I usually read like a freshman fraternity pledge shot-gunning a beer. But when I read Matt Taibbi I enjoy his work like Dorothy J. Gaiter savors a vintage wine. Although Matt blushes at grandiose comparisons, he is possibly the most talented writer to stuff Rolling Stone since Hunter S. Thompson. At the very least, the pen-slinging sensation has accidentally unseated Michael Lewis as the King Writer of Wall Street. Not in a coup sort of way. More like the way Lebron James has taken a seat next to Kobe Bryant.
When I first received an email titled “MUST READ” from a buddy at a top hedge fund, I was a bit surprised the attachment was a scanned article from Rolling Stone. However, the street cred was obvious as Matt’s articles started piling up in my inbox and on excellent financial blogs across the globe. When I overcame my skepticism and read a few sentences, I had that excited feeling a young person gets when they first read Hunter S., Jonathan Swift, or Joseph Heller. I knew I was witnessing the next star writer shine a light on the financial crisis like no major media outlet would dare. In my opinion, anyone who can make finance interesting and easy to understand while explaining how we all got ripped off deserves a Pulitzer Prize.
Like a 16-year old female Jonas Brothers fan on Xanax, I tried to remain professional while having an intellectual conversation with one of the hottest journalists of the day. I think you will find Matt as interesting as his writing.
Damien Hoffman: Matt, when did you realize writing was your passion and you could make a living as a writer?
Matt: Wow. Those are two very different things. I’ve wanted to be a writer as long as I can remember — maybe the age of 11 or 12. I was never really good at anything else. So, whether or not I could make a living as a writer, writing was my best shot [laughing]. I never tried to do anything else seriously. I’ve been working at writing for a long time. I didn’t actually start making a living writing until about four or five years ago [laughing].
Damien: Did you choose to study writing in college?
Matt: Yeah, I was an English major — which is basically preparation for unemployment.
Matt: I don’t think people can study to become a better writer. It’s mostly intrinsic. You have to read a lot and write a lot. I started that process at about 18-years old. I tried to imitate most of my favorite writers, and my writing worked out from there.
Damien: At that age, what stuff were you writing and what writers were you learning from?
Matt: I was always into the humorists and comics. I loved the Russian writers — which is one of the reasons I ended up spending a lot of time in Russia. For a long time, my favorite author was Nikolai Gogol. I also liked the English short story writer Saki [Hector Hugh Munro] who was mean and nasty. I was into Mark Twain, Jonathan Swift, Joseph Heller. Then there are a bunch of Russians who most people are not familiar with.
Damien: Did you read them in Russia?
Matt: In my junior year of college I went overseas to Russia. I sort of never came back. I stayed from 1990 until 2002. During that time I ran my own newspaper.
Damien: Most people don’t know you played basketball. How did you fit in the hoops?
Matt: I played for the Red Army baseball team in Russia, then basketball in Mongolia. In 1996 I was working as a reporter in Moscow for a newspaper called the Moscow Times. After work everyday I would go out to Moscow State University and play basketball on the street. One day I met a kid from Mongolia who told me about a basketball league in Mongolia called the MBA [laughing] — the Mongolian Basketball Association. I thought it was the coolest thing. So, I went into work the next morning, quit my job, got on the Trans-Siberian Railway, went to Mongolia to tryout for the team, and ended up playing for a season. I probably would have stayed longer, but I got very ill and had to leave the country. But it was a terrific experience.
Damien: I consider you one of the most interesting writers at Rolling Stone since Hunter S. [Thompson]. Did he have any influence on you as a writer?
Matt: Absolutely. When I was growing up I loved Fear and Loathing in Las Vegas. I didn’t read Hunter as early as some of the other writers. I was a little older. So I hadn’t read him in time to copy his style. I probably would have if I read him in time. He is a fantastic writer. Fear and Loathing in Las Vegas is one of the best books ever written.
