Welcome to the new version of European Tribune. It's just a new layout, so everything should work as before - please report bugs here.

Larry Summers Will Doom Us All

by Drew J Jones Mon Jul 29th, 2013 at 01:37:04 AM EST

(Crossposted in Orange, at the Frog Pond and at my blog)

Let me put this bluntly: A good way to think of Larry Summers is to take Paul Krugman, up the arrogance tenfold and deduct 99% of the intelligence. He should never be allowed within a thousand yards of the Federal Reserve.

Felix Salmon hits most of the high points here -- his destruction of Glass-Steagal, his sandbagging of Brooksley Born's efforts to regulate derivatives at the CFTC, his all-world incompetence in screwing the finances of Harvard when he was its president, his protection of scumbags on the Harvard faculty in the face of their participation in the rape and pillage of post-Soviet Russia, his half-assed scholarship and accompanying sexism regarding women in the hard sciences, and -- most of all -- his utter refusal to admit that any of this might have been a mistake on his part.

I'll add a bit. Let's journey back.

front-paged by afew

One of the main reasons I was for Obama over Clinton in 2008 was due to a desire to keep the Clinton economic team, who I hold responsible for much -- not all, but much -- of what happened in the crash and whose perceived expertise on economic matters in the minds of voters and pundits is almost entirely mythical, away from power. I was cool with Paul Volcker; Austan Goolsbee seemed fine, if a bit milquetoast and dopey; and I like Christy Romer.

So I voted for Obama, and he won. And then he promptly sent Volcker and Goolsbee off to god-knows-where; gave Romer a token position that appeared higher up than it actually was; and he brought in...the quintessential Clintonista fuck-up. It is among my biggest disappointments with the Obama administration, and it cost us all a much more robust recovery from the recession.

In addition to his deregulation fetish while at Treasury, which should be more than sufficient to disqualify him given the Fed's key role in oversight, Summers -- along with Rubin and Greenspan -- helped build the unnecessary budget surpluses of the late Clinton years that assisted in incentivizing the enormous household leveraging that ultimately led to the crash and our current struggle to recover. That one of the architects of the disaster escaped sufficient criticism to keep him out of the rebuilding effort is a testament to the intellectual garbage that passes for thought on the DC cocktail circuit.

Having screwed us on the front end, Summers got his shot at redemption under a new administration. (Even I personally was willing to give him a shot. I suck.) He promptly used that shot to screw us on the back end.

Back in the early days of the Obama administration, when the President first introduced the stimulus bill, something catastrophically stupid happened. Obama claimed his economic advisors told him that the bill needed to be anywhere from $800bn to $1.6tn. Nobody -- nobody -- I know of could figure out why somebody would tell him it could be as low as $800bn. Everybody who did the math said at least $1.5tn would be needed to restore low unemployment, assuming reasonable multipliers. The shortfall in GDP appeared to be approximately $1tn/year. Assuming a multiplier of 1.3-1.5, a simple back-of-the-envelope calculation suggested the stimulus needed to be between $700bn and $800bn per year for two years, not the $780bn over 2+ years that we got.

From Nouriel Roubini to Joe Stiglitz to Paul Krugman, the consensus was that the $780bn plan would stabilize the economy and add a little bit of employment, but not enough to get us back on track. We would thus spend years "bouncing along the bottom," to borrow (as I recall) Stiglitz's description, as households couldn't generate sufficient demand (since they were rebuilding their balance sheets) to justify businesses reinstating production and investing in new ventures.

And that is exactly what's happened.

(For deficitphobes: That $1.6tn sounds like a lot of money, and it is; but no, it is not an amount worth worrying about in a $16tn economy which controls its own currency. Paired with TARP, the automaker restructuring, and other emergency policies, this would temporarily blow up the deficit. But as the private sector recovered, new income and corporate tax generation would ramp up. Paired with a natural decline in spending as the emergency programs unwound, the deficit would rapidly fall. This is, in essence, what's happened with the deficit in the last couple of years. The key difference is that in the actual case, we did all of this without restoring employment to pre-recession levels. What's more, the more rapid recovery from the proper-sized stimulus would likely result in a lower deficit over the cycle than what we're getting.)

