Crony Capitalism
I do not know Charles Gasparino. We have never met. But I do know his work as a journalist. I read him assiduously. To the best of my knowledge, no one has done a better job to date in following the machinations linking the Obama administration and Wall Street.
So I am pleased – as you should be as well – that Sentinel HC today released his new book Bought and Paid For: The Unholy Alliance Between Barack Obama and Wall Street. Here is the money quote:
The fact of the matter is, when you strip away the name-calling and class warfare coming from the Obama administration, and when you ignore Wall Street’s gripes about the new financial reform legislation that will put a crimp in some of its profits, these two entities are far more aligned than meets the casual eye. They coexist to help each other—in an unholy alliance against the American taxpayer.
You can read an excerpt on Andrew Breitbart’s BigGovernment.com.
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May '10
Re: Crony Capitalism
Meh.
If the administration were engaged in an unholy alliance with Wall Street, it would pursue policies designed to make stocks go higher. This is just a story of business working hard to suck up and insinuate itself and rich guys using money to buy access.
Wall Streeters are part of the same cultural elites as the folks in the Obama administration. They went to the same schools, read the same newspapers and send their children to the same summer camps. There is nothing surprising or secret here.
The real unholy and ideological alliance is the one between the administration and Big Labor. It's not the petty graft that matters at the end of the day. It's the great big giant policy shifts taking place right before our eyes that deserve the sharpest focus.
Edited on Oct 5, 2010 at 6:40amSep '10
Re: Crony Capitalism
It made me feel good that someone with your esteemed background also found Gasparino valuable. Do you value Taibbi’s work? My view is that this unholy alliance with Washington has existed for decades. The most atrocious thing about TARP is that it ensured that the alliance would continue.
Edited on Oct 5, 2010 at 6:41amRe: Crony Capitalism
Trace Urdan:
If the administration were engaged in an unholy alliance with Wall Street, it would pursue policies designed to make stocks go higher. This is just a story of business working hard to suck up and insinuate itself and rich guys using money to buy access.
Wall Streeters are part of the same cultural elites as the folks in the Obama administration.... There is nothing surprising or secret here.
The real unholy and ideological alliance is the one between the administration and Big Labor. It's not the petty graft that matters at the end of the day. It's the great big giant policy shifts taking place right before our eyes that deserve the sharpest focus. · Oct 5 at 6:22am
Edited on Oct 05 at 06:40 am
I don't know if the alliance between Wall Street and big government is holier or unholier than the alliance between Wall Street and big labor, but certainly the former led to some pretty disastrous policies under both Bush and Obama--specifically, "too big to fail," which led to the bailouts and TARP.
May '10
Re: Crony Capitalism
Political attitudes are 10% about access and cronyism and 90% about fear.
The capital markets are big, scary, important things and politicians just don't trust their judgment about what to do. And I'm not convinced that conservatives have any good answers here either. Regulate more or regulate less? The deregulation of derivatives was a significant contributing factor to the meltdown. Let giant Wall Street firms collapse under the effective weight of market panic and perhaps cede capital formation for a generation to Asia?
Don't get me wrong. I wish the (small-m) market had been allowed to do its thing, but I'm not smart enough to pretend that I know what would have happened.
Furthermore, I have a natural aversion to the populist nonsense behind attacking Wall Street. It's all well and good to revere small business, but we don't live in a feudal society and our economy is just a bit more complicated than that.
I'm as happy to attack Obama as the next guy, but this conspiracy business is way too simple. Besides, Wall Street is nothing other than the people you've hired to manage your favorite mutual fund.
Re: Crony Capitalism
liberal jim: It made me feel good that someone with your esteemed background also found Gasparino valuable. Do you value Taibbi’s work? My view is that this unholy alliance with Washington has existed for decades. The most atrocious thing about TARP is that it ensured that the alliance would continue. · Oct 5 at 6:29am
Edited on Oct 05 at 06:41 am
I have learned a thing or two from Taibbi.
Jul '10
Re: Crony Capitalism
If you really want to see day-to-day political corruption, look to the unholy alliance between politicians and real-estate developers.
Government at all levels has influence that can turn worthless land into gold by changing zoning regulations, building roads and sewers, etc. That's what the "Bridge to Nowhere" was really about. Alaska Congressman Don Young's cronies had lots of worthless land on the other end of that bridge.
The number of instances in which local or Federal elected officials have made very modest investments in sleepy real-estate partnerships that subsequently paid off handsomely by virtue of an earmark dwarfs the number of corrupt Wall Street deals.
