Shots in the Dark

Saturday’s Wall Street Journal took a tough look at Bob Rubin’s disastrous tenure at Citigroup.

Mr. Rubin…acknowledged that he was involved in a board decision to ramp up risk-taking in 2004 and 2005 even though he was warning publicly that investors were taking too much risk….

His troubles have upt teh former Treasury secretary in the awkward position of having to justify $115 million in pay since 1999, excluding stock options…. Mr. Rubin said his pay was justified and that there were higher-paying opportunities available to him. “I bet there’s not a single year where I couldn’t have gone somewhere else and made more,” he said.

That is a novel argument: I earned my pay because someone else would have paid me more.

Asked if he had any regrets, Mr. Rubin said: “I guess I don’t think of it quite that way.”

Rubin argues that he was only an advisor to Citigroup and that “the board as a whole is not going to have a granular knowledge” of operations.

But in at least one hugely important matter, this turns out to be not quite true.

Mr. Rubin was deeply involved in a decisin in late 2004 and early 2005 to take on more risk to boost flaging profit growth, according to people familiar with the discusssions. They say hew old comment that Citigroup’s competitors were taking more risks, leading to higher profits.

..At the time, Mr. Rubin was saying in speeches that most assets were overvalued. He would quote a noted investor he knew as saying that “the only undervalued asset class in the world is risk.”

Which, as we all know, turned out to be as wrong as wrong can be. Meanwhile, the stock of Citigroup is down 70% from the time Rubin came on board.

In his defense, Rubin says that no one saw the current crisis coming.

My blog manager tells me that, before this one, I’ve written 3499 posts. So let me take the occasion of Thanksgiving to thank those of you who’ve read this from time to time, or regularly, with special appreciation for commenters—I have a lot of fun writing this blog, but it wouldn’t be nearly as enjoyable if no one read it. It’d be like like shouting into the Grand Canyon.

Here’s hoping that this Thanksgiving finds all of you happy and healthy in the company of loved ones. Have a wonderful holiday.

David Leonhardt in the NYT writes of “the return of Larry Summers.”

Over the last two years, Mr. Summers has carved out a role unlike anyone else’s in theDemocratic Party. He has been something of a shadow economic minister, laying out in real time how a Democratic administration would have responded to the financial crisis. When other economists and policy makers have questions, they often call Mr. Summers.

He is also the centrist who has made it safe for other centrist Democrats to move to the left.

[Blogger: I find this a curious argument—while centrist economists seem to have moved to the left in the past couple of years, I’m not sure you can give Summers credit or blame for that.)

But Mr. Summers also has a habit of alienating some people who could have been his allies. His ill-considered, though also sometimes exaggerated, remarks about women and science are the best-known example. (For more on what he did say, go tonytimes.com/economix.)

If he can avoid such mistakes — and be careful to criticize ideas rather than people — he may find himself ideally suited to the moment.

That seems a fair assessment.

Leonhardt goes on describe Summers’ positions on the issues….but some of the descriptions are, well, a little gentle. Like when Leonhard writes of Summers’ position on regulation:

On this topic, he still sounds like a centrist Democrat. As Treasury secretary starting in 1999, he shepherded a couple of bills that helped deregulate financial markets, and he has made it clear that he doesn’t buy the notion that these laws caused the financial crisis.

As we know, Summers did a little bit more than that: he actively killed a proposal to regulate derivatives, one that likely would have, if not fended off the current crisis, certainly softened it…..

I noticed this unintentionally hilarious piece of copywriting from an advertorial section in today’s Times—it was for products from the “New York Times Store.”

In quite large type, the ad said:

FROM ISAAC MIZRAHI—GIFTS JUST FOR YOU.

“Gifts Just for You”? Think about that for a second.

As an editor, I’m constantly working with writers to purge what I call PR-speak from their writing. It’s like a garden vine that constantly creeps in, no matter how diligently one tries to uproot it. And so I laugh/cry at the rest of the copy, which says things like “Just in time for the holidays are two must-have fashion accessories from none other than Isaac Mizrahi, the renowned fashion designer.”

Such a wonderful sentence, in its own train-wreck sort of way. Consider it. These bags are not really just in time for the holidays, a phrase which implies that someone was actually waiting for them. (Oh! Look! Here they are…and just…in….time!)

And whatever these fashion accessories are, they are clearly not “must-have,” as by definition a fashion accessory is not a “must-have” item. Insulin is must-have. Food, oxygen are must have items. Fashion accessories, not so much.

I also love that “none other than Isaac Mizrahi.” As if it’s some huge surprise that Isaac Mizrahi is putting his name to something…other than, oh, what he sells in Target. It’s as if they’re saying: None other than…Jesus! The renowned son of God.

But wait—there’s more: “Isaac Mizrahi designed this tote while taking inspiration from the unique colors used by Renzo Piano, the architect of the New York Times building.”

The colors in question are red and orange. I leave it to you to assess their uniqueness. But having been in the building in question, I can tell you that these colors were used in kindergartens and grade schools throughout the 1970s, and are not what one might call “attractive.”

The Times, finally, claims that “quantities are limited” (until they make more); customers can only buy three at $249.95 a pop.

(That word “quantities” is essential—exchange it with “supplies,” say the whole thing in a TV announcer voice, and you instantly see how cheesy the whole shebang is.)

Go ahead, I dare you—try to buy four. (Because that’s what everyone needs, four tote bags.)

I’m pretty sure the Times will sell you that elusive fourth “must-have” Isaac Mizrahi tote bag.

…because of his vigorous oversight of Wall Street?

It’s not as crazy as you think…..

Julian Schnabel, that is. (Why—who did you think I was talking about?)

The Post’s Cindy Adams has the gory details.

So not only was that a good celebrity sighting, but it provided the added frisson of watching a famous person step out on his [beautiful, second] wife….

The Times weighs in on Barack Obama’s economic team and, specifically, Larry Summers with an editorial that is mildly critical of them—which for the Times is like swinging the hammer of Thor.*

… the question that most needs answering is not whether Mr. Geithner and Mr. Summers are men of talent — obviously they are — but whether they have learned from their mistakes, and if so, what.

As treasury secretary in 2000, Mr. Summers championed the law that deregulated derivatives, the financial instruments — a k a toxic assets — that have spread the financial losses from reckless lending around the globe. He refused to heed the critics who warned of dangers to come.

That law, still on the books, reinforced the false belief that markets would self-regulate. And it gave the Bush administration cover to ignore the ever-spiraling risks posed by derivatives and inadequate supervision.

Mr. Summers now will advise a president who has promised to impose rational and essential regulations on chaotic financial markets. What has he learned?

Quite so. It would also be fair to ask him what he has learned from the Harvard experience.

*The hammer of Thor. And Thor.

Sarah Palin claims that she didn’t know turkeys were being killed right behind her while she gave a recent TV interview.

As Andrew Sullivan establishes, this is, um, highly improbable.

It’s an embarrassing episode, but really, so trivial. So why can’t Palin just laugh it off, instead of lying about it?

Mel Brooks tries to charge $450 a seat for Young Frankenstein. Young Frankenstein closes.

Everyone is delighted!

Sometimes, in these difficult days, it is nice to hear the sound of bubbles popping.

I wonder how the Yankees are doing selling those $2500-per-game seats.…

The LA Times and the Boston Globe both report on Harvard’s mysterious—and now embarrassing—withdrawal of its tenure offer to economist Christina Romer, who was just named head of the National Economic Council.

The LA Times:

“She’s a great choice,” said Harvard University economics professor Gregory Mankiw, who chaired the economic council from 2003 to 2005 and is a longtime friend of Romer’s. “She’s a very good economist, a great public speaker, and . . . brings to the table an understanding of history that most economists don’t have.”

…But Christina Romer’s appointment was vetoed by Summers’ successor, Drew Faust, Harvard’s first female president. David Romer then turned down his appointment and the couple remained at Berkeley.

So what happened, Professor Mankiw?

The Globe:

Romer, who is 49, received her PhD from MIT in 1985. Earlier this year she and her husband, fellow Berkeley economist David Romer, were in line for tenured positions at Harvard University, until Harvard president Drew Gilpin Faust unexpectedly rejected her bid without explanation.

…“She’ll be weighing in on the side of a large stimulus,” said J. Bradford DeLong, a fellow Berkeley economist.

DeLong was among the economists at both Harvard and Berkeley who were critical of Faust’s decision not to grant Romer a tenured position at Harvard. The Harvard Crimson reported in May that Harvard’s economics department had approved the job offer, but that Faust had vetoed it and declined to explain her decision.

Dear Globe: Harvard’s first female president rejects female economist for department which has reputation for being anti-female. Economist is then chosen for important White House job, making Harvard look silly at best.

Could somebody please report this story?