Matt Taibbi's Great Squid Hunt

The epic failure of America's financial system in 2008 was, among other things, a sobering gloss on the American romance with technical expertise. The tidal onrush of securitized debt that kept the housing bubble afloat was more than the simple byproduct of decades of deregulation in the nation's financial sector; it was also the handiwork of a new generation of market analysts known as the Quants. These ingenious souls harnessed arcane financial instruments like collateralized debt obligations (CDO) and credit default swaps (CDS) to magically scrub bad housing debt of all apparent risk as it was traded up the Wall Street food chain.

The rickety structure was bound to collapse, but the amazing thing is that even though the Quants and all their schemes have been exposed as fraudulent, the cult worship of market savants has gone on unabated. Look no further than the Obama administration, which met the challenge of leading the economy out of the worst recession in seventy years by retaining Ben Bernanke, the Fed chair who'd presided over the meltdown; promoting Timothy Geithner, a principal architect of the shoddy TARP bailout of Wall Street, to treasury secretary; and recruiting Larry Summers, a stalwart advocate of Clinton-era deregulation during his own treasury tenure, as its chief economic adviser. (Summers announced that he would decamp from his post at the head of the Council of Economic Advisers in September, only to return to that other citadel of technocratic hubris he had long ago captained and, not incidentally, helped steer into its own economic peril: Harvard University.) It was a bit like the government subcontracting all future deepwater drilling oversight to BP.

When the idolatry of the market, and market expertise, becomes this perverse and unchecked, the value of a stubborn autodidact like Matt Taibbi stands out in high relief. Heeding the shifting tenor of the times, Taibbi, a contributing editor for Rolling Stone, moved from the campaign beat into finance journalism shortly after the 2008 meltdown. At the outset, he muffed a few things. In his now (in-)famous July 2009 takedown of Goldman Sachs, which placed the investment house at the center of three signature market bubbles—the 1920s joint stock fiasco, the '90s Internet mania and the recent housing Guignol—he overstated the firm's power to drive markets while mischaracterizing crucial Goldman operations such as CDO exchanges as derivatives deals. But despite such missteps—which earned Taibbi the concerted scorn of most of the financial press—the brunt of his argument about Goldman's particular outsize role in the housing debacle has been proven correct, and has gained remarkable traction in our emerging and impressionistic understanding of the past decade of Wall Street larceny. When Taibbi quoted a hedge-fund operator as saying that Goldman's initiative to sell short on the same mortgage deals it systematically inflated in pitches to other investors was nothing less than "securities fraud," the same financial journalists derided Taibbi as an irresponsible naïf—until the SEC charged the bank with securities fraud for constructing just those kinds of deals, in a prosecution that eventually produced the largest civil settlement in the regulatory agency's history. After Goldman-brokered interest-rate swaps proved instrumental in the debt meltdown of the Greek economy in February, Atlantic business and economics editor Megan McArdle's earlier, airy dismissal of Taibbi's reporting on Goldman's hand in the interest-rate markets sounded like a grim joke: "No one, as far as I know, is now proposing that we need to curtail the use of interest-rate swaps." Well, perhaps someone should have.