I love Hunter’s approach to his work. What he does is a lot different than what I do. He was a lot more ambitious and his writing was more like great fiction — very three-dimensional, he was a character in his stories, and his pieces were very alive. On the other hand, what I do is much more traditional op-ed writing or typical reporting. I try to imitate a few things Hunter did, but not on the same level at all. Hunter was definitely great.
Damien: What was the path from your first scrappy paychecks for writing something to ultimately getting some book deals and a job at Rolling Stone?
Matt: At first I had my own newspaper in Russia called The Exile. I was the co-editor of that paper for about six or seven years. It was a well-known publication in Russia. We were notorious for our practical jokes and reporting. In fact, in around 1998 Rolling Stone did a story on us. As a result, when I moved back to the States in 2002, I got a call from my current boss Will Dana who offered me the opportunity to cover the presidential campaign in 2004. I’ve been working for them almost full-time ever since.
Damien: Most people think working at Rolling Stone would be like living the movie Almost Famous. Is that accurate?
Matt: [Laughing] Obviously the atmosphere at the magazine is different than it was back in the rock and roll heyday — the late 60’s and early 70’s. I was most surprised by how professional Rolling Stone is. Most people would expect Rolling Stone to be a party hearty atmosphere, doing bong hits in the hallways and that kind of stuff. But actually, the fact-checking to get an article in print is five times more rigorous than any publication I’ve ever worked for. When I first started working at Rolling Stone, I didn’t like it at first compared to the indie journalism world I came from. But it’s turned out to be a good thing and given me newfound respect for this organization. It’s also helped me grow a lot as a writer.
Damien: In the 60‘s and 70‘s, politics and rock music were inseparable. So, Rolling Stone was a perfect vehicle for educating the masses. Your political and financial reporting is top of the line. Do you feel like it’s reaching your target audience?
Matt: One thing that’s both a plus and minus working in American journalism these days is the mainstream press — which should be covering politics and finance — are doing such a terrible job, it opens great opportunities for smaller news organizations that wouldn’t have had them previously. The only reason Rolling Stone can even think about having an important voice in financial reporting is a result of the traditional financial reporters blowing the stories for the past five or six years or so.
One of the things I love about Rolling Stone is their desire to cover more than rock music and gossip. They don’t have a complex about stepping into the middle of something like the Wall Street story or politics. I think that’s very cool. Most media organizations would not want to step outside their typical purview to go after stories as complicated as the recent financial crisis. Most media organizations also tend to avoid taking on targets that have a history of litigating against people who write about them.
Damien: So did editors nail you with covering Wall Street, or was it an extension of your political coverage?
Matt: After the election story started to wrap-up last year, the financial crisis became an organic topic to cover. I think there was a lot of recognition across the journalism world that the politics story was the finance story. The story had evolved. If you wanted to cover politics, you had to do the financial stuff because people need to know about it to inform political decisions. So, they assigned it to me, but I wanted to do it anyway. For a long time I felt guilty about not knowing enough about finance. It was the perfect time to take the plunge. I was nervous about the move at first, but it all worked out.
Damien: It’s definitely worked out because your articles have become a cult phenomenon on Wall Street. I’ve seen an interview during which you said finance is not your favorite, so I have a theory you’ve accidentally unseated Michael Lewis as the King Writer of Wall Street.
Matt: I don’t know about that. For one thing, Lewis understands finance a lot better than I do.
Damien: That may be true. But since the 80’s Lewis has been the King Writer of Wall Street after he wrote Liar’s Poker. Now, all of a sudden, your works are getting passed around and blogged about like a full blown blitzkrieg. How have you experienced the reaction to your articles?
Matt: It’s been really cool. Unlike almost any other sector of society, Wall Street is a place where people are reluctant to issue very strongly worded statements in public because they are worried about how powerful companies will react. The financial press is captive to a lot of these companies like Goldman Sachs (GS) or Morgan Stanley (MS). A lot of the hedge fund managers I talk with have many complaints, but they are afraid to speak because they don’t want an unfavorable response from the big players on Wall Street. So, the only people who can really complain are complete outsiders.