The person who came up with the $800bn figure was, of course, Larry Summers. The person who came up with the $1.6tn figure was Christy Romer (along with, I suspect, Volcker and Goolsbee and others). The facts speak for themselves on who got it right. Summers claimed the $800bn plan would be sufficient to achieve "escape velocity" from the economic trap we were in. I am not aware of any body of literature in macroeconomics -- orthodox, heterodox, whatever -- that would justify such a claim. "Escape Velocity" is the closest any (nominally at least) liberal economist has come to producing an idea as stupid as conservative economists' Confidence Fairy in recent years.

Larry Summers is not qualified to run a McDonalds, let alone the Fed.

Janet Yellen would not be my first choice for the Fed job. Most of my picks (Mike Woodford, a reappointed Bernanke, Romer, etc) would likely not be interested.  Others much smarter than I can, and have, furnished longer lists, and I defer to them on the merits of those potential candidates.

Bernanke has been far from perfect, as I think he would acknowledge. I wish he'd been more aggressive, but he nevertheless deserves a lot more credit than he'll ever get. He's had to put up with a lot of horseshit over the last several years -- from the nonsensical criticisms of the likes of Ron Paul to irrational inflationphobia at the FOMC and in academia to threats of violence from various nutcases on the right. Through all that, he's worked to keep us above water, and Yellen has been his righthand gal in the ongoing effort to convince the inflation hawks at the FOMC to see the light of day; and going by the comments of some of those Fed presidents, she has had some degree of success.

She's not my first pick, but next to Summers, Yellen is Keynes reincarnated.

I am not aware of any body of literature in macroeconomics -- orthodox, heterodox, whatever -- that would justify such a claim.

The justification was likely Obama's compulsion to engage in preemptive concessions which yield him nothing - unless he really is a right wing mole. Richard Koo clearly demonstrated the cost of NOT providing sufficient counter-cyclical spending in The World in Balance Sheet Recession (PDF) with the case of Japan post '89. Where the Government fails to use fiscal policy to make up the lost production the society suffers a permanent loss of the work that could have been done and adds debt that does not result in an increased ability to repay that debt. Wise fiscal policy creates a self liquidating debt. US policy is, of course, "All Money To The Banks!" - the perfect Capitalist translation of "All Power to the Soviets!".

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Jul 27th, 2013 at 03:05:22 PM EST
I honestly don't think it's intentional on Obama's part.  Obama's a law professor.  He's only going to be as good as the people around him, and it's difficult to expect a politician to be able to distinguish between various economists' arguments.  Especially given that, from his perspective (and that of the conventional wisdom), Summers oversaw a period of growing prosperity.

At some point one should expect him to get it, but he got reelected -- so, again, from his perspective, it worked out.

In short, stupid, not evil.  I hope anyway.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sat Jul 27th, 2013 at 03:11:50 PM EST
[ Parent ]
Obama was a Professor of Constitutional Law who has vigorously followed a policy of 'regulatory forbearance with regard to the financial sector. Of all of the explicit and implied promises he made during his first campaign the ones he has really kept were those he made to the financial sector 'to be there for them' during the '08 campaign when catastrophe was looming. And on issues Obama is probably just to the right of Eisenhower - which doesn't make him a right wing mole, but a right wing candidate. Reminds me of the Toles cartoon showing a mole in a suit setting at a desk at the CIA with the caption " "No one noticed that Aldrich Ames was a mole"

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Jul 27th, 2013 at 03:38:41 PM EST
[ Parent ]
Back in 2006, before Democrats retook the House with a platform of economic populism, the Wall Street wing of the Democratic party went on warpath, creating the Hamilton Project. They wanted to attack growing populism in the party.  

Guess who the keynote speaker for the launch of this group was....... Barack Obama......

Other speakers on the panel he participated on:

Washington, D.C.
Wednesday, April 5, 2006

Senior Fellow
Brookings Institution


Chairman, Evercore Partners
Former Deputy Secretary of the Treasury

Democrat, Illinois
United States Senate

Director and Chairman of the Executive Committee
Citigroup, Inc.
U.S. Treasury Secretary [1995-1999]

Founder, Sojourners
Author, God's Politics

Read the speech, and tell me whether you still think that Obama was clueless about what was going on.  The surprise for me hasn't been the extent to which Obama has adopted neo-liberal ideas.  It's the extent to which he's resisted what is obviously the inclination he brought into office.......

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sat Jul 27th, 2013 at 07:30:21 PM EST
[ Parent ]
SEN. OBAMA: Thank you. Thank you very much.

I would love just to sit here with these folks and listen because you have on this panel and in this room some of the most innovative, thoughtful policymakers, people who have both ideas but also ways of implementing them into action. Our country owes a great debt to a number of people who are in this room because they helped put us on a pathway of prosperity that we are still enjoying, despite the best efforts of some.


