An Analogy Robert Waldmann | November 19, 2010 7:56 am Robert Waldmann Matt Taibbi is to Robert Rubin as Glenn Beck is to George Soros. Comments (25) | Digg Facebook Twitter |
Well, Mr. R–Matt Taibbi is sane and right while Glen Beck is crazy and wrong. After all, Rubin knows what he’s doing and it ain’t all that great for regular people. Whereas Soros means working people well whether they know it or not. What we need is a new Hunter Thompson. Or a Terry Southern to explain the times. It helps to maintain an ironic attitude. NancyO
What NancyO Said. Correcting the analogy:
Matt Taibbi:Robert Rubin::Paul Krugman in the NYT: George Soros
Yes, Mr. Houghton–XR this link. http://www.pkarchive.org/trade/soros.html “Yen omen, O Soros? One money!” NancyO
Robert Rubin knew what he was doing when he became first chairman of the NEC and it cost him .. well he knows tens or hundreds of millions of dollars. The Robert Rubin knew what he was doing when he fought for higher taxes on high incomes and that cost him some more.
If you are aware of any evidence which contradicts the hypothesis that, when he was an employee of the US government, Robert Rubin’s sole aim was to minimize the wealth of Robert Rubin, I’d like to know it.
I agree with Robert Rubin that marginal taxes on incomes over $250,000 should return to C.linton era levels. Evidently, you think that ain’t to great for regular people Why are you so sure that lower taxes for the rich are that great for regular people,. Why are you sure that the proposal of Rubin, Obama and Pelosi ain’t that great for regular people ?
On what issues to Rubin and Soros disagree ? How can it be that one is good for working people and the other isn’t ?
Or to put it another way, do you know anything about Rubin except that he was CEO of Goldman Sachs, the worked in DC then was Chairman of the Board of Citibank ?
What did Rubin do which you think was bad for regulare people. Which do you hate more raising taxes on rich people or raising the EITC ?
What I said to Nancy Ortiz. Explain to me one issue on which Rubin and Soros disagree and I will concede that one can be for one and against the other.
It’s not unusual to have one view of how you would like the world to be, and another more practical way of coping with how it really is. Soros just coped better than most.
But here is Roubini with his thought experiment on how Europe’s debt crisis goes.
He briefly extrapolates the path of passing up the debt burden to higher and higher authority (and deeper pockets) and the chain looks like this:
banks->sovereign government->Eurozone consortium+ECB+IMF->Martians
He quickly concludes that won’t work because there are no Martians.
Personally, I’m not so sure, but I already know how it works if we find out that there are Martians, and that they do indeed wish to bail out Earthlings.
They will loan bailout funds payable in Martian Dollars. This will immediately replace USD, Euro and Yen as the single Earth currency. Next, Earthlings are confronted with the pesky problem of exporting goods to Mars to raise hard currency (which is Martian Dollars – there is no gold on Mars, and they use water as a store of value and wear vials of it for jewelry. Martian churches are water parks). Since Martians believe Earth technology is quaint and funny ( they use anti gravity for transportation, quantum entanglement for communications, and quantum computing for computers) the newly formed One Earth government allows Martians to park an intergalactic FIRE truck in orbit and begin siphoning off our oceans. “We are saved” declares the One Earth government.
So Roubini probably didn’t know this could happen. He also completely ignored the possibility that Rubin may have rich relatives from Uranus.
Anyway, the less than complete Roubini analysis is here:
I’m confused by Roubini’s analysis. Does he think that European governments are on the gold standard? Or does he not understand how fiat currency works?
Former Pres. Clinton also recently said that the economic advisors he relied in while in office were wrong in believing derivtives should be exempt from financial regulation in the face of strenuous objections from others in government to the contrary.
I am not suggesting that Mr. Rubin acted specifically in his own economic interest. However, there is evidence to support the view that financialization of our economy is responsible for our current economic situation. Mr. Rubin certainly did nothing publicly at the time to prevent financial deregulation in general and the exemption of derivatives from regulation specifically. My point is that ordinary people have gained nothing from the policies Clinton, Rubin, Greenspan and Summers advocated and implemented during Clinton’s administration. NancyO
Ah, Cedric–One money. NO
Nancy: If you’re looking for a modern day HST, try this guy: Who Asked For It?
