Brad DeLong sez

    Yes, Gene Sperling Really Is a Liberal


    I Am Now, and Have for Eighteen Years Been, a Rubinite...

    (including that:  You know, Robert Rubin spent six years working full-time to raise his own taxes and decrease his own market was not the repeal of Glass-Steagall that caused our current downturn, but rather other and different regulatory failures long after Rubin had left office...and say that Gene Sperling should be banned from a high position in the administration because he "has done nothing to counter the general impression that he is a Rubinite"?!?! That seems to me to be foolish.....)



    I read that this morning, and his smack at Felix Salmon and others.  Sorry, Brad; I beg to disagree.  He did remember to issue the disclosures that he's friends with so and so and such and such Rubins and friends.  ;o)

    Chris Whalen is a mixed bag now, too.

    I don't really know much about Gene Sperling and haven't done any research so... no opinion there.

    But Delong's second post is kind of amazing.  He says Robert Rubin wanted four things: 1) streamline decisionmaking; 2) A budget balanced by increased tax revenue; 3) More progressive taxation and 4) a more efficient and fair financial system with more competion.

    Delong says he got the first three but not the fourth.  I'll grant the first point because I have no reason to believe otherwise. The second point I'll also grant on the basis of the Clinton surpluses achieved under the Clinton tax rates.  Point 3, I quibble with.  People forget that while Clinton raises income taxes (mostly, but not entirely in the upper brackets) he also cut the capital gains tax rate.  Rich people make a lot of their money on the sale of appreciated assets.  Whatever merits lower cap gains rates have, they make the wealthy very happy, for good reason.  They also act against the progressivity of the tax code.  That's just undeniable.  Another point that has to be considered:  Clinton tried to reign in executive pay by limiting the amount of cash salary that corporations can deduct.  This cause corporations to switch to stock based compensation plans.  Basically, plans that pay based on capital gains, a tax that Clinton and Rubin cut.  How is that progressive?

    Point four gets its own paragraph.  Delong and I agree that Rubin was not able to reform the financial system to make it more efficient or to combat cronyism.  What clearly happened is that under Rubin's watch the financial system enjoyed a merger wave.  It started as strong banks picked the bones of the S&L crisis.  Then they started buying each other.  All of the rational commercial bank mergers and all the rational Wall Street mergers were pretty much exhausted by the late 90s.  A system of local banks and boutiques had given way to national conglomerates.  It was only natural they would want to buy each other and so Glass Steagall had to go.  That consolidated financial power nearly destroyed the economy because entities that used to have arms length (ie carefully analyzed) transactions with one another were now all part of the same company.  Ugh.  This isn't rocket science.

    Finally, DeLong tells us: "you want to draw your White House staff from successful managers--people who have had lots of experience bossing other people and who have done very well at it--and that there are only three groups of successful managers who are Democrats: Hollywood studio executives and their ilk, people who have made careers in government and academia, and executives who have worked for traditionally-Jewish investment banks." Is that not one of the most stupid, offensive things you've ever heard?  As if there aren't competent and even very talented Democratic managers (and they don't have to come from businesses, non-profits have managers too) who could fill these roles?  Total failure of imagination on Delong's part here.

    Re Glass Steagall, In an inserted comment to a reader's reply, De Long says that the investment banks which failed were ones like Bear, Lehman and Merrill, none of which had significant banking deposits. Well, he says, Citi came close to failure. But, therefore,( I assume this is what he means) the repeal of Glass Steagall was not the cause of these institutions' failures. This particular notion that only smaller specialized firms failed was used recently by Jamie Dimon to help justify the existence of mega banks.   

    Citi basically did fail.  Bank of America nearly did as well.  Indymac failed, and that was a traditional bank engaging in Wall Street style activities.  The insiders would love for us to believe that all the failed banks were pure Wall Street but every bank that uses the Fed's discount window is an ongoing bailout recipient.  If it were truly a matter of a few specialty firms getting into trouble, the Fed wouldn't be keeping interest rates at 0%!

