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Tuesday, July 30, 2013

Some see Larry Summers the “loser”; others see Larry the “brilliant”

Destroyer of masses feeds richer: lauding, lambasting Clinton Harvard Obama sweetheart

 guess the president’s judgment is why his figures are falling. Americans who are paying attention are finally seeing a leader who is just talk, a good reader of teleprompters; but substantively, seriously and dangerously inept
Editing, brief comment by Carolyn Bennett

(Reagan) Clinton to Obama via pyramid schemes, Ivy Leagues
Clinton, Summers, Rubin
American economist Lawrence Henry (Larry) Summers was the William Jefferson Clinton administration’s U. S. Secretary of the Treasury (1999 to 2001)

Summers was a leading voice within the Clinton Administration arguing against American leadership in greenhouse gas reductions and against U.S. participation in the Kyoto Protocol (ref. internal documents made public in 2009) 

Damaging deregulation: Summers advises Congress

On May 7, 1998, the Commodity Futures Trading Commission (CFTC) issued a Concept Release soliciting input from regulators, academics, and practitioners to determine ‘how best to maintain adequate regulatory safeguards without impairing the ability of the OTC (Over-the-counter) derivatives market to grow and the ability of U.S. entities to remain competitive in the global financial marketplace.’

On July 30, 1998, then-Deputy Secretary of the Treasury Summers testified before the U.S. Congress that ‘the parties to these kinds of contract are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies.’

Summers, like Federal Reserve Chairman Alan Greenspan (Reagan to 2006, tenure described as  “a leading cause of the subprime mortgage crisis”) and Robert Rubin (U. S. Secretary of the Treasury in first and second Clinton administrations, veteran of Goldman Sachs, director/senior counselor of Citigroup) who also opposed the concept release, offered no proof that the contracts would not be misused by financial institutions. Instead, Summers stated that ‘to date there has been no clear evidence of a need for additional regulation of the institutional OTC derivatives market, and we would submit that proponents of such regulation must bear the burden of demonstrating that need.’

In 1999, Summers endorsed the Gramm-Leach-Bliley Act which removed the separation between investment and commercial banks, saying ‘With this bill, the American financial system takes a major step forward towards the 21st Century.’

rom 2001 to 2006, Lawrence Summers was President of Harvard University and resigned this position “in the wake of a no-confidence vote by the Harvard faculty.”

Deregulation, Disestablishment, Destruction

While president of Harvard and in that position a member of the Harvard Corporation (which bears ‘the school’s ultimate fiduciary responsibility’) Summers approved the decision to enter into the swap contracts and the University entered into a series (totaling $3.52 billion) of interest rate swaps, financial derivatives that can be used for either hedging or speculation. The decision to enter into the swap positions attributed to Summers has been termed a ‘massive interest-rate gamble’ that ended badly.

By late 2008, those positions had lost approximately $1 billion in value, a setback which forced Harvard to borrow significant sums in distressed market conditions to meet margin calls on the swaps.

 In the end, Harvard paid $497.6 million in termination fees to investment banks and has agreed to pay another $425 million over 30–40 years.

In the Charles H. Ferguson-directed 2010 documentary film “Inside Job” about the late-2000s financial crisis ─ ‘the systemic corruption of the United States by the financial services industry and the consequences of that systemic corruption’ ─ Lawrence Summers is presented as one of the key figures behind the late-2000s financial crisis. Ferguson points out the economist’s role in what he characterizes as the deregulation of many domains of the financial sector. The film explores how changes in the policy environment and banking practices helped create the financial crisis.

2010 on

In 2010 Summers, a professor at Harvard University’s Kennedy School of Government, was the Barack Obama administration’s Director of the White House United States National Economic Council.

In June 2011, Summers joined the board of directors of Square, a company developing an electronic payment service and became a special adviser at venture capital firm Andreessen Horowitz. In 2012, Summers joined the board of person-to-person lending company Lending Club.

s the Obama government in the summer of 2013 ponders a loser who, at the expense of the masses, has been rewarded for being a loser, Al Lewis writes at the Wall Street Journal:
Mr. Summers is a master at ‘failing up.’

Screw up at one job, get a better one.

He’s now considered a front-runner to replace Federal Reserve Chairman Ben Bernanke in January.

“Mr. Bernanke’s response to the financial crisis has been to digitally print trillions of dollars and give most of it to the biggest banks that caused the crisis,” Lewis writes. “This seems to have averted another Great Depression, but at what cost?