SEN. OBAMA: I want to thank Bob and Roger and Peter for inviting me to be here today. I wish I could be here longer. I am going to have to run after a few minutes because we do have an important issue relating to U.S.-India relations.

But when Roger originally called to invite me, not only to this forum but to invite me to engage in this project, I couldn't help but think that this was the sort of breath of fresh air that I think this town needs.

We have all known for some time that the forces of globalization have changed the rules of the game--how we work, how we prosper, how we compete with the rest of the word. We all know that the coming baby boomers' retirement will only add to the challenges that we face in this new era. Unfortunately, while the world has changed around us, Washington has been remarkably slow to adapt twenty-first century solutions for a twenty-first century economy. As so many of us have seen, both sides of the political spectrum have tended to cling to outdated policies and tired ideologies instead of coalescing around what actually works.

For those on the left, and I include myself in that category, too many of us have been interested in defending programs the way they were written in 1938, believing that if we admit the need to modernize these programs to fit changing times, then the other side will use those acknowledgements to destroy them altogether. On the right, there is a tendency to push for massive tax cuts, as Peter indicated from my speech at Knox College, no matter what the cost or who the target is, a view that stems from the belief that there is no role for government whatsoever in the challenges we face. Of course, neither of these approaches really works.

Before we came here, somebody was asking me, how do I maintain my idealism? I do because I think the American people know that neither of these approaches works. I think there is a broad consensus out there in the Country that we should be looking for common sense, practical solutions to the problems that we face. I think that there is a market. I think that there is a demand for solutions that are practical, that are based on facts, that are tested, and that
require us to think in new ways.

A lot of the people who are here today have done that in the administration. Not only have they succeeded on many of their policies, but almost just as importantly, they have failed occasionally and have acknowledged those failures and adjusted their views. I think that is the kind of experimentation and attitude that all our policymaking has to pursue. One thing that we all know is that when you invest in people, people will prosper. When you invest in education and health care and benefits for working Americans, it pays dividends throughout every level of our economy. When you keep the deficit low and our debt out of the hands of foreign nations, then we can all win.

 Now, the economic statistics of the nineties that we are all so familiar with speak for themselves--income growth across the board, 22 million new jobs, the lowest poverty rate in three decades, the lowest unemployment in years, and record surpluses. None of this, I would argue, happened by itself. It happened because the leadership we had, including many in this
room, was willing to take on entrenched interests and experiment with policies that weren't necessarily partisan or ideological.

That is what I hope we will see from The Hamilton Project in the months and years to come. You have already drawn some of the brightest minds from academia and policy circles, many of them I have stolen ideas from liberally, people ranging from Robert Gordon to Austan Goolsbee; Jon Gruber; my dear friend, Jim Wallis here, who can inform what are sometimes dry policy debates with a prophetic voice. So I know that there are going to be wonderful ideas that are generated as a consequence of this project.

Not every idea will I embrace, and I hope that one of the roles that I can play, as a participant in this process, is to not only encourage the work but occasionally challenge it. I will give one simple example. I think that if you polled many of the people in this room, most of us are strong free traders and most of us believe in markets. Bob and I have had a running debate now for about a year about how do we, in fact, deal with the losers in a globalized economy. There has been a tendency in the past for us to say, well, look, we have got to grow the pie, and we will retrain those who need retraining. But, in fact, we have never taken that side of the equation as seriously as we need to take it. So, hopefully, this is not just going to be all of us preaching to the choir. Hopefully, part of what we are going to be doing is challenging our own conventional wisdom and pushing out the boundaries and testing these ideas in a vigorous and aggressive way.

But I can't think of a better start, given the people who are partic ipating today. I am glad that Brookings has been willing to provide a home for this wonderful effort.

Just remember, as we move forward, that there are real consequences to the work that is being done here. There are people in places like Decatur, Illinois, or Galesburg, Illinois, who have seen their jobs eliminated. They have lost their health care. They have lost their retirement security. They don't have a clear sense of how their children will succeed in the same way that they succeeded. They believe that this may be the first generation in which their children do worse than they do. Some of that, then, will end up manifesting itself in the sort of nativist sentiment, protectionism, and anti-immigration sentiment that we are debating here in Washington. So there are real consequences to the work that is being done here. This is not a bloodless process.

