The banking system continues to reveal more ugly creases and cracks than an old hag with her make up off.
The latest to take a look at herself in the mirror, sans makeup, is Bank America. After a shotgun marriage to Merrill Lynch, the hag realizes that Mother Merrill is more a drag than a shot of youth and energy. B of A wanted out, reports indicate.
According to FT, several people close to BofA said that it had told the government that it wanted to scrap its takeover of Merrill Lynch last month after realising the depth of the investment bank’s losses in the fourth quarter.
The Treasury, however, reportedly will step up with billions more in cash to keep the marriage in tact. BofA has already been given $25bn in federal funds as part of the TARP program.
BofA and the Treasury have declined to comment, but reports indicate no final decision on the amount of funds to be injected in BofA has been taken. Rest assured it will be multi-billions.
Meanwhile, Robert Rubin's departure from Citi has that stock reeling. Citi shares plunged on Wednesday, closing down 23 per cent to $4.53, the lowest level since the government’s $300bn bail-out, that was guided in by Rubin.
The plunging stock price at Citi, along with the soaring cost of insuring against a Citi default, is raising concerns that the government might have to take additional steps to buttress the bank. This time, however, Citi won't have Mr. Insider, Bob Rubin, around to stick handle in any new bailout funds.
Looks like things are about to get interesting, again.
Showing posts with label RobertRubin. Show all posts
Showing posts with label RobertRubin. Show all posts
Thursday, January 15, 2009
Friday, January 9, 2009
The Robert Rubin Wing of Goldman Sachs Is Closed
Under continuing fire, Robert Rubin has resigned from Citigroup. Other than providing access to government coffers under favorable conditions, which kept Citigroup alive and prevented it from going the way of Lehman Bros., Bear Stearns and others, Rubin's period at Citi was viewed as a disaster, by many.
Rubin is stepping down as senior counselor, immediately. He will remain a director until the bank's annual meeting later this year.
In his resignation letter, Rubin admitted to not having foreseen the credit crisis and market deterioration, which caused roughly 88 percent of Citigroup's share price to evaporate over the last two years.
The bank has taken $45 billion from the government's Troubled Asset Relief Program, and in November won a federal bailout that will limit losses on $306 billion of toxic assets. Rubin played a major role in garnering these funds on favorable terms for Citi, but shareholder activists were more concerned with Rubin's role in the poor management of Citi. The activists have won with the departure of Rubin. Now, however, they have to run Citi without the access and protection Rubin provided. They obviously thought his price tag ($17 mllion per year) was too much for access, when he garbled everything else up.
It'll be back to polishing up government contacts for Rubin, now.
Rubin said he plans to focus more on outside activities and organizations, and "intensify" his work in public policy. He has worked on a transitional economic advisory board for President-elect Barack Obama.
Rubin is stepping down as senior counselor, immediately. He will remain a director until the bank's annual meeting later this year.
In his resignation letter, Rubin admitted to not having foreseen the credit crisis and market deterioration, which caused roughly 88 percent of Citigroup's share price to evaporate over the last two years.
The bank has taken $45 billion from the government's Troubled Asset Relief Program, and in November won a federal bailout that will limit losses on $306 billion of toxic assets. Rubin played a major role in garnering these funds on favorable terms for Citi, but shareholder activists were more concerned with Rubin's role in the poor management of Citi. The activists have won with the departure of Rubin. Now, however, they have to run Citi without the access and protection Rubin provided. They obviously thought his price tag ($17 mllion per year) was too much for access, when he garbled everything else up.
It'll be back to polishing up government contacts for Rubin, now.
Rubin said he plans to focus more on outside activities and organizations, and "intensify" his work in public policy. He has worked on a transitional economic advisory board for President-elect Barack Obama.
Tuesday, January 6, 2009
The Robert Rubin Wing of Goldman Sachs is Doing Well Under President-elect Obama
The Robert Rubin Wing of Goldman Sachs (Citigroup) did very well for itself under GW and Treasury Secretary Paulson.
It appears that the trend will continue under Obama. Dean Baker spots a very interesting tax break as part of Obama's "stimulus" package (my emphasis):
It appears that the trend will continue under Obama. Dean Baker spots a very interesting tax break as part of Obama's "stimulus" package (my emphasis):
Baker then asks the big question:The media seem to have largely overlooked the Citigroup tax credit in their discussion of the latest items in President Obama's stimulus proposal. According to theWashington Post, the proposal will allow companies to write off current losses against taxes paid over the last 4-5 years, not just 2 years,as in current law.
There are relatively few companies that could benefit from this tax break since most companies will not have losses so large that they would need more than two years of tax payments to balance them against. But, really big losers, like Robert Rubin's Citigroup, and other badly failing financial institutions, are losing much more money in 2008 and 2009 than they earned in 2006 and 2007.
