By Michael M. Thomas, Wall Street veteran, journalist, frequent commentator on Wall Street, and the author of eight novels set in the world of high finance; with a ninth—about the financial crisis and bailout—in progress. Cross posted from The Daily Beast.
Washington is swirling with the usual rumors—the White House’s man was pushed! He jumped! But Summers is leaving because he made sure real reform was discussed—but not accomplished.
The rumor that come November, when the mid-term elections are history, Lawrence Summers, administration’s quarterback on economic matters, will leave the White House, has been confirmed. The usual presumptions have been put in play: Summers is weary of the job; the president and his men and women feel the need for a new pair of hands under center; the man has done well; the man has done badly. There is no indication that, like Bush II’s ill-served first Treasury Secretary, Paul O’Neill, Summers is being canned for speaking truth to power. That is not the man’s style, not—let it be said—that there’s much evidence that the administration has better than a shaky grasp of the practical truths of American financial and economic life in the Age of Goldman Sachs.
The bottom line is that we can expect the usual judgemental blahblahblah to grow in volume and marginality on the talk-show and Op-Ed circuit as the day calendared by the media for Summers’ leave-taking approaches.
Summers saw to it that the talk was talked, but the walk was never walked.
I have no punditical stake in the outcome. I am no admirer of Summers. I don’t know the man; I am not an angry alumnus of Harvard rending my crimson garments and keening over the financial and ideological travesties associated with his tenure as President of my alma mater. I have heard him speak once or twice; in both instances I thought myself to be listening to the smartest man in room, certainly in the speaker’s opinion. Henry Ford famously observed that history is bunk, which is my view of economics (and economists) generally. Summers is right at the top of the list of America’s best-known economists, and therefore, in my eyes at least, is guilty by association.
Oddly enough, none of this bears on my view as to the reasons for Summers’ departure. I think he is leaving because he has done what he came to do. I think he was hired to do a job, has done it with all the admirable consistency, duplicity and proficiency that such a job requires, and now both he and his employer agree that all would best be served by Summers’ moving on to do the same thing elsewhere. It’s a classic American theme: In a troubled town, a gunfighter of reputation is hired by the mayor and his circle to deal with the problem. He does so, hands in his star and rides on, leaving his bailiwick in the condition his patrons wanted. In this instance, the problem dealt with was a bunch of noisy would-be reformers wanting to clean up the place. Think of Summers in the Jack Palance role in “Shane.” The question is: will Alan Ladd ever show up?
I think Larry Summers was tasked with making sure the kind of backlash that in 1933 unleashed Ferdinand Pecora on Wall Street didn’t happen in 2009. I think Larry Summers was tasked with marginalizing Paul Volcker, who could thus serve the new administration as moral window-dressing without actually causing trouble. I think it was understood from the outset that any meaningful economics program must involve taking Wall Street to the woodshed, and that this must not be allowed to happen. I think Larry Summers, skilled in the ways of the Washington equivalent of Dickens’s “Circumlocution Office” (in Little Dorrit), saw to it that it did not.
One of the most famous of modern quotations comes from Lampedusa’s The Leopard, when the old prince’s fiery nephew Tancredi tells his uncle, “In order for things to stay the same, everything must change.” But change is as change does. In our time, where talk is deemed equivalent to action, Tancredi might have said, especially had he been a high-ranking Wall Street executive, “In order for things to remain the same, it is only necessary to talk about change.”
As in “I am the Candidate of….”
I think Summers, with a deftness that would be admirable were it not so repellent in its long-term effects, in what it has cost this nation, saw that change was talked about, but not initiated. The talk was talked, but the walk was never walked.
That’s what Summers came to do, in my opinion, and that’s what he did. If, in November, he actually leaves the White House, he can with pride and justice flaunt a banner that reads “Mission Accomplished.” On few mortals is such greatness showered.
Good summary (unfortunately for the US).
Wonderfully savage writing. His description of Summers calls to mind a passage from “The Merchant of Venice”:
There are a sort of men, whose visages
Do cream and mantle like a standing pond;
And do a willful stillness entertain,
With purpose to be dress’d in an opinion
Of wisdom, gravity, profound conceit;
As who should say, I am Sir Oracle,
And when I ope my lips, let no dog bark!
The glitter on Larry Summers is, indeed, not gold.
Nor even brass.
“I think Summers…saw that change was talked about, but not initiated. The talk was talked, but the walk was never walked.”
Indeed, just like his Commander-in-Chief.
Ah, Larry Summers, I wonder what his conversations with Ken Lay before they lobbied Governor Grey Davis for energy deregulation entailed.
As US Secretary of the Treasury in the Clinton Administration, Larry Summers worked successfully for the repeal of the Glass-Steagall Act, which since the Great Crash of 1929 had kept deposit banking separate from casino banking. He also worked with Greenspan and Wall Street interests to torpedo efforts to regulate derivatives. This is why he came in third place just behind Milton Friedman and Alan Greenspan, in the contest to win the Dynamite Prize in Economics (see link below).
