December 3, 2007
A flawed conspiracy theory about Goldman Sachs
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.
It appears a certain newspaper is a bit envious of another paper’s columnist, namely one Ben Stein.
I find it interesting that Mr. Gapper accuses Mr. Stein of the same thing that Mr. Stein accuses Dr. Hatzius.
“In this respect, he[the economist] is much like many economic journalists and commentators who sell newsprint by selling fear.”
Mr. Stein, though, has the winning argument with,
“But economists, like accountants, are artists. They have a tendency to paint what their patrons, who pay them, want to see.”
rx
Posted by: rx | December 3rd, 2007 at 10:20 pm | Report this commentRx,
I am at a loss as to where you see Mr Gapper accusing Mr Stein of anything. He states that he disagrees with Mr Stein’s analysis, and explains why. Having thereby established the lack of intellectual rigour in Mr Stein’s column, he admits that it is nonetheless entertaining.
Are we reading the same blog post?
Posted by: Aidan Clarke | December 4th, 2007 at 1:41 pm | Report this comment