Wednesday, May 30, 2018

"The /Other/ Russia Story"

I've been meaning to tell some of the story of the "S" boys: Summers, Steyer and Shleifer, in serial form but here Mr. Warsh sketches an overview that I couldn't match.
No one who was investing in Russia during that time-period has clean hands, no one, including Mr. Browder who hit the newswires earlier today.

For more on Mr. Summers and what he, Rubin and Greenspan did to Brooksly Born, three of the most powerful men in the world, creators of the financial crisis vs. the woman who tried to sound the alarm, see also:
"The Essential Larry Summers: How He and Alan Greenspan Laid the Groundwork for the Financial Crisis and Larry Lost $1.8 Billion for Harvard "

First up, from Economic Principals' "About" page:
...Who is EP’s proprietor?
David Warsh covered economics for The Boston Globe 22 years and, earlier, reported on business for The Wall Street Journal and Forbes and from Saigon for Pacific Stars and Stripes and Newsweek . He is a graduate of Harvard College in Social Studies and a two-time winner of financial journalism’s Loeb Award. In 2004 he was the J.P. Morgan Prize Fellow at the American Academy in Berlin.
What does EP cover?
EP reports mainly on university economics, as it affects historical awareness, political debate and public policy. It seeks to put under-noticed economic journalism in touch with a wider audience. EP is not about the business cycle.
Who reads it?
Economists, lawyers, journalists, managers, policy-makers, educators, lobbyists, investors, citizens — anyone interested in the connections between university economics and the rest of the world....
And from Economic Principals, May 20:
It may seem like an odd time to bring up the other Russia story, this being the first anniversary of Special Counsel Robert Mueller’s probe. But as it happens, there has been a break in this neglected case – or, rather, two of them.

It was slightly more than a year ago that President Trump fired FBI director James Comey and, the next day, told Russian officials visiting the Oval Office that Comey was “crazy, a real nut job.” He continued, “I faced great pressure because of Russia.  That’s taken off.”  Two weeks later Mueller was appointed, and his Russia investigation has only escalated since then, sprawling into several unexpected corners.

The New York Times offered readers a helpful graphic last winter: “Most of the stories under the ‘Russia’ umbrella generally fall into one of three categories: Russian cyber attacks; links to Russian officials and intermediaries; alleged obstruction.”

There is, however, another aspect of the Russia story, a category altogether missing in the Times’ classification scheme, an obviously thorny topic that almost no one wants to discuss: the proverbial elephant in the room.

It concerns the extensive background to the 2016 campaign – the relationship between the United States and Russia over the long arc of the twentieth century, and, especially, the years since the end of the Cold War.  This aspect is complicated, involving all five US  administrations since the Soviet Union dissolved itself at the end of 1991. It is a difficult story to tell.

I backed into it slowly, having followed for many years the Harvard-Russia scandal of the 1990s. In 1993, the US Agency for International Development, a semi-independent unit of the State Department, hired Harvard University’s Institute for International Development to provide technical economic assistance to the Russian government on its market reforms. Eight years later, the Justice Department sued Harvard for having let its team leaders go rogue.

Harvard economist Andrei Shleifer and his deputy, Jonathan Hay, were accused of investing in Russian securities, and of having established their wives at the head the line to obtain a license to enter the nascent Russian mutual fund industry. The suit was settled in 2005. The government recovered most of the money it had spent. The incident played a part in Harvard University president Lawrence Summers’s resignation the following winter. As Shleifer’s friend and mentor, Summers had distanced himself  via recusal.

After Boris Yeltsin had died, in 2007, I wrote a column about the failures of US policies in the 1990s. Thereafter I followed developments with increasing interest and alarm, particularly after the Ukraine crisis of 2014. And in the summer of 2016, when it seemed likely that Hillary Clinton would be elected president, I set out to collect some of the columns I had written and to add some additional narrative material in order to call attention to the entanglements she and her advisers would bring to the job. That project was supposed to take one year. It took two.

Because They Could: The Harvard Russia Scandal (and NATO Expansion) after Twenty-Five Years (CreateSpace) was finally published on Amazon last week – 300 pages and a relative bargain at $15. Alas, almost as quickly as the book went on sale, Amazon took it down, to make sure I actually owned the collected columns: their cloud computers had discovered these were also “freely available on the web” — in the archives of Economic Principals. Artificial intelligence at work: shoot first and ask questions afterwards.  As of May 24, Because They Could is back in print.The book consists of three main parts.

The first is a recap of the scandal as it appeared in the newspapers, from the front page of The Wall Street Journal, in August 1997; to Harvard’s decision, in March 2001, to try the case rather than settle the government suit; to September 2013, when Summers withdrew from the competition with Janet Yellen to head the Fed. These 29 columns, written as the story unfolded, introduce first-time readers to the scandal, and remind experts of what and when we knew and how we knew it.

The second part concerns the Portland, Maine, businessman whom the Harvard team leaders inveigled to start a mutual fund back-office firm in Russia, then forced out of its ownership. It turns out there was a second suit, overlooked for the most part because Harvard settled, paying an undisclosed sum in return for a non-disclosure agreement. This now-familiar tactic insured that John Keffer, whose Forum Financial at that point was one of the largest independently-owned mutual fund administrators in the world, and a significant presence in Poland, would be unable to tell his story. Only his filings and the massive documentation of the government case remained.

The third consists of six short essays on aspects of the US relationship with Russia since 1991. These relate a brief history of NATO expansion, which took place despite the administration of George H.W. Bush pledging in exchange for Russia agreeing to the reunification of Germany that the US would not further enlarge NATO; tell something of the US press corps in Moscow during those twenty-five years; identify a key issue in Russian historiography; express some sympathy for ordinary Russians and even for Vladimir Putin himself; and seek to separate the accidental presidency of Donald Trump from all the rest, the better to understand why he has so little standing in in the matter.

Also included is a short paean to the news values of The Wall Street Journal and two appendices. One is Shleifer’s letter to Harvard provost Albert Carnesale as the USAID investigation built to its climax. The other is the heavily-annotated business plan, drafted by Hay’s then-girlfriend, Elizabeth Hebert, later his wife, to make it appear to have been written by Hay, and backed financially by Shleifer’s wife, hedge-fund proprietor Nancy Zimmerman, offering control of Keffer’s company to Thomas Steyer, of Farallon Capital (who had been Ms. Zimmerman’s principal backer), and Peter Aldrich, of AEW Capital Management, a director of the National Bureau of Economic Research.

Preparing to espouse these unpopular views has made me snap to attention on the rare occasions when they are expressed in the mainstream press – not on the op-ed pages, where they mostly represent reflexive ballast-balancing, but in the news pages, where some deeper form of institutional judgment is at work. That was the case last Sunday, when an 8,600-word article in the Sunday New York Times Magazine presented the case that the United States shared the blame for the current disorder. “The Quiet Americans” startled me (though not the designer, who illustrated it with a standard what-makes-Russia-tick? design). The dispatch itself was a significant advance in the other Russia story....

Also on Larry Summers: 

Frontline's "The Warning": Now Taking Prop Bets on When Obama Fires Larry Summers' Ass 
The guy is not just arrogant. He was way, way wrong. Summers will be leaving the administration to "persue other interests" Here's the video from PBS...
Welt am Sonntag: "Dirty Larry auf dem Campus"
Democratic Underground: "The Unofficial DU 'Give Crook Larry Summers a Nickname' Contest"