Former Treasury Sec/Goldman Sachs Chairman Robert Rubin: 'Virtually Nobody' Saw Crisis Coming

[mod mom]

Yeah, right blatant greed w no regulation should have been able to go on forever!

Robert Rubin: 'Virtually Nobody' Saw Crisis Coming

Robert Rubin, the former Clinton-era Treasury Secretary and noted champion of deregulation, told a New York City audience last night that "virtually nobody" -- himself included -- foresaw the financial meltdown.

In a discussion at the 92nd Street Y cultural center, Rubin touched on the financial crisis, Obama's economic policies and America's potential in the new global economy -- but not on financial reform or the deregulatory agenda of the 1990s. The former Citigroup director was mostly gloomy about the country's short-term economic prospects. He cautioned against taking too seriously some recent positive economic indicators -- such as the country's 5.9 percent growth last quarter.

Rubin, who has also served as chairman of Goldman Sachs, said that while he became concerned about market "excesses" in 2005 and 2006, he failed to take account of all of the factors that would coalesce into the crisis. During his time at Citigroup, Rubin reportedly pushed the financial behemoth to take riskier bets, including investing in the subprime mortgage market, which imploded in 2007 and instigated the crisis. Next month, Rubin will be grilled by the Financial Crisis Inquiry Commission, which is investigating the causes of the economic slump, notes Bloomberg News-

snip

http://www.huffingtonpost.com/2010/03/03/robert-rubin-virtually-no_n_484130.html

[Warpy]

1. Plenty of people saw it coming!!

Just visit the Economy forum here and go to the archived posts.

Monetarist ideologues didn't see it coming. A hell of a lot of people who are denied a real voice because they're not monetarist ideologues saw it coming.

Honestly, I felt like changing my name to Cassandra. Still do.

[dchill]

2. It seems like there will be a huge group of...

'Virtual Nobodies' out there to be congratulated on their precognition.

[Hannah Bell]

3. rubin synonymous with "liar" in dictionary.

[On the Road]

4. This is One of the Drawbacks of Being a Perma-Bear

You may feel vindicated after the fact, but if your outlook is negative years after years, eventually people will turn you off regardless of whether you are right this particular time.

[girl gone mad]

19. Oh, please.

Many, many people saw the crisis well ahead of time, warned of it, wrote about it in depth, tried to get the government to act, gave talks to numbskull bankers and even got wealthy on the short side. Bullshit phony pejorative labels like "permabear" can't change that cold, hard historical reality for the Rubinites and Summers of the world.

[On the Road]

22. "Perma-Bear" is an Accepted, Long-Standing Term

as is perma-bull. There are certain people who always present respectively the most negative or positive or negative outlook. Whatever the merits of their positions might be, after awhile you learn to tune these advisers out because, like a broken clock, they always have the same reading.

This is not to say they are always wrong. Here's a perma-bear outfit that has some interesting analysis and that I used to consult frequently. They did forecast the market crashes in 2000 and 2008. However, they also completely missed the rallies in 2002 and 2009. If you took their advice and were an active trader, you would be broke now. Same with the perma-bulls.

In contrast, here's a site that is more balanced. Like everyone, Carl Swed lin is not always correct, but he does look at both positive and negative signals and tries to determine what the market is saying right now.

What may be missed by people who do not follow the market daily is that prices are always a balance of positive and negative forces. By definition, there is equal sentiment for both the positive and negative outlook. There are always people on both sides, and those who are right simply because they always have the same opinion tend to get lost in the shuffle.

This is not to deny malfeasance, greed, or groupthink. But sentiment is very powerful and usually wrong. When Clinton's Treasury Secretary said that no one saw this coming -- well, there's a certain point to that. Just like no one now is seeing the recovery.

[Tsiyu]

29. All the Wall Street vernacular is so hip

but really, a hillbilly like me "saw this coming" and so did a lot of non-hillbillies. I have no stake in the market so have never pontificated about it. Call me "Perma-Not-Interested."

But in 2001 and more strongly in 2003 I realized that the house of cards was due for a collapse.

Maybe my bystander view afforded me more of a realistic assessment than those of you who live and breath and completely depend on the market.

[laughingliberal]

30. "Perma-Not-Interested"

I love that!

[On the Road]

43. You May Actually Have Had a More Realistic Assessment

by being on the outside. Any community has emotional dynamics that are very powerful and very hard to go against. And when the financial community is making money, that's the worst of all.

That term 'permabear' does not seem to have gone over very well here. I really wasn't trying to be hip or anything, but you always have to know somebody's background when listening to their forecast.

[Tsiyu]

45. That's what I'm thinking

We all know someone real close to a problem who cannot "see" there is a problem.

Either that, or the PTB and investors chose to ignore the problems because "they" were making money and screw the future...

