No Such Thing As Bad Press
For Goldman Sachs
Matt Taibbi has written a scathing piece in Rolling Stone
magazine about how Goldman Sachs is the "Great American Bubble
Machine." He basically makes yet another case that Goldman
Sachs makes money by controlling America's politicians and
regulators. He is not the first to make this case.
For example in 2006, Kyle Pope, a former writer and editor of The
Wall Street Journal wrote a story in The Los Angeles Times
entitled, “Goldman
Sachs Rules The World,” where he explained that former
President Bush’s team of economic experts were mostly just a
team of former Goldman Sachs executives.
In October 2008, Julie Creswell and Ben White of The New York Times
did a piece called "Government
Sachs," accusing Goldman Sachs of purposefully infiltrating the
American government for profit. Articles like these swelled
during and after the financial crash in late 2008.
More recently, Glenn Greenwald of Salon wrote an article entitled,
“Larry
Summers, Tim Geithner and Wall Street’s Ownership of
Government,” where he revealed from White House financial
disclosure forms that Goldman Sachs paid Larry Summers $135,000 to
speak to them one year ago, allegedly in order to position him and
themselves as lead economists in government.
There is a long list of articles about Goldman Sachs and their
influence on economic policy. Many of these articles go as
far as suggesting a conspiracy.
Do these articles hurt Goldman Sachs, however? It doesn't
seem like it. Goldman Sachs stock is easily outperforming
most banks in the last three, six and twelve month periods.
Accusing them of ruling the world may actually be helping them
accomplish just that, as investors look to park their cash in the
most powerful and stable financial institutions. Speaking of
which, one might wonder where are the articles lambasting JP Morgan
Chase, a company with a history of benefiting from economic
turmoil. They even set themselves up to do the same this time
around by taking over Bear Stearns and Washington Mutual for next
to nothing while investors cried foul. JP Morgan Chase sports
a market cap of over 120 billion today while Goldman Sachs is at 71
billion.
In any case, writers beware: investors looking to profit will only
be encouraged to support Goldman Sachs after reading this latest
article. After all, most of the people interested in reading
these articles are investors themselves. By going after a
single company rather than focusing on the general lack of
effective regulations over these companies, these articles are
taking shortcuts in identifying problems and, in turn, enhancing
the reputations of powerful companies.
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