Not sure how I missed this yesterday in the Goldman Sachs news, but this kind of gives you an idea of the kind of arrogance of these pricks:
Fabrice Tourre, the Goldman executive who helped set up Abacus, emailed a friend in January 2007:
“More and more leverage in the system, The whole building is about to collapse anytime now…Only potential survivor, the fabulous Fab…standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!”
Seriously- who calls himself the “Fabulous Fab?” And these guys knew EXACTLY what they were doing, so spare me the “hoocoodanode” nonsense.
And while we are at it, let’s revisit McMegan’s bizarre attack on Matt Taibbi’s Goldman Sachs piece, in which she agreed with all of his facts, coined the phrase “technically true but collectively nonsense,” and then had this gem of a paragraph defending Goldman, in which she impressively combined a “hoocoodanode” with an “everyone is doing it!” (and, as commenter Downpuppy observed, was wrong both ways):
Even as an indictment of the system this thing is lacking, and showcases Taibbi’s lack of fundamental conceptual understanding. He complains about CDO’s on the grounds that Goldman hid the atrocious risks inside a fancy dan derivative package that no one could understand. But in fact, everyone was aware that CDO’s were repackaging crap mortgages–that was the point. The idea was pure portfolio theory, broadly agreed upon by everyone involved. Everyone knew a lot of the mortgages might go bad, either by defaulting or prepaying. (This is a risk for bankers, who don’t like the idea that if interest rates drop, their 7% mortgage might suddenly turn into a pile of non-interest-bearing cash which can only be invested at 5%.) But if you pool the risk, only some of the bonds will go bad, while others pay off. The result is a less risky, less volatile investment than any individual junk mortgage bond. And it would have worked, too, if it hadn’t been for those crazy kids a collapse in the housing market of a scale not seen since the Great Depression.
Someone looks stupid in the aftermath of the SEC charging Goldman Sachs.
It isn’t Matt Taibbi. And what exactly did Taibbi allege was going on:
Goldman used two methods to hide the mess they were selling. First, they bundled hundreds of different mortgages into instruments called Collateralized Debt Obligations. Then they sold investors on the idea that, because a bunch of those mortgages would turn out to be OK, there was no reason to worry so much about the lovely ones: The CDO, as a whole, was sound. Thus, junk-rated mortgages were turned into AAA-rated investments. Second, to hedge its own bets, Goldman got companies like AIG to provide insurance – known as credit-default swaps – on the CDOs. The swaps were essentially a racetrack bet between AIG and Goldman: Goldman is betting the ex-cons will default, AIG is betting they won’t.
Sound familiar?
Comrade Tank Hueco
And why is The Atlantic paying that nihiltarian twit to write for them again?
electricgrendel
McArdel buys stupid by the barrel. Unfortunately she never seems to budget for shame.
Libby
For the life of me, I don’t understand why anyone reads McMegan. That’s time wasted one nevers gets back. Admit I do sometimes idly wonder how she’s kept that gig for so long, since she’s always so very wrong.
Napoleon
Thanks John. I got my newest Atlantic a few days ago with a note I only have one left on my subscription. Now I remember why I am going to write them and let it expire.
demo woman
Libby wrote want I wondered? Why torture yourself by reading her?
Barry at The Big Picture has a few interesting blogs about the Goldman fiasco. He compares Goldman to The Producers.
OT If you haven’t watched Obama’s weekly address, do. How long will it take before the MSM complains that he was mean to the repubs?
Montysano
I’m not sure that “everyone” means what she thinks it means. Idiot.
BC
If I understand correctly, Goldman Sachs went even further than what Matt Taibbi said – they had someone go through and pick the worst of the mortgages so they knew they were selling junk, then they did the other stuff as well. Sort of like me having someone come into my house and pour gasoline all over it while I am getting the fire insurance.
Violet
@Libby:
Bill Kristol keeps getting pundit gigs, and he’s always wrong. Do the opposite of whatever Jim Cramer says and your finances will probably be in good shape. A pundit’s track record seems to be disconnected from their job retention.
Letting The Atlantic know that McMegan is the reason you’re not renewing your subscription might be the thing that could most influence their decision to keep her.
mr. whipple
Of couse they did. As I’ve said all along, these are not stupid people.
R. Porrofatto
Once again the NY Times has inexplicably given the special McArdle insight several column inches to stink up the place. Needless to say, she’s backpedaling as hard as her illogical inconsistency will allow — any harder and she’ll find herself back at the University of Chicago.
John Cole
@BC: Yes. They didn’t hide things that were going bad. They picked out the worst of the worst, then hid it and lied about it being there.
