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Monday, December 01, 2008

Google Reader + "Rubin's Teflon Finally Wears Off"

Two birds with one stone, so to speak:

(1) I set up Google Reader over the weekend. This is Google's "RSS reader." What does that mean? Practically speaking, it means it can collect posts from blogs all across the web into one place, allowing you to scan and read right there (namely, at instead of at a bunch of different blog sites.

Google's is certainly not the only or first RSS reader. They've been around a number of years--I have an account at that I was using for a second ( Though just now I find that that url gets redirected to hadn't used it in a couple years.

(What is RSS? Read ... basically every blog creates an "RSS feed" which RSS aggregators can read and pull in. In fact, not just blogs..from the wikipedia entry: "RSS is a family of Web feed formats used to publish frequently updated works—such as blog entries, news headlines, audio, and video"..hence newspapers, photo-sharing sites like Flickr, YouTube, etc--all of them have RSS feeds which you can pull into an RSS reader)

As a friend put it, Google's isn't necessarily the best RSS aggregator, but it is (or will be) the most widely used, for a couple reasons: it's Google, so if you've got a Google (gmail) account, you can start right away, just by hitting "Reader" at the top of any Google page. Plus it knows about your Gmail contacts, which leads to a powerful feature of Google Reader: it's easy to share any item (a blog post, a headline, etc) with any of your contacts.

For example, I e-mailed myself the following blog post just now. It's from Felix Salmon's "Market Movers" blog--something I started reading about a year ago, but haven't been keeping up with over the past few months. Now that I've got Google Reader set up, I think I'll be able to keep up (other blog feeds I subscribed to: The Big Picture, Minyanville, Krugman's blog, Mankiw's blog, Brad Delong's you may be able to infer, mostly finance/econ so far.)

Probably it's not 100% kosher to republish Felix Salmon's blog post in its entirety, so I manually cut it off below after a few paragraphs. Click on the title links to go to his blog and read the rest of the post, if you're interested.

(2) I thought this post about Rubin was interesting, and wanted to post it anyways..

----- Forwarded Message ----
From: My gmail address
To: Me
Sent: Monday, December 1, 2008 1:42:16 AM
Subject: Rubin's Teflon Finally Wears Off

Sent to you by Me via Google Reader:

via Market Movers by Felix Salmon on 11/29/08

In one of the most ill-advised pieces of PR I can remember, Bob Rubin has given an on-the-record interview to the WSJ, in which he takes no blame or responsibility for anything which has gone wrong at Citigroup. The reaction in the blogosphere has been, predictably, swift and brutal, helped along by the fact that Rubin's famous charm clearly hasn't worked on his interviewers, Ken Brown and David Enrich. Here's their lede:

Under fire for his role in the near-collapse of Citigroup Inc., Robert Rubin said its problems were due to the buckling financial system, not its own mistakes, and that his role was peripheral to the bank's main operations even though he was one of its highest-paid officials.

It just gets worse from there: by refusing to admit to any mistakes at all, Rubin has garnered himself zero sympathy. Rubin has been surprisingly bulletproof until now: while he's had many critics, his reputation has largely remained intact. But with this interview, it's disappeared at a stroke: no one can read it and think of him as anything other than a pompous and out-of-touch plutocrat, puffed up with much more self-regard than common sense.

For instance, he's quick to the not-my-bailiwick defense:

Mr. Rubin said it is a company's risk-management executives who are responsible for avoiding problems like the ones Citigroup faces. "The board can't run the risk book of a company," he said. "The board as a whole is not going to have a granular knowledge" of operations.

But board members don't get paid $115 million. If he wasn't playing a central role when it came to Citi's risk book, what was he doing for the money? It's not clear, but his comments don't help much:

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.

Justified? What does that possibly mean? And as for making more money elsewhere, I suspect that many Citigroup shareholders wish that he'd done precisely that. But not only was Rubin incredibly well-paid, he also had to all intents and purposes tenure at Citigroup: as a member of the board, he was an employer of the CEO rather than an employee, so there was really no one who could fire him.

The most astonishing instance of Rubin failing to justify his salary, however, comes later:

Mr. Rubin was deeply involved in a decision in late 2004 and early 2005 to take on more risk to boost flagging profit growth, according to people familiar with the discussions. They say he would comment that Citigroup's competitors were taking more risks, leading to higher profits. Colleagues deferred to him, as the only board member with experience as a trader or risk manager...
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."
But it wouldn't have been right for the board to act on his concerns, Mr. Rubin said in the interview: "I wouldn't run a financial institution based on someone's view about what markets would do."

The cognitive disconnect here is simply staggering. Rubin's going around saying that institutions are taking on too much risk, but he's also telling the Citi board that it should take on even more risk. He had no problem with the board following his lead when he said he wanted Citi to take extra risks, but he says that he would have had a problem with the board listening to his concerns about doing so. For this he thinks his $115 million is justifiable?

[go to Market Movers for the rest]

Related Links
Trouble Sticks to Teflon Bob
Pandit Named Citi Chief
Shake-Up, then Break-Up?

Things you can do from here:

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