Update 2 (October 25): Links have been added and some comments on them in the main blog post, in addition to the earlier update with Olagues’ comment.
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By the way, I notice Matt Taibbi’s new True Slant post, as well as his earlier Rolling Stone piece, get around to Pete Peterson’s influence….
Hmmm.. Didn’t we tell everyone to take a look at Peterson and Blackstone and Black Rock..when was it..way back in April this year?
http://mindbodypolitic.org/2009/04/28/pete-petersons-not-so-clean-crusade-against-entitlements/
Not bad for an obscure blog, whose tips just happen to show up months before they’re broken by gonzo journalists…..
Other complaints about Taibbi’s loose sourcing:
*An anonymous poster points out how much of Taibbi’s work is simply lifted without full credit from Deep Capture‘s research (Judd Bagley and Mark Mitchell are the two researchers there).
*Robert Wenzel has pointed out his own extended piece, “Does Goldman Rule the World?” written in 2007.
*An options blog points out that Taibbi has lifted his material from there, as well (link below).
*Other Goldman Sachs blogs make the same claim and New York Magazine asks if Taibbi just summarized about 100 years of Goldman conspiracy theory and added some crude language…
Note: this itself is misleading.
There are no “hundred years of Goldman conspiracy” – the first criticism of Goldman on trader boards that I saw was around 2003 fall, 2004 and I believe they may have been links taken from this site, Catbird Seat, although I am not entirely sure. (Added, June 24, 2011: I should clarify that they were anonymous links and I am guessing that they were from that blog…they might have been from some where else. I haven’t been able to find them since. My own research into Goldman came out of research for “Mobs, Messiahs, and Markets” and was published first as an investment report there).
The links suggested extensive fraud and manipulation. I think I was the first person to put that into an extended piece in 2006. (I’ve already posted on how Taibbi “bubble” thesis looks like a cropped version of the argument from my 2006 pieces, “Why It’s Time to Sell Goldman” and from my 2008 pieces, “Paulson Putsch” and “Three-Card Capitalists.”
Far from being a brilliant or original investigator, Taibbi is a colorful and sometimes misleading retailer of other people’s leads and ideas who adds the footnotes and the “I was there” element that investigative journalism reveres…and needs. Which is OK and on the whole useful – we won’t pull up the wheat in that field of tares…
(I’ll discuss the dangers and limitations of “smoking gun” journalism another time).
So long as Taibbi doesn’t muddy up the story with too many of the usual half-wit mantras of the cultural establishment, he’s helping the debate….
The more serious gaps – in relation to 9-11 – can always be countered by bloggers.
(And in time, Taibbi might “break” the 9-11 story too. Hope he gives Dr. Griffin a footnote when he comes around to that).
At one point in Matt’s article he writes:
“Here’s how naked short-selling works: Imagine you travel to a small foreign island on vacation. Instead of going to an exchange office in your hotel to turn your dollars into Island Rubles, the country instead gives you a small printing press and makes you a deal: Print as many Island Rubles as you like, then on the way out of the country you can settle your account. So you take your printing press, print out gigantic quantities of Rubles and start buying goods and services. Before long, the cash you’ve churned out floods the market, and the currency’s value plummets. Do this long enough and you’ll crack the currency entirely; the loaf of bread that cost the equivalent of one American dollar the day you arrived now costs less than a cent.
With prices completely depressed, you keep printing money and buy everything of value — homes, cars, priceless works of art. You then load it all into a cargo ship and head home. On the way out of the country, you have to settle your account with the currency office. But the Island Rubles you printed are now worthless, so it takes just a handful of U.S. dollars to settle your debt. Arriving home with your cargo ship, you sell all the island riches you bought at a discount and make a fortune.”
If you go to this article from Deep Capture http://www.deepcapture.com/the-simple-metaphorical-explanation/ and read it, Matt’s example, though summarized, is awfully similar to the one written at Deep Capture. Now, I do not know whether Matt gave credit to the author who wrote the article but I could not find any mention of the person within Matt’s article. If Matt did not give credit, then there is a case for plagiarism.
For those who don’t know, plagiarism is defined as the “unauthorized use or close imitation of the language and thoughts of another author and the representation of them as one’s own original work.” (Source: http://dictionary.reference.com/browse/plagiarism)
I hope this is taken seriously and my worries refuted. Matt authors great articles but this does not mean that he stands above honest journalistic integrity.
Regards,
Anon
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My Comment:
When I have more time, I will try to put the pattern of plagiarism in the American media into a larger context….and show just what it cost the country and why the media has very little moral ground to stand on when condemning the bankers. And that includes many of the alternative sites too…
Indeed, at some point, I would like to undertake a bear raid of my own – on the English language media. I include not just the establishment print and TV outlets, but the blogosphere, wiki, alternative press, and the like, which are supposed to be so free of manipulation.
