Dave here. Keep in mind that the article Black rightfully calls to task cites analysts presuming that a Summers nomination would lead to demonstrably lower economic growth and less job creation. Julia Coronado of BNP Paribas estimated a 0.5%-0.75% reduction in GDP over two years and between 350,000-500,000 fewer jobs. More of Coronado’s note and analysis here. Paul Krugman calls it an anti-regime shift signal (though, in fairness, Yellen would be the ultimate in such signals, at least on monetary policy. It so happens that Black and I agree that financial regulatory policy is where the divergence really matters).
By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Cross posed from New Economic Perspectives
The Obama administration, for reasons that pass all understanding, has been running a campaign of leaks disparaging one of Obama’s few senior female appointees, Janet Yellen. Her high crimes include not being a protégée Bob Rubin and doing exceptionally well in economic forecasting. Rubin wants the job of Fed Chair to go to his top protégée, Larry Summers. Yellen, as Vice Chair of the Fed stands in the way of Rubin’s ambitions. (Rubin is too toxic to take the Chair directly.) The administration has been leaking primarily to the New York Times’ Binyamin Applebaum. His latest article contains this remarkable statement, without analysis.
“[T]he president’s top economic advisers uniformly support the selection of Mr. Summers. They regard him as a creative thinker and an experienced crisis manager, qualities they value in particular because they expect the Fed may confront difficult choices as it begins to retreat from its six-year-old stimulus campaign.”
The obvious question, except to the NYT, is who the “president’s top economic advisers” are who “uniformly support the selection of Mr. Summers”? There are six such advisers:
1. Gene Sperling (Director, National Economic Counsel)
2. Jason Furman (Chairman, CEA)
3. James Stock (Member, CEA)
4. Jacob Lew (Treasury)
5. Penny Pritzker (Commerce)
6. Sylvia Mathews Burwell (OMB)
Each of Obama’s top economic advisers is a Rubinite. Sperling is one of Rubin and Summers’ closest allies. Furman’s prior job was running the Hamilton Project – created by Rubin to propagate his ideas. Stock is a Rubinite, a colleague of Summers, and the co-author of the article that infamously coined the term “The Great Moderation” (Ben Bernanke popularized, but did not invent, their phrase.) Some “moderation” – to state the case gently he missed the most important economic developments in modern history. Jacob Lew and Furman share the characteristic of being Rubinites and leading architects and proponents of the “Grand Betrayal” (the effort to inflict austerity and cuts in the safety net). Pritzker is a national disgrace. She connected then Senator Obama with Rubin. Her appointment prompted extremely pointed criticisms.
Office of Management and Budget Director Sylvia Mathews Burwell is a Rubin protégé who most recently worked for Walmart’s foundation.
So the real story should have been that one of the discredited officials who visited so much harm on our Nation and the world, Bob Rubin, has managed to place his protégés and allies in all six of the top economic positions in the Obama administration. Rubin and Summers are infamous for eviscerating effective financial regulation. Unsurprisingly, financial regulation, which has been under unremitting attack for 20 years since the Clinton administration’s “reinventing government” movement began in 1993, has remained scandalously weak and produced with the aid of another Rubinite, Timothy Geithner, the de facto decriminalization of the elite banking frauds that drove the crisis. It tells us nothing substantively that six Rubinites “uniformly support” a seventh Rubinite.
Pritzker and Rubin exemplify the problem. They are huge donors directly and they provide the links to other big bank donors for the Democratic Party. The banks Prizker and Rubin were most closely associated with engaged in massive frauds while they were in a position to prevent such crimes and failed to do so. Rubin leads the Wall Street Wing of the Democratic Party with the aid of allies like Pritzker, Rahm Emanuel, and Bill Daley – the leaders of the disreputable Chicago contingent. The Clinton, Bush (II), and Obama administrations have overwhelmingly given a free pass to the elite banksters. (The Pritzkers were a semi-exception. Bush II was willing to crack down on a leading bank fraud so closely associated with the Democratic Party.)
