I love the smell of napalm in the morning ... Taibbi is hot on the trail of the bankster-in-chief Goldman Sachs
Goldman Sachs as the Heart of Darkness?
6:05 PM, June 28, 2009
Matt Taibbi, the Rolling Stone magazine contributing editor who in March wrote a brilliant and searing piece on the collapse of insurance giant AIG ("The Big Takeover'), now turns his attention to Goldman Sachs Group.
If you've read or heard Taibbi before, you know he's not writing a profile that is likely to be excerpted in the next Goldman annual report to shareholders.
Here's how his story in the latest issue of RS begins:
"The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."
The theme of Taibbi's takeout on Goldman is that the firm has, by design, been at the center of the biggest investment bubbles since the Depression. He includes the tech-stock bubble of the late-1990s, the housing bubble of this decade, and the oil bubble of the first half of 2008.
"The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased."
Of course, he's describing the modus operandi of Wall Street in general. His assertion is that no one does it better than Goldman, and that no firm has enjoyed the political clout of Goldman, given how many of its alumni have landed in positions of power in government -- from Robert Rubin, who was Bill Clinton's Treasury secretary, to Henry M. Paulson, who held the same post under George W. Bush, to William Dudley, now president of the Federal Reserve Bank of New York.
A Goldman spokesman, Lucas Van Praag, told The Post in an e-mail message: “[Taibbi's] story is 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,” Mr. Van Praag added.
And it didn’t stop there. Goldman’s response so infuriated Mr. Taibbi, that he wrote a length rebuttal on his blog Tuesday, saying that “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 I.P.O.’s during the Internet boom years.”
On Goldman’s role in residential mortgages, Mr. Taibbi continues:
“[W]hile their ‘former competitors’…were dumb enough to hold their mortgage paper and be sunk by it, Goldman shorted their own crap, which means…they knew that what they were selling was a loser. 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.”
Goldman, whose alumni appear all over the financial map, from Washington to Wall Street, survived the financial meltdown last fall, but not without help. It took $10 billion from the government’s Troubled Asset Relief Program, or TARP. It also received a $5 billion investment from Warren E. Buffett’s Berkshire Hathaway that came with a strong endorsement from Mr. Buffett.
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