PermaBear is a cute name, actually, but it doesn't accurately describe those who "saw this coming." Many, like me, had no stake in the market, just common sense.

:hi:

[On the Road]

46. Sentiment is a Really Odd Thing

Everybody knows the best way to make money in the stock market is to be a contrarian. But very few people who are involved with the market are able to do it. That's one reason purely mathematical systems are sometimes more successful, because they often give signal that just don't feel right at the time but turn out to be correct.

I tend to be somewhat pessimistic, too, and was worried about real estate prices falling. I avoided overpaying a couple years ago. But by the same token, I missed the initial runup in DC ten years ago, and would could have gotten an easy $2-300k in equity if I had been more optimistic.

The financial industry certainly did ignore problems because they were making money. I think what people are missing is that the whole world economy runs on a tightrope. There are always dangers and always voices of doom. Once the voices of doom have been wrong for the last five years, it beomes very easy to discount them.

[girl gone mad]

33. Turn of CNBS..

get some real perspective.

Any one of the dozens of top notch financial blogs, the SMW daily thread, the economy forum, etc. would be a good place to start. "Permabear" is an empty caricatures that applies to virtually no one. "Permabear" was the derisive name many gave to Roubini to discredit his insightful and accurate analysis predicting the crisis and collapse. "Permabear" is what critics call Rosie when they have no substantive rebuttal to his opinions. "Permabull" is a shallow, bogus descriptor devoid of any real meaning. It's a lazy man's tool used to belittle market observers who consistently note the fundamental, unresolved weaknesses in the world economy.

[On the Road]

42. "Permabear" was Not Intended to Apply to Roubini

I don't know his views before his comments in 2005, so I have no idea if he has been a permabear.

The term has been around for years before the crash and is frequently used in discussing analysts' positions. While I like Alan Newman's analysis on that blog I linked, I have never seen him give a positive forecast in over ten years. On the other extreme, I have never heard the Dow 38,000 guy give a negative forecast. And it is unwise to take advice from a permabear or a permabull without knowing that background. In fact, the very few times they do change, it is an excellent contrarian indicator, because they are among the last knowledgable people to do so.

DU is a permabear community for that matter. Since February 2001, there has never been a month here when the mood was positive or the forecast was optimistic. The consensus here was right about the 2008 crash only in the sense that a broken clock is right twice a day. During two major rallies in the last decade, it was doom and gloom all the way up. It's not really that important because this is a general political discussion board, but if you've been here for any length of time it's undeniable.

[Bonhomme Richard]

5. They saw it coming. That's why derivatives were so popular. n/t

[Greyhound]

26. Bingo! Give that buccaneer a cigar! n/t

[OHdem10]

6. This stretches belief. These men and women at these Financial

Institutions are supposedly the best and brightest and
many are graduates of our very best and highly honored
schools.

What is scary -- The fact that they pushed and paid people
to Lobby for deregulation. Anytime you get a law common
sense should demand that the organization carefully study
the law for UNINTENDED Consequences. Every law has good
aspects but also has a downside--things that can go wrong.
Put in place in your business firewalls against the bad
consequences.
\
I cannot help but ask, why did you not see the crisis
coming??? Did you choose not to see the consequences
because you never planned for unintended consequences.

[Enrique]

7. how much did Rubin make off the crisis? n/t

[HughBeaumont]

8. They didn't see this coming? ORLY?

For the past 28 years:

- The economy has been primarily built on war/defense, pharmaceuticals, insurance, debt investment, technology and risky financial instruments; with the exception of technology, all unstable, speculative sectors and concentrate wealth and security on the top of the chain,

- Pretty much every social program has either been cut or de-funded, resulting in poor schools, crumbling infrastructure and a social safety net that isn't worth the paper it's non-existent plan is printed on,

- With the exception of the Clinton years, taxes on the wealthy have been lower and lower with each passing year, which is part of the reason for a 10 trillion dollar increase in the national debt (the other part being worthless, illegal and greed-based wars) and affecting the economy with booms, bubbles and crashes rather than steady job creation and real wealth building,

- Manufacturing, Automotive and General Industry in the US has gone the way of the Dodo, resulting in several million displaced workers, many of whom will be experiencing long periods of un/under-employment,

- College costs have skyrocketed while college degrees (thanks to there being substantially less jobs available than college-educated workers that can fill them) have become all but worthless,

- Our corporations have been overrun by Friedmanite bean-counters who refuse to veer from this predatory plan that has failed the overall economy for that same amount of time (you know, unless you happen to be well-monied . .. then it works out just fine),

- Incomes of the wealthy have increased anywhere from 29 to 1000 percent while the average worker makes, in real dollars, the same income he/she did in 1973 (this same condition was prevalent in the Great Depression as well),

- Job security no longer exists in many American occupational sectors, which now require massive amounts of expensive training to even get entry to,

- Offshore out/in-sourcing has replaced paying American citizens good wages and has jeopardized the future of at least 14 million jobs by 2015 according to one survey,

. . .. and they're STILL trying to tell us "No one could have SEEN THIS COMING????"