    Robert Kuttner is not a fan of Rubin's, or his advice to Citi: 

    "The former treasury secretary was also heavily involved in Citigroup’s catastrophic strategy of betting the company on big plays involving structured financial products and derivatives. But unlike the smarter wiseguys down the block at Goldman Sachs, Rubin’s guys bet on the wrong side — causing losses into the hundreds of billions of dollars. Citi survived only because of massive bailouts devised by Rubin’s former business partner Hank Paulson, his protégé Timothy Geithner and his No. 1 acolyte, Larry Summers. Rubin has been a disaster for Citi and for the economy, as both a business strategist and a policymaker. But evidently, he still has currency as a fixer." 

    As Rubin comes public as a deficit hawk, Kuttner advises not buying what he's selling given his past failures:   The New Democrat business plans have been horrible for American workers, but they did manage to create plenty of growth for business in the 90s. 


    Right. I think we're going to see more of the "only specialty firms failed" theme, plus disingenuous arguments on "economies of scale", the need to be competitive internationally, and such.

    BTW, if you have it, what's the best reference on how weak these 19 balance sheets actually were, say around the time of the first stress test. Is there anything public or did the Fed just hide it, or whitewash it? 

    My opinion is that a fair valuation of the real estate assets of most of these banks would have erased much of their "equity", but I don't know what research is available on the subject.   


    I don't really know much about Gene Sperling and haven't done any research so... no opinion there.

    David Leonhardt put up a cheat sheet last night, must have read your comment and then thought, "hey, I've got to help destor out." Laughing

    I am a little numb today and cannot really get your message here. I gleaned this from one of the links though:

    I would put it differently. I would say that you want to draw your White House staff from successful managers--people who have had lots of experience bossing other people and who have done very well at it--and that there are only three groups of successful managers who are Democrats: Hollywood studio executives and their ilk, people who have made careers in government and academia, and executives who have worked for traditionally-Jewish investment banks. If you want managers in a Democratic administration, that's where they have to come from. And I don't think you want to throw out a third of your potential talent pool at the very start

    Kind of a philosophical side to all of this.

    You certainly do not want to hire losers, but if you hire the Best & The Brightest, do you end up with dems in name only?

    I dunno

    the end

    Why are those people the best and the brightest?  Why does Delong even suggest that the only good, reliable Democratic managers are to be found in those places?  It's weird.  You could hire a headhunter and find people with these capabilities virtually anywhere.  They aren't so special.

    I think about this all the time.

    There are great actors out there who just do their work in smaller forums giving performances beyond belief

    There are writers out there who will never be acknowledged except within small groups.

    And we can go on and on about Van Gogh who never sold a painting in his lifetime.

    America loves winners. America is caught up in some weird fantasy that only the great rise up through their own devices and their own talents and ....

    There are brilliant people out there who perform admirably in smaller forums. There are attorneys with the Southern Poverty Law Center who would put a corporate lacky to shame.

    Such is life.

    Exactly!  And, of course, the SPLC isn't exactly nothing, either.

    You know what's fun?  Ask these people to describe and define "managerial talent."  They can't do it.  Pick up any book about it and the concepts are so flimsy that you soon realize you're reading some variation on the usual crud.  Be organized, set a good example, delegate except where you shouldn't, give freedom except where you should reign people in.  Don't be the guy who fired Steve Jobs at Apple (unless you're judging the choice in real time in which case some people said "look how brave he is, firing the founder for the sake of the company.")  It's all crud.

    I once interviewed this guy Ram Charan, who is Jack Welch's management guru and advisor for over an hour and I got nothing of substance out of him except that when you have to do layoffs, do them in one round so that everybody left isn't waiting for the axe to fall again.  Wow. For that he's a genius?  It's all hogwash.

    I know this is not a chat room Destor. But damn.

    If you love this country, if you are so up on the talents that exist amongst our citizens, then you must understand that there are millions, tens of millions of people in our country who could handle just about any job you handed them.

    Substance. Yeah, I am in charge and look at what a good boy am I!!!

    It's not what you know, its who you know. 

    I've been sick with GI flu, and am in a brief hiatus, so I am prepared to say now "Fuck Robert Rubin and the horse he rode in on."  He has some dark past with the IMF and giving loans to poor nations that caused them to be yoked to 'reform' policies that cost them dearly for decades into the future.  If I have time (ahem) to look for links, I will. 

