Some juicy gossip about Rep. Paul Ryan and his drinking buddies

Paul Ryan hawking his plan to throw grandma from the train

You may have seen this gossipy story about Rep. Paul Ryan at Talking Points Memo on Friday. I’ve been meaning to post something about it but just haven’t found the time. Now TPM has a very interesting update. Here’s the background:

Rep. Paul Ryan (R-WI), a leading advocate of shrinking entitlement spending and the architect of the plan to privatize Medicare, spent Wednesday evening sipping $350 wine with two like-minded conservative economists at the swanky Capitol Hill eatery Bistro Bis.

[….]

Susan Feinberg, an associate business professor at Rutgers, was at Bistro Bis celebrating her birthday with her husband that night. When she saw the label on the bottle of Jayer-Gilles 2004 Echezeaux Grand Cru Ryan’s table had ordered, she quickly looked it up on the wine list and saw that it sold for an eye-popping $350, the most expensive wine in the house along with one other with the same pricetag.

Feinberg, an economist by training, was even more appalled when the table ordered a second bottle. She quickly did the math and figured out that the $700 in wine the trio consumed over the course of 90 minutes amounted to more than the entire weekly income of a couple making minimum wage.

Feinberg took some photos with her cell phone, approached the table and asked whether the two men with Ryan were lobbyists. One of the men responded by saying, “F&ck her.” Ryan claimed the two men were economists but refused to provide their names. Ryan then paid for one of the bottles of wine, but when asked about the appropriateness of spending so much when he was going all Dickensian on old people, Ryan avoided answering.

Today, TPM learned the identity of the two men who wined and dined Ryan on Friday night.

TPM has confirmed that the two other men with Ryan were Cliff Asness and John Cochrane. Both men have doctorate degrees in economics and are well-known in the conservative media world as die-hard proponents of the free market’s ability to right itself without government bailouts when the crisis hit in late 2008.

Asness, who ordered the wine and who, according to Feinberg was the one who said “Fuck her,” is better known as a high-profile hedge fund manager. Asness founded and runs AQR Capital, which manages an estimated $26 billion in a variety of traditional products and hedge funds, and his life story has been the subject of numerous books and articles about the rise and fall of Wall Street. He’s also grabbed headlines for being one of the most voluble opponents of President Obama’s economic policies.

[….]

Cochrane, the other, more tempered dinner companion, is the AQR Capital Management Distinguished Service Professor of Finance at the University of Chicago, an apparent tip of the hat to the contributions Asness’ AQR Capital Management has made to the Booth School of Business there.

Before launching AQR Capital in 1997, Asness worked for Goldman Sachs, the most profitable securities firm in Wall Street history, as the director of quantitative research for its Asset Management Division.

Via TPM, in 2009, Asness wrote an open letter to Barack Obama in which he (Asness) complained bitterly about some mildly critical remarks the President had made about hedge fund managers who refused to help out by buying Chrysler bonds. From New York Magazine:

Clifford Asness, the filthy-stinking-rich quant behind AQR Capital Management, [is] publicly engaging with a formidable opponent: The president of the United States. Asness, who supported Obama during the election, was appalled by Obama’s treatment of his colleagues during the Chrysler situation, and although he was not personally involved, he felt he had to make a stand.

Here is a portion of the letter:

Here’s a shock. When hedge funds, pension funds, mutual funds, and individuals, including very sweet grandmothers, lend their money they expect to get it back. However, they know, or should know, they take the risk of not being paid back. But if such a bad event happens it usually does not result in a complete loss. A firm in bankruptcy still has assets. It’s not always a pretty process. Bankruptcy court is about figuring out how to most fairly divvy up the remaining assets based on who is owed what and whose contracts come first. The process already has built-in partial protections for employees and pensions, and can set lenders’ contracts aside in order to help the company survive, all of which are the rules of the game lenders know before they lend. But, without this recovery process nobody would lend to risky borrowers. Essentially, lenders accept less than shareholders (means bonds return less than stocks) in good times only because they get more than shareholders in bad times.

The above is how it works in America, or how it’s supposed to work. The President and his team sought to avoid having Chrysler go through this process, proposing their own plan for re-organizing the company and partially paying off Chrysler’s creditors. Some bond holders thought this plan unfair. Specifically, they thought it unfairly favored the United Auto Workers, and unfairly paid bondholders less than they would get in bankruptcy court. So, they said no to the plan and decided, as is their right, to take their chances in the bankruptcy process. But, as his quotes above show, the President thought they were being unpatriotic or worse.