Libby
@Violet: I was kind of joking. I know the wingnut welfare system is still very much operational. See: George Will.
WereBear
Perhaps McArdle’s existence has the point of showing how stupidly Libertarian ideals work in the real world? No? Just an unanticipated side benefit?
I remember getting one of those as part of a team in college. She just wanted to make money. She scorned any learning that did not contribute to making money. She didn’t care what she did to make the money.
It took all my self-control to point out that prostitution paid well, too. And she didn’t need a degree for it!
Libby
OT, but can I mention again how much I love, love, love the new rolling subheader? My new goal in life is to say something witty enough that it ends up in the rotation.
Polish the Guillotines
Veruca was on Marketplace yesterday defending Goldman along the lines that (paraphrase) “these charges are always meant to sound horrific, but once we hear Goldman’s side, we’ll learn that even though it what they did was collectively nonsense, it was technically legal. Oh, and everyone was doing it anyway.”
They also asked her about the 41-signature suicide pact the GOP Senate minority signed. She at least saw it as a politically stupid move, but was vapid enough to wonder why they’d do it. EVERYONE knows the strategy is “If Obama’s for it, we’re against it.”
She is a vacant, strip-mall of an intellect.
El Cid
@Polish the Guillotines: Hearing Marketplace — a program I was already loath to tune into — repeatedly air McAddled’s utter, venial nonsense was what pushed me over the edge to choose sports talk any day over that smug bullshit nonsense, if I hadn’t already been sickened enough by that stupid alternation of “We’re In the Money” and “Stormy Weather” for the stock market, because, you know, “we’re all” major stock holders.
Polish the Guillotines
@El Cid: I couldn’t agree more. Kai Ryssdal is king of “smug bullshit.”
mr. whipple
Along similar lines, did anyone watch the Senate WaMu hearings this week? I found the whole thing to be incredibly depressing.
You had people who lied thru their teeth to get ‘declared income’ mortgages, and the bankers who developed these things in the first place, then the bankers and mortgage brokers who encouraged and sometimes even lied to get unqualified people qualified. Then you had the banks selling this crap to Wall Street scum who were only too happy to repackage it, and then the ratings companies did their part to make them smell better, then you had the regulators at OTS that didn’t regulate, one going so far as to refer to the banks he was regulating “his constituents” and actively thwarting the work of the people at FDIC. An absolute, total, systemic failure of law, common sense and decency by everyone involved.
WereBear
@mr. whipple: Yes, I caught some of it, and while depressing, it was not surprising.
It took my own card to have its date switched, and the subsequent payment being late, to have the interest jacked up to 29%; I figured this was systemic.
Even the Middle Ages had usury laws.
Maude
@John Cole:
This.
MP
McArdle is someone I don’t read. Every now and then, I’ll think to myself that maybe I’m playing to the cognitive bias of reading only those that tend to have the same viewpoint as myself. And then she’ll write a column like this and I’ll realize she’s the writer’s version of an empty suit. Her writing reads well, but the content is pure bullshit.
Her understanding of portfolio theory is laughable. Basically, the idea behind modern portfolio theory (MPT) is that by putting together a bunch of diverse securities, you can earn a given return from the resulting portfolio while lowering the overall volatility. The reason for this is that the individual securities don’t all move in concert – their returns aren’t correlated.
What MPT does *not* say is that by putting together a portfolio of a bunch of shitty securities, you’ll suddenly have a good investment. If McArdle thinks this was “broadly agreed upon by everyone involved” she understands even less than I thought she did.
BDeevDad
The Wall Streeters still think Taibbi’s story was wrong. I just asked one.
J
@El Cid: I think you meant ‘venal’ not ‘venial’, but otherwise couldn’t agree more. Can’t help but notice the voices being raised against rushing to judgment in the Goldman case. To be sure, a worthy sentiment, but I can’t help but be struck by the absence of such voices during the great Acorn Brouhaha. For my part, or course, I would give much more credence to charges emanating from right wing nuts than any lodged by the SEC.
Maude
@mr. whipple:
As far as these guys knowing exactly what they’re doing, yes and no.
Their point of view was soley more and more money. They knew how to do that, but they didn’t know the ins and outs of what they were doing. Nor did they care.
They don’t understand consequences and of course, they are entitled to do Anything they wish. After all, they are far superior to the rest of us and How Dare We?
Frank
Notice a pattern in McCardles thinking?”Technically true but collectively nonsense” joins with her view that the hippies were right about Bush and the Iraq war but for the “wrong reasons”.McCardle wins always!Into infinity and beyond!
YellowJournalism
Is this even a sentence?
russell
Simple solution: take Tourre’s money away and bar him from acting in any fiduciary capacity ever again.