    He was one of the most strident authors of neo-Liberal economics during the Clinton years, and helped to utterly trash the brilliant, prescient and moral Brooksley Born, who tried hard to blow the whistle on the (then) recipe for the impending financial collapse when she was still head of the CFTC.  I think it was Arthur Leavitt who said if he has a hero, Born is it.  (She is one of the Dems on the Financial Crisis Inquiry Task Force or whatever it's called, and has been aghast at the sick report the Republicans have leaked, in which words and terms like 'Wall Street', fraud, subprime mortgages (I believe) and a few other necessary terms have been left out.  Their blame goes to the poor who over-extended, and minorities and Fannie-Freddie, which arguably do need investigate, IMO.)  But I digress.

    Here is Felix Salmon speaking on de Long's piece countering his objections to Altman to replace Summers (he's also appalled by the paragraph Destor chose):

    And here's one clip from the Oct. 2009 Frontline The Warning from The Daily Bail; there's a second clip if you want to get pissed all over again.

    And by the by: Fuck Larry Summers as well.



    Some IMF 'liberalization' stories :

    I tend to agree with your assessment of Summers,

    I blame him, rather than Obama for the lackluster recovery.

    "Save the bankers, let the peasant class eat cake (crumbs) that should fall from the masters table"   Summers  

    Obama chose the team, and kept the team.  Instead of listening to the advice of any true Keyensians, he invited Krugman and Stiglitz to the White House to say, politely I'm sure: STHU.  So now the American public is hearing that 'Keyensian economics didn't work', and neo-Liberals are working within a trickle-down framework, not sure why if business and banks are making such good profits unemployment is so high, and the new jobs are temp jobs. 

    I think Rubin would point out that you are simply one of those people who just won't ever be satisfied. I mean, the Dow is up. Bank profits are at record highs. Corporate profits are up. CEO compensation packages have never been more lucrative. Taxes are low and going lower. Derivative trading remains lucrative and unregulated. "We gots us a license to steal, I'm tellin' ya!" sez Rubin.

    And yet you want to complain about unemployment and the quality of jobs being offered to his gardener and his household help?

    Jeez, Louise! Go buy your own Democrats if you is gonna insist on messing up a good thing, why don't ya?

    Yeah, I mean, come on.  If you had just put a million dollars in the stock market in March of 2009 like everyone else, you'd be rich now!

    I've been trying for years to, Jeezus!  Only I'm forced to barter, since I can't work any longer, and am trying to sell Bird Greeting Cards and Framed Birrrrrd Portraits for pin money.  As you might guess, since the 'downturn', they arent' selling well.  So I take screenshots of them, and email them to my Congresscritters, offering to barter them for my being Queen over them for a year, and they don't even email me back!  Like I'm a freaking joke! 

    I attach lists of populist/sane solutions to a vector of economic justice: passing EFCA, establishing sustainable manufacturing, ditching bad trade deals and/or re-negotiating them to fair standards, reducing health care costs, not just goofin' around with HC insurance, enacting financial transaction taxes, finding ways to force foreclosure and mortgage modifications that keep folks housed; ya know, things like that.  I think it all got me on a list somewhere.  ;o)

    Rubin's right, though.  The Clinton years were wonderful, sublime, la la la...unless you were a worker who lost a job, was retrained, lost it off-shoring.



    I hereby render unto Stardust the Dayly Line of the Day Award for this here Dagblog Site, given to all of you from all of me.



    Thanks for bringing this to light. DeLongs piece was interesting, over the top in many ways. And I hadn't known about Sperling's cushy Wall St. job. I'm getting the impression that none of these appointments is going to push financial reform more than 5% one way or the other over the next two years. But it will be interesting to see how the new Resolution authority will progress within the FDIC and the Fed.  

    Sperling got the job, apparently, unless this is purposeful false leaking:

    Obama Said to Name Sperling as Economic Council Head

    By Julianna Goldman - Jan 6, 2011 3:59 PM ET

    The leaker also spoke to First Read

    and the WSJ, among others:

    And in reading this Ben Adler piece @ Newsweek on the Daley appointment, I found this referenence to agree with DeLong about the liberal label for Sperling:

    It is also possible that Daley’s selection will be packaged with choices that mollify liberals, since Larry Summers, another Wall Street–friendly centrist, just left his role as head of the National Economic Council. “Maybe appointing Daley frees up Larry Summers’s job for someone not Wall Street–connected, like Gene Sperling,” suggests Stephen Hess, a senior fellow emeritus at the Brookings Institution who served in the Eisenhower and Nixon administrations. (Sperling, the leading candidate for NEC chair, actually did some consulting for Goldman Sachs, but he is considered more liberal than Summers and most other potential replacements.)

