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Taibbi Tackles A Tool

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A few weeks ago, I saw Andrew Ross Sorkin’s appearance on Real Time with Bill Maher.  At one point during the discussion, Sorkin asserted that the financial crisis of 2008 did not result from the violation of any laws.  I immediately screamed “Tool!” at the teevee.  Worse yet, because Sorkin is not an attorney, his legal opinions are not worth the electrons used to convey them.

Since that time, ARS has continued with his bankster exoneration crusade.  In the process, he has drawn criticism from such authorities as William Black.

On May 24, Robert Scheer of Truthdig posted a review of the HBO movie-adaptation of Sorkin’s book, Too Big To Fail.  Scheer’s review demonstrated how “access journalism” often creates fawning sycophants.  Scheer closed the piece with this thought:

Perhaps the main value of the book and film is the instruction they provide on the limits of mainstream journalism in the decade that led up to the meltdown. Sorkin, who rose to be a business editor at the Times, covered Wall Street deal-making in exquisite detail, relying on an access journalism that has often proved deeply flawed in traditional business news coverage. What was largely ignored as it was unfolding was the story of the unbridled power of Wall Street financiers over the political process that caused this tragedy for so many tens of millions who have lost jobs and homes.

On June 6, Sorkin wrote a piece for his Dealbook blog in defense of Goldman Sachs.  The essay seemed to be particularly focused on the vulnerability of Goldman CEO, Lloyd Blankfein, to perjury charges resulting from his testimony before the Senate Permanent Subcommittee on Investigations, chaired by Senator Carl Levin. Sorkin concluded that the evidence was “far from convincing” that Blankfein lied when he testified that Goldman “didn’t have a massive short” position against the housing market.

It’s difficult to avoid turning up on Matt Taibbi’s radar when one is carrying water for Goldman Sachs.  Taibbi immediately set about debunking Sorkin’s Goldman piece on June 7.  Taibbi did a thorough job of making it clear that Blankfien lied, using a similar analysis to what I expressed on May 19.  While focusing on Sorkin’s perspective, Taibbi made an especially strong point, reminiscent of the debate which has arisen concerning the ethics of economists in the aftermath of the film, Inside Job. Economists who publish “academic studies” on a subject don’t usually feel obligated to disclose that they are on the payrolls of companies who could benefit from that that type of support.  It appears as though Sorkin may be suffering from a similar affliction.  Consider this point from the beginning of Taibbi’s retort to Sorkin’s June 6 defense of Goldman:

The Sorkin piece reads like it was written by the bank’s marketing department, which may not be an accident. In November of last year, the New York Times announced that “Dealbook” was entering into a sponsorship agreement with a variety of companies, including … Goldman, Sachs. This is from that announcement last year:

DealBook  will also feature news and insights on deal-related topics from  Business Day’s well-known roster of leading business reporters, which  includes recent hires in addition to a veteran stable of Wall Street’s  most highly-regarded journalists.

Barclays Capital, Goldman Sachs, Sotheby’s and Tata Consultancy Services are charter advertisers for the relaunch of DealBook.

“This  is the next step in the evolution of DealBook, providing a community of  highly-engaged readers and busy executives with essential news and  insights, and keeping them plugged in to the most important news of the  day,” said Andrew Ross Sorkin, DealBook editor.

Even last year I thought it was a terrible decision by the Times to take money from Goldman in the wake of an unprecedented period of financial corruption – especially to sponsor, of all things, business reporting.

But now? This looks like a joke. In Russia in the Yeltsin years, reporters had a term for selling editorial print content to mobsters. They called it “selling jeans,” a play on the old Soviet-era black-marketeer practice of trading rabbit hats to tourists for their Levi’s. This Sorkin piece has the unmistakable look of a brand-new set of 501s to me. Pieces like this undermine the great work that reporters like Gretchen Morgenson have done in the paper in recent years.

Once again, Matt Taibbi has used his unique style to keep the spotlight on the malefaction which caused the financial crisis and the subsequent wrongdoing, as well as the failure of the mainstream media to give a damn about any of it.

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Offering Solutions

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October 22, 2009

Many of us are familiar with the old maxim asserting that “if you’re not part of the solution, you’re part of the problem.”  During the past year we’ve been exposed to plenty of hand-wringing by info-tainers from various mainstream media outlets decrying the financial crisis and our current economic predicament.  Very few of these people ever seem to offer any significant insight on such interesting topics as:  what really caused the meltdown, how to prevent it from happening again, whether any laws were broken that caused this catastrophe, whether any prosecutions might be warranted or how to solve our nation’s continuing economic ills, which seem to be immune to all the attempted cures.  The painful thorn in the side of Goldman Sachs, Matt Taibbi, recently raised an important question, reminding people to again scrutinize the vapid media coverage of this pressing crisis:

It’s literally amazing to me that our press corps hasn’t yet managed to draw a distinction between good news on Wall Street for companies like Goldman, and good news in reality.

