Matt Taibbi On Goldman's Short Selling Logic: The Statistical Equivalent Of A Non-Sequitur

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Rolling Stone's chief Wall St. correspondent Matt Taibbi has a missive coming out soon on the fall of Bear and Lehman. But before he reveals the solution to those riddles, he took some time to return to the conspiracy/blame game theorists' version of Old Faithful, Goldman Sachs. This time around, the target is three pages ripped out of a presentation Goldman was apparently using to advance their cause in Washington in connection with the ongoing debate on naked short selling. But chances are MT was not on the original distribution list. So how exactly did he come upon the word according to GS?

Last Friday I got a call from a Senate staffer who said that Goldman had just been in his boss's office, lobbying against restrictions on naked short-selling. The aide said Goldman had passed out a fact sheet about the issue that was so ridiculous that one of the other staffers immediately thought to send it to me. When I went to actually get the document, though, the aide had had a change of heart.
Which was weird, and I thought the matter had ended there. But the exact same situation then repeated itself with another congressional staffer, who then actually passed me Goldman's fact sheet.

But Taibbi didn't just take these stories of Goldman-induced laughter at face value. He had a look himself at the three slides and (after accounting for the 8 missing slides between the first and second piece of evidence), in his professional opinion, the firm is getting a bit egregious with what they believe their facts actually prove.

The thing is, you can't deduce anything at all about naked short-selling by looking at a graph showing levels of normal short selling. This is like trying to draw conclusions about the frequency of date rape by looking at the number of weddings held. The two things have absolutely nothing to do with one another.

An Inside Look at How Goldman Sachs Lobbies the Senate [TrueSlant]