1) Roubini does not think Europe is on the gold standard.
2) Roubini understands very well how fiat currency works.
I think his analysis is “on the money”. But knowledge of space aliens is just not his forte.
I agree that ordinary people gained nothing from the policies which Greenspan advocated and implemented. I think many ordinary people gained from the expansion of the EITC advocated and implemented by Clinton. I also think many ordinaty people gained from the reduction of the US budget deficit largely caused by the tax increase on the rich advocated and implemented by Clinton and Rubin.
Above I asked you why you think the EITC shouldn’t have been increased and why you support Bush Sr tax rates on the rich. You have not answered my question. You have just repeated your assertion. Why do you oppose increasing the EITC ? Or do you deny that Rubin advocated that and that Clinton signed a bill into law which did exactly that ?
Why do you think rich people shouldn’t pay Clinton era tax rates ? Or do you deny that Rubin advocated that tax increase and that Clinton made it happen by signing a bill into law ?
These should not be controversial points. My claims are a matter of simple historical record. I have no idea if you are denying the plain facts of history or if you want low taxes on the rich and high taxes on the poor.
Rubin’s views on new financial instruments are well known. Obviously when he was secretary of the Treasury he advised Clinton then followed the administration line. He was serving at Cltinton’s pleasure. Afterwords, if I recall correctly, he didn’t discuss public policy. Larry Summers made it very clear that he considered Rubin irrationally alarmist about new financial instruments.
So why are you convinced that Summers’ version of the events is false.
I don’t expect you to have any respect for Jacob Weisberg but, either he is lying or your perception of Rubin’s role in financial deregulation is completely wrong
I notice you make no distinction between Rubin, Summers and Clinton. They are three different people.
I admit I find it frustrating to try to deal with who said what in the 80s and 90s. It isn’t on the web. I think your claim that Rubin didn’t argue in public that derivatives were very dangerous is totally false, but that doesn’t mean I can point to something he wrote or said because Al Gore hadn’t invented the internet back when he said and wrote it.
Ah yes. I think your belief that Robert Rubin said that derivatives were safe and could be deregulated is just exactly like the widespread belief that Al Gore claimed he invented the internet. Many people think this is just a known fact. It is a widely believed falsehood.
So I ad another challenge. First explain on what issues Soros and Rubin disagree. Then explain to me why your accusations about Rubin are any different than the claim that Al Gore said he invented the internet. I think they are exactly the same thing. Lazy acceptance of a demonstrably false claim.
I should point out that I have never met Robert Rubin and that Larry Summers is solely responsible for the fact that I am not unemployed.
Credit default swaps (CDS) are a great example of how the financial troika of Rubin, Greenspan and Summers made capitalism even less democratic than it is wont to be. (I have a pet theory that we could have democratic capitalism if the rewards get spread around enough. That includes getting a financial return on your savings)
CDS are basically insurance policies written on bonds, and seem to lower the effective interest rate in normal times by a couple percent. They say this is good for borrowers of course (look how happy the PIIGS and real estate bubble country citizens are…but I digress). But it is rotten for savers because they can’t write CDS and earn the premium, they can only get the low rate on money or credit. The big players write the CDS, but don’t have insurance capital standards and regulators to insure that capital is there to pay off on the insurance if the debt does go bad. When that happens we get blowups like AIG, followed by multi-hundred billion dollar taxpayer bailouts.
In watching the sovereign bond markets of the PIIGS, what happens is first there is fear of default whenever the rollover date comes near by any country with large debt burdens. Everyone tries dumping CDS in the market because no one wants to be holding the insurance policy anymore. Separately, the bonds tank because of default risk. Since it is largely banks holding both CDS and the bonds, they now have concentrated losses in both sides of the “play”. Naturally the pressure for a government bailout is intense. The only ones buying the CDS at this point are the ones betting on a government bailout. The pressure to rig the game with governments is intense.
Guess who loses the game?
