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I found myself both amused and confused after reading Ben Stein’s provocative piece on Goldman Sachs in The New York Times. When someone starts a column with references to a secret government run by (among others) Big Oil and world Jewry, it seems fair to assume that some sort of parody may follow.
But Stein, once a fixture on Comedy Central, is dead serious about the issues he has with Jan Hatzius, a “highly placed” economist at Goldman Sachs. Hatzius, it seems, has been painting a more apocalyptic picture of where the subprime mess will end up than what Stein himself envisions. (We have published his dire views ourselves) Worse, Stein writes, the man is employed by a bank that has capitalized on enthusiasm for subprime mortgages while also shorting the market to make money. As Stein writes: “To me, his paper seemed like a selling document in the real Wall Street sense of selling — namely, selling short.” It was, in essence, a device to drive up fear, thus driving up the profits of those bearish trades.
Personally, I didn’t find it shocking that a bank could both sell collateralized mortgage products and short the market at the same time … unless perhaps it was double-dealing with the same (presumably stupid) party on the other end. But what do I know? Quick, somebody call in America’s Most Smartest Model!
After quoting Eric Burdon (not by name, mind you, but through the lyrics of Spill the Wine), Stein goes on to exhort the government to investigate “what Wall Street and Goldman did to make money as they pumped this mortgage mess into the economic system, and sometimes were seemingly on both sides of the deal.”
Stein raises some good questions, including what former Goldman Sachs chief and current protector of the economy Henry Paulson has to say in all this. It seems like a good bet, at least, that his point of view will be clear.
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