Larry Summers: Goldman Sacked

By Greg Palast, Reader Supported News

18 September 13

oseph Stiglitz couldn't believe his ears. Here they were in the White House, with President Bill Clinton asking the chiefs of the US Treasury for guidance on the life and death of America's economy, when the Deputy Secretary of the Treasury Larry Summers turns to his boss, Secretary Robert Rubin, and says, "What would Goldman think of that?"

Huh?

Then, at another meeting, Summers said it again: What would Goldman think?

A shocked Stiglitz, then Chairman of the President's Council of Economic Advisors, told me he'd turned to Summers, and asked if Summers thought it appropriate to decide US economic policy based on "what Goldman thought." As opposed to say, the facts, or say, the needs of the American public, you know, all that stuff that we heard in Cabinet meetings on The West Wing.

Summers looked at Stiglitz like Stiglitz was some kind of naive fool who'd read too many civics books.

R.I.P. Larry Summers

On Sunday afternoon, facing a revolt by his own party's senators, Obama dumped Larry as likely replacement for Ben Bernanke as Chairman of the Federal Reserve Board.

Until news came that Summers' torch had been snuffed, I was going to write another column about Larry, the Typhoid Mary of Economics. (My first, in The Guardian, 15 years ago, warned that "Summers is, in fact, a colony of aliens sent to Earth to turn humans into a cheap source of protein.")

But the fact that Obama even tried to shove Summers down the planet's throat tells us more about Obama than Summers-and whom Obama works for. Hint: You aren't one of them.

All these Cabinet discussions back in the 1990s requiring the blessing of Goldman Sachs revolved around the Rubin-Summers idea of ending regulation of the US banking system. To free the US economy, Summers argued, all you'd have to do is allow commercial banks to bet government-guaranteed savings on new "derivatives products," let banks sell high-risk sub-prime mortgage securities and cut their reserves against losses.

What could possibly go wrong?

Stiglitz, who would go on to win the Nobel Prize in Economics, tried to tell them exactly what would go wrong. But when he tried, he was replaced and exiled.

Summers did more than ask Rubin to channel the spirit of Goldman: Summers secretly called and met with Goldman's new CEO at the time, Jon Corzine, to plan out the planet's financial deregulation. I'm not guessing: I have the confidential memo to Summers reminding him to call Corzine.

[For the complete story of that memo and a copy of it, read "The Confidential Memo at the Heart of the Global Financial Crisis".]

Summers, as Treasury official, can call any banker he damn well pleases. But not secretly. And absolutely not to scheme over details of policies that could make a bank billions. And Goldman did make billions on those plans.

Example: Goldman and clients pocketed $4 billion on the collapse of "synthetic collateralized debt obligations"-flim-flam feathers sold to suckers and dimwits i.e. the bankers at RBS.

Goldman also cashed in big on the implosion of Greece's debt via secret derivatives trades permitted by Summers' decriminalization of such cross-border financial gaming.

The collapse of the euro-zone and the US mortgage market caused by Bankers Gone Wild was made possible only by Treasury Secretary Summers lobbying for the Commodities Futures Modernization Act which banned regulators from controlling the 100,000% increase in derivatives assets, especially super-risky "naked" credit-default swaps.

The CMFA was the financial equivalent of a fire department banning smoke alarms.

Summers took over the Treasury's reins from Rubin who'd left to become director of a strange new financial behemoth: The combine of Citibank with and an investment bank, Travelers. The new bank beast went bankrupt and required $50 billion in bail-out funds. (Goldman did not require any bail-out funds–but took $10 billion anyway.)

Other banks-turned-casinos followed Citi into insolvency. Most got bail-outs ... and got Larry Summers–or, at least, Larry's lips for "consulting" or for gold-plated speaking gigs.

Derivatives trader D.E. Shaw paid Summers $5 million for a couple of years of "part-time" work. This added to payments from Citigroup, Goldman and other finance houses, raising the net worth of this once penurious professor to more than $31 million.

