Robert Rubin on the economy

Wow, Robert Rubin finally speaks, after stepping down from his perch at Citigroup. According to a few independent thinkers, Rubin was one of the main instigators in the cause of the financial and economic crises we find ourselves in. The former Treasury Secretary formerly headed up Goldman Sachs and Citigroup, encouraging banks to leverage up their balance sheets to increase dubious earnings via the use of derivatives, which ended up being toxic assets. We all know how that drunken party turned out.

His progeny in the ensuing bank bailouts include former Treasury Secretary Hank Paulson (also, formerly of Goldman Sachs), top Obama financial advisor Lawrence Summers, and current Treasury Secretary Tim Geithner, among other well-placed government bureaucrats and bankers.

The editorial actually gives fair warning to the approaching storm, even if it lacks any mea culpa for past misdeeds. I guess omission is a form of honesty.

http://www.newsweek.com/id/225623/page/1

First, there must be sound fiscal and monetary policies. The United States faces projected 10-year federal budget deficits that seriously threaten its bond market, exchange rate, economy, and the economic future of every American worker and family. Those risks are exacerbated by the context of those deficits: a low household-savings rate, even after recent increases; large funding requirements for federal debt maturities every year; heavy overweighting of dollar-denominated assets in foreign portfolios; worsened fiscal prospects in the decades after the current 10-year budget period; and competing claims for capital to fund deficits in other countries.

The conventional concern here is that private investment will be crowded out, which would result in a reduction of productivity, competitiveness, and growth. In addition, the very early 1990s showed that unsound fiscal conditions can have a symbolic effect that broadly undermines business and consumer confidence. But finally, and far more dangerously, our bond and currency markets could react with severe distress to fears about imbalances in the supply and demand for capital in the years ahead or about the possibilities of inflation. Those effects have been averted so far by a number of factors: large inflows of capital from abroad into Treasury securities; concerns about other major currencies; the low level of private demand for capital; and the psychological state of the market. But this cannot continue indefinitely, and change can occur with great force—and unpredictable timing.

Read Matt Taibbi's scathing article on Obama's big sellout and the pandering to big Wall Street bankers--at the expense and hoodwinking of tax payers. Robert Rubin is a central figure in the web of lies, deception, and pilfering.

http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout