Evidence of an American Plutocracy: The Larry Summers Story

[Octafish]

I've got nothing against rich people, especially rich Democrats.
Living in the material world, I know that having money is better than not having money.



What I do want is some fairness on the economic playing field.
Ensuring economic fairness used to be one of government's jobs.
Believe it or not, both Democratic and Republicans felt that way.
It's been a while, though. Case in point...

Evidence of an American Plutocracy: The Larry Summers Story

By Matthew Skomarovsky
LilSis.org
Jan 10, 2011 at 19:31 EST

EXCERPT...

Another new business model Rubin and Summers made possible was Enron. Rubin had known Enron well through Goldman Sachs’s financing of the company, and recused himself from matters relating to Enron in his first year on the Clinton team. He and Summers went on to craft policies at Treasury that were essential to Enron’s lucrative energy trading business, and they were in touch with Enron executives and lobbyists all the while. Enron meanwhile won $2.4 billion in foreign development deals from Clinton’s Export-Import Bank, then run by Kenneth Brody, a former protege of Rubin’s at Goldman Sachs.

Soon after Rubin joined Citigroup, its investment banking division picked up Enron as a client, and Citigroup went on to become Enron’s largest creditor, loaning almost $1 billion to the company. As revelations of massive accounting fraud and market manipulation emerged over the next years and threatened to bring down the energy company, Rubin and Summers intervened. While Enron’s rigged electricity prices in California were causing unprecedented blackouts, Summers urged Governor Gray Davis to avoid criticizing Enron and recommended further deregulatory measures. Rubin was an official advisor to Gov. Davis on energy market issues at the time, while Citigroup was heavily invested in Enron’s fraudulent California business, and he too likely put pressure on the Governor to lay off Enron. Rubin also pulled strings at Bush’s Treasury Department in late 2001, calling a former employee to see if Treasury could ask the major rating agencies not to downgrade Enron, and Rubin also lobbied the rating agencies directly. (In all likelihood he made similar attempts in behalf of Citigroup during the recent financial crisis.) Their efforts ultimately failed, Enron went bust, thousands of jobs and pensions were destroyed, and its top executives went to jail. It’s hard to believe, but there was some white-collar justice back then.

SNIP...

Summers also starting showing up around the Hamilton Project, which Rubin had just founded with hedge fund manager Roger Altman. Altman was another Clinton official who had come from Wall Street, following billionaire Peter Peterson from Lehman Brothers to Blackstone Group, and he left Washington to found a major hedge fund in 1996. The Hamilton Project is housed in the Brookings Institution, a prestigious corporate-funded policy discussion center that serves as a sort of staging ground for Democratic elites in transition between government, academic, and business positions. The Hamilton Project would go on to host, more specifically, past and future Democratic Party officials friendly to the financial industry, and to produce a stream of similarly minded policy papers. Then-Senator Obama was the featured political speaker at Hamilton’s inaugural event in April 2006.

Summers joined major banking and political elites on Hamilton’s Advisory Council and appeared at many Hamilton events. During a discussion of the financial crisis in 2008, Summers was asked about his role in repealing Glass-Stegall, the law that forbade commercial and investment banking mergers like Citigroup. “I think it was the right thing to do,” he responded, noting that the repeal of Glass-Stegall made possible a wave of similar mergers during the recent financial crisis, such as Bank of America’s takeover of Merrill Lynch. He was arguing, in effect, that financial deregulation did not cause the financial crisis, it actually solved it. “We need a regulatory system as modern as the markets,” said Summers — quoting Rubin, who was in the room. “We need a hen house as modern as the food chain,” said the fox.

CONTINUED...

http://blog.littlesis.org/2011/01/10/evidence-of-an-american-plutocracy-the-larry-summers-story/

Until we see economic fairness restored -- through fiscal and other government policies and regulation -- the rich will keep getting richer; the middle class will continue dissolving into the new poor; and the poor will become the silent super-majority.

[CelticThunder]

1. We won't see that while Obama is president.

[ixion]

2. ...

:rofl:

Yeah, right.

[Octafish]

5. Most likely, you are correct. Perhaps in vain, I still hope for change...

Ancient animation of Sisyphus, courtesy of the Mary Huang collection.



For instance, the addition of William K. Black to a leadership position would go a long way toward restoring respect to a government too long working exclusively for the rich. Others I'd include are James K. Galbraith and, of course, Elizabeth Warren, joined by Paul Krugman and Joseph E. Stiglitz.

[chill_wind]

3. K & R.

How could anyone not understand what the Summers/Geithner appointments suggested about the way Prez Obama intended to govern in this economy, especially as time went on? (I know you and many, many here did see it, Octafish) We just kept hoping we were wrong, or that both their stays would be a lot shorter, I guess.

This is another great piece of reading. I didn't know until very recently about his debut at the Hamilton Project, when there was another good thread or two about it.

Pulling the video link out of your OP:

http://www.youtube.com/watch?v=P-5Y74FrDCc

Thanks for the reading.

[Octafish]

6. The forces of globalization have changed the world...

...and the losers have yet to be helped by the winners.

Thanks for the heads-up on the video, chill_wind. I'd been slogging through the links, learning new things left and right. Which is what makes me so darned confused.

War, Debt and the President

by Amy Goodman
Published on Wednesday, August 3, 2011 by TruthDig.com

President Barack Obama touted his debt ceiling deal Tuesday, saying, “We can’t balance the budget on the backs of the very people who have borne the biggest brunt of this recession.” Yet that is what he and his coterie of Wall Street advisers have done.

In the affairs of nations, Alexander Hamilton wrote in January 1790, “loans in times of public danger, especially from foreign war, are found an indispensable resource.” It was his first report as secretary of the treasury to the new Congress of the United States. The country had borrowed to fight the Revolutionary War, and Hamilton proposed a system of public debt to pay those loans.

"President Obama’s debt ceiling deal is widely considered a historic defeat for progressives, a successful attack on the New Deal and Great Society achievements of the past century." (photo: U.S. Army / Staff Sgt. Brendan Stephens)
The history of the U.S. national debt is inexorably tied to its many wars. The resolution this week of the so-called debt ceiling crisis is no different. Not only did a compliant Congress agree to fund President George W. Bush’s wars in Iraq and Afghanistan with emergency appropriations; it did so with borrowed money, raising the debt ceiling 10 times since 2001 without quibbling.

SNIP...

“This year is the 50th anniversary of Eisenhower’s military-industrial complex speech,” William Hartung of the Center for International Policy told me while the Senate assembled to vote on the debt ceiling bill. Speaking of the late general turned Republican U.S. president, Hartung said: “He talked about the need for a balanced economy, for a healthy population. Essentially, he’s to the left of Barack Obama on these issues.”

CONTINUED...

http://www.commondreams.org/view/2011/08/03

"For those on the left, and I include myself in that category." -- then-Sen. Barack Obama

In just five years, the "All the World's a Cage" crowd seems to have gotten their threats messages through loud and clear.

[Rex]

4. Won't be so silent when the super-majority has an empty belly.

You can only ignore people if they want to be ignored. Once hunger sets in, strap in and get ready!

[Octafish]

7. Someone on the Internets said the American people can never handle austerity.

I agree. I can't live with dial-up. It'll be difficult in the cannibal time.

Until then, something completely not different:

Plutocracy Now

Which brings up the ultimate irony, their epitaph: "They had more than enough means to save the planet and themselves but they chose not to. Greed would not let them."

[Fool Count]

8. Here is another evidence of American Plutocracy:

A story of every american who is not a part of it.

[Octafish]

9. The publisher of Harper's and I agree with you -- the People's stories are no where to be heard.

Goodbye to Fosteria, Ohio

The Deindustrialization of America

By JOHN R. MacARTHUR
CounterPunch
Weekend Edition
August 5 - 7, 2011

Pro-North American Free Trade Agreement (Nafta) forces staged on 9 November 1993 what may be remembered as the greatest salesman's trick in televised propaganda. Millions of Americans had just watched CNN's Larry King show, and its "debate" over the ratification of the agreement, between Ross Perot, the anti-Nafta crusader and independent presidential candidate, and then Vice President Al Gore, spokesman for mainstream political and business opinion about free trade and its alleged benefits to the US.

SNIP...

Rewarded for investing in the American dream

Over the past 12 years I have heard many stories about the beneficial effects of free trade from its proponents. But the stories recounted by its victims always seemed more persuasive. Among the best storytellers were two Autolite workers who lost their jobs. When I met Jerry Faeth in 2009 he was 52 and considered himself lucky. With 32 years at the plant, he would retire with a full pension, which he had planned to do just before being laid off. Both his daughters were well on their way to graduating from college, and his house in New Riegel, southeast of Fostoria, was fully paid for. He had liked Autolite because after 28 years, "I got into the prototype section of the plant. I loved working because it's something different every day and you're not just using your hands; you're using your mind and you're working with college-graduated individuals who treat me as an equal." Faeth had invested in the American dream and been rewarded: "I was fortunate because of Autolite. We had good wages... and my wife was able to quit work and stay home for eight years with our two children; and I think that's key to some of the issues we're having in society today because the babysitter doesn't raise your kids like Mom or Dad." But now he was embittered.

After the meeting at which the layoffs were announced by a Honeywell executive, Faeth said it "felt like he hit me in the stomach... I wanted five more years and I'm not going to get it... I said, 'You know, you talked about us competitive. I contribute to the 401K in Honeywell and I get this book every year and it says the top five guys in Honeywell last year made $70 million. Sir, is that competitive?"' According to Faeth, the executive replied: "Well, I can't speak for Dave Cote's salary but, you know, that comes out of a different fund anyway." Faeth said: "'Sir, that's not what I asked. You can't tell me that there's not a smart person down there in Mexico that wouldn't do job for a whole lot less. How can he tell you that we're makin' too much money here when those top five guys made $70 million. What's wrong with that picture?' He didn't have an answer for me."

But others purported to have an answer to Faeth's question. One of them is the economist R Glen Hubbard, dean of the Columbia University Graduate School of Business, chairman of the Council of Economic Advisors in the first two years of the George W Bush administration and a villain in Inside Job (the Academy Award-winning documentary about the 2008 financial crisis). When I encountered Alison Murray at Local 533, she had read parts of his textbook, Macroeconomics. With a BA, Murray enrolled in night classes at the University of Findlay when layoffs loomed at Autolite. As a single mother, aged 42, with only 17 years in the plant, she couldn't retire with a pension and needed to plan for the future. But her encounter with Findlay's economics department left her troubled about post-industrial Fostoria.

CONTINUED...

http://counterpunch.org/macarthur08052011.html

[Hotler]

10. Kicking. Thanks Octafish. eom.