Keep in mind, Summers helped blow up the economy not by accident, but by design. And before he did this he made certain that Uncle Sam would bail the banksters back into prosperity. This wouldn’t have been so bad had some of this prosperity trickled down to the rest of us. But no, Summers and other bankster enablers like Tim Geithner and Ben Bernanke made certain that all the prosperity from the bank bailouts remained firmly in the hands of the banksters. This has caused the gap between our rich and poor to widen to a point where our middle class is now hanging by a thread. And when this thread finally breaks, rest assured that Summers and all of his bankster friends will be celebrating with glee.
This is why Summer has never been, nor will he ever be, a friend of the Democrats. And he can pretend all he wants that he is a friend of theirs, but there is nothing he can do to make them believe this!
Evidence that these crimes were committed with malice and premeditation is the fact that these men still roam free in the halls of power, continue to command the pulpit of a complicit media, retain their booty, and earn ongoing dividends from the royalty they serve so well.
Speaking of dynamite prizes, how fitting it is the military commander-in-chief also won a dubious prize from the inventor of dynamite, Nobel. The Nobel prize is now becoming a booby prize.
The Glass-Steagall Act started eroding way before Summers. Reagan and the complete debacle of regulation left nothing but an act skeleton by the time it was removed.
The post we are commenting on says that Obama ordered Summers not to reform Wall Street. The Democrats may pay dearly in November for that crime.
Well, the only good news is that this is not sustainable.
Without meaningful reforms the next global financial collapse will be within the next few years, not after another 80 years. The “noisy would-be reformers” will have another chance then.
I wish Harvard much fun with this POS.
Yep, they are just careening from one crisis to the next.
well, that’s one of “Obama’s Three Stooges of Finance” down, with Bernacke and Geithner to go.
The GOP proposal to replace Summers with someone who’s more Wall Street friendly is a non-starter, given that there is no such person.
Summers has served America just as well as he served Lithuania when that nation’s government was imprudent enough to hire him to provide economic advice. (their economy got so much worse afterwards that their suicide rate doubled… i.e. “Mission Accomplished”.
I think Summers’ next job should be to provide economic direction to some nation whose government we *really* want to destabilize.
Heh. I’m surprised the neocons aren’t banging their drums, demanding he be sent to Iran as an economic advisor.
I couldn’t agree more. It was no coincidence that he left shortly after helping to shepherd a financial “reform” bill thru that wall street can prosper with.
I think you’re right, and I think this is to a large degree why the Democrats are going to get nailed in November.
This was not, especially with regard to the economic implosion, the bailout and the “reform” (or lack thereof), change you could believe in.
Get ready for the 2nd wave down.
Summers is just heading for cover early.
Brad DeLong makes a bid for Summers’ job (while pretending not to):
Quite the standing ovation by Brad . . .
Wow, I know Brad DeLong is a neoliberal but he really broke out the kneepads for that one, didn’t he?
Now that’s some good hackery.
1. Making sure that the President hears and considers the arguments, and makes an informed decision.
2. Making sure that everybody thinks that the president has heard and considered their arguments, and made an informed decision, and that they are valued and respected members of the team who are being given due influence and deference.–and also to make sure that the president hears everybody’s arguments and makes an informed decision.
(1) is not in fact part of the job, unless “the arguments” refers to those within the allowed range, what’s called the “sphere of controversy” or the “overton window”. Summers never presented what reality would designate as the arguments, nor was that ever his job. (I can believe Hack DeLong is so brainwashed that he sincerely thinks the elites’ allowed range of arguments is synonymous with the actual range of arguments.)
Indeed, even presenting the allowed range isn’t the job if the president has already made up his mind, which this person did before he was even elected.
But (2) really is the job – not to really present the allowed range, but to get the losers among the insiders to think their losing positions within the sphere of controversy were heard, understood, and considered. And at this, by all accounts I’ve seen, Summers has always been notoriously bad.
Indeed, he’s been so bad at it for so long that I have to think placing him in that job was an intentional show of contempt, which is characteristic for this administration.
Just as much as Bush, just with a different tone, Obama truly enjoys loutish displays of contempt for his dissenting supporters.
Of course, the “progressives” think that just because they meekly conform their snivelling requests to the ever-shrinking limits of the sphere of fake controversy, that makes them legitimate players, when in fact they’re just being used and then kicked in the face, as always. The “public option” scam was the ultimate example so far and will probably go down as the classical one. It’s exactly what they deserve. But the people don’t deserve it, and true citizen activists don’t deserve it.
As for Hack DeWrong, I think this set of personnel proposals gives an accurate depiction of the full range and limits of his “thinking”.