Lather rinse and repeat for 1 out of 10 of these irresponsible pricks and in about five years they’ll get the message.
Take their stuff away from them and prevent them from handling anybody else’s money, ever again.
Let him go get a real job.
Simple solutions to simple problems.
mr. whipple
@WereBear:
I guess most shocking to me were these ‘no documentation loans’. I’m a dinosaur, and it’s been probably 25 years since I applied for a mortgage but had to show proof out the wazoo. Likewise for a piddly home equity loan a few years back. In my wildest dreams I would have never thought a mortgage would be granted based on no proof of income/employment.
demo woman
Who is Fav Four? From Business Insider
http://www.businessinsider.com/this-is-fabulous-fab-2010-4#ixzz0lN1HJdol
WereBear
@mr. whipple: Yes, you were being evaluated on the old model of “We want a really serious expectation of you paying the money back, no fooling.”
That’s because bankers were betting their own money on you paying it back. This would trigger the usual “stick up the a$$” bankerly caution.
By doing mortgage derivatives, the game changed completely. Now; it’s not their money. Now; it’s some other sucker’s problem if it doesn’t get paid back. Now; the more, the GD merrier.
When just about anyone can get a mortgage, the bar got lifted along with the prices. Around 2002, we got offers of family help to get us into a house, because they saw the prices rising; and bless them, they figured it was now or never.
But I saw a bubble; having been through one on Long Island in the ’80’s, I knew it would burst. So we declined.
And it’s a good thing, too.
Citizen_X
Fabulous Fab knew exactly what he was doing, but he didn’t understand it.
They built these complex, Rube Goldbergian financial monsters just enough till they made them money. Beyond that, they didn’t know and couldn’t possibly care less. Therefore, they had no idea of what their financial instruments were capable of doing as everything headed south; in other words, no idea of the real risks involved.
That exposes the Goldman ad nauseum Masters of the Universe as crap financial analysts. They didn’t run on “pure portfolio theory,” as McMegan calls it, but pure unicorn theory.
El Cid
@J: Maybe I should just meld “venal” and “denial” into “venial”.
kuvasz
I would kick in a month’s worth smoke of Northern Lights to see Taibbi debate McArdle.
Memphisj
Great post and I wonder exactly how many talk shows we’ll now see Matt T. on now that he has been proven right? Maybe the comedy shows like Stewart or Colbert or semi-serious Maher. The “journalists” should be singing Taibbi’s praises but I won’t be holding my breath…
Boots Day
@MP: Modern Portfolio Theory is a specific idea, something that has been studied and debated and used and researched over the past 50 years. “Portfolio theory” is a nonce construction that McArdle just made up.
I’m not certain Taibbi fully understood everything Goldman was up to, but I’m 100 percent sure McArdle doesn’t understand it.
MP
Somehow, that makes it even worse.
BDeevDad
@Memphisj: See @here
I asked the businessinsider writer and he still thinks Taibbi was wrong and it’s just an individual.
Bill E Pilgrim
Funny that’s just what I was thinking when I saw McCardle included in the invitees discussing this in the NY Times this morning. Where she writes:
and
Yes, but Matt Taibbi must have been “wrong” in that way that only hippie outsiders can be, which is to say categorically, whether everything they say is right or not.
I put McCardle in that pantheon of geniuses who thought they could dismiss Taibbi as a lightweight because he uses expletives in his pieces sometimes.
eemom
McA whoever she is is on my list of Never Have Read, Never Will. Which unfortunately is a lot shorter than my list of Wish I Never Read, But Did.
For once something is read, it cannot be unread.
Brick Oven Bill
Goldman CEO Blankfein is one of Obama’s most frequent visitors, on the visitor lists the Administration is compelled to disclose for our review.
What do Blankfein and Obama talk about in their regular talks? This is not possible to know, as the meetings themselves are secret, but one can speculate. It would be irresponsible not to.
Like the housing bubble, this trial is likely engineered.
The Justice Department’s charges will be broad enough that Goldman will be able to argue that they and their company are immune from any other prosecution, from a future Administration, over which the level of control is not as complete.
Goldman Sachs, of course, has access to the records of Columbia University. These records, for some reason, are not available to us.
This scenario is really not that complicated. Remember that Obama named a Goldman lobbyist to run the Treasury Department. This scenario would also illustrate the ‘arrogance of these pricks’.
The good news is that arrogance usually precedes a downfall.
rootless-e
Jesus, Taibbi versus Mcgarble. Do I have to pick one?
