Larry Summers’ Opposition to $2000 Covid Payments Confirms Our Classic: “Why Larry Summers Should Not Be Permitted to Run Anything More Important than a Dog Pound”

Unfortunately, it looks like Larry Summers will always be with us:

Or as reader Doug put it:

Mr. Summers,

The particular temperature of the economy is — and this will quite obviously come as a bit of a shock to you — of no importance right now.

People are suffering.

I realize in using the word “people”, I am alluding to a phenomenon that is not in your vocabulary or data set.

But, then, you are a grade A asshole.

Indeed, you are just as much a sociopath as Dear Leader DJT

You ought to seek help before it is too late.

At best, Summers’ boneheaded remark shows that he is aggressively defending Joe Biden’s views. Recall that David Sirota recently translated the New York Times’ reporting on Biden’s intervention in the stimulus bill as Biden’s Austerity Zealotry Helped Cut The Stimulus Bill In Half:

Now, in the whittling down of the stimulus legislation, we see the first concrete example of how Biden’s ideology can change policy in the here and now — and in deeply destructive ways.

As pain and suffering is crescendoing across the country, Biden refrained from aggressively pushing the bipartisan initiative for $1,200 survival checks. Indeed, at a time when there was a legitimate chance to flip some Republicans — including Donald Trump! — against McConnell and push for a more robust stimulus, he demurred.

However, the New York Times reminds us today that Biden was “not an idle bystander in the negotiations.” On the contrary, the paper of record tells us that the president-elect played a decisive role in making sure the legislation was cut in half.

For those of you not well versed in Summers’ sorry record, this post might fill in some gaps.

This post first ran on July 22, 2013

I’ve been gobsmacked to see that not only is Larry Summers on various short lists of candidates to become the next Fed chairman, but that Summers is also supposedly closing in on the favorite, Janet Yellen.

In early 2012, Summers was lobbying hard to become the head of the World Bank and didn’t get the nod. The fact that he is now under consideration for a bigger job should set alarm bells off. While Paul Krugman weighs in on both, concluding that Yellen would be the better pick, he’s still far kinder to Summers than the Harvard economist deserves.

The big problem with Summers is not his record on deregulation (although that’s bad enough) or his foot-in-mouth remarks about women in math, or for suggesting that African countries would make for good toxic waste dumps. No, it’s his appalling record the one time he was in an executive position, as president of Harvard. Summers was unquestionably the worst leader in Harvard’s history.

Summers, unduly impressed with his own economic credentials, overruled two successive presidents of Harvard Management Corporation (the in-house fund management operation chock full of well qualified and paid money managers that invest the Harvard endowment). Not content to let the pros have all the fun, Summers insisted on gambling with the university’s operating funds, which are the monies that come in every year (tuition and board payments, government grants, the payments out of the endowment allotted to the annual budget). His risk-taking left the University with over $2 billion in losses and unwind costs and forced wide-spread budget cuts, even down to getting rid of hot breakfasts. The Boston Globe provided an overview:

It happened at least once a year, every year. In a roomful of a dozen Harvard University financial officials, Jack Meyer, the hugely successful head of Harvard’s endowment, and Lawrence Summers, then the school’s president, would face off in a heated debate. The topic: cash and how the university was managing – or mismanaging – its basic operating funds.

Through the first half of this decade, Meyer repeatedly warned Summers and other Harvard officials that the school was being too aggressive with billions of dollars in cash, according to people present for the discussions, investing almost all of it with the endowment’s risky mix of stocks, bonds, hedge funds, and private equity. Meyer’s successor, Mohamed El-Erian, would later sound the same warnings to Summers, and to Harvard financial staff and board members.

“Mohamed was having a heart attack,’’ said one former financial executive….

In the Summers years, from 2001 to 2006, nothing was on auto-pilot. He was the unquestioned commander, a dominating personality with the talent to move a balkanized institution like Harvard, but also a man unafflicted, former colleagues say, with self-doubt in matters of finance.

