Monday Smackdown: The "New York Times" from Eight Years Ago
Needless to say, no editor at the New York Times ever lost a job or a promotion for commissioning and publishing this or any other piece of misinformation perpetrated by Ben Stein. Ben Stein is, I think, exempt from the libel laws because he is not mentally competent to understand what "false" and "reckless disregard" mean. But at the very least there ought to have been a retraction, a personal apology from the editors of the New York Times business section and of the paper as a whole to Jan Hatzius, and steep financial penalties as well.
Th every last thing New York Times readers needed to hear in December 2007 was that worries about the macroeconomic consequences of subprime and the housing bubble were Goldman Sachs trying to create a panic so that it could profit. The indifference of the editorial staff of the New York Times with respect to how they are doing as trusted information intermediaries... spoke and speaks volumes:
(December 2007): The Long and Short of It at Goldman Sachs: "The world is far too complex a place to be run by any one group...
...But the closest I have recently seen to such a world-running body would have to be a certain large investment bank....
A newsletter from a highly-placed economist at Goldman Sachs named Jan Hatzius. That worthy scholar recently wrote a detailed paper about how he thought the subprime mess would get worse and worse... affect aggregate lending extremely adversely and slow down growth. Dr. Hatzius, who has a Ph.D. in economics from ‘Oggsford,’ as they put it in ‘The Great Gatsby,’ used a combination of theory, data, guesswork, extrapolation and what he recalls as history.... As the narrator in the rock legend ‘Spill the Wine’ says, ‘This really blew my mind.’ So I started an e-mail correspondence with Dr. Hatzius, pointing out what I believed were a few flaws in his paper....
I do want to emphasize Dr. Hatzius’s gentlemanliness and intelligence. But I also want to emphasize that, as I see it, his document was mostly about selling fear.... His paper is not really what I would call a serious overview of the situation. It is more a call to be afraid.... Why, then, is his document circulating?... Here is my humble hypothesis, even after talking to Goldman: Is it possible that Dr. Hatzius’s paper was a device to help along the goal of success at bearish trades in this sector and in the market generally? His firm says his paper, like all of its economists’ work, was not written to support any larger short-trading strategy. But economists, like accountants, are artists. They have a tendency to paint what their patrons, who pay them, want to see.... Goldman has a fascinating culture. It is sort of like what I imagine the culture of the K.G.B. to be. You always put the firm first...
