Tag Archives: Larry Summers

Will We Ever Get Change if We Keep Electing People Who Represent Special Interests?

We can see the positioning and the messaging on the Democratic side beginning to take shape for the 2016 elections. Bernie Sanders and Elizabeth Warren with nods to Thomas Piketty and various economists have stepped forward to offer the themes of salvation for the middle class, moderating the extremes of inequality in American society, and doing something real about jobs and wages.

Clinton World seems to be responding, not yet with forthright statements from Hillary Clinton, but recently with articles by stalwarts of neoliberal Clintonism (and veterans of the Obama Administration) such as Larry Summers and Peter Orszag, expressing concerns about inequality and proposing measures to alleviate it, even including increased taxation on the wealthy.

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Bow down to the Bubble: Larry Summerian Endorses Bubbleonian Madness and Paul Krugman Embraces the Hansenian Stagnation Thesis*

By L. Randall Wray

{*Sorry, I couldn’t resist. As many of NEP’s readers know, Michael Hudson has long advanced the argument that America’s policymakers have purposely created Bubbleonia—NOT to generate growth but rather to enrich the thieves at the top. And many of you are familiar with the work of Geoffrey Ingham—a fellow Chartalist traveler—who has focused on J.M. Keynes’s “Babylonian madness”, the period after Keynes had discovered the writings of A.Mitchell Innes that led him to explore the origins of money in Babylonia. Hudson is also a scholar of that period. Alvin Hansen reintroduced the thesis of secular stagnation, giving it a Keynesian flavor.}

Larry Summers has made a big splash by (finally) recognizing that the US has had a series of financial bubbles. (See here.)  Duh! Who wudduv thought? The Reagan years were just a bubble, driven by thrift excesses. The Clinton years were just a bubble, driven by dot-com excesses. And the most recent real estate boom and bust was just a bubble, driven by Wall Street’s thieving Investment Banks. Bubbles-R-US. It’s all we’ve got going on.

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My “Idiotic” Insistence on Being Fair in Criticizing Larry Summers

By William K. Black

My most recent column: Larry Summers Got a Bad Rap on Stimulus: Obama is the Problem so distressed one of my readers that he was moved to comment:

“Wow, this is a piece of shit column, full of straw men and idiotic praising of bad economists. You owe those of us who look up to you much much better than this.”

I have written a series of columns over the last several weeks criticizing President Obama’s reported desire to appoint Larry Summers as Ben Bernanke’s replacement to run the Fed.  I explained why I viewed Summers as a leading architect of financial crises because of his failure to understand fraud and financial regulation.  The reader who I distressed has a long and distinguished track record in fighting effectively for progressive causes.

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Larry Summers Got a Bad Rap on Stimulus: Obama is the Problem

By William K. Black

I am a strong supporter of Janet Yellen and believe her support for the fiscal and monetary policies best designed to produce a stronger, prompter recovery from the Great Recession makes her the superior replacement for Ben Bernanke.  The criticism of Larry Summers’ position on fiscal stimulus, however, was generally inaccurate.  Within the Obama/Biden administration, the best known economists (Summers, Christina Romer, and Jared Bernstein) proved dramatically better economists than did the non-economists who eventually came to dominate Obama’s economic policies (Timothy Geithner, Jacob Lew, and William Daley).  Summers, Romer, and Bernstein were strong voices in favor of fiscal stimulus.  Summers deserves some additional praise because he had to break from his mentor’s (Bob Rubin’s) pro-austerity dogmas to reach his anti-austerian position.

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Why Oh Why Can’t We Have Better Press Corps Stooges?

By Dan Kervick

I really didn’t see the need to blog yesterday about this silly piece from Zach Goldfarb at the Washington Post’s Wonkblog. The whole bit reads like campaign boilerplate written in some White House office handling the Summers for Fed Chair 2013 campaign.

It’s a bullet list of the sort of broad-brush, something-for-everyone, content-poor “predictions” familiar from political brochures: “As President, Governor Smedley will work closely with both the business community and the representatives of American labor to fight for good jobs at good wages, while promoting competitiveness and labor flexibility.”  Goldfarb’s press release on behalf of Team Summers includes hilarious Onion-style political parody like this:

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The New York Times is Wowed that Obama’s Six Rubinites Support Larry Summers

By William K. Black

The Obama administration, for reasons that pass all understanding, has been running a campaign of leaks disparaging one of Obama’s few senior female appointees, Janet Yellen.  Her high crimes include not being a protégée Bob Rubin and doing exceptionally well in economic forecasting.  Rubin wants the job of Fed Chair to go to his top protégée, Larry Summers.  Yellen, as Vice Chair of the Fed stands in the way of Rubin’s ambitions.  (Rubin is too toxic to take the Chair directly.)  The administration has been leaking primarily to the New York TimesBinyamin ApplebaumHis latest article contains this remarkable statement, without analysis.

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Larry Summers’ Take on Efficient Markets and Regulators: Brilliance v. Idiots

By William K. Black
(cross posted from Benzinga.com)

Perhaps the only useful thing to come out of the Obama administration’s inept contest between Larry Summers and Janet Yellen as Ben Bernanke’s successor is the purported agreement among economists and other policy makers that the Fed Chair should make the introduction of effective regulation and supervision by the Federal Reserve a top priority.  It would be even better if this agreement were real and would be sustained.  Regulation and supervision have never risen above tertiary concerns at the Fed and every institutional pressure will push the new Fed Chair to ignore supervision.  

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Jared Bernstein Tries to Reimagine Larry Summers as a Foe of the Banksters

By William K. Black

Jared Bernstein was Vice President Joe Biden’s chief economist and was the strongest economic voice within the Obama administration opposing inflicting austerity on the Nation in response to the Great Recession.  His August 28, 2013 column is entitled “Summers and the Banks.”  He begins by acknowledging that Obama had dreadfully “misplayed” the choice of Ben Bernanke’s successor as Fed Chair.

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Ripping Off Pensioners is Wrong

By Stephanie Kelton

Brad DeLong has a post up today in which he advocates an expansion of the Social Security system.  He opens with the following paragraph:

Edward Filene’s idea from the 1920s of having companies run employer-sponsored defined-benefit plans has, by and large, come a-crashing down. Companies turn out not to be long-lived enough to run pensions with a high enough probability. And when they are there is always the possibility of a Mitt Romney coming in and making his fortune by figuring out how to expropriate the pension via legal and financial process. Since pension recipients are stakeholders without either legal control rights or economic holdup powers, their stake will always be prey to the princes of Wall Street.

Ripping off pensioners is indeed reprehensible, and we should be prepared to call out anyone who schemes the pension system at the expense of the powerless. And we should do it even if it means calling out a certain would-be-Fed-Chairman whom DeLong has championed:

When it comes to Wall Street, Summers said he obtained insights based partly on working part-time for the hedge fund D.E. Shaw and Company where he earned over $5 million in just one year. Summers said the experience gave him “a better sense of how market participants sort of think and react to things from sort of listening to the conversations and listening to the way the traders at D. E. Shaw thought.”

One young female quant who worked with him had this to say on her blog, “But when I think about that last project I was working on, I still get kind of sick to my stomach. It was essentially, and I need to be vague here, a way of collecting dumb money from pension funds. There’s no real way to make that moral, or even morally neutral.”

By “dumb money,” she is referring to the fact that investors, including those who manage public pension funds, routinely buy certain types of secure assets on a regular schedule or in other predictable patterns. Hedge funds like D.E. Shaw take advantage of that predictable behavior by selling these assets to investors for a slightly higher price. Because of the huge dollar value and volume of these investments, such strategies can make hundreds of millions of dollars for hedge funds.


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