Did the political connections of Robert Rubin and others in the financial industry have anything to do with the decision of Obama's economic team to be so generous to them? I don't have an answer to that question, but the media should be asking it.How tight are Obama and Rubin? Very tight.
Wednesday, December 3, 2008
What Exactly Did Robert Rubin Do To Earn $115 Million?
WSJ is asking:
Oh, to be the head of Goldman Sachs and a Treasury Secretary, this is a club you want to get into.
Citi wasn't stupid paying Rubin what they paid him. That's how insiders operate. Many, many years ago I worked for a money manager of sorts, who had this high powered white shoe law firm on his payroll. Month after month, he sent this firm a pretty big check. I never saw any of them and they certainly weren't doing any work for the firm. At the time, I didn't understand it. Why was my man sending this firm this huge check, which it appeared he had been doing for years? Then one day a knock came on the door and my man appeared to be in, shall we say, a little trouble. My man called the law firm he had been sending checks to for years, and they came over and sat down with the people who knocked on the door, all like true gentlemen, the white shoe lawyers all wore suspenders and horn rimmed glasses, and they all discussed this "misunderstanding" .
Something that usually doesn't go away very easily, completely went away. The door knockers went to knock on other doors of those who didn't have a downtown law firm on retainer.
That's what Rubin is there for at Citi, so that if a problem arises, he can sit down like a gentlemen, solve sticky problems and rape taxpayers when necessary.
Was Mr. Rubin to be primarily a member of the board overseeing management, or a part of the management reporting to the board? Things became even murkier when Messrs. Weill and Reed described Mr. Rubin's job: "Bob will participate in strategic managerial and operational matters of the Company, but will have no line responsibilities."Then WSJ reaches the only conclusion possible. He was the fixer. As former Treasury Secretary and former head of Goldman Sachs, he's the man with the insider hook-up:
As a great man of finance, Mr. Rubin would be paid CEO money -- a total of $115 million since 1999, not including stock options -- but without having to run a business or be accountable for the results. For years, journalists tried to figure out exactly what Mr. Rubin's job was at Citigroup, and perhaps even his fellow Citi directors weren't entirely sure.
Mr. Rubin was reportedly critical to securing the latest federal bailout of Citi -- $20 billion in preferred shares plus taxpayers taking on most of the risk in a $306 billion portfolio of dodgy assets. This is on top of the $25 billion in Citi preferred shares that taxpayers bought in October. Giving Mr. Rubin the benefit of the doubt that he is the fixer who delivered the federal cash, this could make his paycheck appear more reasonable to many shareholders.Former Treasury Secretary and former Goldman CEO Rubin cut a deal with current Treasury Secretary and former Goldman Sachs CEO Henry Paulson for billions in taxpayer money and guarantees. Cute, eh?
Oh, to be the head of Goldman Sachs and a Treasury Secretary, this is a club you want to get into.
Citi wasn't stupid paying Rubin what they paid him. That's how insiders operate. Many, many years ago I worked for a money manager of sorts, who had this high powered white shoe law firm on his payroll. Month after month, he sent this firm a pretty big check. I never saw any of them and they certainly weren't doing any work for the firm. At the time, I didn't understand it. Why was my man sending this firm this huge check, which it appeared he had been doing for years? Then one day a knock came on the door and my man appeared to be in, shall we say, a little trouble. My man called the law firm he had been sending checks to for years, and they came over and sat down with the people who knocked on the door, all like true gentlemen, the white shoe lawyers all wore suspenders and horn rimmed glasses, and they all discussed this "misunderstanding" .
Something that usually doesn't go away very easily, completely went away. The door knockers went to knock on other doors of those who didn't have a downtown law firm on retainer.
That's what Rubin is there for at Citi, so that if a problem arises, he can sit down like a gentlemen, solve sticky problems and rape taxpayers when necessary.
Wednesday, November 26, 2008
Citi Never Sleeps,' Says the Bank's Advertising Slogan. But Its Directors Apparently Do...
....so says WSJ, as the Rupert Murdoch media empire has gone into attack mode against the Citigroup board of directors.
A New York Post editorial is calling for all of the directors to be removed and the Wall Street Journal saying most of them did not deserve to remain. Murdoch owns both papers.
Says WSJ:
WSJ calls for the resignation of Chairman Sir Win Bischoff, who has held senior positions at Citi since 2000, and seven fellow directors, former Treasury Secretary Robert Rubin, John Deutsch, Richard Parsons, Franklin Thomas, Michael Armstrong, Alain Belda, and Kenneth Derr, who have all served for more than 9 years.
NyPo keeps things simple.
The Headline: BOUNCE THESE BOZO BANKERS
The Conclusion:
A New York Post editorial is calling for all of the directors to be removed and the Wall Street Journal saying most of them did not deserve to remain. Murdoch owns both papers.
