Griftopia

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protagonist
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Griftopia

Post by protagonist » Tue Nov 29, 2011 11:22 am

I'd be interested in the response of frequenters of this forum to the book "Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History" by Matt Taibbi (http://www.amazon.com/Griftopia-Bankers ... 288&sr=8-1) .

I'm halfway through it. Taibbi writes like a latter-day Hunter S. Thompson (also a Rolling Stone journalist) during Thompson's early , less drug-addled career, with a dose of Tom Wolfe tossed in. Like Thompson, his tone could be described as profane and abrasive or brilliant and caustically witty, depending on perspective. But he does seem to explain the complex causes leading to the recent financial collapse in terms that any semi-intelligent layman can understand, including arcane topics such as collateral debt obligations squared, credit default swaps, etc. As one who does not easily buy into conspiracy theories, whether from the right or the left, I am by nature skeptical. But the more I read the more fascinated, and angrier and more frightened, I become. If Taibbi is right, America has indeed fundamentally changed, and the small investor is little more than a manipulated pawn. The future looks bleak.

Is Taibbi's analysis truly accurate, or is he tweaking the facts to be sensational and prove his theses (a la Glenn Beck and his ilk), and if so, how? I can't critique his logic. I would love to hear comments from those more knowledgeable than I in the areas of finance and economics.

If nothing else, it's a great read that is hard to put down.

Thanks.

protagonist
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Re: Griftopia

Post by protagonist » Tue Nov 29, 2011 12:08 pm

The book got 217 reviews on Amazon. The vast majority are strongly positive. I have been skimming through the "one star reviews" (approx. 10% of the total), and looking for substantive criticism. I have not found any- the vast majority of criticism centers on his style rather than his substance. I'm particularly interested in any critique of his substance.

pkcrafter
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Re: Griftopia

Post by pkcrafter » Tue Nov 29, 2011 12:36 pm

Thanks for the recommendation. I'm not familiar with the book or the author, but he is probably makes some valid points.
If Taibbi is right, America has indeed fundamentally changed, and the small investor is little more than a manipulated pawn. The future looks bleak.
I think there are signs of this happening to some degree, but I don't see how this topic won't shortly end up political, so I will not comment any further. Maybe posters can PM you if you're interested--or you can look for another forum for discussion.


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

FafnerMorell
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Re: Griftopia

Post by FafnerMorell » Tue Nov 29, 2011 1:07 pm

As pkcrafter mentions, any real discussion on this is likely to turn overtly political and/or economical and thus outside the realm of this forum.

As a general rule (at least based on what I've read so far), most of the books on the financial crisis taking a more political stance don't really offer anything substantial to debate - it's like trying to debate whether red or blue is a better color, or holding a witch hunt where the suspected witch is drowned in absentia - they must be a witch, otherwise it would be wrong for us to drown them. Case closed.

Sulvar
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Re: Griftopia

Post by Sulvar » Tue Nov 29, 2011 1:44 pm

I don't know anything about this book, but I've read several of Taibbi's other articles for Rolling Stone. My general impression is that he has a definite bias / point of view that he wants to convey and that he structures the facts he includes and how he presents them to make the strongest case possible for his viewpoint. I wouldn't expect this book to be very evenhanded or to present anything like a comprehensive overview of the topic.

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market timer
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Re: Griftopia

Post by market timer » Tue Nov 29, 2011 1:51 pm

Isn't Taibbi the man who gave us the "vampire squid"?

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soaring
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Re: Griftopia

Post by soaring » Tue Nov 29, 2011 2:18 pm

I hate to be frustrated any more than already by reading and confirming my beliefs about what has happened over the past 12 yrs. I can't change anything so I won't go there. I'm sure Taibbi is spot on though just from reading reviews.
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jj
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Re: Griftopia

Post by jj » Tue Nov 29, 2011 7:42 pm

Thanks for the link to the book. It'll make interesting holiday reading....

(I'll make no comment so as not to contravene any forum rules) jj
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huntertheory
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Re: Griftopia

Post by huntertheory » Tue Nov 29, 2011 7:54 pm

Tiabbi is very bright, witty, very caustic, and usually pretty entertaining. His whole deal this days is to take on the big banks and corporations with fire (and some humor) and to write well in doing it. He also gets a lot of things just flat wrong, and some of the stuff he highlights as direct causes of this or that are very attenuated; indeed it's possible to even agree with him about certain points but see his reasoning and fact checking as way off base. In times like now there's nothing wrong with someone taking on the big guys and doing it in an entertaining way. The problem for Tiabbi is sometimes he falls back on that old magazine writer's saw: never let facts get in the way of a good story.

exeunt
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Re: Griftopia

Post by exeunt » Tue Nov 29, 2011 9:00 pm

I think Taibbi overstates his case. I'm not persuaded there's a conspiracy among the Washington and Wall Street elite (i.e. the Goldman Sachs alumni) to knowingly fleece Americans. I think there's a strong case that soft corruption, blind faith in financial innovation and perverted incentives helped the financial sector in its quest to extract ever larger rents from society. I think a credit bubble that began with financial deregulation in the 1980s helped produce the so-called Great Moderation, sowing the seeds for the financial crisis and subsequent deleveraging we're in today. But Goldman Sachs is a minor part in this story.

