A front-page headline on Wednesday with an article about Warren E. Buffett’s plan to invest $5 billion in the Wall Street investment banking firm Goldman Sachs described that company as “ailing.” While its stock has been battered and it has agreed to tighter government regulation and wants to raise more capital from investors, “embattled” would have been a more accurate headline description of Goldman’s state than “ailing.”
The New York Times, Editors’ Note: September 25, 2008
On the subject of whether the press is using language responsibly with regards the financial crisis, this editor’s note would be evidence not that it isn’t but that it certainly is.
I guess one can understand the difference between “ailing” and “embattled.” The first means Goldman is sick from the inside out; the other means it is under attack from outsiders, which is not necessarily Goldman’s fault.
What’s the record show?
Goldman just received a dose of money from Warren Buffett on terms that are universally accepted as extremely onerous to Goldman and that place Bufffett safely ahead of public shareholders.
Along with the rest of its ailing industry, it was given injections of Fed lending that it isn’t really entitled to; placed in the iron lung of a federal bank charter; and now, has access to the world’s largest publicly funded financial charity hospital in the form of the Wall Street bailout package. This is federal life support. It is the financial equivalent of open-heart massage.
All of this was necessary, of course, because the market really doesn’t know the health of the Goldman’s portfolio and understandably isn’t taking any chances.
What’s more, we know Goldman participated in the behavior that led to this crisis and itself ingested some of the toxicity it created. The only question is how much.
If you are an investment bank and are accepting handouts from strapped taxpayers in order to remain solvent, what are you?