Says WSJ:
When taxpayers are being asked to provide the equivalent of $1,000 each in guarantees on Citi's dubious investments, how can these men possibly deserve to remain on the board?
WSJ calls for the resignation of Chairman Sir Win Bischoff, who has held senior positions at Citi since 2000, and seven fellow directors, former Treasury Secretary Robert Rubin, John Deutsch, Richard Parsons, Franklin Thomas, Michael Armstrong, Alain Belda, and Kenneth Derr, who have all served for more than 9 years.
NyPo keeps things simple.
The Headline: BOUNCE THESE BOZO BANKERS
The Conclusion:
There should be no mistake about where the responsibility resides.
That would be with the Citigroup board of directors - and Robert Rubin in particular.
Monday, November 24, 2008
It's The Rubin Robots
Jackie Calmes at IHT fills in more pieces to the puzzle:
It is testament to former Treasury Secretary Robert Rubin's star power among many Democrats that as President-elect Barack Obama fills out his economic team, a virtual Rubin constellation is taking shape.
The president-elect's choices for his top economic advisers — Timothy Geithner as Treasury secretary, Lawrence Summers as senior White House economics adviser and Peter Orszag as budget director — are past protégés of Rubin, who held two of those jobs under President Bill Clinton. Even the headhunters for Obama have Rubin ties: Michael Froman, Rubin's chief of staff in the Treasury Department who followed him to Citigroup, and James Rubin, Rubin's son.
LOL: Krugman Blames Lame Duck Bush Administration for Rape of Taxpayers in Citi Bailout
Says Krugman:
In fact, this bailout has Citigroup vice-president and "senior counselor" Robert Rubin's fingerprints all over it. And that means the incoming Obama team was all over the deal, since Rubin's robots are all in position to run Obama economics. And, don't forget, the next Treasury Secretary, Tim Geithner, a Rubin robot, was also in the room that cut the Citi deal. Geithner is current NY Fed Prez and future Treasury Secretary, do you think he might have had some say in this new rape of the taxpayer?
The Bush Administration was at the scene of this crime, but, make no mistake, the capo in charge was Obama's man Rubin. Nothing in this bailout would have changed in a post Jan. 19 bailout.
Amazing how much damage the lame ducks can do in the time remaining,
In fact, this bailout has Citigroup vice-president and "senior counselor" Robert Rubin's fingerprints all over it. And that means the incoming Obama team was all over the deal, since Rubin's robots are all in position to run Obama economics. And, don't forget, the next Treasury Secretary, Tim Geithner, a Rubin robot, was also in the room that cut the Citi deal. Geithner is current NY Fed Prez and future Treasury Secretary, do you think he might have had some say in this new rape of the taxpayer?
The Bush Administration was at the scene of this crime, but, make no mistake, the capo in charge was Obama's man Rubin. Nothing in this bailout would have changed in a post Jan. 19 bailout.
CITIGROUP BAILOUT: It's Up To $306 Billion in Guarantees Plus Equity Infusion
The United States government will guarantee up to $306 billion of Citigroup assets, as part of a major bailout of Citi.
In addition, Citi will receive a capital injection of $20 billion. As part of the capital injection, the U.S. government will receive warrants exercisable at $10.61 on 254 million shares. Given the stock closed Friday at $3.77, this is a non-dilutive deal on a per share price basis for Citi shareholders.
THIS IS THE FIRST DEAL DONE BY THE GOVERNMENT WHERE SHAREHOLDERS HAVE NOT BEEN FORCED TO TAKE HUGE HITS ON THEIR STOCK POSITIONS. Freddie and Fannie shareholders are likely to lose everything. Lehman Brothers is in bankruptcy and Bear Stearns shareholders received less than 50% of the closing price on the last day Bear Stearns traded before the government rescue. In this deal, if the warrants are exercised, the government will pay more than 280% above the closing price on Friday.
It pays to be the Robert Rubin wing of Goldman Sachs.
UPDATE: Unlike Freddie, Fannie, Bear and Lehman, no one at Citi in senior management will lose their jobs. Bobby R. has their back.
In addition, Citi will receive a capital injection of $20 billion. As part of the capital injection, the U.S. government will receive warrants exercisable at $10.61 on 254 million shares. Given the stock closed Friday at $3.77, this is a non-dilutive deal on a per share price basis for Citi shareholders.
THIS IS THE FIRST DEAL DONE BY THE GOVERNMENT WHERE SHAREHOLDERS HAVE NOT BEEN FORCED TO TAKE HUGE HITS ON THEIR STOCK POSITIONS. Freddie and Fannie shareholders are likely to lose everything. Lehman Brothers is in bankruptcy and Bear Stearns shareholders received less than 50% of the closing price on the last day Bear Stearns traded before the government rescue. In this deal, if the warrants are exercised, the government will pay more than 280% above the closing price on Friday.