Obviously, the Financial Times or Wall Street Journal is not going to take the chance of alienating an important company like Goldman Sachs. The same phenomenon exists in politics where the NBC or FOX news is not going to completely alienate the White House because they need access to the White House. So, in order for some of this reporting to get done, we need someone totally outside the financial and political world. It’s been cool to play that role.
Damien: Has your collection of works and popularity led to a new book?
Matt: I’m working on a book now that will talk about this financial stuff. It’s very satisfying for me personally because it’s a new world to learn about plus I provide a service to readers by taking something that’s complicated and explaining it in terms they can understand. I plan on coming back to finance over and over again because it’s been a lot of fun and personally rewarding.
Damien: Since you are an outsider who can speak freely about companies in the financial space, do you think Goldman Sachs is the first transnational entity that’s truly more powerful than every government on the face of the Earth?
Matt: It’s hard to say. It seems more like comparing apples and oranges. On the other hand, it’s hard to imagine any company more influential than Goldman Sachs. They have an enormous reach and scope. They were an appropriate target to choose from this world. Although in some of their responses [to my articles] they complained they were not doing anything else others weren’t doing, it would be absurd to pick another bank as an example of the over-reaching power of Wall Street. I don’t know if they’re more powerful than other governments, but they are as powerful as a company can be.
Damien: The last word I wrote after I finished reading “The Great American Bubble Machine” was ‘Leviathan’. Since you’ve done some great research covering Wall Street and Washington, do you know of policy tools we can use to dismember what you affectionately called the “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”?
Matt: I interviewed a government regulator for my previous piece [“The Big Takeover”] who said state regulators already have enormous power. The state banking commissions or insurance agencies, SEC, or the Office of Thrift Supervision can simply write a letter to these banks and say, “You won’t exist tomorrow unless you …” or, “You’re not going to get government funding unless you do this.”
So, they already have enough power to correct all the problems people are worried about. The problem is getting the appropriate people to staff those bureaucracies. If enough people put pressure on members of Congress and the President to appoint the appropriate people, then we should solve most of these issues. I’m not sure what new policy initiatives would be needed. I just think we need new people.
Damien: Do you believe the citizenry can put enough pressure on our legislators, or are we the sheep who are too confused, ignorant, or entertained to affect change?
Matt: The real problem is people aren’t organized enough to make it worth the while of politicians to pay attention to ordinary people. The disadvantage the average Joe has against Goldman Sachs is Goldman can concentrate its campaign contributions in its favor. The typical politician is not going to upset or alienate the five most powerful investment banks because he knows realistically he will jeopardize 30% or 35% of his next election cycle’s contributions. On the other side, there isn’t a way for the average person to organize and deny these politicians the money they need to get reelected. So, until we solve the campaign contribution problem, we won’t have the legislative tool to rebalance the power.
Damien: That’s just in one country. A lot of these powerful companies are transnational. So what do you think of when you see both the US and China flags flying over the door of Goldman Sachs’s office at 85 Broad Street in Manhattan?
Matt: They’ve found a way to masterfully play against the disorganization of the world’s governments. For example, last year they only paid $14 million in taxes because they knew exactly where to shift their revenues. Most of their revenues took place in countries with extremely low tax rates. So long as the international financial regulations are chaotic and disorganized, companies like Goldman are always going to have an advantage because they will place their exchanges in the most unregulated environments. The greatest example is the commodities exchange. They were able to use a loophole to put an oil commodities exchange in the US while keeping a window abroad so customers could avoid US regulations. Goldman and other powerful companies are experts at finding loopholes where regulators are not as organized as they are. We have to figure out a way to address this problem.
Damien: So are we living in a Catch-22 where we have to choose between the Goldman Leviathan sucking the world’s wealth from loopholes or the omniscient eye at the top of the governmental pyramid which becomes the one crown reigning over us all?