Now Harvard had put some of its large operating budget at risk in speculative investments starting in the 1980s, but Summers ramped it up to a completely new level. Again from the Globe:

The very thing that the former endowment chiefs had worried about and warned of for so long then came to pass. Amid plunging global markets, Harvard would lose not only 27 percent of its $37 billion endowment in 2008, but $1.8 billion of the general operating cash – or 27 percent of some $6 billion invested. Harvard also would pay $500 million to get out of the interest-rate swaps Summers had entered into, which imploded when rates fell instead of rising. The university would have to issue $1.5 billion in bonds to shore up its cash position, on top of another $1 billion debt sale. And there were layoffs, pay freezes, and deep, university-wide budget cuts

Without overburdening you with detail on the swaps that blew up Summers’ piggy bank (see this Bloomberg story for the particulars) let there be no doubt that Summers signed up to be a chump to Wall Street. As Epicurean Dealmaker remarked when the Bloomberg expose came out (emphasis ours):

Now forward swaps, or forward start swaps—which behave like normal swaps except the offsetting fixed and floating rate payments are scheduled to start at a date certain in the future—by themselves count as little more than rank interest rate speculation, specifically in this instance as a bet that short-term interest rates will rise in the future. They can make a great deal of sense when an issuer intends to sell bonds in the relatively near future and when the issuer wants to hedge against budgetary uncertainty by converting floating rate obligations into fixed rate debt. That being said, I have rarely encountered a corporate client who feels confident enough about both their absolute funding needs and current and impending market conditions to enter into a forward swap starting more than nine months into the future. Entering into a forward start swap for debt you do not intend to issue up to 20 years in the future sounds like either rank hubris or free money for Wall Street swap desks.

So Summers couldn’t keep his ego out of the way, bullied the people around him, ignored the advice of not one but two presidents of Harvard Management, and left a smoldering pile of losses in his wake. And serious adults are prepared to allow someone with so little maturity and such misplaced self confidence to have major sway over much bigger economic decisions?

Summers’ second big problem is the scandal that led to his ouster at Harvard, which was NOT his infamous “women suck at elite math and sciences” remarks. The university has conveniently let that be assumed to be the proximate cause.

In fact, it was Summers’ long-standing relationship with and protection of Andrei Shleifer, a Harvard economics professor, who was at the heart of a corruption scandal where he used his influential role on a Harvard contract advising on Russian privatization to enrich himself and his wife, his chief lieutenant Jonathan Hay, and other cronies. The US government sued Harvard for breach of contract and Shleifer and Hay for fraud and won. This section comes from a terrifically well reported account in Institutional Investor by David McClintick:

The judge determined that Shleifer and Hay were subject to the conflict-of-interest rules and had tried to circumvent them; that Shleifer engaged in apparent self-dealing; that Hay attempted to “launder” $400,000 through his father and girlfriend; that Hay knew the claims he caused to be submitted to AID were false; and that Shleifer and Hay conspired to defraud the U.S. government by submitting false claims.

On August 3, 2005, the parties announced a settlement under which Harvard was required to pay $26.5 million to the U.S. government, Shleifer $2 million and Hay between $1 million and $2 million, depending on his earnings over the next decade. Shleifer was barred from participating in any AID project for two years and Hay for five years. Shleifer and Zimmerman were required by terms of the settlement to take out a $2 million mortgage on their Newton house. None of the defendants acknowledged any liability under the settlement. (Forum Financial also settled its lawsuit against Harvard, Shleifer and Hay under undisclosed terms.

And while Harvard can’t be held singularly responsible for the plutocratic land-grab in Russia, the fact that its project leaders decided to feed at the trough sure didn’t help:

Reinventing Russia was never going to be easy, but Harvard botched a historic opportunity. The failure to reform Russia’s legal system, one of the aid program’s chief goals, left a vacuum that has yet to be filled and impedes the country’s ability to confront economic and financial challenges today.

