Marketplace Scratch Pad

Goldman strikes back

Scott Jagow Jun 30, 2009

The other day, I pointed out an article in Rolling Stone magazine that’s getting a lot of attention. It’s called “The Great American Bubble Machine,” and in it, writer Matt Taibbi goes to town on Goldman Sachs. I quote: “The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity.” Well, Goldman thinks this is hysterical.

One of Goldman’s PR people, Lucas van Praag, called Reuters blogger Felix Salmon to set the record straight:

Taibbi’s article is a compilation of just about every conspiracy theory ever dreamed up about Goldman Sachs, but what real substance is there to support the theories?

We reject the assertion that we are inflators of bubbles and profiteers in busts, and we are painfully conscious of the importance of being a force for good.

This is the way Salmon sums it up:

… you 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…

And although there’s a strong case to be made that Goldman has failed to capture the legislative branch… I think there’s a pretty compelling case that both the executive branch (home to countless Goldman alumni) and the regulators, like the CFTC, have a pretty strong track record of doing whatever was in the best interests of Goldman Sachs.

Van Praag told me that in the wake of the events of the past year or two, Goldman’s partners have pretty much lost their appetite for going into public service. Maybe that’s for the best. They are generally smart and talented and knowledgeable people, and I daresay that many of them have done a lot of good after leaving the firm and joining government. At the same time, however, we’re supposed to have a government of the people, not a government of multimillionaire Goldman Sachs technocrats. And when you have the latter, you’re inevitably going to end up with a lot of mistrust and conspiracy theories sooner or later, whether they’re well-founded or not.

My initial reaction to the article was similar — it feels like hyperbole, but it’s hard to believe there aren’t sand dunes of truth in it.

By the way, you have to buy Rolling Stone to read the article. I guess the magazine is resisting coming out of the uh, stone age.

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