03/18/2010 05:12 am ET | Updated May 25, 2011

Avoiding the Issue

Recently, there's been something of a back and forth between myself and Mr. Gasparino. I originally wrote something here on the Huffington Post challenging many of his assertions. Interestingly, though, we reached similar conclusions: Goldman Sahcs will have a challenging 2010. Mr. Gasparino seemed to be very offended by my article--he wrote as much in a response posted here on the Huffington Post. What he failed to do, however, was address the issue. Mr. Gasparino decided to write a rebuttal to a piece without rebutting any of the points. In fact, he makes one statement that is patently false. I'll quote here both his line and the matched part of my response from my blog (my response is in bold):

In any event, one line caught my eye: He takes issue with my assertion that Goldman benefits from a subsidy from the government because of its status now as a bank; he says it's really a "financial holding company" as opposed to a "bank holding company" but fails to point out that there's really no difference.

[...] There is a major difference. Banks have stringent capital requirements. Financial holding companies do not. [...] Banks cannot own certain sorts of assets, don't have trading portfolios that need to marked to market every day, and are severely limited in terms of how much leverage they can take on. A [securities firm like Goldman], however, can take much riskier positions, can be more leveraged, and have different accounting rules (in addition to costs of funding). Mr. Gasparino did get one thing right, I failed to point out something that was patently false.

Now, this isn't the worst thing he does in his response. However, this is very telling. Keep this, as an example of a larger problem in mind. And, with that in the forefront of your brain, please read this (again, my response is in bold):

Because he's anonymous, we don't know if he's a Goldman executive (one way Goldman is now looking to attack its critics is by blogging positively about the firm, I am told) an investor with holdings of Goldman Sachs stock (a substantial conflict of interest if this is true), or just some guy with too much time on his hands.

This part is [...] baseless, and implies Mr. Gasparino is backed into a corner. First, let me end this discussion now and forever by making the following statement: I am not now, nor have I ever been, an employee of Goldman Sachs or any of its subsidiaries. Further, I own no financial interest in Goldman or any of its subsidiaries. Second, I dare Mr. Gasparino to produce one shred of evidence, a comment on the record, or anything else indicating that Goldman is indeed using bloggers to defend them (Mr. Gasparino apaprently defines "blogging positively" as pointing out that Goldman almost certainly can't reproduce its strong 2009 in 2010, as I did).

[...] Mr. Gasparino has resorted to a sort of McCarthyism where insinuating someone who doesn't wish to divulge their own identity is planted her by Goldman-a firm better known for suing bloggers than spawning them. This is insulting and should not be tolerated by any thinking person. The people who know the most about finance are the people who work in it. I make zero dollars from my blog and my writing. So many others risk their futures and livelihoods by writing, only to explain what is actually going on to those that are interested.

In fact, Charlie Gasparino, and his ilk, are the reason we exist. If he didn't have the accuracy of a backfiring gun when it comes to issues other than gossip we, the pseudonymed finance writers, wouldn't be needed. The public would understand financial topics much better and the record wouldn't need to be set straight by those in the know. And now, when faced with someone correcting him on the record, he merely wishes to dismiss the facts and figures put before him and insinuate something for which he has no facts. Honestly, this speaks volumes about his regard for the truth and his ability to justify his own words when challenged.

This is, undoubtedly, the deeper, more troubling issue. Financial reporting, apparently, doesn't require a deep knowledge of finance. Very few people who report on finance and the economy have a deep understanding of the issues and even fewer can explain these issues clear enough for the layman. Even more troubling than the fact that financial reporters don't need this expertise is the fact that most reporters don't even seem to want it.

So, it's quite clear why mainstream media personalities are threatened by the blogosphere--bloggers highlight their shortcomings. And, as I pointed out above, these shortcomings are the reason pseudonymous financial bloggers exist. When Mr. Gasparino tries to short circuit the conversation by not talking about the actual points raised and just resorts to "we don't know if he's a Goldman executive," he's not just hurting the debate, he's actively trying to keep others who are more knowledgeable than him from making him look silly. In any event, shouldn't a journalist who makes a shocking and newsworthy claim have to back up his assertions with some sort of proof? Shouldn't a revelation, when used to discredit someone else or as a counterargument, be backed up by statements made on the record? Or, if the information isn't even verified or corroborated, does it have any place in an article from a journalist who wants to be taken seriously? This is exactly why what I do and what so many other in the blogosphere do is important: we don't just repeat hearsay, we explain how things work from the inside looking out, and not just what these opaque institutions want other people to know.

I went on the record and categorically denied his accusations. But, because I consider myself thorough and want to ensure I get things correct, I contacted Mr. Lucas van Praag, the man who interfaces with the press on behalf of Goldman Sachs, and got this statement, on the record:

Goldman Sachs does not, has not and will not employ anyone to blog anonymously or to do so using an assumed name, nor do we pay, or otherwise compensate, others to write blogs in support or defense of the firm.

Further, our employees are not authorized to engage with the media on any subject without prior approval.

Seems pretty definitive, nevermind that it's probably a violation of securities law to do what Mr. Gasparino claimed. Further, this would be a huge story, so if he has proof why doesn't he break the story? Oh, and getting this statement took all of five minutes and a 4-5 line email--maybe this is an investment Mr. Gasparino should have made.

So what's the bottom line here? I believe that people need to start getting wise and asking questions. Read the blogs, independent commentators, and whatever else you can get your hands on. And, most of all, start demanding more when deciding what financial news to consume. The sorts of public episodes, like Mr. Gasparino's, should be a red flag--stifling the debate is only a positive thing when you can't really be in the debate.

As an aside, I didn't think my full response to Mr. Gasparino's most recent piece would fit here on the Huffington Post. If you'd like to read the whole thing (I go line by line and deconstruct the entire article), please go here, to my blog.