And while Summers was not responsible for Shleifer getting the contract, he was a booster and later protector of Shleifer:

Summers wasn’t president of Harvard when Shleifer’s mission to Moscow was coming apart. But as a Harvard economics professor in the 1980s, a World Bank and Treasury official in the 1990s, and Harvard’s president since 2001, Summers was positioned uniquely to influence Shleifer’s career path, to shape US aid to Russia and Shleifer’s role in it and even to shield Shleifer after the scandal broke. Though Summers, as Harvard president, recused himself from the school’s handling of the case, he made a point of taking aside Jeremy Knowles, then the dean of the faculty of arts and sciences, and asking him to protect Shleifer.

And the protection Shleifer got was considerable:

Knowles tells Institutional Investor that he does not remember Summers’ approaching him about Shleifer… However, not long after Summers says he intervened on the professor’s behalf, Knowles promoted Shleifer from professor of economics to a named chair, the Whipple V.N. Jones professorship.

Shleifer’s legal position changed on June 28, 2004, when Judge Woodlock ruled that he and Hay had conspired to defraud the U.S. government and had violated conflict-of-interest regulations. Still, there was no indication that the Summers administration had initiated disciplinary proceedings. To the contrary, efforts were seemingly made to divert attention from the growing scandal. The message from the top at Harvard was, “No problem — Andrei Shleifer is a star,” says one senior Harvard figure…

One instance was a meeting early in the academic year that began in September 2004, less than two months after the federal court formally adjudicated Shleifer’s liability for conspiring to defraud the U.S. government. A faculty member asked [Dean] Kirby why Harvard should defend a professor who had been found liable for conspiring to commit fraud. The second confrontation came early in the current academic year when another professor asked Kirby why Harvard should pay a settlement of $26.5 million and legal fees estimated at between $10 million and $15 million for legal violations by a single professor and his employee, about which it was unaware. On both occasions Kirby is said to have turned red in the face and angrily cut off discussion.

On at least one other occasion, Summers himself told members of the faculty of arts and sciences that the millions of dollars that Harvard paid in damages did not come from the budget of the faculty of arts and sciences, but didn’t say where the money came from. Those listening inferred he meant that the matter shouldn’t be of concern to the faculty and that they shouldn’t raise it, a curious notion, given that Shleifer was one of their own…

Shleifer has never acknowledged doing anything wrong. Summers has said nothing. And so far as is known, there has been no internal investigation or sanction. “An observer trying to make sense of the University’s position on Shleifer, Ogletree and Tribe is driven to an unhappy conclusion. Defiance seems to be a better way to escape institutional opprobrium than confession and apology. . . . And most of all being a close personal friend of the president probably does one no harm.”

But for the faculty, which had already had frictions with Summers, the Russia scandal was the final straw. Copies of the Institutional Investor article were stuffed in the mailbox of every faculty member the morning of the no-confidence vote that forced Summers’ resignation.

And that’s before we get to Summers’ role in the ouster of Brooksley Born over credit default swaps and in supporting the passage of Gramm–Leach–Bliley and the repeal of Glass Steagall (admittedly so shot full of holes at that point as to be close to a dead letter, but still necessary to allow Traveler and Citigroup to merge). Yet Summers has refused to recant any of these actions.

So with this record, it’s hard to watch Paul Krugman yet again tarnish his good reputation endorsing, even in a careful way, a colossally failed proposition like Larry Summers (Krugman put both Yellen and Summers in the “I know and admire” category). Take that back. Summers is your man if you are a banker, looter, or plutocrat.

But given that (per the Ron Suskind book Confidence Men), Obama increasingly couldn’t abide Summers, and Obama wouldn’t nominate Summers for the less influential World Bank position, one has to wonder why his name is suddenly being bruited about as a strong contender for the Fed chair. It may simply be the dint of Summers’ PR efforts.

But I worry another play is afoot. As much as Yellen and Summers are expected to take largely similar postures on monetary policy, Yellen is anticipated to be less of a bank booster than Summers. So Wall Street is likely to be pushing Summers’ candidacy. But the real play may be that the insiders know that Summers won’t hold up well under protracted scrutiny, and at a late date, Timothy Geithner will be pushed to the fore. I can only hope that Geithner (due to his lack of monetary economy chops) won’t be seen as an acceptable alternative, but I would not bet on being so lucky.