Foreclosure fills the Golden Sacks

When Summers left Treasury in 2000, The New York Times reports that a grateful Rubin got Summers the post of President of Harvard University-from which Summers was fired. He gambled away over half a billion dollars of the university's endowment on those crazy derivatives he'd legalized. (Given Summers' almost pathological inability to understand finance, it was most odd that, while President of the university, he suggested that humans with vaginas aren't very good with numbers.)

In 2009, Summers, Daddy of the Deregulation Disaster, returned to the Cabinet in triumph. Barack Obama crowned him "Economics Tsar," allowing Summers to run the Treasury without having to be questioned by Congress in a formal confirmation hearing.

As Economics Tsar in Obama's first term, did Summers redeem himself?

Not a chance.

In 2008, both Democrat Hillary Clinton and Republican John McCain called for using the $300 billion remaining in the "bail-out' fund for a foreclosure-blocking program identical to the one Franklin Roosevelt had used to pull the US out of the Great Depression. But Tsar Larry would have none of it, although banks had been given $400 billion from the same fund.

Indeed, on the advice of Summers and his wee assistant, Treasury Secretary Tim Geithner, Obama spent only $7 billon of the $300 billion available to save US homeowners.

What would Goldman think?

As noted, Goldman and clients pocketed billions as a result of Obama's abandonment of 3.9 million families whose homes were repossessed during his first term. While American homeowners were drowning, Tsar Summers torpedoed their lifeboat: a plan to prevent foreclosures by forcing banks to write-off the overcharges in predatory sub-prime mortgages. Notably, Summers' action (and Obama's inaction) saved Citibank billions.

Loan Shark Larry

The deregulation disaster machinery is not done with mangling Americans. While not-for-profit credit unions, lenders of last resort for working people and the poor in the US, have been under legal and political attack, a new kind of banking operation has bubbled out of the minds of the grifters looking for a way to make loan-sharking legit.

One new outfit, for example, called "Lending Club," has figured out a way to collect fees for arranging loans charging as much as 29%. Lending Club claims it cannot and should not be regulated by the Federal Reserve or other banking police. The recent addition to its Board of Directors: Larry Summers.

If you want to know why Obama would choose such a grifter and gamer to head the Fed, you have to ask, Who picked Obama? Ten years ago, Barry Obama was a nothing, a State Senator from the South Side of Chicago.

But then, he got lucky. A local bank, Superior, was shut down by regulators for mortgage shenanigans ripping off Black folk. The bank's Chairwoman, Penny Pritzker was so angry at regulators, she decided to eliminate them: and that required a new President.

The billionaires connected Obama to Jamie Dimon of J.P. Morgan, but most importantly to Robert Rubin, former Treasury Secretary, but most important, former CEO of Goldman Sachs and mentor of Larry Summers. Without Rubin's blessing and overwhelming fundraising power, Obama would still be arguing over zoning on Halsted Street.

Rubin picked Obama and Obama picks whom Rubin picks for him.

Because, in the end, Obama knows he must choose a Fed chief based on the answer to one question: What would Goldman think?

Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.

Hugo Boss Gave the Nazis Style

By William Boardman, Reader Supported News

17 September 13

ritish comedian Russell Brand attended an event sponsored by GQ and Hugo Boss and gave a speech, while accepting an award, which offended almost everyone in the room (that speech is here). He then wrote a genuinely brilliant (and quite hilarious) op-ed in The Guardian about the role elite institutions play in reinforcing their legitimacy and how they maintain control of public discourse. It is well worth taking the time to read it."
– Glenn Greenwald, The Guardian UK

Sometimes a footnote is more than a footnote

The problem, as it were, with Glenn Greenwald's footnote about an event with little inherent weight is that he doesn't give the full flavor of a throw-away moment that is also a crystallized paradigm of one of the fundamental fascist arrangements in our world today. And Greenwald is simply wrong that Brand "offended almost everyone in the room,” unless they were expressing their displeasure by laughing and clapping. Here is the essential exposition of the event in one overlong sentence:

On September 4, the American fashion magazine GQ's Awards dinner-event at the Royal Opera House in London, corporately underwritten by the eponymous German clothing giant Hugo Boss (founded 1924), was packed with celebrities and others busy taking themselves seriously in hopes that you would take them seriously, even as they watched the host GQ (founded 1931) present a 38-year-old British comedian with an award for being an "oracle," only to throw him out of the venue when his acceptance speech turned out to be too oracular for their taste.