It pays to be the Robert Rubin wing of Goldman Sachs.
UPDATE: Unlike Freddie, Fannie, Bear and Lehman, no one at Citi in senior management will lose their jobs. Bobby R. has their back.
Sunday, November 23, 2008
It's the Robert Rubin Wing Of Goldman Sachs That Will Be In Charge of Obama Economic Policy
So says WSJ:
Rubin was Vice Chairman and Co-Chief Operating Officer from 1987 to 1990. From the end of 1990 to 1992, Rubin served as Co-Chairman and Co-Senior Partner along with Stephen Friedman. He then served as the 70th United States Secretary of the Treasury during both the first and second Clinton administrations.
He now is Director and Senior Counselor of Citigroup where he draws an annual salary of $17 million.
The supermerger between Travelers Group and Citicorp was facilitated by the repeal of the Glass-Steagall Act (Gramm-Leach-Bliley Act). This legislation was passed under the Clinton administration, days before Rubin's resignation. Some believe that Rubin's $17 million Citi salary is quid quo pro for his role in the repeal of Glass-Stegall.
The new economic team emerges from the Democratic Party's moderate flank, with Mr. Rubin as the common denominator. Mr. Summers was Mr. Rubin's longtime deputy at Treasury and then succeeded Mr. Rubin as Treasury secretary. Mr. Geithner was a senior aide at Treasury during this period.
Peter Orszag, who will be Mr. Obama's budget director, was the first director of the Hamilton Project, a program co-founded by Mr. Rubin at the Brookings Institution, a think tank...
Rubin was Vice Chairman and Co-Chief Operating Officer from 1987 to 1990. From the end of 1990 to 1992, Rubin served as Co-Chairman and Co-Senior Partner along with Stephen Friedman. He then served as the 70th United States Secretary of the Treasury during both the first and second Clinton administrations.
He now is Director and Senior Counselor of Citigroup where he draws an annual salary of $17 million.
The supermerger between Travelers Group and Citicorp was facilitated by the repeal of the Glass-Steagall Act (Gramm-Leach-Bliley Act). This legislation was passed under the Clinton administration, days before Rubin's resignation. Some believe that Rubin's $17 million Citi salary is quid quo pro for his role in the repeal of Glass-Stegall.
Friday, November 21, 2008
Tim Geither In Profile
According to various news sources, Tim Geithner will be nominated as Treasury Secretary by Barack Obama. An official announcement is expected Monday.
Judging by his actions it does not appear Giethner believes in free markets. For him, the government needs to stand by with buckets and buckets of money.
According to reports, in 1997 he was instrumental in pushing then Treasury Secretary Rubin to OK a bailout of South Korea.
Geithner also was reportedly behind the $29 billion guarantee against losses that the Fed made to JP Morgan when JPM purchased Bear Stearns. The guarantees against losses, it should be noted was in addition to the fact that JPM stole Bear Stearns at a huge discount from its liquidation value.
His interventionist credentials are pretty well established on Wall Street. Here's Larry Kudlow's thinking on Geithner ans the next tranche of the $700 Billion Paulson boondoggle:
Geithner graduated from Dartmouth College with a bachelor’s degree in government and Asian studies in 1983 and from the Johns Hopkins School of Advanced International Studies with a master’s in International Economics and East Asian Studies in 1985, according to his official bio on the New York Fed site.
He joined the Treasury in 1988 and worked in three administrations, serving as Under Secretary of the Treasury for International Affairs from 1999 to 2001 under Treasury Secretaries Robert Rubin and Larry Summers.
He also worked for Kissinger Associates for three years.
He become New York Fed president in 2003. In that capacity, he worked as the vice chairman and a permanent member of the Federal Open Market Committee, the group responsible for formulating the nation's monetary policy.
One side note. Geithner graduated from the International School of Bangkok, Thailand. His father appears to be a possible CIA agent and is listed by the New York Times as the "program officer in charge of developing countries for the Ford Foundation."
Geithner falls under the Robert Rubin wing of Goldman Sachs influence, as he worked for Rubin when Rubin was Treasury Secretary.Geithner also serves as chairman of the G-10’s Committee on Payment and Settlement Systems of the Bank for International Settlements. He is a member of the Council on Foreign Relations and the Group of Thirty.
But it is his interventionist bent that could prove we have a major inflationist at Treasury. One Obama confident relates a recent conversation between an associate and a Fed official, in which the latter complained, "Christ, Geithner wants to save everybody."
More money hand outs to Wall Street, no wonder the market jumped 500 points on news of the Geithner selection.
Judging by his actions it does not appear Giethner believes in free markets. For him, the government needs to stand by with buckets and buckets of money.
According to reports, in 1997 he was instrumental in pushing then Treasury Secretary Rubin to OK a bailout of South Korea.