    Oops; doubled up on your comment.

    Yeah, Daley's very official,  old news already--this NPR backgrounder is a decent short one.

    BTW, I just had "The Ed Show" on in the background, Howard Dean was on, and he was really praising the Daley choice, much stronger than that Dean quote from the CSM conference that I put up on another thread yesterday.

    Gene Sperling 101
    By DAVID LEONHARDT, January 5, 2011, 9:33 pm

    Thanks artappraiser, definitely helpful.  This, from the quoted Schreiber review, really irks me: "Later he writes that “neither progressives nor conservatives have articulated a vision for retirement security” that guarantees a reasonable nest egg while also helping workers invest in equities"

    What a conventional way to look at the problem.  Presumably, if people had retirement security they could then invest their other money in equities if they so chose.  So what he really means is that any retirement security program must necssarily involve helping people buy equities.  Aside from being bad financial planning (what about bonds?) it's just ridiculous.  There are a lot of ways we could guaranty people's retirement security and some of them have nothing to do with the stock market.  One could simply expand Social Security to a great extent, at the expense of the Pentagon.  It's amazing what that would do.  Sperling seems like a nice guy but like so many of them, he lacks imagination.

    neither progressives nor conservatives have articulated a vision for retirement security” that guarantees a reasonable nest egg while also helping workers invest in equities"

    Yes, we're all to blame, because progressives have failed to come up with their own Social Security privatization plan grounded in faith-based reliance on the Street.  Sheesh.

    Sperling is one of those guys from the 90's whose view is that the reason the bottom half is falling behind is that they are not heavily enough invested in financial products.  He's also one of the Clinton retreads who were already scheming back in the day to quasi-privatize Social Security.  My guess is that what we're going to get from an Obama-Sperling team is further "temporary" cuts in the payroll tax, cuts which will be an easy sell during the recession, but will never be cancelled.  This loss of revenue will create a Social Security funding problem that will be attacked by slashing benefits.  Meanwhile, some kinds of new privatized but government-assisted and underwritten retirement products will be introduced.  Social Security privatization is thus broken up into separate, seemingly independent packages, so that it doesn't have to be marketed to the public as a privatization plan.

    Wall Street, whose greed is bottomless, whose chief passion is the love of fatal risk and rounds of Russian Roulette with the savings of America, and who are ever in search of new revenue streams, has been dying to get its itchy, twitchy fingers on America's Social Security transfer payments for years.  Obama seems determined to be the guy who helps them get this job done.

    As Jimmy Stewart warned, "Potter isn't selling; he's buying!"  Wall Street is buying the Social Security program from America in bits and pieces by offering free money tax cuts that will eventually have to be paid back - and the price they'll demand is the Social Security program.   But remember the scene where Potter tries to buy George Bailey off with a fancy job and a big raise?   Well, Barack Obama is the star of a new dystopian remake of It's a Wonderful Life where Bailey shakes Potter's hand, takes the job and proceeds to help fleece the citzens of Bedford Falls out of their savings and security.

    It's pretty amazing that a mere two years after a riot of rampant, nationwide Ponzi investment crashed the economy, drove 10% of us into unemployment, evaporated the retirement savings of millions of Americans and saddled the balance sheets of America with enormous amounts of toxic assets that still haven't been cleared, a program of negative change brought to us by the hustlers and hucksters of the finacial services industry, the paramours of Big Finance are back in the saddle of government, selling us the same bill of neoliberal and market fundamentalist goods they were hawking in the 90's.

    Obama seems to be one of those Third Way guys who some years back bought into the argument that the only serious and courageous progressives are those with the balls to take on and kill Social Security.  I should have paid attention to the warning signs back in 2007 and 2008 when Obama was caught arguing that Social Security was in "crisis".  He then backtracked - but I think now that that statement revealed his true thinking.