“Eventually, the Fed must ease this money out of the system. And any time Mr. Bernanke even suggests he might do this, the stock market nose dives, spoiling the whole high-wire act. Mr. Bernanke is smart enough to step away before the Fed must unwind this unprecedented position,” Lewis says.

“This task will be like defusing a roadside bomb—and the man to do it is Larry Summers?” 
lso weighing in this week on a “loser” that just won’t go away, columnist Robert Scheer writes, “The idea that Barack Obama would still consider appointing Lawrence Summers to head the Federal Reserve ─ rather than order an investigation into this former White House official’s Wall Street payments, reported Friday by The Wall Street Journal ─ mocks the president’s claimed concern for the disappearing middle class.
“Summers is in large measure responsible for that dismal outcome; and twice now, after top level economic postings in both the Clinton and Obama administrations, he has returned to gorge himself at the Wall Street trough.”

Scheer recalls the Summers history then sums up the “trillions … passed on to the banks to relieve them of the burden of the toxic derivatives they created ─ derivatives that then-Treasury Secretary Lawrence Summers testified to Congress were no threat to the ‘thriving market’ that ‘has assumed a major role in our own economy and become a magnet for derivative business from around the world.’ No threat there because, ‘given the nature of the underlying assets involved ... there would seem to be little scope for market manipulation. ... ‘

“This is an idiotic statement,” Scheer charges, “by someone [U.S. President Barack] Obama considers brilliant or, as the president put it when Summers left the White House in September 2010 to get back into the big money game:

‘I will always be grateful that at a time of great peril for our country, a man of Larry’s brilliance, experience and judgment was willing to answer the call and lead our economic team.’

“What leadership?” Scheer asks and answers, citing a most recent McClatchy-Marist poll and an Associated Press survey showing:

54 percent of Americans think the U.S. remains in a recession

60 percent of Americans see the country ‘going in the wrong direction.’

‘Four out of five U.S. adults struggle with joblessness, near-poverty, or reliance on welfare for at least part of their lives ─ a sign of deteriorating economic security and an elusive American dream.’ (AP)
Reasons cited for the deteriorating economic security: ‘an increasingly globalized U.S. economy, the widening gap between rich and poor, the loss of good-paying manufacturing jobs’ (AP)

“That,” Scheer concludes, “is what Obama conceded in his speech last week [and] which underscores how outrageous it is that he would consider bringing back ‘brilliant’ Larry ─ who caused so much of that misery.”

ho will tell the president that it is time to end the corruption, the incest, the destruction?
Who will show this president how? Who will instill in him the courage to do what needs to be done for the public good?  Or is this just too much to ask of America’s “losers,” America's consumers, and America’s “brilliant”?

Sources and notes




“Larry Summers ‘Failing Up’ to the Fed ─ Mess Up at One Job, Get a Better One (Al Lewis, columnist for Dow Jones Newswires in Denver, blogs at tellittoal.com), July 27, 2013, http://online.wsj.com/article/SB10001424127887324564704578627891340892004.html?mod=googlenews_wsj

“Gag Me with Lawrence Summers” (by Robert Scheer), July 29, 2013, http://www.truthdig.com/report/item/gag_me_with_lawrence_summers_20130729/

Robert Scheer

Author of The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (published 2010).

Scheer has written seven other books including the collection Thinking Tuna Fish, Talking Death: Essays on the Pornography of Power; With Enough Shovels: Reagan, Bush and Nuclear War; and America After Nixon: The Age of Multinationals; The Five Biggest Lies Bush Told Us About Iraq; Playing President: My Close Encounters with Nixon, Carter, Bush I, Reagan and Clinton – and How They Did Not Prepare Me for George W. Bush; The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America.

An American journalist, Scheer has taught at Antioch College, City College of New York, UC Irvine, UCLA and UC Berkeley; and is a clinical professor at the University of Southern California’s Annenberg School for Communication; he appears weekly on the nationally syndicated political analysis radio program “Left, Right & Center” produced at and syndicated by public radio station KCRW in Santa Monica; he writes a column for Truthdig, which is nationally syndicated by Creators Syndicate. Scheer was born and raised in the Bronx, New York City to a Russian Jewish mother and Protestant father, both garment workers. After his formative schooling years in the Bronx, Scheer took a degree in economics at City College of New York, studied at the Maxwell School of Syracuse University then took graduate studies in economics at the Center for Chinese Studies at UC Berkeley. http://en.wikipedia.org/wiki/Robert_Scheer


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