Finally! The announced departure of Lawrence Summers as the president's top economic adviser is welcome news. Harvard's loss in taking back its $586,996-a-year professor and "president emeritus," who is also paid millions by Wall Street on the side, is the nation's gain. Maybe now Barack Obama, who hopefully will also push out Summers' protégé, Treasury Secretary Timothy Geithner, will begin to provide an authentic populist alternative to those tea party Republicans who totally absolve Wall Street of responsibility for the economic collapse. But the early signs are not fully reassuring.
As I stated in my column last week, for the umpteenth time urging Summers' dismissal, I expected the president to have kind words for a man who deserved none if he were to be fired. But Obama's effusive praise on Tuesday went well beyond the requirements of professional pink-slip courtesy and suggests that he is still in denial over the role of key Democrats like Summers in getting us into this mess:
"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."
A parsing of that one sentence will reveal much of what is rotten in our political system and distorted in the president's response to the economic crisis he inherited. There is simply no serious accountability when Summers is lionized for his disastrous service and Wall Street's high rollers are bailed out after their stark disgrace. By what standard would one judge as "brilliant" the abysmal performance of Summers both as treasury secretary in the Clinton administration and more recently as a top economic adviser for Obama?
The "great peril" for our country that Obama referred to was a direct result of the radical financial deregulation that Summers helped make law when he worked for Bill Clinton. He led the effort to destroy the career of Brooksley Born, the Clinton-appointed head of the Commodity Futures Trading Commission who had the prescience to sound the alarm in the face of a dangerously spiraling market in suspect mortgage packages. Her sensible suggestion in a "concept release" for a study of the risks in those newfangled financial gimmicks horrified Summers, who told a Senate committee:
"In our view, the Release has cast the shadow of regulatory uncertainty over an otherwise thriving market--raising risk for the stability and competitiveness of American derivatives trading. We believe it is quite important the doubts be eliminated."
They were eliminated when, at Summers' instigation, Clinton signed off on the Commodity Futures Modernization Act, which summarily banned any regulation of those derivatives under any existing law or by any agency.
Ever one to fail upwards, Summers was rewarded for his betrayal of the public trust with an appointment as president of Harvard, where his dismissal of the scientific competence of women was his most noted achievement. That did not stop candidate Obama from selecting him to be a key economic adviser in his campaign. Nor was the fact that Summers received almost $8 million in consulting and lecture fees from Wall Street firms during the time he advised the Democratic candidate a deal-breaker for Obama.
Obama had absolutely nothing to do with the causes of the financial meltdown, but he wasted two precious years being misled by Summers and Geithner as to how to respond to it. The key error, and it is not too late to rectify it, was the failure to force the bailed-out Wall Street titans to give back something significant to the public in the way of mortgage relief. A temporary moratorium on mortgage foreclosures at a time when 11 million homeowners are "underwater," at risk of joining the almost 4 million who have already lost their homes, is a must to recharge the economy. That is what Obama should have initiated when he first came into office, and I hope it will be done now that the dead hand of Summers has been lifted.
Perhaps at Harvard Summers will have time to reflect on the dismal arc of his split tenure in government service. Thanks to the banking debacle he did so much to initiate back in the Clinton years, the nation now has more people living in poverty, 43.6 million of them, than ever in our history. Americans have witnessed the disappearance of $11 trillion of their net worth, $1.5 trillion in the second quarter; the debt has risen alarmingly; unemployment is stuck at 9.6 percent; and trillions of dollars in toxic pools of housing stock are still held by the banks to be thrown into the housing market fire sale anytime home prices promise to edge upward. Behold what brilliance has wrought.
