Sunday, July 26, 2009

Matt Taibbi's Piece on Goldman Sachs---The Great American Bubble Machine--- in July's Rolling Stone Is One Helluva, Helluva Read


IT'S BEEN ALMOST four weeks since a very smart money man emailed me a copy (in pdf format) of Matt Taibbi's panoramic piece in Rolling Stone on Goldman Sachs. It came with a terse message, you gotta to read this. I was packing the car to drive West and didn't really have a lot of reading time budgeted in my schedule. Still, when he says read something, I listen.

The Great American Bubble Machine was just "rolling" steaming hot off the presses and the hedge fund guys in New York were going absolutely bonkers. The pdf---such as it was---was spreading over the Internet like wildfire.

Late that night, I sat down and struggled to read the worst copy I'd ever seen, attempting to follow the text on my computer. I finally read enough to know one thing: I was running out early the next morning before leaving and buy a hard copy of a magazine I hadn't bought, seen or read in decades.

I tossed it in the front seat of my car and began reading it in bits and pieces as I rolled across Kentucky, Illinois, Missouri, Kansas, Colorado. Every time I stopped for coffee, gas, or at a rest stop I consumed first one, then another American bubble. Then I'd think about it for several hundred miles and read more, since it was far too intense for me to digest all at once. I read, and re-read, stunned, as bubbles inflated and popped like flies being swatted down from a window will. By the time I got to Denver, I called my money man to thank him. It's an unbelievable story, I told him.

Much of it's true, he reiterated. Believe me, he oughtta know....but I won't reveal any more than that right now.

I knew from past readings much of the piece was credible. However I also thought Taibbi had such an attitude that some of it would surely be discredited. He was a loud-mouth liberal and I hated it that I loved his ultra-sophisticated piece so much. He could never have gotten it published in Forbes or Fortune because it war far too profane. Still, extremely well-written and researched, I had to hand it to him.

As I laid over in Colorado for a week, visiting friends, all I wanted to do was talk about this article. I was obsessed (I'll tell you why in a later piece). I gave a copy to David H., a good friend, conservation colleague and water lawyer in Boulder. He stayed up late that night and consumed it. The next morning, he told me he was deeply troubled and disturbed by it. ( More on why later.) Then I visited friends Steve and Peggy in Grand Junction. Steve had read some of Taibbi's work and so dug into this hard copy I brought with me with gusto. He knew much of it already but admitted his mind was blown too. We talked about it for several days. We agreed it was shocking, to say the very least.

I ended up calling a number of friends, family and colleagues to recommend they read this piece. I called one of my US Senators on his cell phone----You of all people have got to read this, was all I said.

I've wanted to write about it for weeks, but haven't for several reasons: First I've been traveling and very busy along the way. More importantly, this piece is a complex, technical piece of financial reconnoitering and reporting, and commenting on it bears a great deal of thought and research. It's above my pay grade, actually.

Still it continues to gnaw on me for reasons that I hope to reveal. So as I can this week, in between everything else, I hope to scratch out enough time to write about i It's truly one of the most interesting, fascinating, disturbing articles that's come out in a long, long time.

The article in it's entirety is here. Be forewarned, it's not easy reading and bears re-reading slowly over time. But worth it. I'm still not over it and will tell you why. Just not tonight. And tomorrow I go on a fishing in Idaho. But I'll be back, God willing soon. So if you have some time, then sit back and get to reading. You'll never be the same. I know I won't.


EXCERPT/TEASER from The Great American BUBBLE Machine:

From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression---and they're about to do it again

---by Matt Taibbi

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. In fact, the history of the recent financial crisis which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who's Who of Goldman Sachs graduates.

(OK, this is a bit over-the-top and dramatic, and I don't agree that Goldman actually "engineered" each of these bubbles, so much as they saw it coming and positioned themselves ahead of the curve, as all smart money does, but read on, gentle gets better.)

By now, most of us know the major players. As George Bush's last Treasury secretary, form Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup---which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the asshole chief of Merrill Lynch who bought a $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multi-billion dollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden parachute payments as his bank was self-destructing......

Read more.


gcotharn said...

Keep your eyes open with Taibbi. He's capable, sometimes inspired, and he sets my internal alarms off and I don't fully trust him. Thanks for the tip on the article.

Webutante said...

No doubt this piece is over-the-top and very edgy with an attitude, Greg. But you can not read it fully and not be shaken by it IMO. Will be interested in what you think after reading it and as I write on.

Stacie said...

I have been shaken by this too...of course, much of it has been hinted at and discussed on Mish's blog, along with Market Ticker for a long time, but the fact that at least this subject is hitting mainstream is comforting. I don't think though that Joe 6 Pack will get riled up about it...if anything, the average American that is up to his eyeballs in debt wants the system to correct (loaded word, I know) and no one wants to go through the pain of a real correction. I don't talk about it much anymore with friends and family..they think I am a shrill tin hatter...maybe I am. Looks as if this has been going on a lot longer then I have been around...we just see the monster behind the curtain now.

Webutante said...

Yes, Stacie, it has been written about at other places, including the Market Ticket; however, Taibbi has researched and written it all down in a stunning historical narrative that is very compelling. Am going to be writing more on this this week, as I can. Best wishes.