This past year, The Big Short, a movie about Wall Street greed and myopia, channelled middle class anger at the one percent. After laughing for a few hours, most people emerged from the theater both nauseated and confused, wondering how supposedly smart people could be so stupid as to nearly bring down the global economy. Ironically, the film’s heroes—renegades within the financial industry who made big money betting against conventional wisdom—were the people who made out like bandits as pretty much everyone else suffered. But they weren’t crooks. They made a straight bet to short the market based on what they saw happening.
Matt Taibbi’s Griftopia, on the other hand, is about the crooks. And if The Big Short made you upset, Griftopia will make you want to scream like a hungover stockbroker berating a barista for forgetting the third espresso shot.
The reason for this is that Griftopia shows the mortgage crisis to be the tip of the iceberg, and outlines how systemic corruption within our financial markets get converted into non-sequitur soundbites for both political parties. Remember when gas prices crept over $4.00 a gallon and the debate about what to do pitted anti-SUV environmentalists against the Palinites as they chanted “Drill, baby, drill!”? The whole crisis was made up. Supply was at record highs and demand was dropping. The price increases were caused by commodities speculators, who, while they were at it, drove up the price of wheat, soy and anything else they could put money on1 — a practice abetted by a government only too happy to cede regulatory control to the banks themselves.
The knock-on effects of higher costs for basic goods slowed business and decreased tax revenue. Don’t worry, though! Goldman Sachs came up with another brilliant way to screw us, “helping” U.S. cities and states temporarily patch budget holes by buying up their future revenues and selling them to foreign governments. Were you wondering why you can no longer find an affordable parking spot in Chicago on Sunday? That’s because the city leased its parking meters for the next 75 years to foreign investment groups who subsequently jacked up prices and went from six days a week to seven so they could collect more revenue. Because why should they give a shit if it’s a holiday?
Even more galling are the conflicts of interest by government actors charged with regulating the supposed financial heavyweights who instead hand out ludicrous sums to their old pals under the guise that they are fulfilling a vital role in our economy. And why do we allow this to happen? Because, according to Taibbi, “We live in an economy that is immensely complex and we are completely at the mercy of the small group of people who understand it—who incidentally often happen to be the same people who built these wildly complex economic systems. We have to trust these people to do the right thing, but we can’t, because, well, they’re scum. Which is kind of a big problem, when you think about it.”
To be sure, Taibbi’s book is a 250-page diatribe against what he calls “the bubble machine”. It is not an even-handed chronicle that seeks out the bankers’ side of the story. Then again, it doesn’t have to, because they’ve made their position clear. In the last chapter, Taibbi lays out the response of several of the Wall Street bigwigs he rails against. One, when asked at a Senate hearing about his regrets in starting the mortgage crisis, says: “Regret to me means something you feel like you did wrong, and I don’t have that.”
We have to trust these people to do the right thing, but we can’t, because, well, they’re scum. Which is kind of a big problem, when you think about it.”
Still, Taibbi’s aggressive POV and his ties to Rolling Stone, a once-great magazine behind the discredited University of Virginia rape story and the syntactical clusterfuck that is Sean Penn’s exposé on El Chapo, leaves me tempted to seek out other explanations of why Wall Street acts the way it does. For one thing, such explanations would have the benefit of greater perspective—Griftopia was published in 2010, back when we were still sorting through the rubble of the mortgage disaster. Moreover, Taibbi is a journalist, not an economist. And it would be interesting to read work written by responsible financial experts with years of experience analyzing the markets and writing thoughtful critiques about whether interest rates should be cut half a percent. But then again, weren’t these the same experts and apologists who said, “Nothing to see here folks—it’s just supply and demand and market forces at work”? They’ll probably tell me that we should just drill, baby, drill.
- To find out how, you’ll have to read the book [↩]