A Conspiracy So Vast

Among conspiracy theories, the one about Goldman, Sachs & Co. controlling the world is about as hackneyed as they come. We can all recite the list of Goldman alumni who were behind the mega-meltdown: John Thain, Bob Steele, Robert Rubin. We've all watched a clique of former Goldmanites engineer the subsequent banking bailout -- Hank Paulson, Neel Kashkari, Tim Geithner (who never actually worked at Goldman but was "mentored" by someone who did).

And we've all marveled at the fact that while other Wall Street firms continue to struggle -- the surviving ones, anyway -- "Government Sachs" seems to be doing just fine, thank you. Indeed, whispers about a Goldman Sachs conspiracy are so vast and so commonplace that the last time anyone tried to write about them, the late, not-so-great Portfolio magazine back in Februrary, it called such a theory "insiduously silly."

But it was only a matter of time before somebody wouldn't think a Goldman conspiracy was silly at all. And that somebody would try to connect the dots not just between the usual suspects of former Goldmanites now in government, but between Goldman Sachs and almost every market ill that has befallen us since and including the Great Depression. That somebody is political journalist Matt Taibbi, who, as you've probably heard by now, has produced a 10,000-word invective against Goldman Sachs for Rolling Stone. It's a takedown from the start.

Goldman, according to Taibbi, is "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." Thain is "the asshole chief of Merrill Lynch," "the only human feeling you could imagine [Robert Rubin] experiencing was a nightmare about being forced to fly coach." But for all the bombast, Taibbi tells readers they should focus on something else -- "the big picture" -- which is this: "If America is now circling the drain, Goldman Sachs has found a way to be that drain."

To paint that big picture, Taibbi draws us six smaller ones, in the form of six market "bubbles" (the Depression, tech stocks, the housing craze, spiking gas prices, the bailout and global warming, which he sees as the next one), and Goldman's alleged role as mastermind of each. Taibbi explains how each bubble came to be -- for example, discussing how conflicts, IPO standards, laddering and spinning inflated tech stocks -- and then places Goldman squarely at the center of each. It's as if the rest of Wall Street doesn't exist. Taibbi insinuates that Goldman invented everything from the investment trusts of the 1920s to collateralized debt obligations of the housing craze, and if it didn't actually create these things, it took them further than anyone else. And the government enabled it along the way.

Bloggers began devouring the piece immediately (and complaining that Rolling Stone did not post it online). While many took issue with Taibbi's contention that Goldman is the engineer of all bubbles -- "that's a whole lot of crazy," wrote the Atlantic's Daniel Indiviglio -- most took Taibbi's advice and looked "at the big picture." And they mostly liked what they saw. "I don't agree with all of Taibbi's article, but I'm surprised at how much of it I do agree with, especially when it comes to the subject of regulatory capture," wrote Felix Salmon at Reuters.com. Magnifo at Daily Kos had a similar reaction: "While I do not agree with some of the conclusions he makes, there is enough in his 9,700 word essay that can make the blood boil."

This is a problem for Goldman, which did not even try to cooperate with Taibbi. The firm has since tried to point out errors in the story via Salmon's blog, which only made things worse, as the blogosphere buzzed about a Taibbi-Goldman feud. Indeed, there's little Goldman can do now to change the minds of anyone inclined to agree with Taibbi. As Salmon noted, "[Y]ou don't read a Taibbi rant for an evenhanded look at both sides of a complex story. It's more a forcefully-put case for the prosecution: some of his charges might not stick, but he'll throw a few chancers in as well for good measure."

True enough. But that makes us a little sad. There's so little long-form journalism these days, especially on finance, that we were hoping for something a little more nuanced and rigorously argued. If we just wanted to see the big picture, we could turn on cable TV.

Yvette Kantrow is executive editor of The Deal.

Comments

[kylenstone]

Is it really so hard to believe? Here are just 158 high-powered interlocks between Goldman Sachs execs and other over-powered organizations: http://littlesis.org/org/20/Goldman_Sachs_Group

[Michael Finnigan]

Goldman Sachs (aided by financial "journalists"): "Nothing to see here people. Move along. *sucking money out of the economy and into the hands of a few uber-rich* Move along now, there is nothing to worry about and nothing to see. This is how things are supposed to work. It's too complex for you to understand. *continues sucking money*"

[watchandlearn]

Good article. You can tell from the lack of comments that the crowd doesn't want to hear it. It's just feels so much better to dine on the "comfort food" of wild theories, unsupported by facts.

[Pye Ian - Huffpost Blogger]

OR...you could tell from the lack of comments that people don't such tactically deployed sycophancy anymore.

Taibbi definitely isn't alone in the sobriety department.

[William1950]

we all need to just stop... stop working, stop spending, stop charging, stop investing, stop texting, stop browsing, just call it a day, or a week... just stop for a short while.. take a break. and let happen what will happen. then when the dust settles we can begin again with what is truly important.

[governmentsuchs]

What Taibbi did for me and others I personally know who(m) also read it was to help set in motion our own study of the issues overviewed in the article. Some things are impossible to confirm Web-wise, but most is there for easy consumption. What troubles me most is my favorite goto financial expert, Jim Puplava of Financial Sense News Hour, is 180 degrees from Taibbi's chapter 4, "$4 a Gallon." I'm having a hell of a time resolving their differences of opinion on this one.

All any one can hope for is that Goldman's sacks are not filled with gold or silver bullion, paper, or even the tiniest of precious metal flecks, or we're all completely...

[mbaty]

The point of the Taibbi article is to connect the dots that no one else is connecting. Not all of the blame can be put on Goldman, but enough blame can be that his case is more than intriguing. Obviously this goes beyond Goldman, as we all have horror stories of this or that bank, this or that credit card, this or that balooning subprime and/or zero-down mortgage. But Goldman represents such a powerful hand in the industry that it is worth noting how they cannot be exempt from the blame of taking down the economy. Taibbi speaks profoundly, articulately, and with a quick wit, and his voice is needed and welcomed in the current debate about how to effectively avoid past mistakes as we transform the economy.

[gulopartisan]

The financial priesthood is certainly welcome to poo-poo "conspiracy theories," but let's get our terminology straight. When one organization abuses enormous power, that is not a "conspiracy." Jay Gould controlled the Treasury in his time, and J.P Morgan succeeded him. There's nothing especially nutty about thinking that the banks that controlled the American economy a century ago have been replaced by a corporate entity bigger and more malign than any of them.
Four companies control 85% of the meat produced in the world.
One company controls 80% of the soybean production in the world.
Eight banks control 64% of our nation's capital.
That is too much power in the hands of too few greedy predators. If Goldman Sachs is the head mandrill, that's no surprise.

[spinns17]

if nothing more than to big to fail dont scare you .it should give us a clue they might not be good for this country.

[jhNY]

So the problem is that Taibbi isn't sufficiently nuanced? That the author wishes for a longer think-piece written by somebody with a cooler head? Everybody does. But that's just wishing there were more actual journalists writing more actual journalism, which is a wish for what is no more and never was so much as we like to remember.

And the chances of getting a story like this on your teevee are approximately zero, even on edgy cable-- the author's statement notwithstanding. The best we can hope for is that Taibbi will be a guest on somebody's show-- now that he's written the article and published it in Rolling Stone.

The real problem is that Taibbi is probably right about Goldman Sachs, but ain't nobody nowhere going to do a damn thing about it.