Geithner also was reportedly behind the $29 billion guarantee against losses that the Fed made to JP Morgan when JPM purchased Bear Stearns. The guarantees against losses, it should be noted was in addition to the fact that JPM stole Bear Stearns at a huge discount from its liquidation value.
His interventionist credentials are pretty well established on Wall Street. Here's Larry Kudlow's thinking on Geithner ans the next tranche of the $700 Billion Paulson boondoggle:
As for the TARP bailout story, it is generally believed that Geithner is a strong interventionist. And so we can expect him to move toward raising the second $350 billion tranche of the originally authorized $700 billion package by Congress.
Geithner graduated from Dartmouth College with a bachelor’s degree in government and Asian studies in 1983 and from the Johns Hopkins School of Advanced International Studies with a master’s in International Economics and East Asian Studies in 1985, according to his official bio on the New York Fed site.
He joined the Treasury in 1988 and worked in three administrations, serving as Under Secretary of the Treasury for International Affairs from 1999 to 2001 under Treasury Secretaries Robert Rubin and Larry Summers.
He also worked for Kissinger Associates for three years.
He become New York Fed president in 2003. In that capacity, he worked as the vice chairman and a permanent member of the Federal Open Market Committee, the group responsible for formulating the nation's monetary policy.
One side note. Geithner graduated from the International School of Bangkok, Thailand. His father appears to be a possible CIA agent and is listed by the New York Times as the "program officer in charge of developing countries for the Ford Foundation."
Geithner falls under the Robert Rubin wing of Goldman Sachs influence, as he worked for Rubin when Rubin was Treasury Secretary.Geithner also serves as chairman of the G-10’s Committee on Payment and Settlement Systems of the Bank for International Settlements. He is a member of the Council on Foreign Relations and the Group of Thirty.
But it is his interventionist bent that could prove we have a major inflationist at Treasury. One Obama confident relates a recent conversation between an associate and a Fed official, in which the latter complained, "Christ, Geithner wants to save everybody."
More money hand outs to Wall Street, no wonder the market jumped 500 points on news of the Geithner selection.
While Citi Crashes...
Citigroup stock is trading below $4.00 this morning, way off its all time high of $54.00.
Yesterday during a telephone conversation, investment advisor Bill Smith of SAM Advisors pointed out to me the absurdity of the current Citigroup situation.
Since Citi is crashing, you would think that the board of Citi would spend extra time focusing on Citi to right the ship. Instead 20% of Citi's board is part of Barack Obama's transition team: Robert Rubin, Richard Parsons, Chairman of Time Warner Inc. and Anne Mulcahy, Chairman and CEO of Xerox Corporation.
Smith is also highly suspicious of what Rubin does to earn his $17 million per year. Rubin thinks the salary is a quid pro quo from Citi for Rubin's taking down the Glass Stegall Act, while he was Treasury Secretary.
Yesterday during a telephone conversation, investment advisor Bill Smith of SAM Advisors pointed out to me the absurdity of the current Citigroup situation.
Since Citi is crashing, you would think that the board of Citi would spend extra time focusing on Citi to right the ship. Instead 20% of Citi's board is part of Barack Obama's transition team: Robert Rubin, Richard Parsons, Chairman of Time Warner Inc. and Anne Mulcahy, Chairman and CEO of Xerox Corporation.
Smith is also highly suspicious of what Rubin does to earn his $17 million per year. Rubin thinks the salary is a quid pro quo from Citi for Rubin's taking down the Glass Stegall Act, while he was Treasury Secretary.
Thursday, November 20, 2008
A Bet On The Robert Rubin Wing of Goldman Sachs
Prince Alwaleed bin Talal's Kingdom Holding said Alwaleed will increase his Citigroup stake, his largest holding, to 5 percent. His holdings in Citi are currently less than 4%.
In his mysterious role at Citi as "Director and Senior Counselor", since joining the bank n 1999, Rubin has pulled down $150 million in salary and bonuses.
In his mysterious role at Citi as "Director and Senior Counselor", since joining the bank n 1999, Rubin has pulled down $150 million in salary and bonuses.
Saturday, November 15, 2008
Hank Paulson Must Think Water Freezes at 60 Degrees
The latest news from our Treasury Secretary is that the consumer credit markets are frozen. The only problem is that Hank Paulson's idea of frozen is different than yours and mine. This guy is probably the only person lookng, in August, for the ice skating rink in New York's Central Park.