A wise man once said "you can't feed the birds by giving the horse more oats".

Yet they keep believing the same old horseshit is going to work for everyone eventually. "It HAS to! We spent millions convincing ourselves Milton Friedman was right, and goddammit, we will keep on trying until he IS!!"

Unbelievable.

[Tierra_y_Libertad]

9. Bollocks. Anybody paying attention to the hyper-inflated real estate market saw it coming.

[dixiegrrrrl]

10. Ahhh.. the Condi Rice School of Banking...

"No one could possibly have foreseen....."

[Uncle Joe]

27. It does feel like

Deja Vu.

[laughingliberal]

31. Perfect! The Condi Rice School of Banking!

I love it.

[Cerridwen]

11. If the "experts" didn't see it coming, could we possibly consider

that "average" Americans didn't see it coming either and quit blaming them for losing in this particular rigged game?

BTW, just call me "virtually nobody" because I knew something was going to explode; though I'm not an "expert" so I couldn't point at what, exactly.

[hatrack]

12. Well, if we assume economics has predctive power, why do economists like Rubin still have jobs?

:shrug:

[kenny blankenship]

13. Translation: "Everyone I knew was in on the take..."

"...and they were all too busy shoveling in cake into their cakehole to get talky about what they knew. 5th Amendment rights and all that."

[gratuitous]

14. Did you hear Rubin's remaks personally?

Because if you weren't in the room when he said it, you're "nobody" as far as Rubin and the Wall Street cognoscenti are concerned. Folks like Atrios were on this burgeoning crisis for years, and Atrios had his own name for the churning of bad real estate paper: Big Shitpile. Nobody really knew what was being bought and sold, everybody figured the previous owner had done his due diligence, and that any little defaults in these trading packages were heavily insulated by all the good performing loans around them. Part of the trouble was that the measure of good performing kept getting shorter and shorter, to the point where brand new loans with no history were touted as good performers.

But Wall Street was so in love with the commissions and the bonuses for swapping these pieces of crap, that nobody bothered to inspect the components very closely. When the predictable happened, and all this furious paper churning finally combusted, the Titans of Wall Street, Masters of the Universe and Captains of Industry that they were, had it blow up in their greedy little hands. But all was still well for Robert Rubin and his robber baron cronies: They could and did go right to their bought-and-paid-for Representatives and Senators to write them a blank check directly out of the Treasury, and take all this bad paper off their hands. A few months later, it's bonus time again, and the suckers are left holding the bag as usual.

[immoderate]

15. reminds me of the two hunters who stop to examine some tracks...

"These are deer tracks," says one.

No, these are bear tracks," says the other.

They stand there arguing when suddenly, they get hit by a train.

--imm

[SoCalDem]

16. Bullshitus Maximus

I saw it coming.. and many others here did as well..What the banksters did not "see" was the collapse coming quite as soon as it did...before they could scurry away, scot-free

[JackRiddler]

17. We are all Nobody, you fucking criminal. There are millions of us, and we remember.

We knew what you were doing in the 1990s with your campaign to repeal all of the New Deal regulations on banking. We weren't surprised in 2000 when the first crash came.

We knew what was going on from 2002 to 2008 with the fake housing bubble, the outrageous asset inflation, the securitization of junk, the lies about how it was Triple-A secure, the way the inevitable damage was being multiplied through leverage and derivatives. Any bright child could have understood where it was heading. Many of the sucker investors knew it, too. They just thought they would be faster on the trigger and exchange their chips for cash in time, before it all came crashing down.

And of course you and your bankster gang knew it was coming, because you were setting up all of the conditions for it. You didn't care that you were killing the six-ton elephant and leaving it to rot on the savannah. All that mattered to you was for you and your friends to get the 50-pound tusks.

And why should you care today? You're still sitting in the fat. You're ridiculously rich and once again a White House adviser, not in spite of, but BECAUSE you were wrong about everything you claimed.

Are you really so stupid to think us so stupid as to believe an excuse as stupid as yours?

[girl gone mad]

18. Hey, Rubin: STFU.

Seriously.

[katsy]

20. Really? Where I'm from that's called STUPID

and negligent.

As the matter of fact... Nothing Rubin can say will change the fact that these "boos-boos", these "ooopsies" are really major fuck-ups and no heads have rolled. NONE. So STFU Rubin.

[ljm2002]

21. If that's so, then why does he still have a job?

These people are such brazen liars it takes my breath away.

