A weekend topic starting with The Atlantic. "One of the most useless political observations since the election is that liberal elites live in bubbles. It is useless, not because it’s wrong—they often do—but rather because it’s like saying 'liberal elites live in the biosphere.' Living in bubbles is the natural state of affairs for human beings. People seek out similarities in their marriages, workplaces, neighborhoods, and peer groups. The preferred sociological term is 'homophily'—similarity breeds affection—and the implications are not all positive. White Americans have 90 times more white friends than they have black, Asian, or Hispanic friends, according to one analysis from the Public Religion Research Institute. That’s not a description of a few liberal elite cliques. It’s a statistic describing the social networks of 200 million people. America is bubbles, all the way down."

"But American homophily is not purely driven by our individual choices. Bubbles are often a result of public policy. For decades, U.S. housing policy has subsidized large suburban homes, but restricted housing construction in rich neighborhoods and deprived minorities of mortgage support. So, poverty concentrates in one area, and the rich cluster in another."

From The Intercept. "In 2011, unemployment was at a near crisis level. The jobless rate was stuck around 9 percent nationally, an unusually high number due to the continuing effects of the financial crash. House Democrats were aghast. Behind closed doors at the Federal Reserve however, the conversation struck a different tone. According to transcripts released this month after the traditional five-year waiting period, Federal Reserve officials in November 2011 were debating whether unemployment was caused by bad work ethics and drug use – rather than by the greatest financial crisis in 80 years. This debate then factored into the argument over setting monetary policy."

"'I frequently hear of jobs going unfilled because a large number of applicants have difficulty passing basic requirements like drug tests or simply demonstrating the requisite work ethic,' said Dennis Lockhart, a former Citibank executive who ran the Atlanta Federal Reserve Bank. 'One contact in the staffing industry told us that during their pretesting process, a majority—actually, 60 percent of applicants—failed to answer ‘0’ to the question of how many days a week it’s acceptable to miss work.'"

"The room of central bankers then broke into laughter."

From Libcom.org. "It is hard to remember now, but Enron was once a very widely respected company. Luminaries such as Nelson Mandela, Alan Greenspan, and Colin Powell made the trip to Houston, Texas to receive the Enron Prize for Distinguished Public Service. A major Republican Party donor, Lay influenced high-level federal policy through top officials in the George W Bush administration. Affectionately known by George W. Bush as 'Kenny Boy,' Lay was also a close friend of the Bush family."

"When Enron suffered a slight blow to its share price in 2001, it didn’t take long for investors to see the company for the hollow shell that it was. Despite its impressive connections, the Bush administration was not willing to defend Enron. The health of financial markets depends on investors acting on at least somewhat reliable information and fraudulent activity undermines this; not to mention the fact that Enron had defrauded the Republican Party’s primary constituency, wealthy investors. Enron was finally out of luck, and when the axe fell, it fell swiftly."

"Managing to escape serious penalties for its involvement in the scandal was Citigroup. Citigroup helped Enron defraud its investors by designing intentionally complex structured finance transactions to help Enron keep its debts hidden from plain view. When Enron's share price began to falter, Citigroup board member and former Bill Clinton Treasury Secretary Robert Rubin made a phone call to the Bush administration’s Treasury Undersecretary to try and forestall a credit ratings downgrade."

"The decision not to prosecute Citi (or JP Morgan Chase which was also caught up in the WorldCom scandal) was probably due to a Bush administration reticence to go after institutions central to the neoliberal project. The Bush administration already felt that it had gone too far by pursuing charges against Arthur Anderson, and Citigroup and JP Morgan Chase in many ways represented the face of the burgeoning financial industry. For their part, far from counting their blessings, Rubin and Citigroup (and JP Morgan Chase) would end up escaping from the fallout of the first bubble only to throw themselves headfirst into more illegal activities."

"Robert Rubin and Citigroup, indeed it is impossible to talk about one without talking about the other, are the unholy poster children of the modern Democratic Party. Originally created by the 1998 merger of the commercial bank Citicorp and the investment banking and insurance conglomerate Traveller’s Group, Citigroup was formed in defiance of the, already severely weakened, Glass-Steagall act."

"Then Treasury Secretary Robert Rubin. Rubin, along with Democratic Party hacks like future Hillary Clinton campaign manager John Podesta, made the push within the Clinton administration to repeal the Glass-Steagall act and allow the Citigroup merger to go through without difficulty. After Glass-Steagall was effectively repealed in 1999 by the Gramm-Leach-Bliley act, Rubin left the Treasury Department to take up a position on the board at Citigroup."

"Shortly after Rubin joined the company, Citigroup ran into trouble. By 2002, Citigroup had already been fined $215 million for its involvement in tricking low-income borrowers into taking overpriced mortgages and credit insurance. An additional fine was paid in 2004 for approving mortgages to homeowners without properly checking their credit history. The rush to approve mortgages for homeowners was tied to Citigroup’s investments in the growing housing bubble."

"So what did Rubin and the Citi executives do when 2007 came around and homeowners actually did begin defaulting on their mortgages en masse? They did what Enron did when its assets started to be far outweighed by its liabilities, lie. When it became clear that he could no longer keep his position at Citi, Rubin retired in 2009 having pocketed a total of $126 million during his time there, much of it tax free,. Of his absurd compensation, Rubin remarked, 'I bet there's not a single year where I couldn't have gone somewhere else and made more.'"

"In 2010 the FCIC recommended that the Justice Department consider bringing criminal charges against Rubin for his role in creating the crisis and for lying to investors about the status of Citigroup. Obama’s Justice Department, led by Attorney General Eric Holder, never followed up. The decision not to prosecute Rubin is not surprising when one considers that prior to running the Justice Department Holder was an attorney at the DC based corporate defense firm Covington & Burling whose clients included Citigroup, Bank of America, JP Morgan Chase, Wells Fargo, and Freddie Mac."

"Apart from a Justice Department full of corporate defense lawyers, the other major obstacle towards preventing any criminal prosecution of Citi was that any prosecution of Citigroup executives would have probably implicated quite a few high level Obama administration officials. As Matt Taibbi explains, to a staggering degree the Obama administration was dominated by Citigroup personnel and people directly connected to Rubin himself."

"In addition to former Citi executives, two of Rubin’s protégés held key positions in the Obama administration. Heading the Treasury Department was Timothy Geithner, who considered Rubin his mentor while he was an undersecretary to Rubin in the Clinton administration, saying, 'while Rubin enjoys an amazing amount of public respect and credibility, people who have worked with him know that he's substantially better than even that exalted perception.'"

"Of course it wouldn't truly be a Democratic Party corruption story without mentioning Hillary Clinton. A somewhat credible leak showed that if elected, Hillary Clinton planned to tap Facebook COO Sheryl Sandberg for Treasury Secretary. Sandberg worked under Summers at the Treasury Department during the Clinton administration and is currently an advisor on the board of the Hamilton Project, a free market think tank co-chaired by, drumroll please, Robert Rubin. In the age of Obama, neoliberalism truly triumphed."