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  1. none

    I’m terrified of the cruelty Summers would inflict on the dogs in a dog pound if he were allowed to run one. His sadism would run completely rampant.

    1. timbers

      Agreed. As a dog owner, I’m sure I speak for many dogs I know in saying dogs everywhere are profoundly insulted by the comparison.

  2. Pat

    2020 just keeps getting crappier. This is the year when I have had to bow down and accept that there is some line in the sand which past means that it doesn’t matter how spectacularly wrong you have been you still get treated as some sort of expert. You would think the fact that Kissinger and Albright not being pariahs would have made that clear long ago, but no I still clung to the belief that actions have consequences.

    This year found a spectacularly bad ex President put his thumb on a primary to give the nomination to a racist misogynistic geezer with cognitive issues whose entire time as a public official was as a bank bagman who fought to destroy the middle class, criminalize being a poor minority, increase the police state, indemnify banks and major corporations from criminal acts, and force bad neoliberal economic policies on other countries by force. That is when he wasn’t selling access for profit, lying whenever possible and plagiarising others work. When this “paragon” won we got retreads from the spectacularly bad ex president’s administration along with suggestions for positions for CEOs known for destroying well run and ethical corporations leaving shells in their place. But the best is the return of Summers, whose history of hubris and failure should have made him hard pressed to get a job as a night gas station attendant.

    The only response anyone should see to this “advice” was: “If Summers is against this and fears its effect on the economy that can only mean the economy must need that payment to not only be that large but be two or three times larger. Forget how mean and cruel his attitude is about Americans in need, except to say perhaps it is long past time to strip him of all income and most of his savings in order to keep the economy from getting overheated so he can learn what the economy actually looks like.” But no he is still accorded some respect.

    1. Carla

      Oh, Pat… actions only have consequences for the little people.

      How many times and in how many ways do our dear leaders have to demonstrate this before we get it?

    2. Hayek's Heelbiter

      Your post hits the nail on the head about something that has recently been puzzling me.
      NC readers and my friends have been right about every sociopolitical issue you care to name in the last fifty years, from civil rights to women’s liberation to enviromentalism to the the decriminalization of marijuana to the perils of the military-big pharma-prison-industrial complex, to the stupidity of the Vietnam War and the forever wars in general to the perils of derivatives to the devastation of the Chicago School and Neoliberalism, to the economic and environmental ruin caused by overpopulation, etc.
      Meanwhile, the people who have been utterly wrong about every single issue you can name still get elected to office and pull down six-figure salaries as talking heads and columnists.
      Or sometimes they start out on the side of agels but then get seduced by name and fame and money and you can’t believe their transformation!
      Please explain to me.
      In meantime, stay safe, stay well and most especially stay sane during the weirdest holiday season since 1348.

        1. fwe'theewell

          the economic and environmental ruin caused by overpopulation

          Capitalist relations are the cause, not bodies. Since white birth rates and life expectancy are declining, one might read your statement as a dog whistle. On Christmas, no less. A shame.

          1. Hayek's Heelbiter

            If you had spent as much time in the slums of India and Kampala as I have and seen the struggle families have raising more children than they have the resources for, and the success of villages where women have been given control over their bodies and the number of children they want, you wouldn’t call it a “dog whistle”. Male patriarchy perhaps, but not a dog whistle.

            1. fwe'theewell

              “Overpopulation” isn’t the cause of economic and environmental devastation, even in your example. Resource allocation is still the issue. I’m all for planned parenthood.

    3. Waking Up

      Pat, I happened to be thinking along similar lines earlier today (maybe because it is Christmas day and I wonder what Jesus Christ would say about our country). Anyway, I truly believe that much of it has to do with an ingrained level of corruption within our government, private institutions, and the wealthy. There is so much sociopathic behavior which has been rewarded for decades now that those with a real conscience have been completely marginalized. This sociopathic behavior has even infested our Christian religion as evidenced by all the “Christians” who believe wealth is a virtue and not a vice. There was a time when I thought if someone said they attended church every Sunday, I gave them the benefit of the doubt that they cared for their fellow man. No longer. Unfortunately, Donald Trump, Joe Biden, Larry Summers and so many others are a reflection of who we are as a country. Corruption and sociopathic behavior are just out in the open now because as you said, there are no consequences.