ThatLeftTurnInABQ
@russell:
Perhaps I’m not understanding this right, but I thought that the problem was that other people read McArdle, are influenced by her, and (most unfortunately) they vote in a way that has an impact on our elections. Not reading her is a solution to this problem in roughly the same sense that closing your eyes and trying to remain very still on the sofa is a solution to having a crocodile in your living room.
See also: David Brooks and the totebaggers.
demo woman
@Memphisj: Bloomberg News has a clip with Matt and he was on one of the networks news stations last night, ABC I think.
Smiling Mortician
I really wish BoB were funnier.
Bill E Pilgrim
@BDeevDad: Rick Santelli still thinks that too much regulation caused the financial crisis, too.
BTW @John: I think were one to flip that to “Collectively true but technically nonsense” it’s a just about perfect phrase for, well so many things.
Shalimar
@Smiling Mortician: At least BoB’s latest offering actually makes sense. That is more than I normally expect from him.
Professor
John, what are you gonna do about it? Are you gonna recommend Matt Taibbi for the Pulitzer Prize for investigative journalism? Good job Matt, those in the MSM were laughing at you then, who has the last laugh?
DougL (frmrly: Conservatively Liberal)
@Smiling Mortician:
I wish he was Silent BoB. If he is supposed to be amusing I have bad news for him, I quit laughing a long time ago. Then I quit reading him.
One thing I love about this site is that the name of the poster is right there on top of the post. There are a few names I regularly ignore here but BoB is the one right at the top of my shit list.
PTirebiter
Maybe two years ago, I heard Big Bill talking about too much money, in too few hands, floating around with no place to go for a decent return. So they created these monstrosities that fueled the housing bubble. Now, I’m wondering how any of this will change. How we can become something other than a nation of bankers swapping notes and have a growing middle class again. I don’t see how we can grow our way out of the income inequality we face. Who said that growth, for growth’s sake, is the philosophy of a cancer cell?
trollhattan
Teh Markets seem to have spoken, and demanded that McMegan, or somebody like her, exist to shovel
nicelysomewhat packaged bullshit into their collective maws. Her improbable career as a bullshit packager and shoveler is a warning to the sane that the sane are not in charge. It’s the same machinery that continue to employ Karl Rove and the Palins, Herr and Frau.Boney Baloney
I remember reading Taibbi when I translated his dialogue back into peasant Russian under my breath, and I’m still waiting for him to get bitch-slapped — backhand, open hand, backhand — for throwing his coffee into that dude’s face.
Some people deserve a clown pie full of horse semen smacked full in the face, but they’re rare, and one should be careful about wearing the livery of Karma even in proven cases. Very few people deserve a half-caf no-fat latte in the face for politely disagreeing with a writer’s writing. Taibbi is lucky some banker hasn’t spent four hours’ income on having Mr. Thang’s head popped like a zit by an invisible professional (hired from Xe, perhaps?), so you’d think he’d stow his tiny penis in his pants when challenged in public.
It’d be fucked up to see him slip through crash-era and post-crash-era Russia as an investigative journalist… and really, God the Father was watching over him the whole time… only to come back to the World and throw hot beverage in the wrong John Wayne-Lee Smith’s face.
I’m all in favor of him being discredited and given the dreaded Rear Admiral like Carl Bernstein, because that’s what happens when you urinate on the robe of Zeus, but I’d hate to see him open his artery with a blunt garden tool like that British WMD scientist.
birthmarker
I honestly don’t know what this sentence means.
Huh?
If the underlying securities were so great, how come the ratings agencies committed fraud while rating them?
http://www.newyorker.com/talk/financial/2009/09/28/090928ta_talk_surowieckitigris
@electricgrendel: see, if you pool the individual stupid, the barrel is actually full of smart.
Violet
@Professor:
Ha! As if the Pulitzer committee would reward Taibbi for anything. They’re far too enmeshed in the Broder-Friedman axis to stick their neck out for a Taibbi. Heck, they couldn’t even reward The National Enquirer for breaking a story that could have upended the presidential race. Taibbi will be waiting a long time for that Pulitzer.
El Cid
@Violet: How ever could the unhinged Taibbi ever match the subtlety and insight of a Kathleen Parker?
Bill E Pilgrim
@birthmarker: I wondered about that too, I went and looked and it looks like JC just didn’t pick up a strikeout with the copy and paste. In her piece it reads like this:
She’s trying to say that all of this was business as usual, and it was only the complete and utter collapse of the financial system, caused solely by housing issues, nothing else, that stopped it from working. Just a spot of bad luck, you understand, an inconvenient and unrelated happenstance, rather than a direct result of all this bullshit they were pulling.