Bagley’s (and Mitchell’s) admirable work at Patrick Byrne’s Deep Capture blog only touches the tip of the iceberg. For a quick recap of Byrne’s position on naked short-selling and his ideological orientation, here’s a video of an interview with him.
I add it, because of Olagues’ comments (see comments below). I assume that Olagues comes from a libertarian position that’s more to the right than Byrne’s. Example: Byrne seems to be involved with school-choice activism with the widow of Milton Friedman.
Update One (Sunday, October 25):
Former options market-maker John Olagues posts a comment below, with a link, which I will add here.
At first glance, his analysis seems to support my own conclusion that the Fed and the major banks were involved. (I have also blogged last year that I believe that LIBOR was manipulated).
I need to research Olagues’ piece a bit more to verify the reliability.
Dear Lila:
Matt Taibbi and Patrick Byrne and his crew of Babley and Mitchell promote this absurd idea that “naked short selling” caused the collapse of Bear Stearns. While Taibbi may be just a opportunist writing for circulation and using others’ information, Byrne and Bagley et al are not as innocent.
Judd produced a video which is taken from the Gary Matsomoto article, where Matsomoto failed to lead the cheers against “naked short sellers” sufficient to keep his job.
The Judd Bagley’s video is deliberately deceptive and actually tries to prove that events that take place in the future can influence the past.
If your readers wish for some truth with “naked short sales”. Here is a link on the Bear Stears take down written mostly 10 days after the event
http://www.optionsforemployees.com/articles/article.php?id=130:
John Olagues
Hi John –
Have added your comment above. I read Matsomoto’s piece
http://www.rgm.com/articles/bloomberg16.html
He starts out well and then in the end slides back into conflating naked short selling and short selling.
They are two quite different things.
I also don’t find it necessary to take sides on this.
There is likely to have been collusion between the Fed and the banks and select hedge funds.
Legitimate short selling (promoted by excessive valuations) as well as abusive short selling could have been going on together.
Matt is too busying “channeling” a newer more hip and “viral” spirit of John Reed to ever be bothered with the facts.
Hi;
Just thought I would follow up:
Taibbi interviewed me for the article for about 40 minutes. Some of what I told him and sent him appeared in that article. He’s buying into the “naked shorting” idea as the cause of the Bear and Lehman collapses, although 90% of the naked short sales took place after the collapses.
And most of the naked short sales arise from the options market makers exercising puts early thereby creating “fails to deliver” that are interpreted by these pundits as “naked short sales”. In Bear Stearns, the open interest in puts was over 614,000 at the close on March 13, 2008 when BS closed at 57. That figure represented the right to sell 60 million shares of BS stock, which is about 50 times as much as the estimated total “naked short sales” at the time. Surely puts that represent the right to sell 60 million shares generate more bearish pressure on the stock than 1-2 million naked short sales prior to the collapse.
All the talk about “naked shorting” being the culprit in Bear Stearns and Lehman is designed to point the finger at options market makers who have technically committed no crime and have no civil liability. The true criminals are the buyers of puts, shorters of stock and sellers of calls prior to the collapse, who traded on inside information. These can be prosecuted and sued for civil liability. Those are the ones who are too big to be prosecuted . That’s why People like Fuld, Cramer, Pandit, Cox, and Paulson are blaming the naked short sellers.
I was an options market maker for 10 years and believe the solution is to reduce the size of allowable short sale positions a person or allied group members can have to about 1/10 of what now exists.
That would reduce any pressure on stocks to collapse by shorts or naked shorts. But it cuts the monster firm from their game of manipulation.
John
Hi John –
If you don’t mind, I think that deserves a post of it’s own.
I don’t have an inside knowledge of the profession as you do, so I find it very useful to hear this.
I’m unconvinced as well that naked shorting ALONE could do what the banks claim they have done – so this is interesting to read.
However, what I’m finding is that people are confusing (perhaps intentionally) several different things:
*short selling (legitimate) versus naked short selling (illegitimate except in limited cases)
*naked shorts as instrumental in the fall of Bear and Lehman (which is what Taibbi has coopted) versus naked shorts as a larger problem in the market (leading to share dilution) – which is Byrne’s and others’ positions.
*regulation (reasonable when within limits) versus captured regulation (highly politicized extensive regulation, which is what we have)
What you say fully supports my view that many of the post October 2008 commentary, especially in the left-liberal press (Alternet, HuffPo, Rolling Stone) is intended to coopt outrage over Goldman Sachs and channel it away from the limited government/anarcho-capitalist viewpoint back to the pro- government school of thought.
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