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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.

Following the deadly mine explosion in West Virginia last week, the CEO of the company that owned the mine quickly emerged as a sort of Dickensian villain in media reports. Massey Energy CEO Don Blankenship’s cavalier, profit-obsessed approach to mining had led him to dismiss pressing safety concerns at his mines. He had called safety regulators “as silly as global warming” and ordered managers to spend more time “running coal” and less time building ventilation structures. One miner told ABC news that working for Blankenship was "like living under a hammer. It's about the bottom line; we all know that."

Blankenship was the hammer, but whose bottom line was he looking out for, exactly? The answer is somewhat surprising.

One of the handful of major investors in the coal company is Stanley Druckenmiller, a billionaire hedge fund manager researched as part of last month’s AlterNet/ investigation of the bubble barons. Druckenmiller sits on the board of the Environmental Defense Fund (EDF), an organization that would seem to be opposed to Massey’s exploits. He apparently saw the company’s abysmal safety record as no cause for concern before throwing roughly $200 million at the company, one of his biggest investments as of December 2009. And he was not put off by the company’s controversial environmental practices — Massey is a leading practitioner of mountaintop removal mining, and Blankenship a leader in the climate change denial movement.

Massey Energy CEO Don Blankenship and bubble baron Stan

Massey Energy CEO Don Blankenship and bubble baron Stan Druckenmiller.

The 300 citizen journalists who joined our investigation of the bubble barons — elite billionaires like Druckenmiller who saw astronomic gains in wealth over the housing bubble years — made over 1,200 of these kinds of connections, linking the wealthy billionaires to politicians, foundations, families and businesses, and collectively mapping a network that controls hundreds of billions of dollars in capital. In doing so, they parted the corporate veils that distance the barons from the business activities that enrich them, discovered the odd philanthropic habits they share, and developed an illuminating picture of the strange world they inhabit.

It was not an easy task. Billions of dollars translates into numerous investments, donations, board seats and “friends,” and lots of not entirely glamorous research is necessary to dig up the most telling connections. LittleSis analyst seanhartnett took the prize as the most prolific investigator, researching David Rubenstein, Donald Bren, and several other bubble barons, but many other citizen journalists contributed substantially to the investigation.

What follows is a selection of findings that came out of these efforts. In some sense, the project will not end as long as the bubble barons rule our economy; there will always be more to dig up, and they deserve sustained scrutiny. But we’re off to a good start.

The underwater economy

If you have visited the Mall of America in Minnesota you may have come across the Underwater Adventures Aquarium, located underneath the mall. The aquarium is owned by Merlin Entertainment, an amusement park company that was purchased by the Blackstone Group in 2005. Blackstone is the private equity firm founded by bubble barons Stephen Schwarzman and Pete Peterson.

Dan, the citizen journalist who investigated Schwarzman, has been to the Underwater Adventures Aquarium. “It costs $19 for adults, $12.49 for kids,” he wrote in an email. “I literally went through it in 15 minutes. It’s cool, but it basically consists of one giant tank, that you go on a moving belt around.”

Dan was particularly interested in Underwater Adventures because a friend of his works as Sharky, the aquarium’s mascot. Working as Sharky entails wearing a 15-pound shark costume and walking around the Mall of America passing out discount coupons to families in order to get them to visit the aquarium.