Then Again, Maybe Not (4.00 / 1)

The failures of predators like Rubin haven't seemed to matter in the past, but if the current crisis has shown us anything, it's that their failures are cumulative, and progressive.

Oh, never fear say all the wise, experienced and pragmatic folks, capitalism itself isn't under any serious threat. We'll rescue the banks (meaning the bankers) move the troops from Iraq to Afghanistan, and everything will return to normal -- with us on top, of course.

It hasn't occurred to them yet, although it's occurred to Krugman and Stiglitz, and even to that filthy Marxist Zizek, that they can't save themselves this time without saving us as well. In the end (if this isn't to be the end) we're the ones who pay the bills, which we can't do, of course, as long as our pockets are empty.

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by: William Timberman @ Wed Dec 03, 2008 at 22:32:22 PM CST

Terminator? (4.00 / 1)

maybe, but for a charlatan with undue influence over the levers of power and apparent imperviousness to death, i like the Rasputin analogy.

(and even the name is close.)

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by: Gaucho @ Thu Dec 04, 2008 at 01:19:24 AM CST

Good points, David! Yes, the NYT is distorting the record here. (0.00 / 0)

Just search their site for news about Robert Rubin" in the last seven days. They haven't covered that lawsuit yet! Since this issue obviously is of importance for the political discourse right now, one can only assume that they deliberately want to put a lid on that. But that's not Journalism any more, that's plain old patronage. The NYT editors should be called to account for that.

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by: Gray @ Thu Dec 04, 2008 at 03:24:51 AM CST

Our country is effectively being run by oligarchies (0.00 / 0)

Specifically, by political, business, financial and media oligarchies (did I leave any out?), which naturally seek to protect their own, even when they've massively failed, or have viewpoints, goals and approaches that are at odds with some members of these oligarchies.

It's a tribal thing, and the Wall St. tribe protects its own, as does the DC beltway tribe, or the establishment media tribe, etc. Or, if one prefers, it's like the Mafia, where, once one is "made", one can effectively do no wrong--except to betray fellow "made" men (and in some rare cases, women). It's the modern version of titled nobility, sans the titles.

Rubin may have betrayed the country that entrusted him with great power, but he didn't betray his fellow financiers and his many political friends and sponsors, and so is still a member in good standing of these tribes. Well, actually, he DID betray them, by helping to destroy the economy upon whose health many of their fortunes and power depend. But seeing as most of them did this as well, in one form or another, they're kind of all in the same sinking ship, and have to stand together, or else they'll hang separately.

When times were "good" (for people like him and the parasitical classes that fed upon his policies, at least), he was a hero and lion held in great esteem by the financial, business, political and media classes. Now that they're not so good, they're forced to keep pretending that he's some sort of hero, to save face, and standing. It's very much a Kabuki thing.

Except that the final act is about to get underway, and things might unravel spectacularly. Or not. Too soon to tell. But I suspect that we've yet to see the true consequences of what's been going on fully play out, and the worst is yet to come. Not just for the economy and the rest of us, but for many of these people as well. We simply can't keep people like Rubin in positions of power and esteem and expect to get out of these messes intact. Something's got to give, and it's either these peoples' power and reputations, or our economy and society.

I'm hoping that Obama believes that, due to political realities, he has no choice but to go with this crew for now, and is giving them one last chance to either redeem themselves, by fixing the messes that they've made, or publically and irreemably discredit themselves beyond the point of salvation, at which point he'll be free to dispense with them forever and appoint his own preferred set of experts, but which he's not able to do right now. I suspect that that's what he's trying to do--or has convinced himself that it's what he's trying to do. I hope that it is, that he's right, and that it'll work, and not blow up in our faces.

Because if it does, it'll be catastrophic beyond imagination, in ways that go way beyond a failed economy. Way, way, way beyond.

