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How Bubble Barons Protected Their Influence While the Economy Tanked

AlterNet citizen journalists investigated bubble barons who got rich as the rest of the economy tanked. The project shed light on the barons' power delusions and toll on society.

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Arnold’s criticism of public education as monopoly is also deeply ironic, considering he used to be a star trader at Enron. His hedge fund, Centaurus, is stuffed full of former Enron employees, and reigns supreme over the speculative market for natural gas.

I asked our team of citizen journalists to speculate why these bubble barons love charter schools so much. This answer, a “gut feel” response from markroussey, probed the depths of the bubble baron psyche:

Charter schools are more controllable than public schools, and bubble barons like to control things, especially things that affect them or their children, or perhaps the children of those they care for or wish to have control over. They may even see charter schools as “breeding grounds” for future employees, perhaps as feeders to certain Ivy Leagues schools…

If the charter school movement isn’t about enhancing the process of social selection, as markroussey writes — if Arnold and other charter school advocates really want to “scale” student production — then there is a significant question looming over all of this philanthropic activity.

Namely, what jobs will be available to the children who benefit from the bubble barons’ vision of a more competitive school-marketplace? Where will they take the gold stars they earn at their charter schools? Will they land an $8/hour job selling tickets at one of Stephen Schwarzman’s amusement parks? A job in one of the deadly coal mines Stanley Druckenmiller invests in?

Or perhaps they will score a good job at a hedge fund like Arnold’s, cheating consumers out of their gas money?

Shell game

It is striking that the bubble barons are so obsessed with accountability, considering their work on Wall Street.

Part of the challenge of investigating the bubble barons is that they are often several degrees away from the businesses and organizations they exert control over. Dan’s friend at Underwater Adventures, for instance, wasn’t aware that Schwarzman was the billionaire ultimately in control of Underwater Adventures, since Underwater is owned by Merlin, which is owned by Blackstone, which is controlled by Schwarzman. Similarly, it’s easy to understand why Druckenmiller’s investment in coal company Massey Energy was not on the radar of the EDF, where he sits on the board, since Upper Big Branch is owned by Performance Coal, which is owned by Massey Energy, which is partially owned by Duquesne Capital, which is controlled by Stanley Druckenmiller.

EDF spokesperson Tony Kreindler eventually responded to a request for comment on with a brief statement backing Druckenmiller: “EDF has a range of board members with a range of investments, and Stan Druckenmiller has always been a very strong supporter of EDF goals." EDF’s annual budget is roughly one-fifteenth Druckenmiller’s investment in Massey Energy.

If Druckenmiller was in the news as one of the owners of the mine that killed 29 last week, EDF might be forced to grapple with the fact that one of its board members makes big money investing in a company that blows the peaks off mountains and does nothing to minimize the safety and environmental threats it poses. But opaque corporate structures like hedge funds and private equity firms ultimately function to shield people like Druckenmiller and Schwarzman — and essentially all the bubble barons — from any form of real accountability.

The bailout barons

Two weeks ago, the New York Times reported that a group of hedge fund managers raked in record billions in 2009 due to successful bets that the country’s banking sector would recover. The article describes the banks’ recovery as “Lazarus-like,” as if it was a miraculous act of God, rather than the work of a corrupt and captured government.