In describing Goldman Sachs' involvement in their first bubble, the Great Depression, Taibbi briefly explains how the firm used leverage-based "investment trusts" -- the Shenandoah and Blue Ridge Corporations -- to rope in "regular-guy investors into the speculation game" and were a " major cause of the market's historic crash".

The problem with that description is that Goldman, Sachs and Co. were relatively late entrants into the market in '29, and did not discover the magic of leverage until a few months before the crash (only one of the above two investment trusts was actually leveraged).

While they did play an impressive role in terms of the size of their investment trusts, you would be better advised to look to National Chase (and the New York Federal Reserve...) if you want to find serious culprits in terms of feeding the speculative bubble. And GS actually got burned on the whole Blue Ridge/Shenandoah operation.

Taibbi ought to know this, if he's read the Galbraith book he quotes.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.