Of course, now even she admits that this was all BS. Will anyone notice? Not really. She’ll keep shoveling this kind of complete nonsense, and get paid for it, and invited to blog at the NYT.
MazeDancer
Fact that any suit, period, was filed, and that it’s against Voldemort-Sachs, and not some bit players, increases hopes that this helps close the political vulnerabilities so present by the administration seemingly doing nothing.
However, the fact that it will make lots of lawyers richer at who knows what kind of insane fees won’t do much for helping the entitled continue to be sealed in their unreal bubble of what’s fair compensation for effort extended.
Elisabeth
@Violet:
heh. Jim Cramer said last night that what GS is alleged to have done isn’t even immoral much less illegal. I was channel surfing and paused to see what the wise one would say ’cause, you know, despite having worked at GS he’s impartial and oh so pro-prosecution.
Fergus Wooster
@Maude:
It’s funny – there were senior credit personnel within WaMu who sounded an alarm about this and tried to slow down the more insane lending policies (especially non-doc). They were fired (or their “positions were eliminated”). Never let credit get in the way of volume and fees.
But banks are self-regulating. Greenspan told me so.
Violet
Matt Taibbi discusses the SEC Goldman lawsuit on Bloomberg TV. There are excerpts and the YouTube video is at the bottom of the page.
He didn’t even know what a CDO was. Now he does. That’s how learning works. McMegan should take notes.
jwb
@El Cid: You forgot that Parker is also “witty.” What does Taibbi have that could match that?
John Cole
Could someone translate Boney Baloney from hipster on meth to English?
mr. whipple
@PTirebiter:
I don’t know if that’s really it. It seems to me that this whole thing is partially the result of Gvt policy(“ownership society”, ahem) that pushed housing hard in order to have some level of ‘economic success’ they could point to. The whole boom created a lot of jobs in construction, banking, real estate, home furnishings, etc that would have never been there but for it. Not to mention all of the other spending that people did because they were able to draw money out of their homes like an ATM machine. If you subtract all of that out of the Bush years, you have an extremely dismal performance.
Our economy has been shit for a long time, and there are no easy answers. We had a tech boom that glossed things over, until it crashed. Then we had the housing boom, which glossed things over, until it crashed.
And we are left with people who are in debt up to their ears, afraid to buy anything because they are either unemployed and can’t or afraid their job could be next to go. We can’t really spend more money for stim because our national debt/deficit is already so high, and there’s no political will.
We are sooo screwed.
Bill E Pilgrim
@John Cole: It would seem to be related to this
Having read some of Taibbi’s early (very) stuff, and that Vanity Fair article about it, I recognized some of the words.
Oh. And this may be related also, just because whoever it is uses the same words.
demo woman
@Elisabeth: Jim Cramer defends Goldman and GE (CNBC) protects Cramer. Page down and watch the video.
Not sure who is worse Cramer or McMegan..
Bill E Pilgrim
Some choice quotes from that Vanity Fair article on Taibbi’s decade in Russia:
I think this stuff is fascinating, and it’s part of what gives Taibbi’s writing the depth and authenticity it has, contrary to idiots claiming that he’s popular because he just says “fuck” a lot. I was seeing someone from a formerly iron-curtain country for a few years and it’s just a whole other view from the other side of the looking glass that most Americans knew simply zilch about. Or had these completely one-dimensional cardboard images, god knows I did, growing up.
What those places have gone through, when you hear it from them, my god we in the States talk about “changes wracking our country” or some such phrases and I want to laugh out loud sometimes now.
Bnut
As usual, people like Joe Weisenthal get their gilded panties in a knot over people not in the club taking issue with how crappily they run things. He and McCardle seem to think an MBA is required to even ask questions. They can go fuck themselves as they have already fucked everyone else dry.
Jamie
hmm. GS strategies are not immoral, but bad enough to keep Pete Rose out of the hall of Fame. Oh yeah, Rose was a sportsman where morality ids important.
burnspbesq
@Memphisj:
“Great post and I wonder exactly how many talk shows we’ll now see Matt T. on now that he has been proven right?”
Proven right? Do I really have to explain the difference between a complaint and a judgment?
Kate520
From business insider review of Taibbi’s RS Goldman Sucks article 7/09:
For now, let’s just focus on the housing bubble, which arguably is the only bubble that even matters, since it was so destructive. If you’re going to write an article about how Goldman is the “Great American Bubble Machine,” you better have a good argument that Goldman caused the housing bubble, otherwise the whole thing is pretty much worthless.
Kate520
From Business Insider article on Taibbi’s RS Goldman Sucks article 7/09:
For now, let’s just focus on the housing bubble, which arguably is the only bubble that even matters, since it was so destructive. If you’re going to write an article about how Goldman is the “Great American Bubble Machine,” you better have a good argument that Goldman caused the housing bubble, otherwise the whole thing is pretty much worthless.