"Those who stand for nothing fall for anything...Mankind are forever destined to be the dupes of bold & cunning imposture" -- Alexander Hamilton

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by: kovie @ Thu Dec 04, 2008 at 09:21:28 AM CST

Don't see the paean... (4.00 / 1)

The Times seems to be all over Rubin's case, albeit a little late. A couple of weeks ago, on November 23, 2008, the Times ran a scathing piece in the Sunday Magazine essentially blaming Citigroup's failure on Chuck Prince and Rubin:

The bank's downfall was years in the making and involved many in its hierarchy, particularly Mr. Prince and Robert E. Rubin, an influential director and senior adviser.

Citigroup insiders and analysts say that Mr. Prince and Mr. Rubin played pivotal roles in the bank's current woes, by drafting and blessing a strategy that involved taking greater trading risks to expand its business and reap higher profits. Mr. Prince and Mr. Rubin both declined to comment for this article.

When he was Treasury secretary during the Clinton administration, Mr. Rubin helped loosen Depression-era banking regulations that made the creation of Citigroup possible by allowing banks to expand far beyond their traditional role as lenders and permitting them to profit from a variety of financial activities. During the same period he helped beat back tighter oversight of exotic financial products, a development he had previously said he was helpless to prevent.

And since joining Citigroup in 1999 as a trusted adviser to the bank's senior executives, Mr. Rubin, who is an economic adviser on the transition team of President-elect Barack Obama, has sat atop a bank that has been roiled by one financial miscue after another.

The article then outlines many of those financial miscues.

And in the most recent NY Times article, the one you refer to as a "paean" to Rubin, it actually does point out that Rubin's star has lost its luster:

But times have changed since then. On Wall Street, Mr. Rubin is facing questions about his role as director of Citigroup given the bank's current woes. And in Washington, he and his acolytes are calling for a new formulation to address the global economic crisis that Mr. Obama will inherit - and rejecting or setting aside, for now, some of their old orthodoxies.

Instead of deregulation, Mr. Obama has sworn to usher in a period of re-regulation, to avoid the freewheeling risks that Citigroup and the rest of the financial industry undertook after Mr. Rubin, with Mr. Summers, helped tear down the regulatory walls between banks, brokerages and insurance companies, and freed them to trade in unregulated and little-understood derivatives worth trillions of dollars. Mr. Geithner spent his first years as president of the Federal Reserve Bank of New York seeking ways to at least monitor those markets better.

Instead of balancing budgets, the Obama team will be going deeper into debt for at least two years by spending hundreds of billions of dollars more to stimulate the economy, without concern for deficits, for aid to the jobless, states and cities; tax cuts for workers; and job-creating construction of roads, schools and other public works.

The Times also points out concerns from liberal economists:

Yet Rubin critics remain, mostly in Mr. Obama's own Democratic Party among liberals and union members who favor even more domestic spending and more protectionist trade policies.

"What worries me is there is not one person in the senior group who is the outsider to this club," said Robert Kuttner, a colleague of Mr. Bernstein's at the liberal Economic Policy Institute who has written a book, "Obama's Challenge," about approaches to the economic crisis. "Where is the diversity of opinion in this economic team?" Mr. Kuttner asked.

Yet even Mr. Kuttner has warmed to some he calls Rubinistas. He praises Mr. Geithner for not hailing from a Wall Street investment bank and for being "among the toughest on the need to re-regulate" the financial industry from his perch at the New York Federal Reserve.

Yes, the chumminess worries me too. But it is duly noted.

My issue with the NY Times, the WSJ and other media groups is, Where were they four or five years ago when CDS's and CDO's were getting tossed around like poker chips? That's the biggest lapse in journalism since the Iraq War.

At the Wall Street Journal and the NY Times archives, I searched the terms "CDO" and "collateralized debt obligations," "CDS" and "credit default swap" and the first mention of them was in 2008. Even Krugman, although repeatedly warning about the housing bubble and impending collapse, didn't point out how these financial instruments were destroying the banking industry.

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by: CaptCT @ Thu Dec 04, 2008 at 09:39:52 AM CST