Taibbi out on a lonely limb

This summer, Matt Taibbi gained notoriety by a journalistic hatchet job on Goldman Sachs for Rolling Stone, made immortal by the "vampire squid" passage:

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.

More recently, Taibbi has joined the anti-nakedness crusade. That is, he is now among those who believe that "naked short sales" are a critical problem for the US markets and for the U.S. economy. I have spoken about such views in this blog and elsewhere, and to be concise about it here: I don't share them.

Anyway, Taibbi now does. And pursuant to this new conviction he has posted on his blog a video that he says shows the process in action.

Has the rest of the anti-nakedness crusade hailed this new high-profile recruit? or for that matter this video evidence? No. For the most part they've been silent. Maybe that is wise. Kid Dynamite gives a convincing explanation of what is actually going on in that video, and it isn't what Taibbi thinks. It's just an audit trail entry. If it is anything. There is also a school of thought that suggests it is a fake, and Taibbi is the dupe of some scammer.

Penson, the financial services company who allegedly okayed a "locate" of a massive number of shares without proper basis (i.e. green-lighted an illegal naked short sale) has itself taken the initiative by going to the SEC. Shouldn't Taibbi have done that, given his belief that he has uncovered blatant market manipulation?

It was Penson who went to the SEC to inform the agency of "an apparent hoax and unsupported accusation."

We'll see how it pans out. But it seems to me that it is Taibbi who is way out on a limb here. And I hear wood cracking.

The David Bowie theory of the recession

http://www.rollingstone.com/rockdaily/index.php/2009/01/13/british-press-blame-david-bowie-for-recession-we-clear-ziggy-stardusts-good-name/

this is from The Rolling Stone.

Presented without further comment.

"David Bowie is to blame for the recession and the current credit crunch, the U.K. press reports today. According to a BBC Today host, it was the Thin White Duke, Ziggy Stardust himself, who opened the flood gates for the current economic problems, all thanks to his “Bowie Bonds.” Back in 1997, Bowie issued “Bowie Bonds” as a way of getting his royalty money up front. He sold bonds of his future royalties to his fans for an immediate sum of money, figuring they’d be more patient about waiting for the royalties, plus it’d give them a stake in Bowie’s catalog.

"Economically, the term for this action is “securitization.” The article speculates that banks were inspired by Bowie’s foresight and started to do the same thing, except with mortgages instead of Hunky Dory. The plan was so successful for banks that they lowered the bar on who got loans, figuring a deadbeat would be the problem of whoever scooped up the security, or the bundle of mortgages. Repeat this and multiply it by several thousand and you’re faced with one of the main reasons for the current recession."