*   *   *

In fact the dichotomy between the economic health of ordinary people and the traditional “market indicators” is not merely a non-story, it is a sort of taboo — unmentionable in major news coverage.

That quote inspired Yves Smith of Naked Capitalism to write a superb essay about how “access journalism” has created a controlled press.  What follows is just a small nugget of the great analysis in that piece:

So what do we have?  A media that predominantly bases its stories on what it is fed because it has to.  Ever-leaner staffing, compressed news cycles, and access journalism all conspire to drive reporters to focus on the “must cover” news, which is to a large degree influenced by the parties that initiate the story.  And that means they are increasingly in an echo chamber, spending so much time with the influential sources they feel they must cover that they start to be swayed by them.

*   *   *

The message, quite overly, is: if you are pissed, you are in a minority.  The country has moved on.  Things are getting better, get with the program. Now I saw the polar opposite today.  There is a group of varying sizes, depending on the topic, that e-mails among itself, mainly professional investors, analysts, economists (I’m usually on the periphery but sometimes chime in).  I never saw such an angry, active, and large thread about the Goldman BS fest today.  Now if people who have not suffered much, and are presumably benefitting from the market recovery are furious, it isn’t hard to imagine that what looks like complacency in the heartlands may simply be contained rage looking for an outlet.

Fortunately, one television news reporter has broken the silence concerning the impact on America’s middle class, caused by Wall Street’s massive Ponzi scam and our government’s response – which he calls “corporate communism”.  I’m talking about MSNBC’s Dylan Ratigan.  On Wednesday’s edition of his program, Morning Meeting, he decried the fact that the taxpayers have been forced to subsidize the “parlor game” played by Goldman Sachs and other firms involved in proprietary trading on our coin.  Mr. Ratigan then proceeded to offer a number of solutions available to ordinary people, who would like to fight back against those pampered institutions considered “too big to fail”.  Some of these measures involve:  moving accounts from one of those enshrined banks to a local bank or credit union; paying with cash whenever possible and contacting your lawmakers to insist upon financial reform.

My favorite lawmaker in the battle for financial reform is Congressman Alan Grayson, whose district happens to include Disney World.  His fantastic interrogation of Federal Reserve general counsel, Scott Alvarez, about whether the Fed tries to manipulate the stock markets, was a great event.  Grayson has now co-sponsored a “Financial Autopsy” amendment to the proposed Consumer Financial Protection Agency bill.  This amendment is intended to accomplish the following:

– Requires the CFPA conduct a “Financial Autopsy” of each state’s bankruptcies and foreclosures (a scientific sampling), and identify financial products that systematically led to a large number of bankruptcies and foreclosures.
– Requires the CFPA report to Congress annually on the top financial products (the companies and individuals that originated the products) that caused consumer bankruptcies and foreclosures.
– Requires the CFPA take corrective action to eliminate or restrict those deceptive products to prevent future bankruptcies and corrections

– The bottom line is to highlight destructive products based on if they are making people “broke”.

From his website, The Market Ticker, Karl Denninger offered his own contributions to this amendment:

This sort of “feel good” legislative amendment will of course be resisted, but it simply isn’t enough.  The basic principle of equity (better said as “fairness under the law”) puts forward the premise that one cannot cheat and be allowed to keep the fruits of one’s outrageous behavior.

So while I like the direction of this amendment, I would put forward the premise that the entirety of the gains “earned” from such toxic products, when found, are clawed back and distributed to the consumers so harmed, and that to the extent this does not fully compensate for that harm such a finding should give rise to a private, civil cause of action for the consumers who are bankrupted or foreclosed.

It’s nice to know that bloggers are no longer the only voices insisting on financial reform.  Ed Wallace of Business Week recently warned against the consequences of unchecked speculation on oil futures:

Is today’s stock market divorced from economic reality?  Probably.  It is a certainty that oil is.  We know that because those in the market are still putting out the same tired and incorrect logic that they used successfully last year to push oil to $147 a barrel while demand was plummeting.

Because oil is not carrying a market price that fairly reflects economic conditions and demand inventories, overpriced energy is siphoning off funds that could be used for corporate expansion, increased consumerism and, in time, the recreation of jobs in America.

Did you think that the “Enron Loophole” was closed by the enactment of the 2008 Farm Bill?  It wasn’t.  The Farm Bill simply gave more authority to the Commodity Futures Trading Commission to regulate futures contracts that had been exempted by the loophole.  In case you’re wondering about the person placed in charge of the Commodity Futures Trading Commission by President Obama  —  his name is Gary Gensler and he used to work for  …  You guessed it:  Goldman Sachs.



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