HRA
@mr. whipple:
“In my wildest dreams I would have never thought a mortgage would be granted based on no proof of income/employment. ”
Having gone through what you also experienced, it makes my head spin to think they did this and expected to get away with it.
Tim P.
The reason McMegan still has a job is because of posts like this and the countless others like it all over the internets. She may be incredibly wrong about a great many things, but she generates buzz and I’d bet she drives a lot of traffic. Whether that’s worth the ongoing loss of prestige for the Atlantic is an open question.
Glenn Smith
A key point that has emerged in the wake of the Goldman Sachs suit is that much, if not most, of the bailout money went to people like Paulson who bet against the mortgage market. I know this sounds arcane and inconsequential — but think about it.
T.R. Donoghue
This,
Leaves me speechless. I honestly have no idea how to respond, I’m equal parts shocked, horrified and laughing at the sheer genius of such a phrase. Not to mention the audacity in such a statement given the context. Sweet Jeebus.
LongHairedWeirdo
@MP:
The issue is actually frighteningly reminiscent of the theory behind junk bonds.
See, junk bonds were traditionally a business’s first issue of bonds. They were rated as likely to default, because the business had no history of bond issues.
But here’s the thing: they very rarely defaulted, because the business owners would move heaven and earth to cover those bonds, to protect their ability to issue bonds in the future. The only way they’d default would be if the business actually failed – and there, you’re better off than a holder of common stock.
So, they were seen as a cunningly good investment – high interest, and surprisingly low default rates. So, the junk bond market expanded, and soon, people were issuing junk bonds who really shouldn’t have been making bond issues, people who the bond market would have rejected as bad risks just a while ago. And, *surprise*! A lot of those bad risk bonds turned worthless. A lot more than you’d have expected, except for the incredible expansion of the bond market, and the aggressive pushing of bond issues.
Mortgage backed bonds were the same deal. “No one is going to default! They’ll lose their *house*! No one wants to lose their house!”
And so the mortgage market expanded, until banks were giving mortgages to people they’d have rejected as bad risks just a while ago. And, *surprise*! A lot of those bad risk mortgages turned worthless. A lot more than you’d have expected, except for the incredible expansion of the mortgage market, and the aggressive pushing of mortgages.
So – the portfolio theory isn’t quite as stupid as it actually is. (Yes, I know, bear with me.) The idea that “some mortgages would default, but most are pretty solid, because they represent people’s homes, and they’ll move heaven and earth to stay in their homes!” wasn’t stupid on its face.
What made it stupid was that people knew that the mortgage market had gone crazy, that bankers were making loans based upon idiotic criteria that any competent fiduciary would have rejected in the past. People knew there were “liar’s loans” and “interest only” loans and even loans that weren’t quite interest only (principal could increase for the first n years).
It would be perfectly defensible to speak to someone who’d been asleep from 1995 through 2005 and say “they have a new bond issue – mortgages are being packaged up and sold as bonds,” and have that person say “That’s cool! What a great idea! There’ll be some defaults, but, if you’ll forgive a small bon mot, that bond issue will be safe as houses!”
That modern-day Rip Van Winkle would not be stupid for making such a statement.
But any modern financial analyst would have been. *That* is where the stupidity creeps in – people who didn’t connect the dots.
New Yorker
The “Fabulous Fab” doesn’t surprise me in the least. From my (admittedly limited) contact with Goldman guys, they’re the most arrogant pricks on the planet.
One of the people I knew in business school was a Goldman alum. He was in the class behind me and was hated by pretty much everyone else in that class. He had this annoying habit of knocking on the computer lab door expecting people to open it for him from the inside (it had a card swipe, but he was too lazy to use it). One day I finally confronted him about it and all but threatened to throw him out the window (the lab was on the 14th floor of the building). It helped that I’m about twice his size. He finally started swiping his card to get into the lab, and I became a minor cult hero for it.
rootless-e
@Glenn Smith: Not in this case. Paulson took money from IKB, not the US bailout. Of course, IKB needed a bailout from the German taxpayers because it had blown its investments, but …
Nylund
Megan’s plan seems to work very well for her.