With the possible exception of their ally Alan Greenspan, no two individuals have as much culpability in the modern era for causing crises as Rubin and Summers. The Rubinites’ stated rationale to the NYT for appointing Summers to run the Fed redefines the old joke: “what’s chutzpah mean?” Instead of killing one’s parents and then demanding that the court show mercy to you as an orphan, the Rubinites demand to be put in charge of the Fed because they’ve caused so many more crises than Yellen that they have vastly more experience trying to deal with crises. When we were financial regulators we found it desirable to avoid creating crises. Summers and Rubin did not respond well to the crises they helped cause. Their “solutions” caused great misery in much of the world for decades.
The Rubinite cult needs to drink some fancy koolaid and remove themselves from our world.
Their elitist class system is anti-humanistic and with enabling by the faith based folks they have put us on the endangered species list.
Cult is the best term to describe the Administrations economic advisory cadre. Psychohistorians’ admonision that they “drink the koolaid” is too apt, being a reference to the Jim Jones Cults Gotterdammerung Exercise. The Jones group did so in response to the threat of exposure of their crimes. It could be argued that such was a morally pragmatic course. The Rubinites know neither morality nor pragmatism. “By their fruits shall ye know them.” What bitter fruit indeed.
I was reading comments from the bottom and have already posted my opinion, but I will repeat it. Obama is paranoid man, and Summers is an Obama insider. Anyone with a differing opinion might not be on the same level.
Look at Syria and the President’s argument about his credibility being at risk. The argument is bizarre, but its almost like he is worried world leaders are mocking him behind his back. Considering the level of discourse in the Cameron House of Commons versus today’s Senate hearings on Syria, mocking American leaders probably represents the bulk of NSA recordings.
The other issue which springs to mind is Obama’s desire to use the Espionage Act of 1917. There was a series of articles about his disappointment that no is ever brought up on those charges. Of all things wrong, Obama is worried people might tell secrets about him.
I think the appearance of a cult is a direct result of Obama’s paranoid self-obsession which can only promote people who agree with Obama’s friends (Geithner and Summers) because only they can be trusted. People who served in the job previously can be trusted because troubles are the fault of the previous regime not Obama.
Obama has turned over the nation’s economic policy to Rubin and the Rubinites, but then what did you expect? We live in a kleptocracy and neither Obama nor Rubin are on our side. We knew this from the beginning when Obama made Rubin his chief economic adviser during the 2008 campaign, and then when he chose Rubin acolytes, like Orszag for OMB, Summers for his chief economics adviser in the White House, and Geithner who if I remember correctly was more of a Summers protégé. What we are seeing is a defining trait of Obama. He always doubles and triples down. Summers, Syria, going after Snowden are just the most recent examples.
I have to add that just because Yellen is not Summers does not make me a fan of Yellen. One does not get to be Vice Chair of the Fed without drinking gallons of neoliberal, kleptocratic koolaid.
protégé > masculine singular
protégée > feminine singular
protégés > male plural and mixed company plural
protégées > all female plural
Obama is doubling and tripling down on Summers and the Rubinites because that is what he always does. Syria and his hamfisted pursuit are two other recent examples.
Yellen did not achieve her position at the Fed without drinking gallons of the neoliberal koolaid and supporting the broad goals of the kleptocrats.
protégé, masculine singular
protégée, feminine singular
protégés, masculine and mixed plural
protégées, all female plural
How come French kids don’t win the Spelling Bees like Indian kids? You’d think that learning how to spell what a word sounds like 4 different ways would give them an advantage. Quelle mystère! Damn, there I go showing my illiteracy. Quel mystère! You can understand now why I’d never write French even I knew how to speak it (which I don’t). I started to learn but gave it up when I found out that John Kerry (Mr. Ed) was fluent. I gave up windsurfing too and never had the opportunity to marry an airess, sorry, heiress.
Okay, if we must play this game of make believe pretending the Fed is anything BUT hopelessly insolvent, then why not insist for the sake of “transparency” current Fed chair Confetti has so valiantly imposed that, Wayne Huizenga be nominated his replacement? Would not the man whose resume proves how “one man’s trash is another man’s treasure” be perfect for the job?