Re: Crony Capitalism
Trace Urdan:
I'm as happy to attack Obama as the next guy, but this conspiracy business is way too simple. Besides, Wall Street is nothing other than the people you've hired to manage your favorite mutual fund. · Oct 5 at 7:18am
I think that you underestimate the degree of collusion between this administration, the likes of Barney Frank and Chris Dodd, and the big firms on Wall Street. We do not hire people to manage our mutual funds -- any more than we hire people to manage the companies in which we own stock. That is only notional. When was the last time that a shareholder revolt result in anyone of this sort being fired?
The general pattern governing the relations between business and government is what economists call "regulatory capture." The large corporations, like the unions, put out a great deal of effort in a quest to control the institutions set up to regulate them, and the aim of these corporations is to prevent market entry on the part of potential rivals.
Re: Crony Capitalism
Kenneth: If you really want to see day-to-day political corruption, look to the unholy alliance between politicians and real-estate developers.
Government at all levels has influence that can turn worthless land into gold by changing zoning regulations, building roads and sewers, etc. That's what the "Bridge to Nowhere" was really about. Alaska Congressman Don Young's cronies had lots of worthless land on the other end of that bridge.
The number of instances in which local or Federal elected officials have made very modest investments in sleepy real-estate partnerships that subsequently paid off handsomely by virtue of an earmark dwarfs the number of corrupt Wall Street deals. · Oct 5 at 7:39am
You are, I suspect, correct. Here is the problem. The Wall Street deals do a lot more harm. Think about the damage done by the collusion between Wall Street and the federal government with regard to the marketing of bonds based on subprime mortgages.
Jul '10
Re: Crony Capitalism
Paul A. Rahe
You are, I suspect, correct. Here is the problem. The Wall Street deals do a lot more harm. Think about the damage done by the collusion between Wall Street and the federal government with regard to the marketing of bonds based on subprime mortgages. · Oct 5 at 7:53am
Trust me, I was in the mortgage industry during the bubble: the real estate developers (most of whom had their own mortgage-brokering companies) were right in the thick of Alt A and sub-prime, lobbying for relaxed lending rules, knowing they could sell off their risky mortgages to Fannie Mae and Freddie Mac at the end of each week.
May '10
Re: Crony Capitalism
But Paul, Lindsay Graham was the responsible party in the case of deregulating derivatives. Whatever problem you see is surely systemic, not partisan.
I reject this assertion completely. That's like saying we don't tell cereal companies how much sugar to inject in their product. Consumers move their money around constantly rewarding funds with higher short-term returns. It absolutely starts with individual investors and their retirement savings.
Absolutely. But how to fix this situation which is more pervasive than Wall Street and Democrats.
Sep '10
Re: Crony Capitalism
There is a difference between pro business politicians and pro market pols. The later are few and far between. However, I essentially agree with Trace that this is less collusion and more anticompetition. Wall St didn't tell them to make mortgage interest deductible or to subsidise the GSEs or to force the institutions into buying bogus AAA paper. To an extent competition in other areas crushed their margins and drove them toward that business but they were complicit in that they created lousy products and leveraged themselves to the sky stupidly. I suppose the street did create money market funds but that was a workaround of stupid legislation too.
Sep '10
Re: Crony Capitalism
Trace: I agree with your point about unions but stocks rose 60% in 14months. I believe this is the sharpest increase on record. While I believe it is a bear market rally, it must be viewed as an argument that O has pursued policies that would cause stocks to rise.
I believe it was Gasparino who wrote a series of articles that traced Goldman’s relationship with DC. (eye opening) Perhaps the Prof. knows where they could be located.
May '10
Re: Crony Capitalism
Yes of course. If Obama can be credited with the World not ending, he can claim responsibility for that. But I am looking at capital flows out of equities at alarming rates. Maybe it's Glen Beck's fault though with all his gold talk.
Jul '10
Re: Crony Capitalism
Trace Urdan
Yes of course. If Obama can be credited with the World not ending, he can claim responsibility for that. But I am looking at capital flows out of equities at alarming rates. Maybe it's Glen Beck's fault though with all his gold talk. · Oct 5 at 8:40am
Hate to burst your bubble, Jim, but the S&P is still down 20% from it's 2007 high.
Re: Crony Capitalism
Gasparino did an earlier book called, I believe, The Sell-Out.
Re: Crony Capitalism
For the record, I would not want to suggest that crony capitalism is a purely Democratic operation. Nor would Gasparino make any such suggestion. But the Dems are awfully good at it. Look at Government Motors.