Liar

Image from here.

Let's discuss a post that Megan McArdle didn't write. McArdle didn't write about her CNN appearance opposite Matt Taibbi, a man who is dead to her because he does her job better than she ever even imagined doing it. Her Taibbi Voodoo Doll must have gone through a workout that night, for McArdle's humiliation spread far and wide in the business press and her owners must be wondering if putting her on tv is going to benefit or harm them. No doubt her future appearances will be carefully vetted to ensure she is not challenged in public again; perhaps Larry Kudlow will have her on as they both seem to experience a deeply satisfying, tingling thrill at the thought of the rich getting richer and the poor getting poorer.

McArdle made her usual arguments--nobody can know anything ever and nobody is responsible for anything ever. To make these arguments she has to lie, and it is immensely gratifying to see someone call her out to her face.

Lie #1: Goldman Sachs sold assets that they knew were toxic to clients; in fact, they also made a bet that those assets would fail. McArdle said that it was legal to do this.

MCARDLE: Well, I think the fair argument is these investments are incredibly complicated and it's very hard to know what happened. But the fact is that we generally assume that an institutional investor, like a pension fund or a hedge fund has the intelligence, the know-how and the motivation to figure out what's going on in the other side. So we don't offer them the same protections as we offer ordinary investors.

VELSHI: That's not true anymore, right? I mean, now I think we've probably learned that it seems they don't --

TAIBBI: If I could jump in there, Ali. There's definitely a legal standard that requires an investment bank like Goldman Sachs to disclose adverse elements of the deal, like for instance, they had a $2 billion short position against --

VELSHI: Let's spell that out, you're saying that they had a legal obligation to tell somebody they were selling an investment to they had a $2 billion bet against that investment?

TAIBBI: Absolutely.

MCARDLE: If I could jump in here --

TAIBBI: Goldman actually in that deal even said affirmatively that their interests were aligned with the client because they had a $6 million stake in that same deal. But they didn't disclose they had a $2 billion bet against the deal.

VELSHI: Megan?

MCARDLE: Look, inherently someone who is selling you an asset is going short that asset, right? They aren't owning it anymore and you presume that there is a reason for that. Markets are made by people betting one way or the other and what you have to do --

VELSHI: I'm not sure that makes sense for an investment firm, though.

The sheer gall it took to make these arguments is impressive, in a perverse way. When a company sells a product you don't assume that they are selling it because it was defective and they want to get rid of it. Do you buy a car with the assumption that the factory wanted to got rid of it because it was a dud? The argument is insultingly feeble.

Lie #2:Selling toxic assets was okay because the clients knew the assets were bad.

MCARDLE: What we have to do is disclose. It's perfectly legal for a dealership to sell me a car I'm not going to like or that's too expensive for me. It's not legal for them to sell me a car that's not what they represented it as.

And we set certain legal minimum standards and that's what happened here. At least, John Losera and all the devils who are here argues that he actually has gone through these documents and says that a lot of these things were disclosed. That in fact Goldman laid out in very lengthy detail all of the ways in which this could go wrong. I haven't read the disclosure documents personally.

Of course not. It would cut into her drinking time.

McArdle depends on the fact that her audience usually doesn't know enough about the subject to contradict her and her colleagues are extraordinarily reluctant to accuse a nice, polite, white, upper-class woman who is backed by an entire wingnut welfare industry of being a liar.

TAIBBI: I have.

Oh, snap! Which brings us to Lie #3.

MCARDLE: There are two competing versions of the story.

There is the truth and there are the lies, but that's not the same thing as two competing versions, is it?

VELSHI: Matt, you've read them?

TAIBBI: Well, I've read all the documents in this report and I've also talked to some of the principals in this entire story. I definitely know some of the client that is Goldman was talking about were completely blindsided by the fact that, for instance.

They were buying assets out of Goldman's own book when they were told that Goldman was buying these assets off the street. They definitely did not make key disclosures that they were legally obligated to make.

Lie #4:We are hunting down poor, innocent Goldman, Sachs because we just want to blame someone--anyone--for the sorry state of our economy.

MCARDLE:...But here's the thing. I think there is a real desire to have a sense of closure on this, a desire to track down a villain, figure out who did this to us.

And I think that really underweight the power of human stupidity and poor system design. It can produce terrible results even without anyone doing --

The bald-faced smarminess of this lie sets off Taibbi:

TAIBBI: You're not ashamed to do the job that you do. How you were not ashamed to apologize for these billionaires who ripped off ordinary people. I can't believe that --

McArdle, of course, has no shame, or sold it off long ago, along with her soul and her firstborn. Lie #5:

MCARDLE: There weren't ordinary people. A hedge fund is not an ordinary --

TAIBBI: How about this? They ripped off a billion dollar from Morgan Stanley, which then in turn took a $10 billion bailout from the taxpayer ergo they ripped us off. How do you answer that?

MCARDLE: How do I answer that? I think that, you know, in fact, they do deals with big banks. There are questions about how we should have done those bailouts.

Lie #6:

{MCARDLE, CONT.} But the fact is it's not Goldman Sachs' responsibility to make sure that Morgan Stanley makes money. More than it's the Atlantic's responsibility to make sure that Rolling Stone makes money.

TAIBBI: I don't know how that makes sense on any planet in any universe. That is just insane.

The denial of reality is insane, but it is also very profitable.

Lie #7:

MCARDLE: Well, you know, I think that it's very morally satisfying to try to track down people who did things to us. But I think in the end, justice wants to make a case that Goldman didn't just do something that we don't like.

They want to make a case that Goldman did something that was actually illegal at the time when they did and that's a lot harder standard to meet. In fact like in the aftermath of this crisis, what you get is a lot of cases brought that fail

Eliot Spitzer didn't make his cases. A lot of Rudy Giuliani's cases ultimately fell apart. Even some of the Enron stuff has been falling apart. And so it's actually a lot more difficult to track down --

That's nearly a lie a minute. I'm very impressed. When The Atlantic finds a younger, cuter econoblogger McArdle will have a very fine career ahead of her as a PR flack for the nuclear industry or some foreign dictator.