There is no such thing as financial insolvency with a central bank. The central bank manufactures the fundamental financial asset in terms of which all other financial assets are denominated. It can’t run out of them.
Mr. Blacks’ post was the first thing I read this morning (out here on the coast, it’s earlier than you think.)
What a refreshing diatribe. Mr. Black usually couches his critiques in facts. This was just an open bore barrage. Delightful (depressing, but we all know the facts on Obombya’s oligarch complicity by now. Nothing new there.)
And yes, in all fairness, I did learn a lot – by name -about Obombya’s Rubinite Inquisition staff.
What I find depraved these days is the look in Obombya’s eyes these days. Determined. Hubristic. Deranged.
The true tragedy is that it won’t matter one bit who the next Fed chief is- the choice between Summers and Yellen is like trying to choose between cat shit and dog shit.
“it won’t matter one bit who the next Fed chief is.”
Disagree strongly. Not all presidential appointees are half-brained subservient lackeys. From a historical perspective, there have been a number of Fed Chairmen with remarkably independent judgement. Paul Volcker is a perfect example. During the late Carter and early Reagan years, inflation had gone double digit and was wildly out of control. Volcker fixed the problem by jacking up interest rates, even though that soured the public on President Carter’s handling of the economy. Volcker stood his ground. There are other examples of independently minded Fed Chairmen, including William McChesney Martin. There is a good Wikipedia article on Martin; a lackey he was not.
Antiestablishmentarianism, a rebuke of any kind of authority, is misguided. There are always choices as to who guards our public institutions, and to assume everybody is bad is to lack any historical perspective.
Hey… we have a winner for intelligently and correctly using the oft-claimed longest word in English… Antiestablishmentarianism
By the way, Nice comment too.
Agree. I don’t see anything in Yellen’s record that indicates that she is personally corrupt. But Summers is a greedy economic climber who has made ample use of the revolving door for personal benefit, and has used positions of authority to shield cronies from justice.
Volcker enabled the Reagan Revolution. One can argue about his intentions.
How the Bank Lobby Loosened U.S. Reins on Derivatives
One by one, Gary Gensler’s supporters deserted him. Now the chief U.S. regulator of derivatives was being summoned by Treasury Secretary Jacob J. Lew to explain why he refused to compromise.
Banks and lawmakers, as well as financial regulators from around the world, had besieged Lew with complaints about Gensler’s campaign to impose U.S. rules overseas.
The July 3 meeting in Lew’s conference room with a view of the White House grew tense, according to three people briefed on it. Gensler argued his plan was vital if the U.S. hoped to seize meaningful authority over financial instruments that helped push the global economy to the brink in 2008, taking down American International Group Inc. (AIG) and Lehman Brothers Holdings Inc. and igniting the worst recession since the 1930s.
Lew insisted that Gensler coordinate better with the Securities and Exchange Commission, whose new chairman, Mary Jo White, was also present. Gensler, who was deep into negotiations with his European counterparts, was surprised by Lew’s demand. He’d been hearing the same request from lobbyists seeking to slow the process, and he told the Treasury chief it felt like his adversary bankers were in the room, the people said.
keep voting for the same conflicted garbage and you get….conflicted garbage…..wake up.
Thanks for the link, rich. Then there’s the guerilla in the closet: derivatives. Appears the banks’ and large energy corporations’ lobbyists have been successful in stymieing Gensler, who deserves a medal from the People of this country IMO: http://www.bloomberg.com/news/2013-09-04/how-the-bank-lobby-loosened-u-s-reins-on-derivatives.html
Surprisingly, former Treasury Secretary Geithner comes across in the article as having been more attentive to systemic health than I had previously believed. But wondered where the Fed, FDIC, OCC, SEC, DOJ, Congress, and Yew’s Treasury all were hanging out during this process? Begs the question of the true role of the leadership these institutions at this point, doesn’t it?
