| Eight reasons to dump Larry Summers |
I mentioned in my article Bankrupting the world that Tim Geithner was just the face, the voice, behind the PPPIP giveaway to America’s top commercial banks to restore what amounts to $200 trillion in their cumulative derivative debt. I can say today that it’s even more apparent that Larry Summers is the corrupt brain behind the give-away and should go.
First, Summers and his backers persuaded Obama they had the best way to solve the worst financial crisis in history, that is, hand the keys to the banking system to a gang of hedge fund thieves. Nevertheless, a number of “real” economists, like professor and noted author James Galbraith (son of FDR’s economic adviser John Galbraith), and Nobel Laureate Paul Krugman, warned that the bailout schemes would make things go from bad to worse.
They argued that to save the US banking system, it needed reorganization under bankruptcy protection, a view, as I mentioned, shared by Lyndon LaRouche as well. Additionally, Former Federal Reserve Chairman Paul Volker, who heads the President’s Economic Recovery Advisory Board, reiterated even more resolutely in a speech in New York City that the current system had to be reorganized in a Glass-Steagall framework, no ifs, ands, or buts.
Apparently, Summer’s notorious ego blew and his penchant for job-losing got the better of him. He actually had the chutzpah to tell President Obama he wasn’t going to continue working in the same arena with Volcker. In the army, you get shot for that or spend a long time looking at brick walls. Yet the novice president, perhaps intimidated or brainwashed, feeling he needed Summers and Geithner to make things happen, quietly charged Volcker instead to head a tax-code review to close corporate loopholes, and streamline tax laws to generate revenue.
This was announced by OMB Director Peter Orszag, who said the review had a December 4 deadline, and the code, some 96 years old, needed simplifying to reduce tax evasion and what he termed “corporate welfare.” This is like being two touchdowns behind in the fourth quarter and you put your second-string quarterback in because the first one isn’t hacking it and is having a fit on the sidelines. Not good.
It didn’t take a rocket scientist to figure out that as soon as Volcker butted heads with Summers, first over timing of regulatory reform, second, over the larger question of bringing back the Glass-Steagall Act, there would be major conflict. After all, Summers spent all of 1999 wrecking the act as Bill Clinton’s Treasury secretary, replacing it with his fellow free-marketer friends’ Gramm-Leach-Bileley Act. The latter killed the parts of The Glass-Steagall Act that prohibited commercial banks from getting into the mortgage-backed securities and collateralized debt obligations game.
The Gramm-Leach-Bileley Act also split supervision of banking conglomerates among a host of different government agencies, creating an oversight disaster. The Glass-Steagall Act would have allowed Congress to simply break down the US’s five largest banking conglomerates into their smaller components, and to determine which were solvent enough to continue, and which were too broke to live. So a lot was on the table. Yet, Obama, like a Manchurian Candidate gave the nod to Summers, not Volcker to proceed with “Summers plan.”
Second, consider Summers infamous comments at the World Bank. In December of 1999, Summers as Chief Economist for the World Bank wrote in a memo that bore his signature and was leaked to the press that though free-trade wouldn’t much benefit the environment in developing countries, there was a clear economic logic in dumping toxic waste in them. This gives you a sense of the man’s character, or lack of it.
Summers actually wrote, “I think the economic logic behind dumping a load of toxic waste in the lowest wage countries is impeccable and we should face up to that . . . I’ve always thought that under-populated countries in Africa are also vastly under-polluted.” I wonder how that would have sat with President Obama’s late father who was Kenyan. It’s patronizing beyond insult. And if that’s how Summers calculates human value, we are in big trouble.
Third, back in 1998, Summers testified in Congress against regulating the derivatives market. He actually said we could trust Wall Street. “The parties to these kinds of contracts,” Summers pronounced, “are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies and most of which are already subject to basic safety and soundness regulation under existing banking and securities laws.” Is this our Wall Streeters he’s talking about? Bernie Madoff? Goldman’s Lloyd Blankfein? AIG FC’s, Joseph Cassano? You’re kidding?
Summers ladled even more praise on over-the-counter derivatives, blocking all moves to regulate them right up through 2000. He waxed patriotic, calling them “an important component of the American capital markets and a powerful symbol of the kind of innovation and technology that has made the American financial system as strong as it is today.” And as strong as it is today, as I write, April Fool’s Day, 2009. Of course, after he retired from the Treasury, he took a high level management position at D.E. Shaw, a hedge fund famous for its omerta (Mafia for code of silence).