She writes something so stupid, so filled with logical holes and inconsistencies that someone, somewhere will eventually break down and write the screaming, “I can’t contain my thoughts on how utterly stupid and wrong this woman is!” At which point, her Atlantic Colleagues and/or her even less intelligent ideological partners will attempt to save her reputation by adding in all sorts of qualifiers, corrections, and re-categorizations of her original piece in an attempt to save face (for her embarrassment is theirs too). This will lead to another round of pointing out how wrong, disingenuous, contrived, or outright stupid such defenses are. After a few rounds some great “centrist” will step in, decide that no one is wrong or right, all sides all have their valid points, but that the one thing that must be stated is that we all owe Megan a great deal for starting such a worthwhile discussion with her original thought-provoking piece.
Its this ability to hijack the online discourse for days with such utter stupidity, and to win praise for it which makes her so maddening. There are plenty of dumb wingnuts out there (Pam Atlas, Confederate Yankee, etc.) But besides being an occasional source of humor, they don’t interrupt my life. But Megan, she prevents smart people from writing about worthwhile topics, things I’d actually appreciate reading.
John Cole
@T.R. Donoghue: It is an unparalleled masterpiece in the glibertarian genre.
nitpicker
McCardle:
SEC Enforcement Director Robert Khuzami:
McCardle (Now):
No apology to Taibbi, though.
Brachiator
The theory (actually, more like the lie) was that risk was being pooled. The reality was that bad mortgages were being pooled in such high numbers that total failure was a near certainty. McMegan obviously doesn’t keep up with the revelations about Washington Mutual.
Jamey
Taibbi = Journalist: has assumptions, looks for answers
McArdle = Not journalist; convinced nonetheless that her assumptions are the answers
Boney Baloney
For those who’ve been reading Taibbi for less than ten years:
1) Two giant skyscrapers folded up like accordians because jet fuel burns hella hot, and a jumbo jet on a seven-degree glide slope punched a hole in the Pentagon like an aluminum straw kung-fu-ing through an oak plank — politely not trenching the turf with its engines, whipping leaves off trees, or doing anything ever observed at any FAA crash site on record, including leaving a giant debris field with the inevitable human heads on roofs and stuck high in trees — and if you don’t like it, you’re full of conspiracy dog poop.
2) Russian journalists have died off faster and less plausibly than “Lost” cast members have had their story arcs changed, pretty much the whole time Putin has been the man behind the curtain — with a 1:1 corellation between investigating corruption and cronyism and dying at spectacular random like a tourist in Anhk-Morpork — and if you don’t think it’s a conspiracy to silence influential voices before they attract a following, you’re full of dog poop. For that matter, if you think someone else’s fantasy rotisserie of twenty favorite dead journalists aren’t evidence of very bad faith at the highest level, you’re an ANTIMATTER conspiracy theorist — how much evidence do you need, anyway? Lummox!
3) “Bankers run everything” isn’t a conspiracy theory, it’s demonstrably true, so much so that you can take a flying leap at the thesis in public with your nuts flapping loose on one side and a few niggling and stupid inaccuracies fluttering in the breeze on the other, in the sure and certain hope that lobbyist waterboys and poor-Republican wingnuts won’t spend 24 hours proofreading your copy and making you look like a college sophomore the morning after you go to press. Except for the part where you shrug off petty details in favor of the Big Outrage. It works great until it doesn’t.
4) Flinging hot coffee at a skeptical fan-cum-skeptic in a public place is a sign that inner peace has not yet been fully achieved. Waking up pantsless in a Dumpster with a butt plug superglued to one’s cheeks is a relatively benign way to learn to control one’s temper. It can happen.
5) Either Goldman Sachs et alia have more money and power than God, or they don’t. If they don’t, Taibbi is tilting at dandelions. If they do, he’s gotta be all-balls to keep flicking their collective dickhead with his thumbnail, especially naming names as he does. Americans don’t take shelter under a krysha, and even if they did, Bernie Sanders wouldn’t frighten off Kermit the Frog, and multibillionaires have as many options for knocking off minor irritants as I have for sending out for ethnic food.
Simpler?
Jamey
@Boney Baloney: I’ll bet that posting made a lot more sense in its native Martian.
Comrade Kevin
So, Boney Baloney is a 9/11 truther nut. What a surprise.
Salt and freshly ground black people
Fabrice Tourre certainly comes off sounding like an asshole, but I’m left wondering why one low-level (conveniently French) Goldman VP ends up being a scapegoat. Apologies if someone already raised this – haven’t read through the thread.
burnspbesq
@Jamey:
Nope. I’m a native-level speaker of Martian. It’s gibberish in that language, too.
Mark S.
@Boney Baloney:
What do you think?
1) You’re a truther.
2) Putin’s killed people? Russia isn’t really free? Professional wrestling isn’t real?
3) Bankers are very powerful.
4) I don’t see what you did last weekend as being very relevant to the present discussion.
