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Thursday, January 14, 2010

Summers and Rubin personify the corrupt, connected shadow elite oligarchy that plundered Russia and now America

For The Shadow Elite Failure Often Guarantees Future Rewards
(Huffington Post) -- Janine R. Wedel --

Far from the old pull-yourself-up-by-the-bootstraps model of acknowledging failure and starting anew, the shadow elite do not admit failure at all. More important, past failure may guarantee their future success. When most of us fail, consequences are not widespread. When the shadow elite fail, it affects all of us because their power is pervasive and they are largely beyond accountability. For confirmation one need only look as far as two of the country's top economic helmsmen, Robert Rubin and Larry Summers.

Rubin and Summers, "flexians" and their "flex nets" , continue to be rewarded--and rewarded big--for their failures. Those rewards extend to giving them the reins of power to shape what our financial system will look like well into the future. The tendency to reward the failure of the top-most flexians has brought us to a dangerous point in U.S. history, in which state and market power are increasingly intertwined.

We have seen the disastrous effects of this for both democracy and the free market before. Take Russia, for instance. A small coterie of Russian and American players, entrusted after the collapse of the Soviet Union with creating a market economy with a legal and regulatory backbone, failed utterly. Instead, they facilitated the opposite: a corrupt bureaucracy that virtually precluded the development of free markets and the expansion of an unaccountable state with a democratic facade. This all took place under Rubin and Summers' watch and with their encouragement and sponsorship, when they were both at the Treasury Department...

Meanwhile, in Russia, backed by Summers and hundreds of millions of dollars in Western aid and loans from the international financial institutions, the Harvard-Russia partners made end-runs around the democratically elected parliament, operated through top-down decree, and fused their own agendas with that of the state...

Far from paying any price for their joy ride, Summers and Rubin were handed a fleet of limousines. Summers, appointed president of Harvard, in turn appointed Rubin to the Harvard Corporation, the university's all-power executive board. Only after Harvard settled the government lawsuit did Summers resign (in 2006) amid public relations troubles within and outside the university. In true flexian fashion, he landed well, as a university professor at Harvard, a part-time managing director of the investment and technology development firm D. E. Shaw & Co., and columnist for the Financial Times. He has since landed even more smoothly. While fallout from his unpopular performance as Harvard president may have kept him from being renamed treasury secretary and confirmed by Congress, he is now back in the saddle as a crucial economic adviser to President Obama. Neither his Harvard and Russia track records nor his past advice and promotion of deregulation--which has come back to haunt the financial system of the United States, indeed the world--deterred Obama. Though Summers and his followers led both Harvard and Russia into debacles from which they have yet to recover, he is nonetheless praised as "brilliant."

Rubin, for his part, as Treasury secretary between 1995 and 1999, fought (along with Summers and others) to repeal the Depression-era Glass-Steagall act (paving the way for the merger that became CitiGroup) as well as to remove legal obstacles that were keeping Citigroup from investing in the risky derivatives market. That was a significant factor in the economic collapse of 2008-2009. Rubin spent most of the last decade in the top ranks at CitiGroup, leading it to such "success" that it had to be bailed out by the U.S. government. And, as Matt Taibbi pointed out in December, the Obama administration's economic team members have so many connections to Rubin (through his tenure at Goldman Sachs, the Clinton administration, Citigroup, and a think tank he founded to promote his financial philosophy) that "the White House now looks like a backstage party for an episode of Bob Rubin, This Is Your Life!" These of course, include the well-known Summers (head of Obama's National Economic Council) and Treasury Secretary Timothy Geithner, as well as players lesser known, but nonetheless intimately connected to Rubin in other configurations.

I've seen this kind of intertwining of roles and relationships before. They are exactly what you'd find in communist and post-communist societies...MORE...LINK

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