Fourth, Summers backed the awful Commodity Futures Modernization Act of 2000, the flip-side of Glass-Steagall. The CFM ACT stopped the highly effective government regulatory agency, the Commodity Futures Trading Corporation (CFTC), from any oversight over trade of financial derivatives. As of 2000, they could not touch a one. So the door was wide open to disaster, again thanks to Summers.
Fifth, Summers ganged up with ex-Fed Chairman Greenspan and Enron’s corpse, “Kenny boy” Lay. This was during the California energy crisis of 2000 when the boyz beat up on then Governor Grey Davis, lecturing Davis that the reason for their energy crisis was excessive government regulation. Believe that? Summers even browbeat Davis into additional deregulation of California’s utilities and even relaxing California’s environmental standards in order to “reassure the markets.” Reassure them, that is, that they were going to make a bundle bankrupting California.
Sixth, Summers proclaimed in a New York Times Op-Ed “we’re all Friedmanites.” This was on the death of radical libertarian economist Milton Friedman, in which Summers confessed Friedman was “his hero,” “The Great Liberator,” and that “any honest Democrat will admit that we are now all Friedmanites,” adding that the old free-marketer made enormous contributions to monetary policy, and even greater contributions “in convincing people of the importance of allowing free markets to operate unencumbered.” That concept is in total contradiction to Obama’s platform of regulating markets to keep them safe and healthy for all concerned.
Seventh, economists and Democrats like Peter DeFazio (D.–Or.) stated President Obama was “ill-advised by Larry Summers.” In January 2009, as the administration tried to pass its stimulus bill, DeFazio, James Galbraith, Paul Krugman, and economist Joseph Stiglitz argued that more of the stimulus money should be spent on infrastructure projects. But Summers favored more tax cuts.
DeFazio said, “Larry Summers HATES infrastructure.” After all, what did infrastructure ever do for him, except get him to work, pump water and power into his home, and build the city he made his fortune in? So, if he hates infrastructure, he doesn’t want a consumer driven recovery. He thinks we need an investment and productivity driven recovery (read financial give-away to banks recovery) for this county. Good luck.
But this is the Summers who has the ear of President Obama who ran on the need to overhaul infrastructure and reregulate the nation’s financial and banking system. Who’s on first? I thought it was Obama, who wants to push through a major social agenda and be known as the president who built a cross-country, high-speed, maglev transportation system and also led the US out of the biggest economic crisis ever. You have to put your put down, Mr. President.
Eighth, Summers fired a derivatives whistleblower at Harvard. After suffering Enron’s collapse, Iris Mack, a derivatives researcher, sought a quieter life. Mack joined Harvard Management Co., a privatized company which managed the university’s endowment fund in 2002. To her surprise, she found the Harvard endowment fund was not so staid. In fact, it was involved in the same speculative trading as her former employer, Enron. Worse, after she spoke up about it to Harvard President Larry Summers’ chief of staff, Marne Levine, she was fired four months later for raising the subject. No academic freedom in finance, I guess.
Mack eventually sued (and won out of court) saying she was “shocked at the inexperience of her co-workers,” some not even licensed securities dealers. “The group I was working for had no background whatsoever to be working on [complex derivatives trades],” she told the Harvard Crimson. Traders were also using discredited variants of Black-Scholes statistical modeling, now acknowledged as having been at the heart of the 1998 collapse of Long Term Capital Management.
Bottom line: “When the bottom fell out” in 2007, Harvard’s endowment went with it. Her former boss, Jeffrey Larson, lost $350 million of Harvard’s cash in a hedge fund he’d started in 2005. Overall, the endowment plunged 22 percent in four months, with a projected collapse of 30 percent for the year. Iris Mack adds, “I’m not trying to pretend I’m omniscient or anything, but a lot of people who were quantitative traders . . . we knew a lot of those models were just that: guestimates . . . I wasn’t crazy, I knew what I was talking about. But maybe if more and more people had spoken up, the economy wouldn’t be the way it is now.” How prescient!
