I'll Take The Squid Over The Fake Tan, Thanks

So, once again I find myself defending Goldman Sachs and the rest of the investment banking industry, which no doubt will lead many (some of them my friends) to believe that I am a patsy for the vested interests of Wall Street bankers far better paid than me. So be it. I have, I've come to understand, a clear bias here: it is that I am simply unwilling to accept the reigning wisdom that the people are Wall Street are in general worse than those in other places. The evidence I've seen points to the contrary: the corruption of commercial bankers and mortgage companies (and add mortgage brokers and real estate agents and everybody else who profited from the real estate bubble) knows no bounds. My personal distaste for Angelo Mozilo and his ilk exceeds my personal distaste for investment bankers.

That corruption is generally accompanied by a matching stupidity. Where Goldman stands out is that it managed to avoid some of the stupidity of the rest of the financial industry. The conspiracy theorists would have us believe that market bubbles are created by speculators (that is, Goldman) who have it all figured out and have a grand scheme to pull the carpet out from under everyone else after they have blown up the bubble to sufficient size.

This is just not true. Market bubbles are created by investors who are both greedy and dumb, and believe that they will be able to get out before a bubble bursts. This is rarely the case. Goldman and other "speculators" who manage to make money when bubbles burst are a brake on the process. Did things go wrong in the financial crash? They sure as hell did. But blaming things on "speculators" or "short sellers" or "Goldman" or whoever else managed to bet right in a period of market turmoil is an ancient strategy beloved by ... well, by those who imagine that if you just took out the only players who acted reasonably that you would be able to keep the bubble expanding for even longer. That much is right; and it would just be even worse (yes, that can be imagined) in the end.