Skip to content

Our investigation of the bubble barons concluded earlier this month — below is the piece I wrote for AlterNet, summarizing our findings. A big thanks to all the analysts who


Our investigation of the bubble barons concluded earlier this month — below is the piece I wrote for AlterNet, summarizing our findings. A big thanks to all the analysts who participated! On to social security.

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 all 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 which 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 Druckenmiller.
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 1200 of these kinds of connections, linking the wealthy billionaires to politicians, foundations, families, and businesses, and collectively mapping a network which 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 over our economy; there will always be more to dig up, and they deserve sustained scrutiny. But we’re off to a good start.


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 which 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 1 giant tank, that you go on a moving belt around.”

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

Sharky makes $8 an hour. Some days, if enough of the coupons he passes out bring families to Underwater Adventures, he makes a commission.

Schwarzman and Underwater Adventures' Sharky.
Schwarzman and Underwater Adventures' Sharky.

Schwarzman sees tremendous value in amusements like Underwater. “There’s usually room in the theme parks business for efficiencies on the cost side,” he told Reuters last year. Blackstone has found cost efficiencies in the compensation structure of the sales department at Underwater Adventures: coupon targets are now higher than they were before Blackstone/Merlin purchased it, effectively making it harder to win commissions for sending kids in the mall to the aquarium.

This is the underwater economy. People (and companies) get loaded up with debt — credit cards, mortgages, car loans — so that they have money to spend on $19 for a conveyor belt trip around an aquarium (plus $25 for their two kids). Then they turn around and get paid wages of $8 an hour to put on a shark costume and try to attract families to an overpriced amusement. The bubble barons stay afloat and thriving, of course. Stephen Schwarzman, for one, can pay Rod Stewart $1 million in Sharky profit to play for half an hour at his birthday party.


If you imagine the bubble barons as ruling over their own wealthy fiefdoms in relative isolation from one another, competing over business, profit, and prestige, think again. They sit on each other’s boards, give to each other’s causes, and partner on investments, essentially helping one another amass further wealth and power. They pride themselves on being able to determine the value of things (and people), and a lot of times that involves showing up to the same party at the same time. Building value means imagining it at the same time as their bubble baron friends, extracting profit for a time, then getting out while the getting’s good. Their tight networks help them coordinate this exercise in fruitful delusion.

Take bubble baron David Rubenstein, who was investigated by seanhartnett. Rubenstein is the founder of the Carlyle Group, a private equity firm that would seem to be one of the Blackstone Group’s biggest competitors. Seanhartnett’s investigation of Rubenstein, in conjunction with Dan’s work on Schwarzman, showed that Rubenstein and Schwarzman are actually quite chummy, far more than you’d expect from people who are supposed to be chief competitors.

They sit on at least four of the same boards, including that of the Asia Society, the Kennedy Center for the Performing Arts, the advisory board of JP Morgan Chase, and the Tsinghua University School of Economics and Management. When Schwarzman stepped down as chair of the Kennedy Center for the Performing Arts earlier this year, he passed the torch to Rubenstein, who talked about how “the arts bring people together.” And they partner on business deals; this joint interview on Charlie Rose sheds some light on their business relationship, which seems to involve quite a few friendly arrangements.

Rubenstein and Schwarzman’s close relationship isn’t unusual. Other boards that bring four or more bubble barons together: the Lincoln Center for the Performing Arts, Rockefeller University, and New York Presbyterian Hospital.

The extent of bubble baron chumminess starts getting mildly spooky when you look at the philanthropic activities of bubble baron Michael Milken, who was investigated by rjgwood. Rjgwood was surprised that Milken is on the list — he is an ex-felon, having gotten caught up in a bit of securities fraud back in the 1980s. But he served his time, retained his wealth, built on it, and has successfully revived his image over the course of the past 15 years through a range of philanthropic efforts.

Core to the re-making of his image is the Prostate Cancer Foundation, which Milken founded after being diagnosed with the disease in prison. No less than eight of the bubble barons on our list have made substantial donations to the foundation, contributions totaling well over $10 million. The Prostate Cancer Foundation boasts more bubble baron donors than any other organization in our database, oddly enough, aside from politicians like George W Bush and Barack Obama.

