Ben Stein Takes A Beating
Or Charlie Gasparino & Howard Lindzon: Ben Stein’s Lonely Defenders

We’re not the only ones who have called out Ben Stein for yesterday’s column. It’s getting roundly trounced by most commentators. Here’s a quick round-up of some of the comments we’ve come across today.

• Roger Ehrenberg thinks the main sin of Goldman economist Jan Hatzius did was dissenting from Stein’s rosy view of our economic prospects. “Just because his paper doesn't comport with Mr. Stein's view of the world doesn't make it wrong or its methodology flawed - it's just that Mr. Stein doesn't like it,” Ehrenberg writes.

• Athenian Abroad says that Stein doesn’t seem to understand the difference between capital requirements and reserve requirements. “Hatzius's paper describes the impact of the sub-prime crisis on bank lending via the hit to banks' capital. Stein dismisses this, because the Fed can create reserves, and because Stein doesn't know that these are completely different things,” the Athenian writes.

• Naked Capitalism goes back an re-reads that Alan Sloan piece Stein refers to and discovers that the New York Times columnist totally misread it and seems to have confused events of 2006 with those of 2007.

• Stein’s even getting it from his fellow denizens of the New York Times. “Maybe I don’t have what it takes to be a serious columnist. I mean, it would never have occurred to me to suggest that the only way to explain an economic forecast I don’t agree with is to say that it must be part of an evil plot to drive down the market, so that Goldman Sachs can make money off its short position — and to suggest that Goldman should be the subject of a federal investigation,” Paul Krugman says.

• Leftist economist Dean Baker won’t even support the Goldman bashing. “Stein gives no reason whatsoever to doubt that Hatzius wrote a serious analysis of the current state of the U.S. economy,” he writes.

• Dan Altman turns Stein’s conspiracy theory around. “You could also ask whether Stein, a friend of the Bush family and sometime cohort of the president, is just trying to prop up the economy to help his old pal,” he writes.

• Surveying the scene—the Stein piece, the reaction to it (we cribbed a couple of these links from his earlier post)—Portfolio’s Market Mover Felix Salmon finds himself depressed. “It's not illegal – in this country – for Stein to make such allegations. But it is quite shocking, and depressing, that the Gray Lady would willingly allow herself to be used as a vehicle for this kind of yellow journalism – and would place it on the front page of its business section, no less,” he writes.

• Even Fake Ben Bernanke takes a shot: “Stein goes on to say in reference to Goldman ‘It is far worse when the sellers were, in effect, simultaneously shorting the stuff they were selling, or making similar bets.’ Of course, Stein innocently points out that he’s simultaneously a shareholder in the company he’s criticizing. Why not have it both ways?”

• Oh, and because of the wonders of the internet, we have already heard from Henry Blodget, whose crooked stock analysis was cited by Stein in the column. “The real lesson here is that Wall Street analysts can't win: No matter what they say, it is easy to suggest that their conclusions might be motivated by something other than the facts. This is fair (who knows what truths lurk in the hearts of men?), but let's at least note that Wall Street shares this conflicted condition with many other industries,” Blodget writes.

So far, Stein’s only defenders seems to be our pals Charlie Gasparino, who has been appearing on CNBC to balance what has been a brutally critical reaction by most of the networks anchors and guests, and Wall Strip founder Howard Lindzon. Over on his blog, Lindzon writes that “Goldman is the world’s largest bookie that fixes games and legally sells you shit while they are dumping it out the back door.”

Comments

1

Posted by joe , Dec 03, 2007 5:22PM

if another person sends me this article today asking for my opinion I'm going to become America Most Violentest Analyst and beat the crap out of Stein. It's bad enough I had to slog through the nonsensical non-argument; being sent it 10 times in 12 hours and asked for thoughts is outright torture.

2

Posted by PBateman , Dec 03, 2007 7:18PM

joe - couldn't agree more. The more Ben Stein writes about economics the less I respect his opinions. The real problem is that so many uninformed people know who he is and think he's smart, so every time he opens his mouth you have to spend hours the next day pointing out the fallacies in his "arguments."

3

Posted by anon , Dec 03, 2007 9:48PM

i can't help but notice that dealbreaker loves to hate on Citi but will defend GS to no end.

i would guess that most journalists (and bloggers) defend GS because if they didn't assume GS was always right then they would have no basis for anything they write.

