August 12, 2011
In the list of people most responsible for the economy’s wreckage, Robert Rubin is the only person who can rival Alan Greenspan for the top spot. As Treasury Secretary he pushed the over-valued dollar policy which led to the massive U.S. trade deficits.
These trade deficits are the fundamental imbalance in the U.S. and world economy. A trade deficit implies that either or both the government or private sector has negative savings. In other words, because we have a large trade deficit we must have a budget deficit or the sort of asset bubble-driven consumption boom that we had during the stock and housing bubbles.
Rubin also was a big proponent of removing government restrictions on the financial system. He helped to push through the repeal of Glass-Steagall. He also nixed Brooksley Born’s efforts to regulate derivatives like credit default swaps.
After his years in the Clinton administration he took a top position at Citigroup where he earned over $100 million. When he left the bank in 2008 it was on government provided life support. It had been at the center of the subprime crisis, securitizing hundreds of billions of dollars of subprime mortgages.
Presenting Rubin as just a wise man who used to be Treasury Secretary, as this NYT article does, is like presenting the Unabomber as simply a man who lived in a small cabin in Montana.
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