andrewmcintyre.ca

This week I noticed an opportunity to perform a little experiment on the traffic generated by relevant links in the comments of Paul Krugman’s Friday column in the New York Times.

The article in question was “The  Joy of Sachs,” a critique of the record quarterly profits posted last week by Goldman Sachs, even while the continuing, endless economic decline surrounds them on all sides. Goldman Sachs is  a Wall Street giant whose successful senior executives regularly pass through the revolving door into the US Treasury Department. Yep, the foxes are running the hen house.

Or as Krugman puts it:

Goldman is very good at what it does. Unfortunately, what it does is bad for America.

I’ve been watching Goldman Sachs closely lately. I want to know how these guys are gaming the system to come out on top no matter what market they operate in.  So moments after the article was posted at 10:00 MT on Thursday night (12:00 AM ET or Friday morning in New York) I posted this comment inviting other readers to look at two other relevant pieces I recently shared on twitter providing some background on Goldman Sachs.

For more in depth analysis of Goldman Sachs’ slimy business practices I recommend:

1. Matt Taibbi’s “Vampire Squid” take on Goldman Sachs in the latest Rolling Stone: http://bit.ly/hwCbZ

2. CBC’s 30 minute interview with Pulitzer-Prize-winning investigative reporter David Cay Johnston on Goldman Sachs & Gov’t. Here’s the MP3: http://bit.ly/ZzLFm

It was the first comment posted on the op-ed. Four days and 279 NYT “recommends” later my comment was the 13th most recommended comment and on the first page. Admittedly, both the Taibbi and Johnston pieces are excellent, but I am still surprised by the results of the web traffic experiment.

I used the bit.ly URL shortener for each link. With 40 clicks on the Taibbi piece and 52 clicks on the David Cay Johnston interview to start with, I was impressed to see a huge spike in traffic.

With gems like this delicious line – “the world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”  – my link to Matt Taibbi’s Goldman Sachs piece received 1324 clicks on Friday and 271 and 74 clicks on Saturday and Sunday respectively.

My direct link to CBC’s The Current Podcast episode with  David Cay Johnston, a hidden gem from Canada’s public broadcaster received tons of traffic too, even after I described it as a “30 minute interview.”  After 768 clicks on Friday the podcast received 199 and 205 on Saturday and Sunday.

Four days later my quick comment with two relevant backgrounder pieces have generated over 3,000 clicks between to the two shortened URLs.

There’s a lesson here. Curating, saving and sharing relevant, valuable links in the comments of very popular websites can generate impressive traffic.  Traffic that leads away from the New York Times’ website. This is a big change.

It’s like I encouraged readers to put  down the newspaper to read a magazine and listen to the radio.  But the Times‘ does benefit from my traffic draining, eyeball diverting links. Creating a community that encourages users to link to background information maintains their reputation as the place to get information; the “paper” of record, even if there are no dead trees involved.

In the end, I’m just happy to do what I can to expose Goldman’s business practices and help the Times readers call “bullshit” on the Wall Street orthodoxy that deserves at least part of the blame for the near-total economic meltdown.

Michael Lewis writing for Vanity Fair: “Wall Street on the Tundra”

Iceland’s de facto bankruptcy—its currency (the krona) is kaput, its debt is 850 percent of G.D.P., its people are hoarding food and cash and blowing up their new Range Rovers for the insurance—resulted from a stunning collective madness.

What led a tiny fishing nation, population 300,000, to decide, around 2003, to re-invent itself as a global financial power?

Michael Lewis explains:

Iceland was entirely new to his experience: a nation of extremely well-to-do (No. 1 in the United Nations’ 2008 Human Development Index), well-educated, historically rational human beings who had organized themselves to commit one of the single greatest acts of madness in financial history.

The fundamental transformation came in 2003:

Iceland’s three biggest banks had assets of only a few billion dollars, about 100 percent of its gross domestic product. Over the next three and a half years they grew to over $140 billion and were so much greater than Iceland’s G.D.P. that it made no sense to calculate the percentage of it they accounted for.

Riot in Reykjavik - Jan 20, 2009

I understood the basics of the story of Iceland’s collapse from reading the news reports of riots as the global financial system melted down, but I learned of this amazing Vanity Fair article when I listened to CBC’s “The Current” podcast on the way home from work last week. The March 27th show dug deeper on a point raised in the ”Wall Street on the Tundra“ piece.  Many of these “well-educated, historically rational human beings” we’re susceptible to believing myths even more ridiculous than the one that there was little risk inherent in leveraging their country’s entire 2003 economy 47 times by 2007…

The majority of Iceland will not deny the existence of elves:

According to Lewis, when the American aluminum giant ALCOA decided that it wanted to build a smelter in Iceland, the company had to first verify that it wouldn’t be trespassing on land occupied by “hidden people” or as most of you would know them… elves.

