or that others are reaping rewards provided by his tax dollars, he won’t know to hold the pols accountable.
August 2nd, 2009 at 3:09 pm
@clawback – my preferred scenario for Citi was to have nationalized the bank. So, I suppose I would agree with you there. The govt should have taken over Citi and sold it in parts and fired the entire management. No question of bonuses/clawbacks in that case. I suspect that did not happen partially because of powerful foreign investors (if you know who I mean).
While Taibbi’s regulatory capture point is important I don’t agree with a lot of his points. I prefer to think of it within ex-IMF chief economist Simon Johnson’s framework (http://www.theatlantic.com/doc/200905/imf-advice). I hope you’ll read his article and find it useful.
August 2nd, 2009 at 3:44 pm
jbr,
Yes, I suspect “you know who” as well — is there still any other candidate out there?
And double-yes on the Simon Johnson. I read the piece earlier and agree with it by and large.
Considering the situation we’re in, I think we should take anti-bailout allies whenever we can get them — even if they’re non-finance people who get some things wrong. But the Johnson piece is particularly damning. Do you know if there has been much reaction to it amongst the opinion makers? I guess it’s not going to be useful to either the D-team or the R-team, so I suspect it will just be ignored. Kudos to Johnson for writing it, though.
August 3rd, 2009 at 5:28 am
I don’t know if it has had any reaction but the article is atleast getting read and Simon is continuing to write at http://baselinescenario.com/
August 5th, 2009 at 7:42 am
[...] in June of this year, Rolling Stone published Taibbi’s article on Goldman Sachs. It was a epic takedown, full of righteous anger and blustery fury over [...]