Robert Scheer's pinata blows to Larry Summers have not broken the connection another writer shows exist between Wall Street, the Government, and Academia. Glum experts who understand economics know the worst is yet to come. Before his ouster, Summers went public saying the Bush tax cuts and their expiration had little to do with the economy, unemployment, and the housing market. the Summers-Geithner-Bernanke triumvirate were/are a trojan horse for President Obama. As Doug Kass said, shorting the bond market will be the "trade of the century." With most Americans choosing to park there, guess who will be riding high on those profits now that he has no "official" government post? Tell President Obama the solution is to stop the Fed's madness where the fundamental problem is money itself.
If anybody dreams of being a future US president, he/she should seriously take many courses of economics during their college or graduate years, at least to have somewhat prepared sets of ears to understand what their economic advisors will whisper on his/her ears.
It's disappointing that Summers has not been able to use his giftedness in constructive, positive ways for the country. Is there such a thing like bad giftedness?
It seems the economy is headed in the right direction not only in the US but worldwide, with the rollercoaster ride of the stock markets notwithstanding.
Voters really need to decide what way to go in the coming election. The conservatives trying to grab the steering wheel are really trying hard to get back in power but the numbers seem to be against them so far. The voters choices are to either have GOP policies that care less for regular folks and the Dems who are concerned about Main St. for the most part.
To have a lot of folks out of jobs and getting foreclosed is not good but the economy seems to be going in the right direction slowly. Governments are involved in politics and managing the nation's business, not in magic. Consumer confidence translated into buying will also turn the tide more than anything.
Those who got Obama's message of promise should not think he's changed his mind and goals but he does have to contend with the vagaries of democratic govenment. Keep the faith, folks--hang in and support the folks, the Dems, who have Main St. folks in mind, not like the super-rich who take care of their own.
Think about it. Hang in and VOTE!
Robert. Thanks for going straight to the point on what's excruciatingly needed... NOW... -Way to gut that catfish.
18 months ago it was mentioned with such heavy sighs how long it'd take for judges going over every case, how much work it would be, all that.... Dammit, They'd be close to the end, or at least well past half way by now, if they wouldn't have listened to the lazy cowards ( also what his tenure seems to have bred) who shied away from that big job. Not only would we be that far along, our nation would begin to be feeling a great relief, since movement of money causes such momentum from the tax base of a township, to the county, not to mention all the other things so importantly in line with citizens being able to NOT LOSE THEIR HOMES!!!!
I'd like to see Robert Gibbs get away with debating someone like you, Janet Tavakoli or Bill Black (or hell, even myself,) and try to call any one of you a member of the "professional left"...
Everything you've said here is as right on and alarmingly clear as it is tragically late in the game. But you're right about something else... It's still not too late. Hopefully.
And thank you Robert Scheer for the overview of who Summers really is - all that's missing is his role in the G20 business. And do we really expect people like him to see the ants from their ivory tower?
I believe neither, in the face of such dramatic loss, is sound leadership.
Is it the unwillingness of both the Clinton and Obama foci of the Democratic party to challenge their Wall Street friends, especially when some of these friends have defected to the Party of No? I can't answer that, but I know FDR would have had an answer to that.
As for Summers, he pushed for the deregulation of the banking sector and the repeal of Glass-Steagall which led to the meltdown in the first place, so there's his responsibility.
The continuation of policies that led to the meltdown in the first place, is their legacy under the Obama administration.
The failure of the elected representatives can be blamed for most of the structural problems. And Obama's appointment of Summers and Geithner is a great example of that. Bottom line is that Obama is another in a long line of elected representatives beholden to the special interests to maintain the status quo.
He was a United States Senator - he may not have done anything to actively cause the financial melt down, but he did nothing to help prevent it. He voted "present" then as he's doing now. We need a real leader. I have no confidence that he'll choose a new economic chief that is good for the recovery we so need, it'll be another academic political appointment.
Not that academia is not its own universe ...
But O keeps appointing establishment cronies that serve the same interests that created the economic disaster he INHERITED and only managed a wet tissue Financial reform ... so, where does that leave the country.. right back in the hands that created this mess.