protagonist
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Re: Griftopia

Post by protagonist » Tue Nov 29, 2011 11:37 pm

huntertheory wrote: His whole deal this days is to take on the big banks and corporations with fire (and some humor) and to write well in doing it. He also gets a lot of things just flat wrong, and some of the stuff he highlights as direct causes of this or that are very attenuated; indeed it's possible to even agree with him about certain points but see his reasoning and fact checking as way off base. In times like now there's nothing wrong with someone taking on the big guys and doing it in an entertaining way. The problem for Tiabbi is sometimes he falls back on that old magazine writer's saw: never let facts get in the way of a good story.
Huntertheory, can you be more specific about what things you think Taibbi gets "just flat wrong", what you see as attenuated and why, and which of his facts are way off base? Thanks.

peter71
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Re: Griftopia

Post by peter71 » Wed Nov 30, 2011 12:12 am

Hi Protagonist,

I think part of the problem is that many of Taibbi's "factual" claims are tough to pin down. Consider the following opening to one of his Rolling Stone articles:

"The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who's Who of Goldman Sachs graduates."

Read more: http://www.rollingstone.com/politics/ne ... z1fA4yRocw

If Taibbi said:

"Goldman Sachs controls 75% of the world's investment banking business," we could check that out.

Same if he said, "75% of G-20 global finance ministers over the past 25 years have worked at GS at some point in their careers" . . .

Count me among the many here who have no love for (any) of Taibbi's targets, but irrespective of who bad guy x is, I'm just inherently skeptical of the person who says, "bad guy X is pure evil" rather than something more boring and evidence-based.

Best,
Pete

protagonist
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Re: Griftopia

Post by protagonist » Thu Dec 01, 2011 7:31 am

Pete, I totally agree with you, and I am skeptical as well about many of his blanket statements which seem to be made for effect (such as the one you quoted).

However, in Griftopia, he backs up his claims with numbers and specifics, not just hot air. Whether the numbers and details are accurate, or whether he may be leaving out or distorting specific details to support his point, is where I am at a loss, since I am not well enough educated in economics or finance to evaluate his logic. This is where I was hoping somebody could fill me in, since,as a layman following his arguments, he is quite convincing.

Economic policies are prohibited topics on this forum.

Userdc
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Re: Griftopia

Post by Userdc » Thu Dec 01, 2011 10:24 am

Taibbi wrote an article about the federal reserve's TALF program that I believe had factual inaccuracies.

The TALF program was designed to pair equity investments from private investors with non-recourse debt from the Federal Reserve to purchase Asset-Backed Securities as a way to thaw out the consumer credit markets. The structure of TALF put private investors in a first-loss position so that any losses are first bourn by the private investors. Only after the investors' capital was wiped out would the Fed take a loss. Somehow Taibbi managed to write this sentence:

"The loans were set up so that [private investors] would keep 100 percent of any gains on the deals, while the Fed and the Treasury (read: the taxpayer) would eat 90 percent of the losses."

Without getting into whether the program was a good idea and whether some private individuals profited unfairly from the program, Taibbi is misrepresenting the basic economics of TALF. And this doesn't necessarily justify the program, but it's also worth nothing that there have been no losses to date for the pricate investors OR the Fed and the Fed will almost certainly make a large profit on the program when it's all said and done.

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Cloud
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Re: Griftopia

Post by Cloud » Thu Dec 01, 2011 10:59 am

It was a great book.... Loved it...

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Joe S.
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Re: Griftopia

Post by Joe S. » Thu Dec 01, 2011 1:03 pm

protagonist wrote:Pete, I totally agree with you, and I am skeptical as well about many of his blanket statements which seem to be made for effect (such as the one you quoted).

However, in Griftopia, he backs up his claims with numbers and specifics, not just hot air. Whether the numbers and details are accurate, or whether he may be leaving out or distorting specific details to support his point, is where I am at a loss, since I am not well enough educated in economics or finance to evaluate his logic. This is where I was hoping somebody could fill me in, since,as a layman following his arguments, he is quite convincing.

Economic policies are prohibited topics on this forum.
Economic policies are prohibited topics, but the idea that Wall Street rips off small investors is an allowed topic; in fact, it's one of our favorite topics. So we could discuss Taibbi's claim the small investors are being ripped off.

protagonist
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Re: Griftopia

Post by protagonist » Thu Dec 01, 2011 11:35 pm

protagonist wrote:Pete, I totally agree with you, and I am skeptical as well about many of his blanket statements which seem to be made for effect (such as the one you quoted).

However, in Griftopia, he backs up his claims with numbers and specifics, not just hot air. Whether the numbers and details are accurate, or whether he may be leaving out or distorting specific details to support his point, is where I am at a loss, since I am not well enough educated in economics or finance to evaluate his logic. This is where I was hoping somebody could fill me in, since,as a layman following his arguments, he is quite convincing.

Economic policies are prohibited topics on this forum.
I'm curious....why is economic policy discussion prohibited? I'm not complaining, just curious, since it seems so relevant to investing- much more than many other things discussed. That said, I wasn't aware of the prohibition....sorry.

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