In Orwellian fashion, GQ has since made the comedian a semi-unperson on its website. Go ahead, try to find "Russell Brand" on gq–magazine.co.uk – his old stuff is there but his new links are amputated. Still available for now is a clip titled, with lovely irony, "Underestimate Russell Brand at your peril."

Some people believe it's bad manners to mention genocide

Here is some of what Russell Brand said, transcribed as well as possible from YouTube ("Russell Brand Rips on GQ Hugo Boss and Syria War," posted September 8) – the audience was laughing throughout his four-minute riff and no boos can be heard:

Ah. [holding up award] Thanks. Thanks for this lovely award and accompanying bag. John, that's really kind of you to be sincere and sweet, particularly in this context ... 'cause this is not designed for sincerity, this environment, you realize [laughter] – we will struggle if we start bringing sincerity into the situation. [laughter]

Thank you. Thank you for my oracle award, which to me sounds like something that has recently been made up [laughter] – it's not like a legit award – oracle award, will you come? [laughter] Yeah, yeah, oracle award, thank you for oracle award….

Also glad to grace the stage where [London mayor] Boris Johnson has just made light of the use of chemical weapons in Syria [laughter] – meaning that GQ can now stand for Genocide Quips [laughter, some applause and whoops] –

I mention that only to make this next comment a bit lighter because if any of you know a little bit about history and fashion, you know that Hugo Boss made the uniforms for the Nazis [laughter] – now the Nazis did have flaws, but they did look f-ing fantastic, let's face it [laughter] – while they were killing people on the basis of their religion and sexuality [laughter].

Genocide Quips OK – no, it's OK, it's OK, it's already been sanctioned, it's all cool [laughter]….

I'm literally a comedian, and it's my job to make jokes about things – like Hugo Boss, like fair enough, like he might not know [laughter]… 'We had a lot of clients in the thirties and forties I can't remember all of them' – did you make a lot of elasticated crotches, Hugo [goose-steps] – does it ring any bells? [laughter]….

Good luck being more offensive than that, son, ta-da! [exits to laughter and applause]

Reportedly, GQ magazine editor Dylan Jones was not happy with Brand's performance and promptly kicked him out of the event (another report has him kicked out of the after-party). They also apparently exchanged these tweets on Twitter:
Jones: "What you did was very offensive to Hugo Boss."
Brand: "What Hugo Boss did was very offensive to the Jews."

The history of Hugo Boss features Nazism, forced labor, and no atonement

Hugo Ferdinand Boss, the founder of the company, was born on July 8, 1885, in Matzingen, near Stuttgart. The youngest of five children, he started his clothing factory in 1924, went bankrupt by 1931, and joined the Nazi party (#508,889) on April 1, 1931. Prior to that he had contracted to make brown shirts for Germany's National Socialist Party (in 1934 ads Hugo Boss claimed that he had been a "supplier for National Socialist uniforms since 1924"). By 1934, Hugo Boss was also producing the all-black Nazi SS uniform. In 1945, Hugo Boss still had a photograph of himself with Hitler hanging in his apartment.

According to the Daily Mail on September 6, Hugo Boss "believed that Hitler was the only man who could lift Germany out of its economic doldrums…. There were certainly better men [than Hugo Boss] who refused to do business with the Party, but though Boss was happy to sign contracts with them, he was not a rabid Nazi. He was simply a pragmatist."

Pragmatically, Hugo Boss used forced labor for about five years in his increasingly profitable factory. Men and women from occupied countries, as well as French prisoners-of-war, all helped Hugo Boss become a rich man. The way the Daily Mail explained it:

Although Boss's factory was not part of a concentration camp – and his labourers were not prisoners — the conditions were dreadful. One former Boss labourer, a 17-year-old Pole called Jan Kondak, was forced to work in the factory from 1942 to 1945. He recalls the hygiene being very poor. "In the barracks there were lice and fleas." He describes the food as insufficient given the hours they had to work. During air raids, the workforce was not allowed into shelters, but had to stay in the factory…. Still, by the standards of some employers, Boss did treat his labourers reasonably well – and paid them somewhat less meanly.