If I were Obama, I would (a) move Tim Geithner over to the West Wing job, for that is the job that matches his skill set where I think he would indeed by best in the world, and (b) bring Laura Tyson in to be Treasury Secretary…
Failing that, were I Obama, I would probably try to grab Alan Blinder from Princeton to fill the West Wing job…
And were I really devious, I would bring Ben Bernanke over to the West Wing and put Larry in the Fed Chair job…
Not to wish ill upon the man but I hope something excrutiatingly painful blows out of his fat ass.
Summers: Good Riddence
It is the midterm change out. It goes to show there are no true believers around Obama, only true opportunists, which all things considered is what he, but not the country, deserves.
On the one hand, it’s really right wing brown noise to deal in personalities rather than principles.
On the other, it’s excruciating to watch someone shuttle from one high status job to another when a just society would send them to the gray bar hotel where they would learn to slow dance with the big guys.
Remembering the NPR tapes of Lee Atwater on his deathbed are little satisfaction, considering by then, we’ll be in one deep hole.
Yves, if you are going to publish more than vague conspiracy theories, you are going to have to do better than this. “I think Larry Summers was tasked with making sure the kind of backlash that in 1933 unleashed Ferdinand Pecora on Wall Street didn’t happen in 2009.” Really Yves? By whom – Obama (not schooled in the ways of banks)? Geithner (think back to when he was appointed – he certainly couldn’t hold sway on anything like Summers)? Who “tasked” Summers with this job? You further write “I think Larry Summers was tasked with marginalizing Paul Volcker” – Again, Yves, by whom? Shadowy Wall Street backstabbers? Revolving door wallstreeters? Obama? Who did it?
“I think it was understood from the outset that any meaningful economics program must involve taking Wall Street to the woodshed, and that this must not be allowed to happen.” Exactly who understood this, Yves? And who was skilled enough to sway the babe in the woods Obama into making sure Summers talked Obama out of anything meaningful?
Yves, you’re better than this. Paranoid style rantings are not your style, and they don’t become you.
I suggest you learn to read more closely. This is a guest post, and clearly labeled as such.
Moreover, it has been widely reported that Summers/Geithner pushed Volcker aside, and Summers has been reported as a very effective bureaucratic infighter. Thomas’ views are hardly far out; they are widely shared by people I know who are much closer to the action than he is.
My apologies Yves – I read too quickly and didn’t realize it was a guest post.
So I suppose you think if a team signs a linebacker and he plays linebacker, and someone says “he was tasked to play linebacker”, to you that’s a conspiracy theory.
What a disagreeable, odious little man. Maybe Obama will bring his Bush impersonation full circle and award this breathtaking failure with the Medal of Freedom.
For links today, from Bloomberg:
“Retirees Duped by Derivatives with Wall Street Structured-Note Sale Surge.”
If you need 1M to invest in a hedge fund, you should have 1M before you can invest in these notes. (And that 1M should be increased…)
Mom-and-Pop investors should be limited to stocks, simple bonds, and fixed-rate or simple variable-rate mortgages/borrowing.
And I’d include municipalities and state governments in Mom-and-Pop investors.
“Mom-and-Pop investors should be limited to stocks, simple bonds, and fixed-rate or simple variable-rate mortgages/borrowing.”
I think a decent way of doing that would be to change statute so that only vanilla investments get tax deferral in retirement accounts.
So Michael Thomas, those were my exact thoughts hearing of his (eventual) resignation. He was brought in to block reform and lend all aid to the banksters: mission accomplished. This Admin will be crippled from mid-November on, so no fear, and Obama hasn’t a reformist bone in his mucuous membrane of a body? Summers can back to a well-paying job.
Dear Dr Summers,
Thank you for everything! You know, just two years daddy would come home from his job at Goldman Sachs and be so so angry! Everything was falling apart! He said he might have to take my horses away! And he made mommy cry when he said she couldn’t spend $10,000 a week at Hermès like she always does (you should see the cute sweater I’m wearing!). Daddy says you saved everything! And the cook and maids who all talk Spanish are so happy too because now they don’t have to go back and be poors again!
Anyway, I don’t know what you did, but daddy says you’re great and mommy would say so too if she ever came out of her clothes closet! Ha ha, just kidding! She comes out to yell at the maids.
So, thanks again Dr Summers — you’re my hero and always will be.
The real disappointment is that Summers was installed for another turn in Washington. That this happened speaks volumes about the lack of genuine leadership from Obama.
Like many who voted for Obama in 2008, Summers appears near top of my list of why I will not vote for him again in 2012.
Ironic that this mid-level management lackey is called a “socialist” by the right-wingers. And indicative of how many people in the land of E Pluribus Unum haven’t the slightest capacity for critical thinking.
Good luck and thanks for the great article.I will are available back again.