Friday, November 5, 2010

The (in)visible hand of the world of finance in the world of politics

I like to explain to my students that the world of finance has an invisible stronghold on the world of politics. Check out then the below text from the Globalist on Larry Summers, who was paid millions just before joining Obama's economic team in the White House. Can this explain why he was against temporarily nationalizing American banks during the crisis? I wonder what new job he is going to get now... Goldman Sachs anyone?

"In 2008, the year before he joined the Obama Administration, Mr. Summers made more than $5 million in compensation from the D.E. Shaw hedge fund and received more than $2.7 million in speaking fees from Wall Street companies that received bailout money.

Now, at that pay level, there were always legitimate concerns about this being "pre-pensation" rather than compensation for actual services.

It was as if to say with a wad of dollars: "Once you're at 1600 Penn, we know you'll keep a watchful eye out for the interests not just of the firm or hedge funds, but the big players in the financial industry more generally.”

And that, in his two-year stint in the White House, he certainly did."

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