Well, Duh! But if “filthy, stinking rich” guys like Asness were patriotic, we probably wouldn’t have had a financial meltdown in the first place, now would we?

The other guy with Ryan on Friday, Professor John Cochrane of the University of Chicago, is a freshwater economist and follower of Eugene Fama AKA “the father of modern finance,” and Robert R. McCormick Distinguished Service Professor of Finance a the University of Chicago. Cochrane is also married to Fama’s daughter Elizabeth.

In early 2009, Cochane and Nobel Prize-winning economist Paul Krugman engaged in a legendary on-line debate that also involved Brad De Long and Eugene Fama. The whole thing was too wonky for me, but I gather it had something to do with Fama and Cochrane critiquing the use of fiscal stimulus and Krugman saying that the two freshwater economists wanted to return to the “Dark Ages of macroeconomics.” Here’s Krugman’s introductory paragraph:

Brad DeLong is upset about the stuff coming out of Chicago these days — and understandably so. First Eugene Fama, now John Cochrane, have made the claim that debt-financed government spending necessarily crowds out an equal amount of private spending, even if the economy is depressed — and they claim this not as an empirical result, not as the prediction of some model, but as the ineluctable implication of an accounting identity.

Maybe Daknikat can explain what the “cage match” was all about.

I think Paul Ryan is going to need to be a little more careful in the future if he is going to continue promoting the end of Medicare as we know it.


12 Comments on “Some juicy gossip about Rep. Paul Ryan and his drinking buddies”

  1. dakinikat says:

    Figures he’d hang out with these guys. What a bunch of jerks!!!

    • bostonboomer says:

      Fama doesn’t have a Nobel Prize does he?

      Funny that Cochrane married Fama’s daughter.

      • dakinikat says:

        Nope. His stuff never gets beyond hypothesesl

      • dakinikat says:

        Fama is the father of the efficient markets hypothesis. Probably the biggest set of blinders ever sent to enable Wall Street.

        Cochrane is an expert on “asset pricing” models which include the Fama-French models.

        These are finance models which are subsets of microeconomics. What passes as ‘research’ in finance is considered krunching numbers and trying to find some that fit your world view and would never be published.

        Asset pricing models from finance failed during the Great Depression and the Great Recession but Cochrane and Fama always seem to leave those periods out of their studies as ‘anomalies’. Behavioral finance is a new area that’s on the rise to offset their hypothesis some of which are considered unprovable.

        The dust up between Krugman and Cochrane came when Cochrane made some comments that basically showed he’d forgotten his basic microeconomic theory. This doesn’t suprise me since all the finance models have such HUGE, unrealistic assumptions to make them work. Stuff that’s publishable in top finance journals wouldn’t pass muster in top econ journals. His stuff would never fly in the purely economics profession. I’ve got my feet in both sides of the professions and as such know both finance theory and economic theory. Finance is a much more profitable subject to teach but I find it’s theoretical framework to be weaker than economics. Almost all asset valuation models are–at best–rules of thumb. Cochrane’s made a fortune taking them uber seriously.

  2. JeanLouise says:

    The economic stuff is Greek to me but the thought of Paul Ryan drinking a $350 bottle of wine when he’s trying to mak paupers of working Americans should earn him a new nickname. Instead of Eddie Munster, I’m going to start calling him Marie Antoinette Ryan.

  3. Beata says:

    Paul Ryan is a sleezeball hypocrite who hangs around with wealthy scumbags? I’m shocked, absolutely shocked, to discover this.

  4. okasha says:

    Marie Paulette

  5. paper doll says:

    i>”fuck her”

    how charming…..and yet so refreshingly honest! ….the ” her” ,Susan Feinberg ,was in fact standing in for millions of us at that moment and that is this swine’s attitude to the all we peons …not just those with the guts to call them on their shit

    Thanks, Susan Feinberg,…you are a brave lady

    and thanks BB for the post !

  6. Anon says:

    Clifford Asness donated $2,300 to then-Sen. Obama’s presidental campaign in June 2007, along with donations of $2,300 apiece to the 2008 presidential campaigns of Sen. Chris Dodd, D-Conn., Sen. Hillary Clinton, D-NY.

    He has also given $15,309 to the Democratic Senatorial Campaign Committee in 2007 and 2008; and $25,000 to the Democratic National Committee in 2005.

    • dakinikat says:

      He wants to keep his preferred tax treatment as well as the lack of regulation so he can do whatever he wants. He hedges all bets evidently.