I think that as long as all of us retain that sense of passion about the ultimate outcome that we want, which is a stronger, more prosperous America than we are passing on to our children, then I think we will do well in this process. I am glad to be a part of it.

Thank you very much.

So the Clinton years were as good as they come, globalisation is good (even though some see their jobs eliminated and have no prospects) and there is an inherit need to modernize the new deal programs. On the other hand it is important to take care of the human stock with education and health care. And it would be good if something could be done for the saps in Illinois so that they don't seek other political options.

Standard third way.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Sun Jul 28th, 2013 at 01:46:33 AM EST
[ Parent ]
When you keep the deficit low and our debt out of the hands of foreign nations, then we can all win.

Two fallacies in one cliche! The only real advantage of the Clinton surplus was as a club with which to beat the Bush 46 administration and even then the Chinese were accumulating US debt instruments. Aristotle claimed that mastery of metaphor was the mark of genius. Here, at a minimum, Obama demonstrates mastery of the fallacious cliche to rhetorical advantage.
There has been a tendency in the past for us to say, well, look, we have got to grow the pie, and we will retrain those who need retraining. But, in fact, we have never taken that side of the equation as seriously as we need to take it.

But Walmart, McDonald's, etc. do their own training and how can you talk of re-training as a solution for shrinking overall employment? At least he mostly got unemployment insurance extended until his second term started even if he 'settled' for half a stimulus.

To do more Obama would have had to seriously engage, himself or via clear proxies, with the rampant tangle of fallacies that is 'mainstream economics' and vigorously deconstruct it in favor of something that works. But that would anger much of the financial sector - with whom he identifies - so, instead, we got 'regulatory forbearance'.    

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Jul 28th, 2013 at 09:17:33 AM EST
[ Parent ]
I have to preface this by noting that I don't know a lot about the Hamilton Project.

Echoing ASKOD below, this sounds like the typical middlebrow horseshit that Dem VSPs have been spewing since the Clinton administration.  It was the dominant view among the party powers, especially back in 2006 before the world blew up.  (I think it's less so now, although they still hold a ridiculous amount of influence.)

It still -- again, taking the preface into account -- strikes me as stupid rather than evil, a politician betting on what seems to have worked for the last guy in his party to hold the White House and wanting to be seen as Serious.

I'd also add out of my personal experience that politicians, in general, are not very bright people.  They're half a step above journalists, and you guys know how I feel about journalists' intelligence.  They listen to the people around them, and the people around them are usually there on the advice of the old guard within the party, due to their perceived competence as far as making policies that have gotten other politicians elected to higher offices or reelected to their current offices.  Bill Clinton pretty much acknowledged this in apologizing for his deregulation policies in the '90s.

In that sense, Larry Summers looks great on paper.  Clinton to this day, even after the crisis, has a reputation for sound economic management and was reelected in a landslide.  (Dems should be thankful for that, too, as it undoubtedly helps Hillary should she choose to run.  Hopefully she's bright enough to have learned a few lessons from Obama and her husband.)

None of this is to say that Obama and Clinton don't ultimately own it.  They're their appointments, and it falls on them to make good appointments.  I'm just saying I think it's not surprising to find them making bad ones here, because neither is -- or was, in Clinton's case (to his credit he admits he fucked up) -- really going to know how to distinguish Summers from a competent guy.  It doesn't help either that the guys who are capable of taking him down intellectually also happen to be his longtime friends (although even they seem to be either backing off him or -- in Krugman's case -- sandbagging him).

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sun Jul 28th, 2013 at 09:06:13 AM EST
[ Parent ]
Where is all this "momentum" behind a Summers nomination coming from? It must be remembered that Obama got elected (twice) not just on the much hyped small donations, but with an awful lot of Wall Street money as well. That doesn't mean he's their creature - because ultimately  he will be judged on his economic record, and at the moment it is the Republican Congress which is the main obstacle - even if centrist Democrats could also be the obstacle if they had the swing vote.

Could Summers, ultimately, be more effective because no one would question his neo-liberal credentials, or would he try to lead Democrats down the wrong path again? The question is, is he capable of learning from his past mistakes, or will he be tempted to double down on them?

I care less about the "personality" of the Fed Chairman, and much more about what policies he will be able to implement. Obama, even if he has the right instincts, can do little. Bernanke has been relatively effective at bringing his Board with him in the teeth of rabid conservative opposition, would Yellen be able to do as much?