After World War II, Hugo Boss went through the de-Nazification process. At first he was deemed to be an active supporter of Nazism, fined 100,000 marks, banned from voting, and barred from running any business. He appealed. He was then classified as a mere "follower" of Nazism and was allowed to run his business till he died in 1948. Not until 51 years later did the company agree to contribute to a fund that compensated its victims of forced labor.

Without suggesting that Hugo Boss expressed any repentance for his actions, or made any act of atonement, the Daily Mail concluded: "Ultimately, Boss was not an evil man, but he did not do enough to stop evil happening."

In 2011, Hugo Boss the company issued a public apology to "express its profound regret to those who suffered harm or hardship at the factory run by Hugo Ferdinand Boss under National Socialist rule." The apology was timed to coincide with the release of a book about the company in which the author wrote: "We can only repeat that the behaviour towards the forced labourers was at times harsh and involved coercion, but that concern for their welfare was also displayed, rendering simplistic characterisations impossible."

You won't hear the Nazi heirs at Hugo Boss demanding any apology

For the better part of ten days after receiving the GQ "oracle" award, Russell Brand didn't have that much to say about the event until he published his own somewhat meandering account in the Guardian of September 13. The Guardian initially published the video of Brand at the GQ Awards along with his narrative, but later substituted a notice: "This video is no longer available due to a copyright claim by Conde Nast [the owner of GQ magazine]." Here's some of what Russell Brand had to say on his op-ed about that September 4 soiree:

In case you don't know, these parties aren't like real parties. It's fabricated fun, imposed from the outside…. Everywhere you look there's someone off the telly; Stephen Fry, Pharrell, Sir Bobby Charlton, Samuel L Jackson, Rio Ferdinand, Justin Timberlake, foreign secretary William Hague and mayor of London Boris Johnson…. [emphasis added]

I could see the room dividing as I spoke. I could hear the laughter of some and louder still silence of others. I realised that for some people this was regarded as an event with import…. What dawned on me as the night went on is that even in apparently frivolous conditions the establishment asserts control, and won't tolerate having that assertion challenged, even flippantly, by that most beautifully adept tool: comedy.

The jokes about Hugo Boss were not intended to herald a campaign to destroy them. They're not Monsanto or Halliburton, the contemporary corporate allies of modern-day fascism; they are, I thought, an irrelevant menswear supplier with a double-dodgy history. The evening, though, provided an interesting opportunity to see how power structures preserve their agenda, even in a chintzy microcosm….

For example, if you can't criticise Hugo Boss at the GQ awards because they own the event, do you think it is significant that energy companies donate to the Tory party? Will that affect government policy? Will the relationships that "politician of the year" Boris Johnson has with City bankers – he took many more meetings with them than public servants in his first term as mayor – influence the way he runs our capital?...

Ought we be concerned that our rights to protest are being continually eroded under the guise of enhancing our safety? Is there a relationship between proposed fracking in the UK, new laws that prohibit protest and the relationships between energy companies and our government?

Real legends don't get awards, and award winners don't say, "I'm Spartacus!"

Almost two hours after Russell Brand's oracular moment, the GQ Awards ended with Samuel L. Jackson presenting the "Legend of the Year" Award to Michael Douglas, who thanked everybody very politely and appropriately. He even thanked the movie industry for giving him "some social consciousness" in a fuzzy ramble about nuclear power, nuclear weapons, John Lennon, and vaccination for cervical cancer, before concluding: "I'm really touched by all this. I know it's been a long evening. I hear there's an incredible after-hours party that goes on here after this evening, so have a great time!..."

Apparently, if you want to be a legend for a year, you'd better not be an oracle. Much better to deny the revolt and to say, in effect, "I'm not Spartacus. He's not Spartacus. None of the rest of us are Spartacus. Anybody who wants to be Spartacus is going to get crucified."

William M. Boardman has over 40 years experience in theatre, radio, TV, print journalism, and non-fiction, including 20 years in the Vermont judiciary. He has received honors from Writers Guild of America, Corporation for Public Broadcasting, Vermont Life magazine, and an Emmy Award nomination from the Academy of Television Arts and Sciences.

Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.