Goldman Sachs has played a crucial role in creating every market
bubble since the 1920s — and has profited from not only the bubbles,
but from the crash that followed as well, says a new expose in Rolling Stone magazine.

An article in the July 9-23 issue of the magazine, written by Matt
Taibbi, lists five asset bubbles that the 140-year-old investment bank
helped create — and one that Taibbi asserts the firm is currently
working to make happen.

The five bubbles the article says Goldman was central to creating
are the Wall Street stock bubble in the 1920s, which led to the Great
Depression; the tech-stock bubble of the late 1990s, which ended in the
2001 recession; the housing bubble of the past decade, which resulted
in the current economic crisis; the oil price run-up last summer, when
oil shot up to $140 a barrel, likely helping tilt the entire world into
recession; and what Taibbi describes as "rigging the bailout," when
Goldman Sachswell-placed alumni inside the U.S. government engineered
last falls bank bailout in such a way that the company profited
massively.

Taibbi writes that Goldman Sachs has traditionally been a late
arrival to market bubbles, getting in once others have started the
trend, but, once in, the company quickly ramps up the bubble, predicts
its bursting, and then hedges its bets so as to make money from the
bubble crash.

The article, which is not yet officially available online, adds one
more bubble to the list: the "global warming bubble," or specifically,
the proposed cap-and-trade legislation that would allow companies to
trade pollution credits on an open market.

Taibbis argument suggests the Wall Street bank may well want to
turn climate change policy into yet another Wall Street casino game.

Because emissions caps will continually be reduced, Taibbi argues,
pollution credits will constantly be growing in value, and Goldman
Sachs wants in on the ground floor.

Taibbi writes: "The plan is (1) to get in on the ground floor of
paradigm-shifting legislation, (2) make sure that they’re the
profit-making slice of that paradigm and (3) make sure the slice is —
a big slice. Goldman started pushing hard for cap-and-trade long ago,
but things really ramped up last year when the firm spent $3.5 million
to lobby climate issues."

On his blog,
Taibbi has begun a discussion of the public reaction to his article.
Some commenters have suggested that Taibbis understanding of high
finance is limited, accusing him of misreading Goldman Sachsactions.

— Daniel Tencer