I recently finished the book Griftopia by Rolling Stone journalist Matt Taibbi. Thanks to one of our clients for suggesting the read. Honestly, I almost stopped reading in the first chapter. I thought it was going to be an entire book about politics (a subject I literally can’t stand since I think both parties are painfully inept and doing anything correctly). Thankfully, it didn’t take long for Taibbi to move from the attacking the Tea Party to CNBC to Alan Greenspan to ObamaCare and pretty much anyone or any organization in his path. Although, after also reading Boomerang by Michael Lewis, I don’t think the US is nearly in as bad a shape as most other countries. Taibbi does explain how the 2008 bubbles (yes there were several at once) were actually inflated and he goes well past the 1970’s to do so.
The chapter on Alan Greenspan was extremely interesting. I remember vividly in College (I was an economics major) discussing how “important” Greenspan was to the country and the world. As we have seen since 2008 much of his praise was undeserved and Taibbi paints an astonishing picture of why and how Greenspan built trust from Presidents of both political parties and the public. He stops short of blaming everything on him…but just barely.
The sections on Goldman Sachs were not new to me (being in the financial industry) but Taibbi was able to tell the story of their involvement in a very entertaining writing style (with some well place f-bombs here and there). To me, this was one of the most infuriating chapters because not much has changed. In fact we now have few big banks controlling a larger piece of the US economy. The way Goldman Sachs changed their requirements for underwriting IPOs in the late 90’s borderlines on criminal (in my opinion) but that is nothing compared to some of the stories outlined in the book. For a company to purposely create and sell investments that it knew was junk while at the same time betting against it screams of greediness to a level unseen before. And to think, tax money was spent sending Martha Stewart to jail while this sort of thing was going on at Goldman.
Unfortunately (but not surprising), Taibbi does not offer any sort of solution to all the problems he brings up. No one can. Yes, the Government bailed out some banks while letting others implode. Yes, Wall Street and the Government seem to get a lot of things wrong. How do we solve it? The good news with all of this stuff is that it is in the record of history. We just have to learn from it.
