A Message from my Friendly Capitalist

I have this very good friend--been a registered Independent for years--an old business friend of mine. We worked together for years at a couple of firms, we live in the same town and get together much less than I would like but regularly.

He took a bit of an offense at me sending around the Bernie Sanders piece the other day:

Is this the beginning of the liberals denouncement of their involvement? If so--it is very frightening. Why politicize this mess? The facts are, Congress--including Sen Sanders-- has not performed its most important and fundamental responsibilities--oversight and bring forth updated bills and regulations that could have simply stopped this greed.

What he does not remember, but should, because he is an independent like Sanders, is that Sanders has tried to exercise the oversight and perform. He's chewed bureaucratic butts for years. However, he read Sanders' proposal for an alternative plan as an attempt to cast blame and politicize the financial mess. I didn't read it that way at all. My friend wants us to "stop this divisive behavior and work together NOW."

And I have to love him when he writes:

There will be plenty of time to direct blame and analyze who those persons and companies are who were behind this Greed--right Angelo? [A reference to one of the greedy guts guys, Angelo Mozilo, one of the founders of Countrywide Financial] When the dust settles let's get all of the profiteers (so called executives) and get the tax payers' money back and file criminal actions against the despicable bunch of thieves. Signed, your friendly capitalist.

I gotta tell you it's delightful to see a capitalist write like this. So I wrote back to my friendly capitalist as follows:


I don't agree here--Sanders is one of the few people who has been against the madness all the way through, and has been quashed or shoved aside. This seems to me to be more populist than partisan. He's been pissed at Dems as well. The problem, as you and I agreed the other day is that the Dems are culpable as well--it gives me the willies (pun intended) to see that Robert Rubin and Larry Summers are big Obama advisers NOW and they were the ones who pushed through the repeal of the Glass-Steagall constraints in the second Clinton term--a few days after which Rubin resigned and took over CitiCorp, and then proceeded to merge it with Travelers.

Or Joe Biden pushing for that miserable revision of the Bankruptcy codes when the information about 25-30 % of the bankruptcies were due to medical catastrophes. Or Phil Gramm, who snuck in the 1999 budget the Enron loophole and the big loophole in the 2000 budget (that Clinton signed) to allow for subprime derivatives and CDOs and CMOs to exist without regulation of any kind. That's Gramm as in McCain's choice for Treasury secretary! and he's still advising McCain under the table, from what I can gather. So he got shunned after his "Nation of Whiners" comment two months ago. He's been a big shot at USB (Bank of Switzerland) since he retired from the Senate. And guess who came knocking at the door last night to get money from the bailout plan? USB.

These guys are pirates, and that's why I like Independent Bernie Sanders. You told me you've been registered as an independent as well. Meet Bernie. Best Senator around.

I think Bernie Sanders was pissed because Paulson (who came from Goldman Sachs, just like Rubin, came to Congress with an arrogant proposal that had NO real accountability (6 month reports to congress) and no recognition that abuses needed correction.

I think that what Sanders is trying to do is get some leverage on the matter and attempt to figure out a way to get some recompense for the bailout.

It's systemic--and actually, a risk avoidance philosophy is to bear part of the blame: suck people in on no down payments and balloons and assure them that the prices will keep rising and then jettison the mortgages to third and fourth parties, slice and dice--and destroy the relationship between debtor and lender that really kept it all in check.

I wouldn't worry about blame games--the guys who are responsible will get their fannies spanked and be embarrassed in Congressional hearings and then go to Greenwich for the weekend cocktail party at their country estate.

Believe me, I'm at the point of lesser of two evils--as you well know--and have been there for a good number of months. My prime reason for going with Obama is the Supreme Court appointments and some semblance of deliberation about foreign policy. The way McCain has gone into his temper tantrums this week about firing Christopher Cox at the SEC (and I really don't think he even understands why Cox should have been fired to begin with) and clearly showed that he doesn't even know who the prime minister of Spain is or that Spain is in Europe, not the Western Hemisphere, does not give me confidence.

I researched that the Navy's health service down in Pensacola has had a continuing study of Vietnam POWs which indicates serious longevity and health impacts for all of them, way worse than the general population, and when you take into consideration that McCain's grandfather died at 63 and his dad at 70, it makes me think about those actuarial tables more than ever.