I will now quote from “In an Uncertain World” by Robert Rubin and Jacob Weisberg which was published in 2003
“regulatory measures might possibly have some effect in inducing investors to exercise discipline, and could certainly help protect the financial system itself. Disclosure requirement … not controversial. But … lead a horse to water…
Larry characterized my concerns about derivatives as a preference for playing tennis with wooden racquets … Perhaps, but I would still reduce the leverage allowed on derivatives substantially.”
That book was published in 2003.
Sure Clinton had already signed the Commodity Futures Modernization Act, but any good Rubin could have done back then would have been done privately by advising Clinton. How many other people argued on 2003 or before that derivatives were a menace to the world economy.
The very frustrating thing about this thread is that no participant seems to accept my claim that Alan Greenspan and Robert Rubin are actually different people. The discussion of Rubin is entirely divorced from any evidence about what he said and wrote.
I shouldn’t have to steel copywritten material from Amazon.com to convince you that Seven years ago, your claims about Rubin were proven false.
Why would he claim in 2003 that he supported tighter regulation of derivatives if he didn’t support tighter regulation of derivatives ? It isn’t as if many other people were warning about derivatives back in 2003. Born was (of course). Maybe Buffet too for all I know.
Up thread the challenge was to find something that Rubin did “publicly *at the time*”. Why wold anyone expect him to do anything publicly at that time ? He was working for the Clinton administration. Speaking publicly would have been a violation of message discipline and would be severely punished. We can only know what he thought back then from what he wrote when he was free to write what he thought. Why would he write what he wrote in 2003 and tell Clinton the opposite in 1998 ? Why would he change his mind between 1998 and 2003 ? It isn’t as if many other people wised up during that interval of time.
In 2003, Rubin wrote that Summers and Greenspan were dead wrong about derivatives. He was not writing with the benefit of hindsight. as I noted above 1999< 2000. Now I have to add that 2003<2007. Am I going to have to list all integers before I manage to convince someone that Robert Rubin isn’t Alan Greenspan ?
From the Treasury website.
” Duties & FunctionsSecretaries of the Treasury
The Secretary of the Treasury is the principal economic advisor to the President and plays a critical role in policy-making by bringing an economic and government financial policy perspective to issues facing the government. The Secretary is responsible for formulating and recommending domestic and international financial, economic, and tax policy, participating in the formulation of broad fiscal policies that have general significance for the economy, and managing the public debt. The Secretary oversees the activities of the Department in carrying out its major law enforcement responsibilities; in serving as the financial agent for the United States Government; and in manufacturing coins and currency.
The Chief Financial Officer of the government, the Secretary serves as Chairman Pro Tempore of the President’s Economic Policy Council, Chairman of the Boards and Managing Trustee of the Social Security and Medicare Trust Funds, and as U.S. Governor of the International Monetary Fund, the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, and the European Bank for Reconstruction and Development.
So maybe we give Rubin a pass on his job performance because he complained about derivatives and financial regulation a bit, then left for the $8,000,000 job at Citi? ($8M was his asking salary, I’m not sure on what Citi settled at). Looks like that makes Clinton the bad guy however.
I’m still trying to find out who is in charge of doing something within the USG. Or is working there kind of like “debate club” and we just get to grade everyone on the quality of the debate?
You are leaving some important horses unhitched to your troika. Larry Summers and Robert Rubing put together had no power compared to Bill Clinton. They advised Clinton. Clinton decided. Clinton could fire them at any moment.
Also somehow you have discussed the commodity futures modernization act without mentioning congress. Clinton chose to sign the bill and not to veto it. Aside from the yes or no decision it was written by Republicans notably Phill Gramm.
Before someone else mentions it, I will concede that, like Greenspan, Rubin opposed the unilateral reinterpretation of existing law by the CFTC. The issue was that existing contracts which were OK’d when signed would be retroactively declared invalid. That would lead to problems. But who decided to OK those contracts making a situation in which either financial derivatives were unregulated or laws (as interpreted by the CFTC) were changed ex post. That would be Wendy Gramm.
Discussing the history of regulation of CDSs in the USA without typing the name “Gramm” is like discussing the end of the Roman Republic while neglecting the role of the Julii or discussing the origins of Christianity while overlooking Jesus.