Matt: It’s pick your poison. But before we can even worry about the international government question, we have to start at home with our own country. We have to start by protecting the citizens of our country. Even in the United States, Goldman is allowed to get away with things they shouldn’t be allowed to get away with. If we can tighten up and enforce the rules here, we will be much better off before even looking at the international issue.
Damien: Most powerful institutions such as the Federal Reserve and Vatican dismiss most criticisms as “fringe conspiracy theory.” Why should the average citizen not dismiss your claims against Goldman as fringe conspiracies about bankers or Jews?
Matt: That was the tactical criticism I got from Goldman who said to the media, “Next thing you know he’s going to blame us for the Kennedy assassination and say we faked the moon landing.” But if you pay attention to all the criticisms they are leveling, it’s what we call in this business a “non-denial denial.” When people respond by calling names and changing the subject, it means they don’t have any issue with the factual allegations in the article. So, in response to being called a conspiracy theorist, the fact that they are resorting to the rhetorical non-denial denial shows they don’t have any real basis to criticize the facts in the article. The article speaks for itself and the fact they don’t have substantive issues with the piece is highly revealing. In fact, before the article went to print I was extremely nervous we had gotten something wrong and Goldman would come out with a whole list of things they’d say we made mistakes about. But the fact that they didn’t come up with a single thing greatly emboldens me to think we got it right.
Damien: Another indie media outlet Zero Hedge is receiving the same rhetorical response from Goldman about alleged front running claims. What are your thoughts about indie journalists such as Zero Hedge who are covering the financial crisis? Are there any other journalists who you think are doing an extraordinary job covering finance or politics?
Matt: In the oil and commodities space I think Mike Masters is doing a great job. His website is accidentalhuntbrothers.com. Zero Hedge is an amazing story because it’s a small independent blogger. Just by virtue of the fact they were right, they forced Goldman Sachs to respond to them. They’ve made themselves major players in Wall Street journalism.
This gets back to what we discussed before. A small time blogger would never be able to become such an influential news source if it weren’t for the fact that the Wall Street Journal and Financial Times consistently don't do the job they are supposed to be doing. The stuff with Goldman, AIG, or Merrill Lynch isn’t hidden or hard to see — it’s right out in the open. Anybody who knows anything about this stuff should have been screaming about it ages ago. It’s pathetic that the real reporting has been left to a music magazine and some independent bloggers.
Damien: Do you think the mainstream media will ever get in the weeds and report the gritty information?
Matt: Not in real time. They get around to it eventually. But far after the fact. At some point there’s always a magical moment in time when the tide turns and the major media will criticize a powerful person or organization. It’s a form of herd behavior. There’s a theory that if there’s 50 deer in a herd, the instant 26 decide to run away, they all run away. But until that moment, they all stand still. The same goes for journalism. Everybody backed Bush in the Iraqi War and through the 2004 election, then all of a sudden everyone realized he was wrong about almost everything and the entire press turned on him. I think that’s going to happen with this Wall Street story too. For a while, there will be a reluctance to go after the key players. But once the floodgates open, the mainstream press will take up the slack and do the job they’re supposed to be doing.
Damien: So the press protection in the First Amendment to the Constitution is a delayed protection held up by issues of access?
Matt: Yeah. Also, news organizations are hierarchical too. Journalists don’t get promoted because they’re risk takers or rabble-rousers. They tend to get promoted for the opposite qualities. So the people who tend to be the elite political and financial reporters have an instinct to protect the status quo. It’s not in their nature to go after Goldman Sachs, the White House, or whoever.
Damien: So from your outsider vantage point, where are you going to shine your pen light next?
Matt: They have me on the healthcare thing now. So I will be off the financial story for a while.
Damien: Well, Matt, best of luck with that. I look forward to reading your next article. Thanks for taking the time to chat with me amidst the Goldman storm.
Matt: Thank you, Damien. I enjoyed it. I’d be happy to talk with you anytime.