    I don't hate the guy personally.  But on the real bread and butter economic issues, the guy is turning out to be a giant ass.  He strikes me as a lot like Clinton: an opportunistic social climber who advances himself by showing the powerful how eager he is to please them and act as their gofer.

    Right on!  Dan

    Shine the light.

    I do have this uneasy feeling that some form of privatization chip is going to be played by Obama. Perhaps a "trial" of some kind, with younger workers.  Dean has been saying that it's the under 35 age group who elected Obama and whom he badly needs in 2012, so I'm wondering what this demographic thinks about some form of privatization.

    He might be a Liberal by the Brookings Institution's definition; neo-Liberal he might be, by some standards.  Yech.  Better than Altman, I guess.

    Gene Sperling Returns

    By Matthew Yglesias, January 13, 2009


    Among other things, Sperling’s been a CAP (Center for American Progess) guy ‘lo these past several years so here’s a taste of his writing:

    He also wrote a book, The Pro-Growth Progressive, which has a slightly annoying title and lots of great policy ideas.....

    David Corn is not who he used to be, IMO.  I yield, AA: I will love Sperling!  (Can't say the same for  CAP, however.)  Podesta?  Okay.  I am starting to not care any longer who's staffing the White House.  Or: How I learned to love Chicago and save my sanity!

    I don't it has to be total thumbs up or total thumbs down.  But when one considers following, one has to consider that Sperling is just someone who believes the only thing in the world is his bank account and the bank accounts of his buddies:

    After the Clinton administration ended in 2001, Sperling, according to a former Clinton administration aide, spoke to several "wise men" about what he should do next. As a former NEC director, he was in great spot to cash in. And he received the same career advice from all of these counselors: go to Wall Street for the next eight years, make millions, and then return to public service (when there might be a Democratic president). He didn't follow this guidance. Instead, Sperling devoted most of his time to addressing the challenge of global poverty, particularly promoting the need for basic education in developing nations (with an emphasis on educating young girls). He created and led the Center for Universal Education at the Council on Foreign Relations. (The center is now based at the Brookings Institution.) He wrote papers and articles and convened seminars on how the world's wealthy had to do more (and spend more) to redress poverty in developing nations, especially Africa, where he traveled frequently. He developed a program with Hollywood star Angelina Jolie to push for educating children in regions of conflict.

    In 2000, the United Nations had devised the Millennium Development Goals, which included ensuring that every child on the planet could complete primary education by 2015. Sperling was doing what he could to hold wealthy nations to this target. "He fully embraced the idea that basic education was core to positive development overseas and tried to make that issue central to US deveopment thinking and strategy," says Ray Offenheiser, president of Oxfam America. Tom Hart, senior director of government relations at ONE, a nonprofit focused on African development, notes that Sperling "was a leading outside-the-government advocate for basic education, and he used his considerable network built during the Clinton administration to work on this. He didn't have to focus on this. He chose to." A friend of Sperling adds, "After having been head of the NEC for Clinton, he could have immediately gone to Wall Street and made a lot of money. That's what most people in his situation do. But he didn't. A lot of us who know him scratched our heads about that."

    The same goes with his article regarding the Wire.  At some level, one has to say the fella gets it.

    ....When someone creates a remarkable television show about the lives of largely overlooked and ignored black young men, the show itself is largely overlooked and ignored.

    I won't push the metaphor too far. The program's slight is a mere shame. That our nation has no comprehensive response to the high numbers of young minority males who drop out, are unemployed or who get caught up in the criminal justice system is a disgrace.

    ``Over the last two decades, the economy did great, and low- skilled women, helped by public policy, latched on to it,'' says Ronald B. Mincy, a professor of social policy at Columbia University in New York. ``But young black men were falling farther back.''

    While our failure starts with our unwillingness to pass a quality early-education program for all disadvantaged children from birth to age 5, at least poor toddlers are treated as sympathetic and deserving in the rhetoric of most politicians. Yet, when the same children are forced to fend for themselves in violent and decaying neighborhoods with inferior schools and end up opting for destructive activities, too often these young men are simply blamed for making ``poor choices.''

    Those were admirable endeavors and beliefs, for sure.  Thanks, Trope.

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