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Jul 28th, 2013 at 09:40:31 AM EST
I find it hard to imagine Larry on any other than a 'wrong' path. I'm with Drew on the Fed nomination. Yellen would be as good as it could get, but, for that very reason Summers is more likely.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Jul 28th, 2013 at 10:07:56 AM EST
[ Parent ]
If he'd demonstrated some capacity for learning from his past mistakes, he could be forgiven.  Unfortunately, he hasn't done that.

It's not that Summers is stupid.  He's actually done some interesting stuff in his academic life.  (See, for example, his attack on Ed Prescott and Real Business Cycle theory in the '80s, or his and DeLong's work on Noise Traders vs Efficient Markets.)  But a lot of academics just suck at policy.  They're plagued by the notion -- not helped, in this case, by Summers's view of himself as having 60 IQ points on everybody this side of Keynes -- that their ideas are impossible to implement.  "The political system is too crude.  It's too hard."  And along with that, Summers is such a creature of Washington at this point that he's clearly more inclined to adhere to Village Law than to stick to what his work in his past life told him.

Extreme arrogance is also not a good thing in a Fed chair.  As Krugman pointed out about Summers, "Larry's extremely smart -- ask him and he'll tell you."  That's not good.  Barring a surprisingly strong recovery in the coming years, the next Fed chair(wo)man is going to need to build consensus towards more aggressive policy.  It's hard to do that with Summers running around calling everybody idiots.

And, again, Summers never admits being wrong, even when the evidence is overwhelming.  He denied the existence of the housing bubble and berated Ragharum Rajan for suggesting that "financial innovation" had made the world riskier.  He apparently attacked Krugman for suggesting Asian economies implement capital controls during the '90s crisis -- an idea so radical and outside-the-mainstream that it's now part of the IMF handbook; and an area of economics that Krugman pretty much founded, while Summers is a nobody.

He still thinks deregulation in the '90s was awesome.  He was ready to let the automakers collapse, which would've cost us the 2012 election.  He deliberately misrepresented to Obama the various stimulus proposals (he didn't even show Obama Romer's proposal in the original memo), and then made up the bullshit excuse that it would've been too hard to spend the extra $800bn.

It's a remarkably long list of bad calls, and the fact that he hasn't offered a mea culpa on any of them is disturbing.  

And this is all in addition to the fact that he's far less qualified than Yellen in terms of experience.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sun Jul 28th, 2013 at 10:33:53 AM EST
[ Parent ]
Summers' ability to implement policy is a bad thing, because Summers is at best a neoliberal hack and at worst a slavering lunatic. Having an empty chair and the FOMC running the show would be superior to Summers.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jul 28th, 2013 at 10:34:07 AM EST
[ Parent ]
An empty chair and the k% rule would probably be superior to Summers.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Sun Jul 28th, 2013 at 10:48:40 AM EST
[ Parent ]

And all the more frustrating with Summers is that his academic background is quite good.  And his background prior to becoming an academic is absolutely ridiculous.  His dad was an economist.  His uncles are Kenneth Arrow and Paul Samuelson -- and, whatever the merits of their ideas, they are nevertheless giants.  He studied at MIT under Robert Solow and Marty Feldstein.  His classmate was Krugman.

The guy's literally been surrounded by giants his entire life.  He was doing higher-level stats and math before he was old enough to drive.  He was tenured at Harvard when he was 27.

He probably has the most absurdly privileged background of any economist who has ever lived.  Most PhD candidates would cut their legs off for a background like that.

Yet he's never lived up to it.  And I think it's probably because he was never raised on the intuition, and he never had to really want it.  It's sort of like an athlete who's the son of an NFL Hall-of-Famer.  He's born with athletic abilities most guys could never dream of, skates by based on pure talent throughout his high school and college years.  And then he gets to the big stage and fails miserably, unable to live up to the hype.

Summers never got the central insight Keynes really meant by his quote about "the long run" -- that the task of macro is to make people's lives better and acknowledge that we aren't even close to having all the answers, and that if all we can do is say "Meh" during turbulence, then we might as well just go home.

It's great to be skeptical of the cries of vested interests.  It's great to think probabilistically.  But don't allow that skepticism and probabilistic thinking to become intellectually crippling.  That, I think, goes to the root of Summers's problems.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sun Jul 28th, 2013 at 01:59:28 PM EST
[ Parent ]
Wednesday Obama went to the Hill for a closed door meeting with Democrats. I heard a report that he had defended Summers against the many Democrats who oppose his nomination. Ominous if true.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Aug 1st, 2013 at 10:23:42 AM EST
[ Parent ]
... bought and paid for, but rather he's their creature as being a believer in their line that they got behind early to help him win his Senate seat.

