Larry Summers the new Dick Cheney?


Okay, that was a little below the belt, but only a little.  Summers is the head of Obama’s National Economic Council and, according to some White House insiders, he seems to have gone to the Cheney-Rumsfeld School of Bureaucratic Manipulation:

The weird thing about Summers’ role right now is everyone I speak to in the administration agrees that he’s the real power on domestic policy making (focusing on the economy, but with hands in health, energy, and much else) but hes fundamentally not accountable because his position as an adviser makes it very hard to see what is and isn’t emerging out of his office.

This is particularly notable because Summers was already a controversial economist before Obama picked him for his team.

Summers was a Treasury official under Robert Rubin during the Clinton administration.  It was Summers and Rubin, in conjunction with Phil Gramm in the senate and Alan Greenspan at the Fed, who successfully argued that the government should not regulate some newfangled debt instruments based on pools of mortgages.  (Maybe you’ve heard of them; they’ve been in the news lately.)  They said the markets knew best.  We should just let the markets work their magic.  (Maybe you’ve heard how that worked out; it’s been in the news lately.)

Summers also was briefly president of Harvard University, before making some sexist remarks and getting shown the door.  People skills, it turns out, aren’t really his strength.  Pretty much everybody who had to work with him in the Clinton administration came to hate him.

Except this one guy.  Tim Geithner.  Wonder what ever happened to that guy.


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2 Responses to “Larry Summers the new Dick Cheney?”

  1. michaellasley Says:

    I heard that school is hard to get into.

    What do you think about the paragraph in Klein’s article just above (I think) the one you exerpted? About nationalization?

  2. urbino Says:

    I guess I agree with him. About nationalization, I mean. It’s an option that many have been advocating for quite a while. It seems Sweden experienced a banking crisis identical to ours, a few years ago, and that’s how they solved it: nationalized the banks, made the stockholders take their own losses (which were 100%), rehabbed the banks’ bad assets, then sold the banks back to the private sector. Worked great.

    Somebody finally asked Obama about this directly, today: why don’t we follow the Swedish model? His answer was, basically, our banking system is way bigger and more complex than Sweden’s, with way more players involved, and the Treasury Department just flat doesn’t have the resources to run it, even short-term.

    He also throws in some claptrap about how that’s not the kind of thing we do in America — nationalize industries. As Yglesias points out in the linked story, having the taxpayers pay for private parties’ bad investments isn’t the kind of thing we do in America, either, but here we are, doing it.

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