Obama in contrast, held off deliberately until he could see the details of the plan and consulted with his old grey guys--Paul Volcker and Warren Buffet among them, before he said anything. That contrast tell me a lot. early middle age over old farts with a temper any day.

I still don't think I will convince my friendly capitalist to vote for Obama.

Re: Chicago Boyz

So my friend DP writes in an email:

Be vigilant! The financial crisis is likely another application of Naomi Klein's "Shock Doctrine" and the crisis will likely be used by this administration to put into place further laws and bailouts that will benefit the wealthy and hurt main street. Just wanted to throw this out to the group to get your reaction.

So I react:

BUT: Let's not forget that Obama's top economic financial advisers are Chicago School boys, so if they win caveat emptor and beat up on the Dems very hard--even to the point of demonstrations and hard lobbying--during November!! (December will be too late. Get some good guys in there and make sure Robert Rubin doesn't get back in to do his black fuggle magic.)

I supply a list of the Obama economic advisers and some dots to connect. First, from the NYTimes:

The Democrats, besides talking about a broader range of subjects, also have the freshest face among the top campaign advisers — Barack Obama's lead economist, Austan Goolsbee, a 37-year-old star professor at the University of Chicago (who writes a monthly column for The New York Times). The two men met when Mr. Obama was teaching at the law school there, and they both seem to favor achieving Democratic goals through market-oriented policies. As Mr. Goolsbee has written: "Moral exhortation doesn't change people's behavior. Prices do."

And next, a list from the blog Economists for Obama:

Jason Furman (director of economy policy)
Austan Goolsbee (senior economic policy advisor), University of Chicago tax policy expert source
Karen Kornbluh (policy director)
David Cutler, Harvard health policy expert
Jeff Liebman, Harvard welfare expert
Michael Froman, Citigroup executive
Daniel Tarullo, Georgetown law professor
David Romer, Berkeley macroeconomist
Christina Romer, Berkeley economic historian
Richard Thaler, University of Chicago behavioral finance expert

Robert Rubin, former Treasury Secretary source
Larry Summers, former Treasury Secretary
Alan Blinder, former Vice-chairman of the Federal Reserve
Jared Bernstein, Economic Policy Institute labor economist
James Galbraith, University of Texas macro economist

Paul Volcker, Chairman of the Federal Reserve 1979-1987
Laura Tyson, Berkeley international economist, Clinton economic adviser
Robert Reich, Berkeley public policy professor, former Secretary of Labor
Peter Henry, Stanford international economist
Gene Sperling, former White House economic adviser

and a few snide comments from The Unrepentant Marxist:

--David Cutler: Harvard economist who believes that high health costs are good for the economy
--Jeffrey Liebman: another Harvard economist and former Clinton adviser who favors privatizing social security
--Austan Goolsbee has been a columnist for Slate.com and the NY Times, as well as a standup comedian. His economics are not meant as a joke, as I understand it. His columns are written very much in the same vein as fellow U. of Chicago neoclassical economist Steven Levitt's Freakonomics," examining everyday problems such as "Why you get stuck for hours at O'Hare." Most are fairly uncontroversial except for the swipe he took at Michael Moore's "Sicko", whose single-payer recommendations violate his free market principles.

And very serendipitously, I can remind him to see Bill Moyers interviewing Kevin Phillips, who wrote the book that lays out the problems: Bad Money

And finally remind him that if he looks up these folks you will see it's not quite as bad as the idiot republicans on McCain's campaign like Phil ("a nation of whiners") Gramm, now off the team for that comment, but a sure bet to be McCain's Secretary of the Treasury (shudder).

However, these include (Rubin, Sumnmers) some of the Democrats who during the Clinton administration accelerated the pump and dump economy of the last 28 years--especially Robert Rubin--and his "Rubinomics." The only people worth their salt are Galbraith and (not on this list) Joe Stieglitz and Warren Buffet; but of these last three, Galbraith is apparently only marginally close to Obama, Buffet has become a "senior adviser" (along with Paul Volcker) and the guys at the top of the list are all "free market" koolaid drinkers, none of whom really believes in a national health care program.

As I said, caveat emptor. Especially if you plan on getting sick or breaking your hip.