Robert Higgs explains:
Robert Higgs explains:
Notwithstanding the many developments on the bailout front during the past six weeks, the New York Times, like other media outlets, continues to quote Wall Street insiders who report, as Alex Roever of JPMorgan Chase did recently: "You have a market that is frozen." What planet do these guys live on? It certainly is not the same one to which the Federal Reserve's data apply. I’ve been singing this song for many weeks, but I’m going to keep singing it until somebody in the news media wakes up and realizes that these "frozen credit market" tales are pure hooey. Look at the data, for crissake. By now we should all be ready to move beyond hysteria, get a grip on reality, and begin thinking about how to repeal everything the government has done during the past six weeks...My gut tells me that in Henry's mind unfreezing this non-frozen market means shipping more billions to the Robert Rubin wing of Goldman Sachs, i.e. Citigroup.
Memo to NYT: check the data on consumer loans published by the Federal Reserve System. The latest report, dated November 7, says: "Consumer credit increased at an annual rate of 1-1/4 percent in the third quarter. Revolving credit increased at an annual rate of 2-1/2 percent, and nonrevolving credit increased at an annual rate of 1/2 percent. In September, consumer credit increased at an annual rate of 3-1/4 percent." Would you describe this report as indicating a "frozen" credit market? Total consumer credit outstanding in September, $2,588 billion, exceeded the average amount outstanding in any year from 2003 to 2007, the period of the credit bubble.
Monday, November 10, 2008
Treasury Secretary Paulson Lied to Congress
I don't know how else to interpret this report from WSJ:
Of course, as we now know, the money has gone mostly to solvent financial institutions and in the form of equity investments. With Goldman Sachs, Paulson's old firm, and the Robert Rubin wing of Goldman, Citigroup, among the first to get billions from the Treasury.
Mr. Paulson wanted flexibility to use the money any way he saw fit. Privately, he told his staff that equity injections might be needed. But in public testimony, he all but ruled out that option, describing it as something a government would do for failing institutions, not the solvent ones he wanted to assist.
Of course, as we now know, the money has gone mostly to solvent financial institutions and in the form of equity investments. With Goldman Sachs, Paulson's old firm, and the Robert Rubin wing of Goldman, Citigroup, among the first to get billions from the Treasury.
Friday, November 7, 2008
The Obama Press Conference: John Maynard Keynes and the Oligarchs Are Alive and Well
John Maynard Keynes and Oligarchs appear to be alive, well and ready for the Obama Administration.
In Barack Obama's first press conference, since winning the presidential election, Obama sounded like a typical big spending Democrat. In opening remarks, he called for a "rescue package" for the middle class, unemployment extensions and other fiscal stimulus. He also said that something had to be done for the automobile industry since it is "the backbone of the country." Somewhere, John Maynard Keynes and Marx are blushing.
Obama did not address how any of these proposals would be paid for.
I took special note of some of the members of his "economic transition advisory team", most of whom stood behind him as he promised to do vasts sums more spending than Imelda Marcos ever did during a good shoe shopping trip to New York City. It was a politically correct mixed crowd that included many women, a Latino and even another African-American, interspersed with oligarchs. Just what you need to fight a downturn in the economy, a politically correct group and oligarchs.
The oligarchs we were told included Warren Buffett (who, golly shucks, usually just represents himself) and Robert Rubin (former Goldman Sachs CEO, now running the Rubin/Citigroup wing of Goldman),but both failed to appear in chorus line fashion behind Obama for the press conference, as did the politically correct and other oligarchs and oligarch representatives.
At the press conference chorus line, the towering Paul Volcker was there, who has been a career long Rockefeller operative. The tiny Robert Reich was there, who was most likely invited as a reward for his regular bashing, on his blog, of Hillary, during the primaries.
An oligarch stepped a bit out of the shadows for the chorus line, Chicago-based Penny Pritzker, who was an early Obama backer, was there. Pritzker served as Obama's National Finance Chair. She and her husband hosted a $28,500 per plate fundraiser for Obama's campaign in Chicago with Warren Buffett and his wife, and Obama advisor Valerie Jarrett. She is also a member of the Council on Foreign Relations. She is 135th richest person on the Forbes 400 list of "America's wealthiest," with an estimated net worth of $2.8 billion US. If one was forced to come up with one name that Obama answers to, Penny Pritzker would not be a bad choice. They are on each others cell phone speed dials, guaranteed.
The Chicago Political Machine was well represented by Mayor Richard Daley's brother William, who also is a member of the executive committee at JP Morgan Chase.
Google's Chairman Eric Schmidt was part of the chorus line.
Much to my surprise, Los Angeles Mayor Antonio Villaraigosa was the token Latino. Readers will recall I had a Q & non-A encounter with the mayor, only a few weeks back.
In short, no one in this group strikes me as the type that understands Say's Law, never mind the business cycle. They all are very good, though, at protecting the very powerful interests that they are aligned with, nothing else. The oligarchs are sleeping very well tonight.
In Barack Obama's first press conference, since winning the presidential election, Obama sounded like a typical big spending Democrat. In opening remarks, he called for a "rescue package" for the middle class, unemployment extensions and other fiscal stimulus. He also said that something had to be done for the automobile industry since it is "the backbone of the country." Somewhere, John Maynard Keynes and Marx are blushing.