Now, as far as we know, most ALCOA officials don’t believe in elves. But ALCOA does acknowledge that it paid hard cash to make sure the future site of its smelter was elf-free.

In the CBC interview, we learn that there are consultants that hire themselves out to companies to ensure potential worksites are elf-free and that sites have even been moved because of their interference with the “hidden people.”

Slate.com elaborates:

According to a poll conducted in 2007, 54 percent of Icelanders don’t deny the existence of elves and 8 percent believe in them outright, although only 3 percent claim to have encountered one personally.

All this begs the question: is it really a surprising coincidence that Iceland, whose former Prime Minister David Oddsson – “the architect of Iceland’s rise and fall” – was “under the spell of Milton Friedman,” AND that it also has a burgeoning elf detection industry?

Great myths require fertile soil.

John Holbon’s “Either/Or”  is a sensible short analysis of the heart of the financial crisis and presents the case for giving the Geithner plan time to work,(or fail) excerpted from Crooked Timber:

Suppose Obama came out and said, roughly:

My fellow Americans, the thing about the Geithner plan is this. Experts disagree about the nature of the crisis. Either it is a liquidity problem or an insolvency problem. That means: either the market values of these so-called toxic assets are depressed because of a kind of market failure; or the market has priced these assets more or less correctly and many institutions holding these assets are, as a result, insolvent. If we are indeed in a liquidity crisis, the Geithner plan should solve it as well as any alternative plan could. If it is an insolvency crisis, however, as many experts believe, the Geithner plan will do nothing – or not nearly enough.

If the Geithner plan fails, we will confront another either/or: either nationalize these too-big-to-fail institutions, at great cost, or allow them to fail, collapsing the global financial system and, very likely, the world economy. This is no true choice, however. Hard as nationalization will be, if it comes to that, the alternative would be far, far worse.

We do not need to take this daunting step of nationalization yet because, first, we’re trying the Geithner plan. What you should know about the Geithner plan is that, if it fails, it will still have been worth trying. We will have determined that the problem is indeed insolvency. We will have clarified the path to be taken, laid to rest any reasonable skepticism about the strict need for nationalization. And we will have paid no more for this knowledge than we would have had to pay in any case. If the government effectively transfers money to distressed financial institutions, under the Geithner plan, and later those institutions have to be nationalized for a time, there is no need to ‘pay twice’.

[Read the rest at crookedtimber.org]

This is the first piece of analysis that has actually put me at ease in a long time. In summary, experts disagree about the nature of the problem, Geithner’s plan may “work” or may fail. If it does fail, the case for nationalizing the US banks is clear; the money spent bailing them out will be effectively back in the hands of government until they can get the financial system back on a solid foundation and re-privatize. To be clear, I still share Krugman’s concerns about the potential of a luke warm, quasi-success / semi-failure of the plan where the global economy sputters along flatlining and not growing (I also share Krugman’s concerns about the moral hazard inherent in the government handing over huge subsidies to investors). If this third outcome results, the biggest fight of Obama’s first term will likely be the political battle about the necessity of temporary nationalization of the banks.  

Let’s hope it works the first time. Because if the Geithner plan does fail (or even semi-fail), Obama will have lost lots of one of his most precious resources in the midst of this crisis: time.

From the NYT “A.I.G., Where Taxpayers’ Dollars Go to Die” A.I.G. is proof of the existence of black holes.

Late Black Hole Update: Boing Boing reports that a secret A.I.G. briefing document was leaked revealing $1.6 Trillion in exposure to derivatives. These are the same derivatives that Warren Buffet called “financial weapons of mass destruction” and pose a “mega-catastrophic risk” for the economy. The worst is yet to come. *sigh*

The Globe & Mail: “Canada Envy, Amid a Global Meltdown” Canada is well positioned to weather the storm because we were innovative – sane and rational in the regulation of our banking sector. Note the slick  flash map of global banking insanity.

Terry Gross of NPR’s Fresh Air interviews Donovan Campbell, an Iraq war vet,  about his new book “Joker One: A Marine Platoon’s Story of Courage, Leadership, and Brotherhood.” The scenes he describes are heart wrenching, and the interview borders on him breaking down in tears:  So incredibly powerful.

On the Media looks at “The Confidence Man” and provides some context for us on the history of con men in the US. Particularly apt is the point of implicit acceptance of the con, by those who can “pass it along.” Look for the comparison of the Florida real estate bubble to the proliferation of random currency in the 1850s. “Is this condo (or bill) worth anything?” Society tacitly accepts the con, one transaction at a time, when they decide it doesn’t matter as long as you’re not the one that ends up with the hot potato.