A former Goldman Sachs executive who now spends most of his waking hours looking after a doddering old man in the nation's capital revealed Friday that, to the surprise of no one, he knows next to nothing about bitcoin. Asked about the cryptocurrency's psychotic rally during a televised appearance, White House economic advisor Gary Cohn had this to say:
Given that Cohn spends more time than almost anyone at the president's side, sitting by as Trump yells at the TV and misremembers recent events, we shouldn't be surprised that the former Goldman Sachs president can't come up with anything snappy to say about the hottest fad in markets. This holds broadly true for the White House as a whole, which for some reason has dispatched the Department of Homeland Security to investigate the bitcoin.
But Cohn didn't do himself any favors by opening his mouth, either:
“We’re watching it, of course we’re watching it,” Cohn, the former president of Goldman Sachs Group Inc., said Friday in an interview on Bloomberg Television. “Right now we don’t think it’s a serious risk, but right now we’re watching it.”
...“We’ll see what goes on here,” he said. “It’s an evolving market. We’ve watched this happen before as markets have evolved.”
That's...not entirely true. Though there's a tendency out there to overstate the scale of bitcoin, it still remains sui generis. Whether you think it's fraud or a scam or a bubble or a revolution, you have to admit that the modern world has not encountered something like bitcoin. Deutsche Bank sees a bitcoin crash as a new market risk, and a plausible case has been made for systemic impacts stemming from cryptos.
It's not just the suddenness of bitcoin's manic rise that makes it unique, but the novelty of the tech that enables it. While every other speculative bubble has had at least some sort of actual underlying asset to justify it, from tulip bulbs to dot-coms to subprime derivatives, bitcoin is by design about bitcoin and bitcoin only. As Dealbreaker alum Matt Levine recently wrote, “It is pure speculation about speculation, a Keynesian beauty contest where all the pictures are blank.”
But even if Cohn's White House position has reduced him to a morally compromisedwind-up dollyammeringprepackaged soundbites that fail to convince even his own class, he still could have offered some insight into bitcoin. He made his bones trading commodities and later ran Goldman's securities division as it dove headlong into the subprime mire. He may not be the academic type, but he's got a trader's sense for how markets work. Cohn could have (just maybe) had something informative to say about the psychology and maybe even the financial mechanics behind the zaniest bubble of our time. Were he still at Goldman, he might even have been in the camp that successfully lobbied to take a role in the imminent crypto futures market.
Instead, Cohn now spends his days subjecting himself to the ceaseless indignities of serving at the foot of a second-rate real estate developer blackballed from Cohn's former bank for being too toxic to even let in the door, let alone lend to.