4

Posted by GSBSD , Dec 03, 2007 10:42PM

I'm surprised to see so many people so eagerly come to GS's defense.... trying to get a head start on getting a job at GS I suppose. Anyway, as far as people saying crazy things to sugarcoat the US economy, you guys are letting Neil Cavuto and Kudlow off the hook too easily. May be nobody is watching. Man, to watch these guys on TV, you couldn't really tell where their lips end and where W's ass begins.

5

Posted by GSBSD , Dec 03, 2007 11:01PM

Hey anon, nobody hates Citi. We just feel kind of embarassed for them. How could you run a fixed income trading house with $55B of naked liquidity puts on your book? NAKED, my friend. That's just beyond embarassing, man. It's as embarassing as having the entire Citi senior management lining up on Wall Street, naked, their asses painted Citi red and holding "I'm For Stupid" signs. Investment banks hold inventories of all the toxic wastes they sell all the time. What differentiate investment banks from pension funds is investment banks hedge these wastes. Citi, in this case, acted like a stupid, old-fashioned pension fund run by a bunch of 3rd tier state school MBAs. When the music stopped, they were left with dirty diapers on their heads, all by themselves in the middle of the dance floor. It's that embarassing! How can you hate someone who is that retarded? You can't.

6

Posted by Noonan , Dec 04, 2007 8:24AM

Don't worry Kruggie, no one ever considered you a serious columnist.

7

Posted by Tom a taxpayer , Dec 05, 2007 9:11AM

Regardless of the merits of Ben Stein's specific charge, there is a related, broader charge against Treasury Secretary Paulson that is indisputable: his conflict of interest in dealing with Goldman Sachs. The Secretary is leading the charge to bail out the bad part of Goldman Sachs business (aka "help homeowners"), but the Secretary has not referred Goldman Sachs (and other Wall Street firms) to the Justice Department for investigation and potential prosecution. It is in the Treasury Secretary's role as regulator and investigator of potential wrongdoing and criminal acts at Goldman Sachs that Paulson has an indisputable conflict of interest. Can Treasury Secretary Paulson be expected to investigate and refer for prosecution Goldman Sachs CEO Paulson?
Mr. Paulson has a blatant conflict of interest. He is part of the problem, not part of the solution. Public confidence in the banking system will only be restored after vigorous investigation and punishment of the guilty by federal prosecutors of the biggest financial scandal in U.S. history.
If Mr. Paulson wants the public to believe that his gross interference (Super SIV Entity, Freeze loan rates, etc.) with the markets is to help homeowners and to achieve other noble causes, but not to bail out his Goldman Sachs buddies and Wall Street fat cats, he can do it.
Simply make it a condition of any New Deals (rate freeze, Entity) he is brokering that the CEOs, principal officers, and board of directors of the banks, Wall Street brokerages, lenders, etc who caused this crisis be fired. Not only fired, but fired with no golden parachute.
This group of pirates who raped and pillaged the home mortgage industry and the credit markets must be removed from having anything to do with Mr. Paulson’s New Deal.
Removing the people who caused this problem is just as important and urgent as helping homeowners.The first requirement for any government sanctioned New Deal must be to throw out the whole thieving command and control of banks, brokerages, and lending institutions.

8

Posted by AU , Dec 09, 2007 10:50AM

To look for the answer behind the question of the column, one must find out who at GS has wronged Stein. Most of his columns begin and end with self. There is some good reason -- other than the seven pieces of real estate that he owns and not wanting to see his values go poof -- motivating this most recent one. He is not so niave as to not understand the workings of the market. No. Someone done Ben wrong and he quickly dashed off a column alleging all of the more unsavory conclusions one might reach and then hit "send." Understand that what is steaming him the most is that people think that he doesn't understand what he is talking about. Being wrong? As a card carrying republican, he's used to that.

9

Posted by guest , Aug 09, 2009 1:27PM

Ben Stein has made it with no looks no outgoing personality. I have not heard him involved in any scandal.

He made an observation about a group coddled by the feds while the masses remain unemployed.

When you look at the situation does not the phrase "let them eat cake" cross your mind.

Hope things turn out better than it did for the upper crust French.

For my part, I like Ben.

10

Posted by guest , Aug 09, 2009 1:27PM

Ben Stein has made it with no looks no outgoing personality. I have not heard him involved in any scandal.

He made an observation about a group coddled by the feds while the masses remain unemployed.

When you look at the situation does not the phrase "let them eat cake" cross your mind.

Hope things turn out better than it did for the upper crust French.

For my part, I like Ben.

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