Obama did not address how any of these proposals would be paid for.
I took special note of some of the members of his "economic transition advisory team", most of whom stood behind him as he promised to do vasts sums more spending than Imelda Marcos ever did during a good shoe shopping trip to New York City. It was a politically correct mixed crowd that included many women, a Latino and even another African-American, interspersed with oligarchs. Just what you need to fight a downturn in the economy, a politically correct group and oligarchs.
The oligarchs we were told included Warren Buffett (who, golly shucks, usually just represents himself) and Robert Rubin (former Goldman Sachs CEO, now running the Rubin/Citigroup wing of Goldman),but both failed to appear in chorus line fashion behind Obama for the press conference, as did the politically correct and other oligarchs and oligarch representatives.
At the press conference chorus line, the towering Paul Volcker was there, who has been a career long Rockefeller operative. The tiny Robert Reich was there, who was most likely invited as a reward for his regular bashing, on his blog, of Hillary, during the primaries.
An oligarch stepped a bit out of the shadows for the chorus line, Chicago-based Penny Pritzker, who was an early Obama backer, was there. Pritzker served as Obama's National Finance Chair. She and her husband hosted a $28,500 per plate fundraiser for Obama's campaign in Chicago with Warren Buffett and his wife, and Obama advisor Valerie Jarrett. She is also a member of the Council on Foreign Relations. She is 135th richest person on the Forbes 400 list of "America's wealthiest," with an estimated net worth of $2.8 billion US. If one was forced to come up with one name that Obama answers to, Penny Pritzker would not be a bad choice. They are on each others cell phone speed dials, guaranteed.
The Chicago Political Machine was well represented by Mayor Richard Daley's brother William, who also is a member of the executive committee at JP Morgan Chase.
Google's Chairman Eric Schmidt was part of the chorus line.
Much to my surprise, Los Angeles Mayor Antonio Villaraigosa was the token Latino. Readers will recall I had a Q & non-A encounter with the mayor, only a few weeks back.
In short, no one in this group strikes me as the type that understands Say's Law, never mind the business cycle. They all are very good, though, at protecting the very powerful interests that they are aligned with, nothing else. The oligarchs are sleeping very well tonight.
Thursday, November 6, 2008
Alert: Obama Press Conference
US President-elect Barack Obama and Vice President-elect Joe Biden will hold a news conference at 2:30 EST on Friday after meeting with their team of economic advisers to discuss the transition to the White House.
Obama and Biden will be joined by economic advisers, including former Treasury Secretaries Lawrence Summers and Robert Rubin, former Chairman of the Federal Reserve Paul Volcker, former Securities and Exchange Commissioner William Donaldson and several others. Berkshire Hathaway Chairman Warren Buffett will participate via phone.
All major networks are expected to carry the press conference live.
Obama and Biden will be joined by economic advisers, including former Treasury Secretaries Lawrence Summers and Robert Rubin, former Chairman of the Federal Reserve Paul Volcker, former Securities and Exchange Commissioner William Donaldson and several others. Berkshire Hathaway Chairman Warren Buffett will participate via phone.
All major networks are expected to carry the press conference live.
Wednesday, November 5, 2008
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.
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.
Monday, October 27, 2008
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:
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?
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?
Wednesday, September 3, 2008
Sarah Palin Appearances Cancelled; Meets With AIPAC
Except for a meeting with the pro-Israel lobby AIPAC, Sarah Palin appearances have been canceled, according to WSJ. "She has to familiarize herself with every position John McCain has held over a number of years. That takes work and briefing," one McCain aide said. She has been kept from contact with the media and others by Republican operatives. Palin spent Tuesday in her hotel suite meeting with campaign aides and working on her speech.
She had private sessions with Connecticut Sen. Joe Lieberman and members of the pro-Israel group AIPAC. An AIPAC spokesman said Gov. Palin told its members she would "work to expand and deepen the strategic partnership between the U.S. and Israel."
Gov. Palin met with the campaign's top political advisers, including McCain campaign manager Rick Davis, senior strategist Steve Schmidt and Mark Salter, Sen. McCain's closest aide. The campaign released a photo of her sitting with Laura Bush and Cindy McCain, the wife of her running mate, but didn't provide any other details.
She also met with Douglas Holtz-Eakin, who handles domestic policy for the McCain campaign, and Randy Scheunemann, who directs foreign policy.
According to WSJ, beginning next week, Gov. Palin will travel to battleground states, starting with Florida, a McCain aide said, and including a heavy dose of visits to rural areas. She has 16 fund-raisers scheduled for this month in swing states.
She had private sessions with Connecticut Sen. Joe Lieberman and members of the pro-Israel group AIPAC. An AIPAC spokesman said Gov. Palin told its members she would "work to expand and deepen the strategic partnership between the U.S. and Israel."