If they did not understand the risks that were being taken then they should be unceremoniously thrown out on their butts, never again to work in the financial industry.

If they did understand the risks that were being taken then they should be tried, convicted and spend the next, oh, 20 years (at least) in prison.

But as usual, they get to have it both ways: "I was ignorant, who could possibly have known?" vs. "We get these high salaries and bonuses because we're so smart and we're doing God's work!"

The idea of a meritocracy has such appeal. Too bad it's not how we run things.

[roamer65]

23. I saw it coming.

By early 2007, I was telling co-workers a recession was coming very soon. I could have bought a house in 2005, but I passed on it. It just smelled like a bubble that far back.

Cheap money loaned to just about anyone with a pulse. The result of that game is easy to predict...POP.

[amborin]

24. Nobel Prize winner Joseph Stiglitz predicted it! he's highly critical of Obama's economic moves

[Greyhound]

25. (to music)"He's a lying sack of crap, a lying sack of crap..." n/t

[Hansel]

28. Oh bullsh*t.

I know a lot of people who saw it coming. Of course many were low end paper pushers who processed this junk and not the guys you pay million dollar bonuses to because they are so brilliant.

Bankers that didn't fall for this crap saw it coming.

This is complete bullsh*t. They just didn't care that it is was coming because they were going to get in big and back out before the house of cards fell.

Anyone with half a brain saw it coming.

Rubin = Condie Rice "who would have thought someone would take planes and fly them into building?" Who indeed?

If they didn't see it coming, then they need to all find another line of work.

[sendero]

32. Fucking liar..

... and 5 years from now he'll say we didn't see the next leg down coming either, but plenty of economists have already said they do.

[tnlefty]

34. !

:rofl:

[robdogbucky]

35. Peter Schiff predicted it

as well:


(Fortune Magazine) -- A couple of years ago, when Peter Schiff first began appearing regularly on TV to warn of an impending real estate collapse that would crash the U.S. economy and stock market, he was surprised and disappointed to find that he was rarely, if ever, approached by strangers in restaurants.

"I'd walk down the streets of New York and figure, 'Gee, you know, I'm on CNBC, CNN,'" says the brash 45-year-old president of brokerage Euro Pacific Capital. "But nobody ever recognized me."

Those days, as Schiff will triumphantly tell you, are over. Perhaps no market soothsayer has had his profile raised higher over the past six months. As one of the few talking heads who loudly, relentlessly, and more or less accurately sounded the alarm about the mortgage bubble and its consequences - in the process becoming the latest bearish commentator to earn the moniker "Dr. Doom" - Schiff has suddenly emerged as a cult hero and something of a minor celebrity...

...'Ponzi economy'
As he outlined in 2007 in his first book, Crash Proof: How to Profit From the Coming Economic Collapse, Schiff believes that the U.S. economy has become dangerously and unsustainably dependent on consumption - fueled by trillions of dollars borrowed mainly from Asian countries like Japan and China..."

http://money.cnn.com/2009/01/20/magazines/fortune/okeefe_schiff.fortune/index.htm




Just my dos centavos

robdogbucky

[robdogbucky]

36. Oops, dupe

Sorry

[Canuckistanian]

37. Brooksley Born saw it coming

And when she tried to warn people about it, she was roundly dismissed.

[Lucky Luciano]

38. All the bankers could see it coming...just timing it and being nimble

enough to trade large notionals when they absolutely NEEDED to became completely impossible.

I know one banker who was making a ton, but refused to stop renting his little one bedroom apartment. He said NYC real estate was so inflated. He said that what he needed before he bought was for a good Wall Street crash in which he had a huge PnL so that most bonuses were smoked, but his was good. With smaller bonuses, residential real estate would get smoked and with his large bonus he would finally scoop up a place. He still has not bought...and he did absolutely crush it - he has been doing very well in a very tough market.

[Catshrink]

39. Well, hell, that man should get a bonus!

Just like the other failed bankers who took $$ from TARP then scooped up their bonuses like greedy pigs.

But be sure to fire the teachers.

[Odin2005]

40. Morons.

[MisterP]

41. Randroids and neolibs never think that things can go downhill once their policies are enacted

any downturn must be caused by gub'mint interference (q.v. the books "Freedomnomics," "Meltdown"): hence their ideology of cutting social services, like Clinton's holy welfare reform. Since less is interfering with the market, the poor will be employed more by their beneficient corporate masters and small businessmen. They don't realize that labor is at the BOTTOM of economics, rather than being supported by the hardworking capitalists.

it's a messianic movement, so it expects prosperity and wealth to rain down as long as capitalism isn't interfered with "any day now": loss of home, job, and wages are "growing pains"

[arcadian]

44. I wanted to see what this jackass looks like

Here is what this jackass looks like: