Albany - Corrupt Yet Again

WaPo reported:

Federal agents on Thursday arrested powerful New York Assembly Speaker Sheldon Silver (D) on federal corruption charges, stemming from payments he received from two New York City law firms.

Silver is charged with five counts of fraud and conspiracy, according to court documents filed Wednesday. Prosecutors allege he used his position to take more than $6 million in bribes and kickbacks.

“The show-me-the-money culture of Albany has been perpetuated and promoted at the very top of the political food chain. And as the charges also show, the greedy art of secret self-reward was practiced with particular cleverness and cynicism by the Speaker himself,” Bharara said. “Politicians are supposed to be on the people’s payroll, not on secret retainer to wealthy special interests they do favors for. 

Five years ago The Carlyle Group settled with the New York Attorney General for $20 million for paying agents to land state pension fund investments.  That settlement (and promise to behave better) stated:

The announcement arises from a two-year, ongoing investigation into corruption involving the New York State Comptroller’s Office and the Fund. The charges to date allege a complex criminal scheme involving numerous individuals operating at the highest political and governmental levels under former Comptroller Alan Hevesi, in which the New York state pension fund was used as a piggy bank for the Comptroller’s chief political aide and a favor bank for political allies and other friends. 

Cuomo and Carlyle co-founder David Rubenstein can chuckle over old times at the World Economic Forum in Davos.  What favors are being banked betwixt and between the jet set in Davos?  It's where deals get done.

Private Jetting Davos Gives Lip Service to Inequality

Dealbook reported:

David Rubenstein, co-founder and co-chief executive of the Carlyle Group

Bullish on: the United States dollar, China, investing in Japan.

Oil prices: “Will stay low for a while.”

Concerned about: European banks holding Russian debt. “They could struggle again if Russia can’t pay off that debt.”

Other thoughts on energy: Renewables will take a hit from the oil price decline.

Regulation: He’s not complaining as it has been a major boon for his business, including its foray into lending.

Unintended consequence of regulation: Most creative minds in finance don’t go to banks anymore. “They go to hedge funds and private equity where they are more adequately rewarded.”

CNBC gave the following Davos update:

Inequality was a major topic on Wednesday, the first formal day of the WEF.

"We have a big problem in the United States," David Rubenstein, co-founder of private equity heavyweight Carlyle Group, said during a panel discussion on economic growth.
"If our GDP growth is 3.5 percent, that sounds great—corporate profits are terrific, stock prices are high—but what about the people left behind?" asked Rubenstein, himself a billionaire. 

Former Clinton Treasury Secretary Larry Summers told CNBC on Wednesday that middle-class incomes have not kept pace with the economic recovery.
Growth needs to be equally distributed, Summers said, "so we have a 'race to the top' rather than 'race to the bottom' when it comes to questions like taxation and regulation." 

"The middle class has to increase its wealth and we have to get better jobs, and it's going to have to be done, among other ways, through education," Blackstone Group head Stephen Schwarzman said on CNBC.

"We all have different views as to what level is the most important for education," the billionaire private equity boss added. "I think you have to start at the beginning, and you also can take enormous steps that can take people of very low income and get them to perform at very high levels." 

PEUs Rubenstein and Schwarzman made out like bandits after Gramm-Leach-Bliley, ushered in by one Larry Summers. Private equity has been all about paying fewer people, offering little to no raises and requiring them to do more.  Consider this from a former business reporter in July 2011:

There are very few people out there who will talk and write honestly about private equity. I know from personal experience that the financial press is so eager to break news on "deals" that reporters (who are increasingly compensated on the number of "market moving stories" they write) can't afford to be critical of Carlyle, KKR and Blackstone, and risk losing access to people at those firms.

I have seen so many people -- particularly those in their 50s - 70s -- taken apart by what has happened in their industry as greed has hollowed out the economy. These are people took pride in their jobs and held themselves to this invisible standard that we all just took for granted, but is being wiped out. 

The Carlyle Group scares me more than anything I've ever seen on Wall Street. It seems to exist to corrupt politicians and it's hard to know who they even represent.
I watched a video interview of (David) Rubenstein and his arrogance is really beyond tolerance. He was going on about the debt ceiling problem and how there would need to be cuts in services and higher taxes. When the reporter asked him about tax on carried interest he turned really disdainful and said that this "only" amounted to $22 billion over some number of years and this was not serious money. Boy, nothing like everybody doing their small part to save the country from oblivion!

Rubenstein left countless behind, as did Schwarzman.  Their words rise from the abyss of greed they've created and nurtured over the last thirty years.  The system produced that for which it was designed. PEU lamentations ring hollow, especially at Davos with its 1,700 private jets.

New PEU Growth Talk at Davos

I'll offer a different description of David Rubenstein's Davos talk.

How are private equity underwriters betting on commodities (like energy) with cheap debt (growing cheaper by the day) and public pension fund money (looking for huge returns), while taking advantage of persistent unemployment to keep wages low?  

That's my take on Rubenstein's PEU talk. 

Davos 2015: The U.S. Contingent

The World Economic Forum, held annually in Davos, Switzerland, published a short list of world leaders expected to attend this week's gathering of billionaires and those executing their political will.  The list showed the following attendees from the United States:

John Kerry, Secretary of State
Al Gore, Generation Investment Management
Mary Barra, GM CEO
Melissa Mayer, Yahoo President and CEO
Eric Schmidt, Google Executive Chairman

A second list showed Commerce Secretary Penny Pritsker and a smattering of U.S. Congressmen attending Davos.

Other notables include U.S. Trade Czar Michael Froman and USAID's Rajiv Shah.  They'll attend an event with an expected 1,700 private jets.

I'll peruse the speaker list for private equity underwriters (PEU's). The Carlyle Group's David Rubenstein usually appears on a PEU panel and often interviews one of his peers.  I'll report what I find.

Update 1-20-15:  The Guardian reported Obama is ready to push the Froman negotiated Trans Pacific partnership.  Are there enough Congressmen in Davos to swing the tide Obama's way?

Update 1-24-15:  U.S. Treasury Chief Lew showed up in Davos.

Update 1-29-24:  Shah is now head of the Rockefeller Foundation and was recently interviewed on The David Rubenstein show.

Carlyle Loves Public Education Money

Pensions&Investments reported NGP Energy Capital Management closed on a new energy fund with $5.3 billion in commitments

Carlyle Group owns 55% of NGP's revenue and was due a fee from NGP for any new limited partner that invested in the fund.

State teacher pension funds ensuring Carlyle's new fees include Virginia, Kentucky, Pennsylvania, Louisiana, Ohio and New Hampshire.   The Carlyle Group loves public education money, directly or indirectly.

While PEU Carlyle grows fatter public schools deal with increasingly impoverished youth.  It's a byproduct of the race to the lowest global common denominator for worker pay, taxes and actual enforcement of laws/regulations.

Condi "Informs" the Public

The NYT reported:

White House officials favor two primary tactics when they want to kill a news article, Condoleezza Rice, the former national security adviser, testified Thursday: They can essentially confirm the report by arguing that it is too important to national security to be published, or they can say that the reporter has it wrong.

Politicians try to bury the story or lie.   This is the same Condi Rice who lectured the Middle East that democracy requires a growing middle class, the very group decimated under two terms of President George W. Bush, followed by two terms of President Barack H. Obama. 

The Obama administration has persuaded reporters to delay publishing the existence of a drone base in Saudi Arabia, the name of a country in which a drone strike against an American citizen was being considered, the fact that a diplomat arrested in Pakistan was a C.I.A. officer and that an American businessman was working for the agency when he disappeared in Iran.

 The rewards for burying illicit activities and lying are significant.  Condi Rice sits on numerous corporate boards and storied companies hired her consulting firm. 

Frankly, if Condi Rice's lips are moving she could be lying.  That's what her record shows and the Government-Corporate Monstrosity clearly approves.

Patients Die from Practice Saline

The FDA warned health care facilities not to use fake medicines on actual patients as "practice medicines" killed one person and sickened others.  The question is how fake IV solutions were distributed to hospitals such that personnel saw them as real saline products?  The deadly products were intended only to be used in simulations.  There are many unanswered questions.  It remains to be seen if the FDA fills in the blanks.