Gov. Palin met with the campaign's top political advisers, including McCain campaign manager Rick Davis, senior strategist Steve Schmidt and Mark Salter, Sen. McCain's closest aide. The campaign released a photo of her sitting with Laura Bush and Cindy McCain, the wife of her running mate, but didn't provide any other details.
She also met with Douglas Holtz-Eakin, who handles domestic policy for the McCain campaign, and Randy Scheunemann, who directs foreign policy.
According to WSJ, beginning next week, Gov. Palin will travel to battleground states, starting with Florida, a McCain aide said, and including a heavy dose of visits to rural areas. She has 16 fund-raisers scheduled for this month in swing states.
Tuesday, September 2, 2008
The Myth of Sarah Palin as Tax Cutter and Budget Cutter
Anne Kilkenny reports from Alaska:
And as governor, as I have already pointed out. Palin proposed a $750 million oil tax increase (bad enough). But it came out of the legislature at over $1.5 billion. According to Alaskan Andrew Halcro, "she signed it saying she thought it was close enough."
Palin signed into law a $6.6 billion operating budget—the largest in Alaska's history.
Palin proposed giving Alaskans $100-a-month energy debit cards. Of course, basic economics teaches the last thing you want to do, when a commodity is rising in price, is to encourage consumption. She also proposed providing grants to electrical utilities so that they would reduce customers' rates, again the last thing you want to do. She subsequently dropped the debit card proposal, and in its place she proposed to send Alaskans $1,200 directly.
In October 2007, Palin called a 30-day special session to raise the state's oil tax rate.
The governor's plan is called Alaska's Clear and Equitable Share, or ACES. Clear and equitable share? Doesn't sound very free market oriented--and it isn't.
It raises the state's current net profits tax on North Slope oil from a 22.5 percent to 25 percent base. There's also a "progressivity" surcharge where generally, when oil prices rise above roughly $50 a barrel, the tax rate increases by another .2 percent for each additional dollar a barrel. Thus, at $100 per barrel the tax jumps to 35 percent.
The bill also has a tax floor, at $40 per barrel. Palin said of her bill:
No tax cutter or budget cutter here.
Kilkenny report via Andrew Sullivan
During her 6 years as Mayor, she increased general government expenditures by over 33%. During those same 6 years the amount of taxes collected by the City increased by 38%.
She inherited a city with zero debt, but, despite the increase in taxes,left it with indebtedness of over $22 million.
What did Mayor Palin encourage the voters to borrow money for? Was it the infrastructure that she said she supported? The sewage treatment plant that the city lacked? or a new library? No. $1m for a park. $15m-plus for construction of a multi-use sports complex which she rushed through to build on a piece of property that the City didn’t even have clear title to, that was still in litigation 7 yrs later--to the delight of the lawyers involved! The sports complex itself is a nice addition to the community but a huge money pit, not the profit-generator she claimed it would be...While Mayor, City Hall was extensively remodeled and her office redecorated more than once.
And as governor, as I have already pointed out. Palin proposed a $750 million oil tax increase (bad enough). But it came out of the legislature at over $1.5 billion. According to Alaskan Andrew Halcro, "she signed it saying she thought it was close enough."
Palin signed into law a $6.6 billion operating budget—the largest in Alaska's history.
Palin proposed giving Alaskans $100-a-month energy debit cards. Of course, basic economics teaches the last thing you want to do, when a commodity is rising in price, is to encourage consumption. She also proposed providing grants to electrical utilities so that they would reduce customers' rates, again the last thing you want to do. She subsequently dropped the debit card proposal, and in its place she proposed to send Alaskans $1,200 directly.
In October 2007, Palin called a 30-day special session to raise the state's oil tax rate.
The governor's plan is called Alaska's Clear and Equitable Share, or ACES. Clear and equitable share? Doesn't sound very free market oriented--and it isn't.
It raises the state's current net profits tax on North Slope oil from a 22.5 percent to 25 percent base. There's also a "progressivity" surcharge where generally, when oil prices rise above roughly $50 a barrel, the tax rate increases by another .2 percent for each additional dollar a barrel. Thus, at $100 per barrel the tax jumps to 35 percent.
The bill also has a tax floor, at $40 per barrel. Palin said of her bill:
Progressiveness is the additional share we capture when oil prices and profits are high. I chose to set the progressiveness knob [i.e., the windfall profits tax] at a relatively low level in exchange for more security when prices are low. We accomplished this through a gross tax floor at our legacy fields. If the Legislature chooses to discard that floor, then the knob on progressiveness needs to be set higher — to make sure we capture a more equitable share when prices are high and profits extraordinary.
No tax cutter or budget cutter here.
Kilkenny report via Andrew Sullivan
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