Reminded me of what the Rubinites did to Brooksley Born, and Summers involvement.
Maybe Gensler will agree to be the keynote speaker at the first annual NC BBQ on that little island off the coast of Maine I read about here yesterday.
having posting problems. hope 4 copies of this don’t show up all of a sudden.
So Gensler didn’t get the memo that bankers are not adversaries?
At least Mary Jo White can set him straight and inform him that there is a whole cornucopia of financial products that are NOT securities! Use your Webster’s, dummy.
And if you really want to know which aren’t – talk to London!
Besides, the US Treasury(dba as the mythical US taxpayer) and the Fed ARE responsible for backstopping US multinational banks doing whatever they do in foreign markets. Just as they are foreign banks doing business in the US. They are legally US Commercial Banks – insured by the FDIC – not private investment banks! The IMF can always help too, and why not, the US contributes big bucks to this charitable institution which can always make loans to troubled countries so that can then pay off old bills.
Get with the 21st Century, Mr Gensler. We are competing, fair and square, with Euro banks – not trying to get chummy with their peon governmental overlords!
Love Bill Black’s articles, but some of the links are beyond good. The ‘national disgrace’ link gives marvelous detail about Penny Pritzker, Obama’s current Commerce Secretary and key economic advisor. Pritzker’s family has deep historical links to organized crime in Chicago; fascinating to read about. More recently Penny’s family went into banking and offshore money laundering, and one of their banks went bust, costing U.S. tax payers a mere half billion dollars! Penny herself was a player in the family banking business. Now she is in politics, having been a key player and donor in Obama’s presidential campaigns. That bought her a job as Obama’s Commerce Secretary. Now she has been scrubbed clean, because her bio on the official goverment page as Secretary of Commerce makes a good show of her vast business experience and philanthropic activity.
In other articles Bill Black often mentions how bad ethics drives good ethics out of the market. A corollary seems to be that bad people drive good people out of politics. There doesn’t seem to be anybody left in Washington DC with personal integrity that’s committed to the pursuit of public interest. Obama’s economic advisors are all standouts, black rotton to the core. Lovely that Pritzker provides such a direct link between criminal enterprises and the US Presidency.
Minor disturbance in the force? Hardly. More like a tidal wave return of forces from the Dark Side.
She’s doing what all kleptocrats do…launder their ties and past……..
“Behind every great fortune there is a crime” — Honore de Balzac
They’ve played us for fools…all of them….so put away your pom poms at the next election…it’s pathetically useless.
Since we can create money out of thin air, and money (their own0 is all these Rubinites care about, why don’t we just create a bunch, give it to them, and tell them to go away. Preferably to another planet, but Siberia will do in a pinch.
Citi already gave Rubin at least $130 million in pay for Rubin’s post civil service job being a hood ornament for Citi.
Rubin can use his own money to buy a castle far away somewhere and bring all his protoplasm buddies along.
Actually Citi paid Rubin $265 million during his eight year apprenticeship as its Chairman. The stock went from $75 to $10. I think he retired before it fell to $2.
What About Bob!
Obama probably promised Summers the Fed chair during the adrenaline rush of the financial meltdown where he was part of the ‘Committee that saved the world’, Not quite realizing that the same group was formerly named ‘The committee to destroy the middle class.
I think Obama is paranoid and can’t trust anyone. We know Obama doesn’t do background checks on his appointees (cough Tom very obvious tax cheat Daschle cough), but his appointees often show a lack of imagination. Either they were close associates or held in the office in the previous 2 administrations.
Instead I think he looks for people who like or pretend to like him or already have the office for his hires because he can trust them to not blow the whistle. Summers fits the bill because Summers isn’t going to give the inside scoop on Obama without exposing himself.
It really gets a bit more complicated than all the above:
“Making the World Safe for Banksters” (and Larry Summers role)
For the life of me, even after doing enormous research and following this mess since early 2000’s…I can only shake my head at the following events after the great cataclysm of 2008-09…..into our present times….
The same corkscrew economic policies are still being run by the same corkscrew insane asylum!