Wall Street's Influence On Barack Obama

Two spheres of influence appear to circle around Barack Obama. Wall Street investment bankers, who have paid, through donations, to sit at the Obama table, and fellow traveling lefties who appear to be kindred spirits with Obama. Here's a breakdown on the Wall Street influence.

Naturally, Goldman Sachs won't miss a beat with the Obama Administration.

Governor Jon Corzine of New Jersey, former CEO of Goldman Sachs is close to Obama, and what I call the Robert Rubin Wing of Goldman Sachs will have a very strong presence in the Obama Administration. Rubin served as Co-Chairman and Co-Senior Partner at Goldman Sachs from 1990 to 1992. He later became Secretary of the Treasury in the Clinton Administration. He is now Director and Senior Counselor of Citigroup, and co-Chairman of the Council on Foreign Relations. In addition to Rubin, himself, being a player in the Obama Administration, many around Rubin appear to have likely roles in an Obama Administration.

Lawrence H. Summers, rumored to be a strong candidate for the position of Treasury Secretary, served under Rubin as Deputy Secretary, when Rubin was Treasury Secretary. He also is an Advisory Council Member of Rubin's very own think tank, The Hamilton Project.

Jason Furman, a senior fellow at The Hamilton Project, is an economic adviser to Obama and is likely to be offered some position in an Obama Administration.

Others from the Rubin Wing of Goldman that may end up with positions in the coming Obama Administration are:

Michael Froman, a top executive at Citigroup, who served as Rubin's chief of staff at Treasury.

Jamie Rubin, the son of the former Treasury secretary.

Kevin Thurm, an executive at Citigroup.

Frank Brosens, who runs Taconic Capital Advisors and is seen as very close to Rubin.

Non-Goldman players close to Obama include:

Jamie Dimon, chairman and CEO of JPMorgan Chase & Co

Robert Wolf, an investment banker and CEO of UBS Americas

Mark Gallogly, a private-equity expert who used to work for Blackstone

Jim Torrey, Hedge fund manager Jim Torrey

Josh Gotbaum, the former chief executive of the September 11 Fund who has worked for the Carter and Clinton administrations and Lazard Freres.

Obama has also relied on the left leaning, pro-tax hikes, senior advisers Warren Buffett and Paul Volcker.

At a recent conference held by the Financial Professionals Association, economist Marty Feldstein told the conference that Buffett and Volcker were being used by Obama as fronts to hide a much more radical left agenda that Obama believes in.

Obama's Core Belief System

The soundbites off the release of the Obama Chicago Public Radio interview, do not surprise U.S. News and World Report's James Pethokoukis:

This should be a Saturday Night Live sketch. Use the court to redistribute wealth? Really? The Warren court was not radical? Really? Anyone could craft a theoretical justification to use the court to spread the wealth? Really? This all strikes me as highly weird...Keep in mind, now, that every Obama economic adviser I can think of—Warren Buffett, Austan Goolsbee, Jason Furman, Robert Rubin, Lawrence Summers, Jared Bernstein—thinks that we need higher income and investment taxes to deal with income inequality and that tax rates would pretty much have to double before they would hurt the economy. So Obama's comments reflect a core belief system that he's apparently held for years and continues to hold.

Will we yearn for the days gone by when only the banks were nationalized and Paulson stuffed billions into the pockets of his crony buddies?

Jason Furman Doesn't Get It

As we have pointed out before, Barack Obama's economic advisor, Jason Furman, does not seem to have a clue about business cycles or the unique power and importance of the Federal Reserve.

David Wessel at WSJ moderates an ongoing debate on economics between Furman and, McCain economic advisor, Douglas Holtz-Eakin.

Wessel put the following question to both:

QUESTION #6: Would it be a good idea for the Federal Reserve to set a public, numerical target for inflation, as some officials there have advocated? Would it be consistent with the dual mandate Congress has given the Fed — to aim for maximum sustainable employment and stable prices

This would have been an ideal opportunity to stress the importance of the Fed, instead Furman mouthed off some platitudes about the need for Fed independence and then switched the subject away from the Fed:

Barack Obama respects the independence of the Federal Reserve and does not comment on the Federal Reserve’s policy actions. He believes that the Federal Reserve plays a critical role in price stability and in maintaining full employment.

But it’s important to understand that the Fed doesn’t act in isolation. There are many things we could be doing that we’re not that would help with both inflation and the overall economy. For example: aggressive actions to limit the fallout in the housing market, repair our financial markets, and jumpstart economic growth would ease the pressure on the Fed to be the sole tool in fighting the recession, and in the process potentially Barack Obama respects the independence of the Federal Reserve and does not comment on the Federal Reserve’s policy actions. He believes that the Federal Reserve plays a critical role in price stability and in maintaining full employment.

With over four million unsold houses in the country, Furman has to be clueless to think there is any action other than Fed money printing that will result in houses clearing at present price levels. Just what aggressive action is he talking about?

