With Romney leading the pack for the Republican nomination, it is germane to ask what is his take on the inequality in American society? Romney is part of the 1% - he sees a $360,000 income as peanuts (click here). But more telling is his view that concern about inequality is simply down to envy! This reveals how out of touch he actually is. The United States fought the War of Independence to rid itself of an aristocratic elite. From across the Atlantic, it looks like aristocracy is coming back into vogue.
Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms. Below is the paper's abstract and the full paper is available here . The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small ne...