Follow the Money

That's what Deep Throat said to Bob Woodward in All the President's Men. Good advice. I'm certainly not a specialist on campaign contributions, but Hillary Clinton said regarding Wall Street that "They’re not giving me very much money now, I can tell you that much" after the exchange with Anderson Cooper (video available here), and I decided to check it out. This website provides some comparative data on Hillary and Bernie's donors [I'm assuming the data is accurate and the info I provide is based on that assumption].

Hilary gets 80% of her funds from large donors, compared to 26% from Large Individual contributors for Bernie. At the top of her list the Soros Fund, with more than 7 million, while for Bernie it's Alphabet Inc., with less than 100,000. Not sure how she claimed to receive 90% from small donors.

If we take "Wall Street" to mean the sum of Securities & Investment, Real Estate and Misc. Finance, then she received about 21.5 million from them in this electoral cycle, or about 16% of the funds raised. Number one industry for Bernie is "Retired" (if that can be called an industry) and second is Education, with 1 and half a million respectively. Real Estate and Misc. Finance contribute slightly more than 200,000 of his funds.

 Hilary does receive 50% of her contributions from women, while for Bernie it's about 36%.

You decide who, if anybody, is the Wall Street candidate.

PS: For comparison Jeb Bush gets 93% from big donors, and about 38% from "Wall Street," defined as above. If you add Insurance, then he gets about 46% from "Wall Street." Ted Cruz is also at around 45% of his contributions.

Bob Pollin on Clintonomics

At The Nation. Few important points. As Bob notes Hillary does invoke the mantle of Clintonomics. In his words:

"In trying to burnish her credentials as a can-do populist and to portray Bernie Sanders as a purveyor of naive socialist fantasies, Hillary Clinton has increasingly invoked Bill Clinton’s presidency as her economic policy lodestar."

 And Bill Clinton's program was not really progressive. Again:

"The starting point for understanding Bill Clinton’s economic program is to recognize that it was thoroughly beholden to Wall Street, as Clinton himself acknowledged almost immediately after he was elected."

 His Treasury Secretary, one of them, was Robert Rubin, ex-chairman of Goldman Sachs. And financial deregulation, which is at the heart of two bubbles, and two recessions, continued in this period. Bob says:

"A major driver here was Wall Street’s craze for Internet start-ups... Throughout the bubble years, Clinton’s policy advisers, led by Rubin and his then protégé Larry Summers, maintained that regulating Wall Street was an outmoded relic from the 1930s. They used this argument to push through the 1999 repeal of the Glass-Steagall financial regulatory system that had been operating since the New Deal. The Clinton team thus set the stage for the collapse of the Dot.com bubble and ensuing recession in March 2001, only two months after Clinton left office. They also created the conditions that enabled the even more severe bubble that produced the 2008 global financial crisis and Great Recession."

A good analysis of the limitations of Clinton's economic policies is in Bob's old paper Anatomy of Clintonomics.

Goldman and Chinn discover the accelerator

Steve Bannister (where have you gone Joe Di Maggio?) pointed out this nice post by Menzie Chinn on the "puzzle" (sic) of the slow investment recovery during the crisis. Note that it is actually not a puzzle at all. Chinn cites a study by the Vampire-Squid (Goldman Sachs), that concludes that (wait for the surprise) "the accelerator model generally fits well." Chinn also finds that lending conditions and "slow GDP growth (attributable to fiscal drag) are important determinants of low nonresidential fixed investment." Is rain wet?

PS: Lending conditions (which is actually a measure of liquidity) might actually be caused by the level of activity and investment rather than the other way round.

Goldman and the satanic derivative mills

Great piece by Matt Taibbi, which shows two important things. First, despite all the talk about the sophistication of the mathematical models behind the creation of derivatives, the whole thing was pretty trivial.  According to Taibbi the infamous Timberwolf deal (the sh**ty one):

(...) was built on a satanic derivative structure called the CDO-squared. A normal CDO is a giant pool of loans that are chopped up and layered into different "tranches": the prime or AAA level, the BBB or "mezzanine" level, and finally the equity or "toxic waste" level. Banks had no trouble finding investors for the AAA pieces, which involve betting on the safest borrowers in the pool. And there were usually investors willing to make higher-odds bets on the crack addicts and no-documentation immigrants at the potentially lucrative bottom of the pool. But the unsexy BBB parts of the pool were hard to sell, and the banks didn't want to be stuck holding all of these risky pieces. So what did they do? They took all the extra unsold pieces, threw them in a big box, and repeated the original "tranching" process all over again. What originally were all BBB pieces were diced up and divided anew — and, presto, you suddenly had new AAA securities and new toxic-waste securities.

The other thing, is that there is plenty of evidence in the Levin Report is more than enough to indite several managers at Goldman, in particular, Daniel Sparks, the head of the mortgage division, that lied under oath, when he claimed that they did not expect the securities that they were betting against were going to be downgraded.

PS:  The original post was accidentally deleted by Blogger.  The guy on top is Goldfinger, a lesser villain than the guys at Goldman.