It doesn't take any eerie prescience about State Senator Obama's Presidential prospects to back him in his run to win the nomination and then the election for Senator from Illinois ... having a pro-Wall Street Senator is quite reason enough.

Having him rise to the White House at a time when a more populist Democrat might have had a big financial sector CEO perp walk a week to placate white resentment in 2009 was a bonus.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Jul 30th, 2013 at 01:43:33 PM EST
[ Parent ]
Having him rise to the White House at a time when a more populist Democrat might have had a big financial sector CEO perp walk a week to placate white resentment in 2009 was a bonus.

Regulatory forbearance was probably seen as implicitly promised by Obama in the regular conversations he had with his Wall Street backers. But in the bargain they also got legal forbearance. In for a penny, in for a pound. He would be far from the first politician to buy into supporting the money people all the way. So Wall Street gets unconditional love when what the country and the people need is for them to get tough love. Obama is no Roosevelt by any stretch of the imagination.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Jul 30th, 2013 at 05:54:36 PM EST
[ Parent ]
Good writing and, yes, fully agree

Wind power
by Jerome a Paris (etg@eurotrib.com) on Mon Jul 29th, 2013 at 07:07:08 AM EST
Via Paul Krugman, it seems that, Summers or no Summers, we're going to have inflation fearmongering no matter what.

Such hard money obsession is baffling at times like these. The Fed is failing on BOTH its mandates since inflation is far below target, yet Obama wants above all to make sure that the Fed will keep inflation low. Crazy.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Jul 29th, 2013 at 07:55:31 AM EST
The Fed is failing on BOTH its mandates since inflation is far below target, yet Obama wants above all to make sure that the Fed will keep inflation low. Crazy.

Not so crazy if you are a net creditor, or identify with those who are, as you are getting repaid with money that is worth more than the money you lent.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Jul 29th, 2013 at 10:25:58 AM EST
[ Parent ]
Perhaps there is still hope: Summers is quite well known. And connected to the Clintons. For that reason alone, republicans will oppose him and make into a communist or something. Perhaps they actually try to filibuster him.

In that case, Summers could be withdrawn - satisfying the Obama urge to shower republicans with concession.

And the next person will wiggle through. Especially a somewhat less well known person.

by IM on Mon Jul 29th, 2013 at 11:05:14 AM EST
Perfect! And the Republicans could filibuster him because he is such an out-of-touch liberal elitist that he might just go all the way and turn communist.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Jul 29th, 2013 at 12:09:44 PM EST
[ Parent ]
It's hard not to be reminded of Niall Ferguson when you look at Summers' career.

  • Some solid academic work back in the mists of time.
  • Skilled at rhetoric, has a certain kind of intelligence.
  • Somewhere along the line his own estimation of self got to the point where it was impossible for him to consider ideas or data from anyone else as valid.
  • Long descent into really bad decision making.
  • All enabled by Harvard, too.
by Metatone (metatone [a|t] gmail (dot) com) on Tue Jul 30th, 2013 at 04:54:56 AM EST
Larry Summers' biggest blunder   Dean Baker  RWER Blog

The prospect of seeing Larry Summers as chair of the Fed has angered many policy types in Washington and across the country. There is a multi-count indictment that includes his support for the repeal of Glass-Steagall, his opposition to regulating derivatives, his notorious comment about women possibly lacking the ability for sophisticated mathematical reasoning, and his protection of the big banks in his years as President Obama's National Economic Adviser.

These are reasonable issues to raise as Summers is being considered for the country's most powerful economic position. But the most important charge has generally been left off the list. Summers played a major role in creating the economic imbalances that fostered the housing bubble and explain the weakness of the economy right up to the present. This is the problem of the huge U.S. trade deficit, which was in turn caused by the over-valued dollar.

The Minotaur, like The Creature from the Black Lagoon, doesn't poop, so there is no recycling.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Aug 3rd, 2013 at 09:48:48 AM EST

Go to: [ European Tribune Homepage : Top of page : Top of comments ]

Top Diaries

Brexit: Get on with it already?

by Bernard - Jun 26

Spain votes again

by Migeru - Jun 26

Defeat from the Jaws of Victory

by rifek - Jun 27

Reversing Brexit?

by Frank Schnittger - Jun 25

Should I vote for Brexit?

by tyronen - Jun 22

Recent Diaries