Upon researching Milken and Prostate Cancer Foundation further, rjgwood took note of a controversy surrounding Milken’s networks and a new prostate cancer drug. Rjgwood posed a question to the LittleSis community: “Are bubble barons like Michael Milken using charitable foundations as stock manipulator laboratories?”

LittleSis analyst WileECoyote responded to the question by observing that Milken’s way with charity was fairly standard:

Michael Milken is not alone in advancing financial, political or ideological objectives through philanthropic organizations. His ability to attract the best and the brightest to events staged by the Milken Institute has been on of the keys to his public redemption, IMHO…..

Indeed, the more one researches the bubble barons, the more it becomes apparent that the bubble barons’ philanthropic activities are designed to achieve strategic objectives and reinforce their world view.

Take the Robin Hood Foundation, an anti-poverty charity in New York City. Aleinad, leia, and I all linked bubble barons to Robin Hood: Paul Tudor Jones as founder, Ray Dalio as donor, Steve Cohen and Stan Druckenmiller as board members. Robin Hood describes itself as a “nonideological organization” while championing a world view that is so Wall Street-oriented, so bubble baron, as to be almost farcical.

“By applying sound investment principles to philanthropy, we’ve helped the best programs save lives and change fates,” its website proclaims, above a four step plan which reads “100%,” “Attack the Source,” “Add Value,” and “Get Results.”

The foundation’s obsession with metrics means that they only make grants to organizations which measure results. Perhaps such practices will soon lead to the creation of ratings agencies which assign reliable, AAA ratings to non-profits based on the metrics they provide.

Sound familiar?


No philanthropic cause elicits the collective drool of the bubble barons like the charter school movement.

Bubble baron Carl Icahn co-founded a charter school in the Bronx (it’s named after him). Paul Tudor Jones founded a charter school in Brooklyn. Julian Robertson’s son, Spencer Robertson, started a charter school in Brooklyn called PAVE Academy. Druckenmiller chairs the board of Harlem Children’s Zone, which has founded several charter schools. The list goes on.

Diane Ravitch, a former Bush administration education official who has established herself as a leading critic of charter schools, has called the charter school donor network a “billionaire boys club,” and her allegations were certainly borne out by our research. One such billionaire is bubble baron John Arnold, a natural gas trader and a major donor to YES Academy in Houston. Last year, Arnold told Forbes why he liked the charter school movement:

“Education is not a natural monopoly,” he writes in an e-mail. “If these charter management organizations continue their trajectory of success, and do so at scale, then school districts will be forced to take notice and improve their product to protect market share.”

School districts as markets, students as “product” — this is a radical vision for education in America (inspired by Pink Floyd?). But it is one that the Obama administration is embracing through its “race to the top” program, which delivers grants to states that establish competitive education reform initiatives. Ravitch has observed that the program is wholly in conflict with Brown versus the Board of Education, which stressed equal opportunity education as a core principle of our democracy. But the idea has powerful backing; Arnold and his wife, for example, have given over $60,000 to Obama.

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 as to why these bubble barons loved 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 school? Will they land an $8/hr job selling tickets at one of Stephen Schwarzman’s amusement parks? A job in one of the deadly coal mines that 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?


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.


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.

Nowhere does the article mention the trillion-dollar bailouts that the banking sector received at taxpayer expense — the fact that the federal government gave the banks its full backing, against the wishes of a vast majority of voters.

Every one of the ten hedge fund managers named in the article was on our list of bubble barons: David Tepper, George Soros, James Simons, John Paulson, Steve Cohen, Kenneth Griffin, John Arnold, Philip Falcone, Edward Lampert, Carl Icahn. Yes, they made successful bets that the banking sector would recover. But their bets were successful because the game is fixed in favor of the wealthy and influential and tightly networked — in favor of the bubble barons. They are the biggest beneficiaries of the bank bailouts, “smart” bets or not. When will they take some heat?

I asked our group of investigators to come up with questions they would ask a bubble baron, if granted an interview. Hollywood V. Near‘s, who investigated Peter Kellogg, offered a succinct and amusing response: “How is predation as a lifestyle?”

Inside the bubble, in the thrall of their handy metrics — stock prices and bank account balances and property values — the bubble barons seem to truly believe in the goodness of their work, and that their worth is justified. Their brand of delusion runs so very deep, and has so many real and lasting consequences, and has so many people completely convinced, that it deserves further investigation.

So we’ll be doing it again — click here to join us.