Squashing the Goldman Beef

Goldman Brawl

You can always tell when you’re talking to someone who at one point in their career worked at Goldman Sachs.


Simple.  Within the first 5 minutes or so, they will begin a sentence with the phrase “When I was at Goldman,”.

This is the real world equivalent of Anchorman‘s Ron Burgundy telling a girl at a party that he’s “kind of a big deal”.

It is exactly this notion of the average Goldmanite’s perception of himself that has led to the recent free-for-all of GS bashing when the firm was basically just doing exactly what it has always done and exactly what every other firm would do if given the opportunity.

The whole Goldman Runs the World meme has been the dominant topic on many financial blogs and in a lot of the mainstream media this summer, even as the stock and bond markets have staged furious, record-setting rallies.  Apparently, outrage still outweighs greed as an interesting subject.  Either that, or too many market commentators were caught short and found themselves in need of a good vendetta or conspiracy theory to perpetuate in order to change the subject.

The recent online battle over GS has been every bit as verbally intense as the East Coast/ West Coast Hip Hop rivalries in the 1990’s.  Instead of disses on mixtapes and albums, however, the combatants are using op-ed space in the Times and the Journal, or venting on the digital pages of The Business Insider, The Daily Beast, Zero Hedge, Market Ticker and Felix Salmon’s Reuters blog.

I hear Salmon won’t even make a move without a bullet-proof vest these days…ok, I made that part up, but seriously, it’s gotten heated.  Players from every corner of the media and blogging world have added to the Beef.

Here’s a quick idea of what some of the back-and-forth’s have looked like:

  • Matt Taibbi vs. Goldman Sachs
  • Charlie Gasparino Defends GS
  • Heidi N Moore Defends GS
  • Matt Taibbi vs. Charlie Gasparino
  • Matt Taibbi vs. Heidi N Moore
  • Megan McArdle vs Matt Taibbi
  • Joe Weisenthal vs Matt Taibbi
  • Cody Willard Calls for Prosecution of CEO Lloyd Blankfein
  • Jon Stewart vs GS
  • Tyler Durden vs Everybody
  • Godzilla vs Rhodan

You get the picture.

Either way, Goldman kinda deserved the bashing, we all engaged in it, and now I’d say it’s enough.  Let’s move on.

I am not writing this blog post as a defense of Government Sachs (a la Charlie Gasparino or Heidi N Moore).  We all know what the AIG bailout really was, and this weekend’s Gretchen Morgenstern column detailing the amount of phone calls last fall between Paulson and Blankfein just isn’t that shocking.  I’m sorry, it’s not a smoking gun.  Neither was Matt Taibbi‘s blockbuster Bubble Machine article in Rolling Stone, although it will surely be looked at as one of the most important pieces of journalism documenting this era.

Anyone who’s worked on The Street already knows that this stuff is part of the fabric and culture of American finance.  It’s not that we should all resign ourselves to the fact that taxpayers and investors are perennially being taken advantage of; a little bit of healthy dissent keeps ’em half-honest.  I’d say my point is, wouldn’t any and all of the other investment banks and commercial banks have pulled this stuff if they could have?  Wouldn’t most of the people you know on Wall Street have used this type of influence during the crisis to protect themselves if they were able to?  Wouldn’t you have taken advantage of a set up like this once in a while if you could, or if you had to for that matter?

Just because you don’t have the opportunity to pull the strings, doesn’t mean you wouldn’t pull them if they were in reach.

I’ve not heard a single argument that rationally excuses the dealings between the Treasury, the Fed and some of the major Wall Street firms and the argument for dropping the subject I make here is not a defense.  What I would like to interject into the discussion is the simple fact that when a wounded animal is backed into a corner, it will do anything it has to in order to ensure survival.  This includes eating it’s own young, ingesting it’s own waste or gnawing off a limb to escape a trap.  Investment banks circa the fall of Lehman were endangered, so why are we shocked that they did whatever they had to in order to survive?  The fact that some are now thriving so soon after their government-assisted survival is actually preferable to having a banking system that acts like it’s the walking wounded.

Is any of this “fair”?  You tell me…is life usually “fair”?

I’m not justifying corruption, I’m simply asking if we can all stop pretending that it isn’t human nature to tilt things into our favor when possible.  Wall Street’s sponsorship and domination of the government is just one such manifestation of this basic principle of our existence.  That’s how the game always has worked and always will.  Goldman’s just mad good at playing it.

So let’s lay off of Goldman Sachs already.  Let’s all stop pretending that someone doesn’t have to be in charge.  And if you’re so ignorant of human history that you truly believe your elected officials are ever actually in control, I have a mortgage-backed security to sell you, AAA-rated with a 9% yield.

Give me a break.

Sources and Related:

Lucas Van Praag’s To Do List (TRB)

Paulson’s Calls to Goldman (NYT)

Taibbi’s Goldman Bubble Machine Piece (RS)

Megan McArdle Rips Matt Taibbi (The Atlantic)

Clusterstock Takedown of Taibbi’s Piece (TBI)

Gasparino: Stop Blaming GS (DailyBeast)

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