And so it goes. There is also the terrible story about what Summers did to the Russian economy in 1999, but let’s save that for another day and hope he doesn’t do it to America in 2009. If you’re not convinced this guy’s not only a free-market loose-cannon, dangerous to and heedless of anyone around him, read as well Debra Hanania-Freeman’s President Obama Must Dump Summers To Save His Presidency at LaRouche’s Executive Intelligence Review. Summers should not be advising Obama. Summers should be looking for new employment. It’s that simple. Sack him, President Obama. And give America, yourself and your vision a chance to survive..... - Obama's New World Order: This article addresses Washington's financial coup d'etat in the context of discussing Michael Hudson's important, very lengthy and detailed April 5 Global Research.ca one titled: "The Financial War Against Iceland - Being defeated by debt is as deadly as outright military warfare." ...
What's true for Iceland holds everywhere, including the developed world, the idea being to enrich finance capitalism through state-sponsored debt bondage and neo-feudal impoverishment. The global economic crisis was no accident. ...
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In her latest quarterly review, [Catherine Austin Fitts] predicts that "Obama will do more to help bankers achieve centralized control and one world government than any (previous) US politician." In less than three months in office, he's shown bankers they can count on him - to the tune of trillions of dollars, further open-ended checkbook amounts on request, and global "diplomatic" pressure on targeted nations to surrender. ...
- Obama’s Plan To “Geo-Engineer” The Planet Mirrors CFR Policy Documents
- Hope Abandoned: Obama Protects and Promotes CIA Torture Mavens: It was obvious from the moment that Barack Obama appointed Leon Panetta to head the CIA that there was going to be no serious investigation -- much less prosecution -- of the high crimes of torture committed by the agency at the order of the Bush White House. ...
- How Many Democrats Will Stand Up Against Obama's Bloated Military Budget?
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- Netanyahu To The West–Destroy Iran Before Israel Destroys You: Israel–through her leaders and various spokesmen over the years, has made it clear she is not like other nations. Indeed, much like Jim Jones and his infamous “People’s Temple” the Jewish state is cut from the same cloth as other cults envisioning themselves as being divine in nature, who are unable to function in the real world in a rational way and determined to go out in a blaze of glory. From Ariel Sharon’s infamous “Let them tremble, let them call us a mad state. Let them understand that we are a wild country, dangerous to our surroundings, not normal, that we might go crazy, that we might go wild and burn all the oil fields in the Middle East, or that we might start World War Three just like that” to Moshe Dayan’s “Israel must be like a mad dog, too dangerous to bother” to Prime Minister Golda Meir’s “This country exists as the fulfillment of a promise made by God Himself…It would be ridiculous to ask it to account for its legitimacy”, one thing the Jewish state has made clear since her inception is that she is not playing with a full deck, and the few cards she does possess are jokers.
This being the case, concerned, rational people have every reason to assume Netanyahu’s remarks concerning the “failure” of Western civilization is not as much a comment as it is a veiled threat, similar in its style to the famous line from the Godfather “I‘ll make him an offer he can’t refuse“. It is the language of professional terrorists who for reasons of liability know they cannot be clear on certain matters except when speaking with each other. In an age when information circumnavigates the globe literally in a matter of seconds and when quotes and sound bites are grabbed and permanently plastered on thousands or even hundreds of thousands of websites in all four corners of the world, criminals these days know they must mind their ‘p’s and ‘q’s lest their “frankness” come back to haunt them.
Nor is the idea of Israel destroying Europe, the epicenter of Western civilization, some mad, conspiracy theory rabbit pulled out of some anti-Semitic black hat. Besides Judaism’s organic hatred for all things Christian (as demonstrated not only by the sham trial and crucifixion of Jesus Christ 2,000 years ago but as well the by-now incalculably high number of attacks on Christian institutions throughout the West by for-the-most-part organized Jewish groups) there are the remarks of Martin Van Creveld, Israel’s most respected military historian to consider–
“We possess several hundred atomic warheads and rockets and can launch them at targets in all directions, perhaps even at Rome. Most European capitals are targets for our air force…We have the capability to take the world down with us, and I can assure you that that will happen before Israel goes under.”
- THE GENTILE DECLARATION OF INDEPENDENCE: "We shall consider the nation of Israel to be a pariah nation devoted to endless war against the Gentile people both literally and in all other ways, be they economic or through the proliferation of false information. We shall counter every claim of Anti-Semitism, by these largely non Semitic people, with the counter claim of Anti-Gentilism. We shall recognize the Palestinians as the true Semitic inhabitants of that land presently called Israel and shall henceforth call that land, Palestine- for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor."