In the current
Rolling Stone, Matt Taibbi talks about the ridicule he and the editors caught last year over his big Goldman Sachs takedown, "The Great American Bubble Machine." The financial media cognoscenti had laughed at his suggestion that Goldman had committed securities fraud. Taibbi gets to
laugh now, and it probably won't be his last:
The truth is that what Goldman is alleged to have done in this SEC case is even worse than what all these assholes laughed at us for talking about last year.
Prior to the "Bubble Machine" piece, I had heard rumors that Goldman had gone out and intentionally scared up toxic mortgages and swaps in order to get short of them with sucker bookies like AIG. But – and this seems funny in retrospect – I foolishly dismissed those tales as being too conspiratorial. I thought it was bad enough that Goldman was shorting the subprime market even as it was selling toxic subprime-backed securities to chumps on the open market. The notion that the bank would actually go out and create big balls of crap that would be designed to fail seemed too nuts even for my tastes.
In the year since – and this, to me, is the main lesson from the SEC case against Goldman – the public has quickly come to accept that when it comes to the once-great institutions of modern Wall Street, literally no deal that makes money is too low to be contemplated.
(Crossposted from Scrutiny Hooligans.)