Posts Tagged ‘Rubinomics’

Obama Surrounds Himself With Acolytes Of A Proven Economic Failure

November 26, 2008

The Obama administration is shaping up to pretty much be a Clinton administration reunion.  Hotair’s story is “Obama administration: Clinton sequel?”  The Politico story is “The Clinton band is back together.”  “Change” means “Just like the Clinton years,” and “new politics” means “Pretty much exactly like the old Clinton machine politics.”  You kind of have to wonder: if people had wanted a “Clinton administration, version II,” why wouldn’t they just have elected Hillary Clinton instead of Barack Obama?

Just in case you’re thinking, “Because a ‘Clinton administration version II’ would have all the bugs worked out,” think again.  There are still plenty of bugs.  And one of those bugs is named Robert Rubin.

According to the International Herald Tribune:

WASHINGTON: It is testament to the star power of former Treasury Secretary Robert Rubin among many Democrats that as Barack Obama fills out his economic team, a virtual Rubin constellation is taking shape.

The president-elect used the announcement Monday that he was appointing two Rubin protégés, Timothy Geithner as Treasury secretary and Lawrence Summers as senior White House economic adviser, to underscore his determination to step aggressively into a economic leadership vacuum in Washington while also maintaining continuity with the Bush administration before the transition of power Jan. 20.

Obama is expected to soon announce the appointment of another Rubin protégé, Peter Orszag, as White House budget director. And even the headhunters for Obama have Rubin ties: Michael Froman, who was Rubin’s chief of staff in the Treasury Department and followed him to Citigroup, and James Rubin, Robert Rubin’s son.

Geithner, Summers and Orszag have all been followers of the economic formula that came to be called Rubinomics: balanced budgets, free trade and financial deregulation.

But there’s only one problem with this “constellation of Rubin”; the biggest star has plunged to earth in a flaming trail of cosmic disaster.

Or maybe you want to have as your next President’s senior economic adviser the guy who ran one-time powerhouse Citigroup right into the ground.

As the New York Post puts it:

There’s no shortage of blame, but if a vote were taken for mayor of the Citi of Fools, Robert Rubin, the most prominent member of the bank’s board of directors, would almost certainly win hands down.

Rubin, a former treasury secretary, played a key role by leading Citi into a risky strategy of gambling on the weirdest and most exotic investments – like securities backed by subprime mortgages that probably would never be paid.

As long as the money and bonuses kept rolling in, who cared if no one really knew what all these strange securities were worth?

Certainly not Rubin, who was paid an astonishing $62.2 million between 2004 and 2007 – or his fellow bozos on the board.

“Citigroup’s board of directors increasingly resembles a first-class sleeping car on a train wreck that just keeps happening,” said J. Richard Findlay, head of the Centre for Corporate & Public Governance.

“Almost whatever it does, it is too slow and too late.

“It can take months for Citigroup’s directors to clue into what others in the real world have known for some time.”

Noting that Citi’s stock has lost more than $133 billion this year alone, Findlay said, “Citigroup’s board has demonstrated that it has not been on top of any major issue in more than a decade, much less ahead of it.”

Charles Elson, director of the Center for Corporate Governance at the University of Delaware, told The Post that Citi’s board consistently misled the public.

“Even up until last week, we were told Citi was a strong institution, but it’s clear now that things are a lot worse than we knew,” he said.

“Where was the board during this? It’s very troubling.”

Thanks to the negligence of board members – who smiled for the cameras as they assured anyone who’d listen that everything was A-OK – taxpayers are now on the hook for $351 billion.

In other words, even as Obama bets the country’s future on “Rubionomics,” the rest of the financial world is starting to recalculate.

Hey, Barack, I hear that GM CEO Rick Wagoner may be on the market pretty soon; why not appoint him to advise you on how you should move forward with the auto industry?  He’s right on board with you: he wants you to socialize the economy, too.

Folk over at the Wall Street Journal are wondering, “Why are Robert Rubin and other directors still employed?

I mean, even the Huffington Post is starting to ask the question: “Is Robert Rubin “Competent” Enough To Guide Team Obama?”  As the story unfolds, and builds the case that Rubin was directly involved in devising the strategy that led to Citigroup’s ruin, the answer becomes pretty clear.

And it is beginning to increasingly occur to investors that the “star economic team” of Rubin acolytes Barack Obama is assembling is pretty much the same bunch of guys who have been part of the crowd that basically turned our economy into the Titanic.

I suppose Barack Obama’s advice to Rubin will be something like, “Just think the exact opposite of absolutely everything you thought as the CEO of Citigroup, and we’ll do great.”

Advertisements