5) If banks aren’t all-powerful, Taibbi’s tilting at dandelions? That seems a tad binary.
licensed to kill time
@Salt and freshly ground black people:
Nice handle! Glad to see somebody read that news link I pasted in a so off topic but you gotta read it way.
Salt and freshly ground black people
@licensed to kill time: Thanks for the link! It made me laugh so hard I had to change my handle from ominira.
licensed to kill time
@Salt and freshly ground black people:
Here it is again for those who didn’t see it. You have to read the whole thing, I love the bit about:
O,rly?
Comrade Kevin
@licensed to kill time: Private Eye likes to reprint stuff like that. Years ago, they reprinted one referring to the restaurant chain “Kentucky Fried Children”.
licensed to kill time
@Comrade Kevin:
I bet Kentucky Fried Children are delicious seasoned with salt and freshly ground black people, too.
Boney Baloney
I’m a truther because I think the airframe of a modern jet is a collapsable tube with wing-shaped gas tanks sticking out the side and engines that run for hours at internal temperatures equal to the melting point of quite a lot of the metal on the rest of the aircraft, or because I maintain that aviation fuel doesn’t burn hot enough to melt steel, as in flight data recorders?
(See also: soda can bongs cause Alzheimer’s because of metal inhalation! You see, butane from a disposable lighter burns hot enough to melt AND vaporize aluminum! …Except those people have an excuse: they’re stoners.)
If that makes me a truther, what word is left for people who think Wall Street is the Beast from the Sea AND that alarmist people who hoard precious metals are crazy-wack-funky? Um… shut up, is what, am I right? Sure, the supply of circulating paper money is no longer KEPT TRACK OF (!), and Treasury people with a few G and T’s aboard will joke about how much it sucks that they can’t print oil or gold, but… only the kind of people who’d recommend buying gold and silver would actually recomment buying gold and silver, and we know what THOSE people are like. Right. I see where I’m lost in delusion, now. Thanks.
I’ve been called worse by better informed. A friend of the family, whose organization had one of the super-thicko walk-in vaults full of classified nastiness halfway up one of the towers (one of two that everyone in the know knew about, and damn sillier than putting the Command Post in the basement), told me in 2002: “This is a crime, and nobody will ever be indicted. They’d rather go to war than fuck, and they’re always horny, but there’s never, ever going to be a criminal investigation into this,” and “You think they’re looking for body parts? You think they’re burrowing through Fiberglas and asbestos and glass shards looking for arms and legs? They’re looking for The Room, intact and secure for preference, and they’ll never find it, and they’ll never rebuild until they find it.”
Now that’s crazy talk. And yet, no narrative of the crime has emerged that would pass the laugh test before a federal grand jury, and we’re still at war with two countries that didn’t do it, and Galt Construction still haven’t started building so much as a Woolworth’s on Ground Zero.
So yeah, I guess my mind has been softened by exposure to tinfoil-hatted proto-teabaggers. It doesn’t hurt as much as you’d think.
New Yorker
@Boney Baloney:
No. Try reducing the LSD dose before posting next time. It also might have the added benefit of making you realize that 9/11 truth conspiracies are nonsense.
Glenn Smith
rootless-e,
Thanks for your feedback. I think we’re agreeing with each other.
trollhattan
@Boney Baloney:
Dude/dudette. Doesn’t need to “melt” structural steel, it only needs to weaken it to the failure point. See the difference?
You’re welcome.
BDeevDad
And I have a friend that worked in the KGB….
If he had any actual knowledge or intelligence, he would not be telling anyone, anything. The folks with information don’t even say where they work.
El Cid
From what I’ve seen, though a cellular presence of aluminum around Alzheimer-affected tissues may be a sign of that very problem, it isn’t connected with evidence that this in any way is connected to an environmental exposure, rather it appears just as likely to be a result of whatever underlying process seems to be causing the problem.
El Cid
Had 9/11 never happened, and had the corporations building and owning the WTC’s come out and claimed their skyscrapers could withstand a fully fueled 767 crashing into them without falling, I’m pretty sure no one would believe them, and suddenly you’d have lots of amateur experts going around proving how quickly they’d be likely to fall.
Since the opposite occurred, we now have plenty of back-figuring experts proving that no, these 1960s/ early ’70s skyscrapers obeyed every gosh-darn regulation they were supposed to and according to our reckonin’ and figgerin’ should have withstood a 500′ tall tsunami hitting them at Mach 2 without so much as flinching.
Germane Jackson
@Boney Baloney:
Good God. Honestly, I don’t care if you’re a truther or not, but trying to read one paragraph of your writing just gave me a headache. You do realize the fundamental purpose of writing is to communicate ideas with other people, right?