“Why, then, is his document circulating? ….. To me, his paper seemed like a selling document in the real Wall Street sense of selling – namely, selling short.
Here is my humble hypothesis …. : Is it possible that Dr. Hatzius’s paper was a device to help along the goal of success at bearish trades in this sector and in the market generally? His firm says his paper, like all of its economists’ work, was not written to support any larger short trading strategy. But economists, like accountants, are artists. They have a tendency to paint what their patrons, who pay them, want to see.”
– Ben Stein, “The Long And The Short Of It At Goldman Sachs”, The New York Times, Sunday December 2
Two Sundays ago, Ben Stein made what I consider to be a vicious attack on Goldman Sachs Economist Jan Hatzius for Hatzius’s argument supporting his recent call for a 40-45% chance of recession.
In addition to calling Hatzius’s logic “an estimation based upon a guess” and “not really what I would call a serious overview of the situation”, Stein went so far as to question Hatzius’s integrity in writing the piece, as the above quotes show.
I was reminded of this article this morning as I read Morgan Stanley Economist’s Richard Berner’s piece from yesterday, “Recession Coming”. The piece is well argued, in my opinion, and I assume Hatzius’s piece was as well.
One wonders whether the real bias in the whole situation is Stein’s bullish take on the whole housing/mortgage situation and his view that it won’t matter much, won’t push the US into a recession and won’t cause a bear market in stocks.
I have no problem with bulls who see things this way. But to attack the bear’s argument as an “estimation based upon a guess” and “not really a serious overview of the situation” and to go so far as to attack their motives strikes me as crossing the line of what is morally acceptable. In fact, the charges he directs at Goldman border on criminal, given the “Chinese Wall” and the analyst scandals of the tech bust.