Further, the fact that he mentions, "aggressive actions... would ease the pressure on the Fed to be the sole tool in fighting the recession, and in the process potentially limit some of potential side effects from the Federal Reserve’s policy in terms of inflation and the value of the dollar," suggests he does not realize that, to date, the Fed has been sterilizing its bailout activities by either liquidating Treasuries from its portfolio or exchanging them for junk on the books of various banks. This means that to date there is ZERO inflation impact from the Fed's activities, and zero impact on the value of the dollar.

McCain's man, Eakin, also throws out a bunch of platitudes, but at least he doesn't fool himself into thinking there is some sort of non-Fed aggressive action that can be taken to turn the housing market around:

The cumulative success of the Federal Reserve over the 20th century in establishing its credibility, independence, and regulatory support of financial markets under its current dual mandate is quite impressive. Accordingly, this argues for caution in changing the statutory foundations of the Federal Reserve system, especially dictating a numerical inflation target. From the perspective of the Fed, there has been a steady evolution of the Fed in the frequency, character, and volume of its communications with market participants; steps take by the Fed under the dual mandate toward better economic performance for America’s workers and their families. The Fed itself will be best-positioned to determine if it can better meet its obligations by communicating to markets and the economy as a whole in the form of a numerical target

Bleg

If anyone knows of any connection between Obama economic advisor, Jason Furman, and the extreme left wing organizaton, ACORN, please email me details.

Thanks.

RW

CNBC’s Squawk Box to Host Debates on Economy

CNBC's morning show, Squawk Box, will host a series of debates on the economy featuring advisors to both the Obama and McCain campaigns.

The first debate will be Thursday, July 10, at 7:30 a.m. and they will continue, once a week, for five weeks.

First debate will be un job growth July 10 by Jason Furman, economic-policy director for the Obama campaign, and Douglas Holtz-Eakin, economic adviser to McCain.

Obama's Economic Policy Director Disses Free Markets

Barack Obama's Economic Policy Director, Jason Furman, was recently interviewed by CNBC's Larry Kudlow. In the interview Furman says the economy is getting "unbalanced". He uses the term while discussing raising taxes and increased funding of various government programs.

Some of the biggest threats to this economy are that it’s getting unbalanced. And it’s getting unbalanced, you see that in the fiscal deficit, you see that in cutting Head Start, you see that in under investment in research and healthcare for example. And it’s some of those imbalances that we need to redress. Those are the real threats to our economy. And we can’t redress those problems while continuing to let the most affluent keep every single one of those very generous tax cuts they’ve gotten over the last seven or eight years.

His reference to needed increased "investment in research and healthcare" is nothing more than a disrespect for free markets. Furman sees the markets failing and believes that the solution is Obama dolling out the money after it is taxed away from others.

Does Goldman Sachs Run The World? Part II: The Obama Infiltration

By far our most popular EPJ post, ever, has been our Does Goldman Sachs Run The World? post.

Here's an update on Goldman Sachs and their latest power move, the infiltration of the Barack Obama campaign.

The infiltration is led, of course, by Robert Rubin, former Co-Chairman of Goldman Sachs, and who is now advising Obama. There's is also some talk of him as Obama's VP.

Further, Obama has named Jason Furman, his top economic adviser. Furman, with Rubin, was an aide in the Clinton White House, and worked there directly under Rubin. He is also a close associate of Rubin through their work together on the Hamilton Project.

Which doesn't mean that current Goldman employees aren't paying attention to Obama. David Brooks of NYT reports that:

When you break it out by individual companies, you find that employees of Goldman Sachs gave more to Obama than workers of any other employer...Over the past few years, people from Goldman Sachs have assumed control over large parts of the federal government. Over the next few they might just take over the whole darn thing.

Opensecrets.org identifies Goldman Sachs as one of the most influential organizations in federal politics and reports that Goldman employees have donated $571,330 to Obama.

Obama Names Jason Furman As Economic Policy Director

Barack Obama today named Jason Furman as economic policy director, in an annoucement coming from the campaign.

A quick perusal of his writings, and you can only reach the conclusion that Furman doesn’t have a clue. There is no indication he understands business cycle theory or fears inflation. In fact, it appears he believes the economy can be micromanaged by government, while at the same time he is a Keynesian and an inflationary monetarist.

In the following quote, Furman manages to come off as a Keynesian and inflationary monetarist in the same sentence!

The good news is that the rate cuts will have a big effect on the economy — leading economic forecasters are predicting that the rebate checks and other stimulus measures will add about 0.7% to real GDP.

And once the fiscal and monetary madness makes everything fine, according to Furman, he is going to solve all the rest of government created problems with more government programs:

When the economy does start growing more strongly again, we should use that as an opportunity to focus on some of the long-run growth issues…We should also focus on reforming unemployment insurance, health insurance and taxation in ways that automatically reduce the severity of business cycles and, more important, cushion families from some of the worst downsides of those business cycles.

"Reforming unemployment and health insurance …in ways that can reduce the severity of business cycles” is a new one for me. What does health insurance have to do with the business cycle?

The man doesn’t have a clue, except when it come to understanding the con. He gets that:

…policymakers from both political parties have also been attracted to using the tax code for health reform because of the perception that the public prefers measures described as “tax cuts” to substantively similar measures that are treated in budgetary conventions as “spending increases.”