I know Gramm was a major bad player. But besides one senator, we still have a President, Sec. Treasurer, Federal Reserve, Comptroller of the Currency, and all sorts of financial regulators. Don’t ask me why a senator can outvote all of them. I don’t know the answer.
Mr. Robert–I know that Rubin and Greenspan are distinct individuals. I am writing to make a single comment with two parts. As between a transfer payment in the form of the EITC, and a good job with higher wages, the people I dealt with preferred the good job that paid more. And, now that millions of people are unemployed, the EITC is not available to many who could previously take advantage of it. Certainly many people took part in deregulation. Of them all, he and the President had the most power over the outcome. Mr. Rubin gets credit for his succesful decisions and the criticism earned by his bad ones. Nancy Ortiz
welllll… Rubin is a lot more handsome than Greenspan. I presume he also has better taste in writers.
Eric in Austin
Thanks for the link, nanute. Interesting writer. NO
“Soros means working people well whether they know it or not”
Which working people does Soros mean well?
How about his Jewish childhood friends, whom he betrayed when he collaborated with the Nazi’s as a child?
Maybe it was the English working class when Sorros collaborated with Rothschild and destroyed the purchasing power of there life savings?
Is it the working people in Yugoslavia where the Sorros lead efforts to destabilize the region brought war and the death of a nation?
Is it the working people in Osseta that were slaughtered by a Sorros enplaced creature from neigboring Georgia?
I don’t know which working people have benifitted from Sorros existance, but I no for sure that another of his creatures Obama, sure has not helped the working class in this country.
What is Glenn Beck to George Soros?
How did we go from Rubin to Nouriel Roubini?
I’m pretty sure Clinton criticized Rubin by name at least once. I don’t know if he did so based only on Rubin’s opposition to Born’s proposal to regulate derivatives by reversing cancelling and finding invalid the earlier interpretation of the existing law previously made by Wendy Gramm. He certainly opposed that effort. Rubin opposed declaring invalid contracts which were signed in good faith following advice from the relevant regulator that they were ok. Given Republican control of congress, it is clear with hindight that the choices were Born’s way or radical deregulation. I don’t believe that Rubin recognised that back in 1999 before drafting of the commodity futures modernization act had begun.
You refer to Clinton referring to his economic advisors. Which of them ? It is clear that Larry Summers (to whom I owe a whole whole lot) advised him that derivatives could be deregulated. It is not clear at all from your comment that Rubin did so as well. I don’t see why he would argue for more regulation in 2003 after arguing for little regulation in 1999.
Clinton almost always tells the truth. However, he often suggests things without stating them which aren’t quite true and which make him look better than he would if he told the whole truth as well as saying true things. I think we can guess how Clinton would put it if all his advisors advised him to sign the commodity futures modernization act after it passed, but one person who had been his advisor before it passed, gave advice which would, if anything, support a decision to veto.
I’m pretty sure that Clinton once accused Rubin more directly using his name.
I believe that someone named Harold Truman explained rather clearly who is in charge of the Executive branch. He had this little sign on his desk whcih said “the buck stops here.”
As the text you quoted makes clear, the secretaries role in legislation is purely advisory. In practice, the Republicans in congress ignored advice from the Clinton administration. In practice, the role of the Secretary of the Treasury in financial regulation was advising the President on whether to sign or veto bills.
My view is that the President is responsible for signing the things he signs. This view is quite widespread. In any case, a former secretary of the Treasury who retired before the bill was drafted would not normally be considered responsible for the President’s decision to sign the bill. At the time of the signing, Robert Rubin was not an employee of the USG.
Somehow you think I am blurring lines of responsibility when I say that someone who is not in the USG is not “who is in charge of doing something within the USG.” We can agree that it is someone within the USG can’t we ?
Citigroup paid Rubin a total of about $120,000,000 for his services. So what ? That doesn’t support Taibbi’s theories that Rubin secretly controls Obama economic policy and doesn’t imply that he wasn’t the Clinton subordinate* most opposed to financial deregulation. I use subordinate to refer to people Clinton can fire and am not asserting that Rubin was the subbordinate most opposed to deregulation. I’m just noting that no one has presented any evidence in this thread that he wasn’t.