A bit of a kerfuffle this (US) morning about Ben Stein’s column in The New York Times on Sunday, in which he suggested that Jan Hatzius, Goldman Sachs’ chief US economist, is spreading doom-laden prophesies about credit markets to help Goldman gain from its short position in US housing.
The Stein column has become a hot topic, perhaps because Goldman’s exceptional results have caused a lot of muttering about how it does it. I see that Stein’s column is near the top of the NYT’s most-emailed list this morning and it has caused uproar on various blogs, led by Felix Salmon, who maintains a Ben Stein Watch on the grounds that the latter’s columns are often absurd.
I cannot say I go along with the Stein theory that Goldman is blatantly up to no good. It is unconvincing on two grounds.
First, there is nothing sinister about hedging a position, as Stein suggests. It does not imply that you are saying one thing and doing another, or selling securities you do not believe in. An bank is quite within its rights to sell different kinds of instruments to customers that want different things.
Second, the notion that Hatzius selflessly put at risk his own reputation as an independent analyst for the greater profits of the Goldman brotherhood just seems silly. If this is the best way the combined brains of Goldman can think up to make money, it is time to short the bank’s shares.
On the general topic of Ben Stein, however, I agree with Henry Blodget’s point that a columnist ought to be provocative and entertaining. If you seek ruthlessly utilitarian economic analysis, it is generally best to go elsewhere. Coincidentally, I was at a dinner party on Sunday with a Goldmanite whose husband said that he enjoyed reading Stein’s columns.