      1. Synoia

        I wonder what Jesus Christ would say about our country

        We know:

        Blessed are the poor in spirit, for theirs is the Kingdom of Heaven.
        ⁴Blessed are those who mourn, for they will be comforted.
        ⁵Blessed are the meek, for they will inherit the Earth.
        ⁶Blessed are those who hunger and thirst for righteousness, for they will be filled.
        ⁷Blessed are the merciful, for they will be shown mercy.
        ⁸Blessed are the pure in heart, for they will see God.
        ⁹Blessed are the peacemakers, for they will be called children of God.
        ¹⁰Blessed are those who are persecuted because of righteousness, for theirs is the Kingdom of Heaven.
        ¹¹Blessed are you when people insult you, persecute you and falsely say all kinds of evil against you because of me.
        ¹²Rejoice and be glad, because great is your reward in heaven, for in the same way they persecuted the prophets who were before you.

    4. sheila

      Amen, Pat. One longs for the days when people had shame, like the Japanese who disembowel themselves when they’ve disgraced themselves publicly and hurt other people.

      I’m not a fan of capital punishment, but I’m all for bringing back the Stocks, where these guys get locked up in the public square and we get to throw rotten fruit. This kind of public humiliation would be the worst punishment imaginable for the arrogant oligarchs who run our country

    5. Pym of Nantucket

      Great comment from you, Hayek’s Heelbiter, and Waking up. The absurdity of Biden As Progressive Savior from Trump seems like some kind of skit by Ionesco where the world sits watching with a collective facepalm. The Naked Emperor shuffles around like grandpa lost in his own home looking for the bathroom at night but nobody knows what to do about the the tangle the world is in.

      If there is one measure of virtue in a society, I believe it is truly its ability to reduce corruption. The Covid relief bill/encyclopedia stands as a benchmark in 2020 of how massive a fat ring is needed to encircle a tiny medallion of meat in the US legislative system today. I feel that at some point it has to come undone. When do we declare the system dead from parasitic infection so a fresh start is possible?

      The Chinese are busily managing Covid, setting up massive trade and development relationships, a huge Asian trade deal and a military built around much less expensive systems. I tremble to think of a NWO with China at the helm, but who is going to stop them? There are so many things wrong with the Chinese system, and yet they are getting results. Our main key trump card against them is freedom and we’re screwing that up.

      That was my second rant on NC this week, so I am probably past my quota. Simple question: what comes next?

  3. Larry

    Moreover, I love that the only portion of the economy that might overheat is people buying goods and services they need to live. Summers and the financial press don’t speak of asset price inflation as overheating. No, our elites would very much like stock prices to rise to infinity forever and ever.

      1. KLG

        Putz? You are being overly generous. The “kick-down, kiss-up” force is still strong in this one, and he will have influence in coming Biden Maladministration.

        When Herman Daly was at the World Bank IIRC and pointed out the “economy” is not something that can be abstracted from the biosphere of a finite planet revolving around a middling star in a middling galaxy, Larry Summers replied, “That’s not the way to look at it!” What is the Yiddish word for “holier than thou misogynist dipsh*t who is wrong about every damn thing in this universe”?

        Happy Holidays to all!

      2. rosemerry

        The latest from Prof. Wolff is my next move when I finish reading all of NC.
        He already knows Janet Yellen personally- I am sure he will comment.
        I remember all the pollution/women in academia fuss, but not all the worse stories until I read them in NC. Thank you Yves.

    1. Pelham

      Good contrast between buying stuff to survive and inflating assets.

      There ought to be some legal, routine mechanism by which society at large can single out highly destructive figures like Summers and forever rid ourselves of their presence in positions of power or influence, either in the public or private sectors. As matters stand, these contemptible people persist and multiply.

      1. Pym of Nantucket

        When you get unwanted rodents in the house, garage or barn, you need to set out effective traps, but you also have to store your food in metal containers and not leave the dog food bowl out at night. I don’t see much of either happening. My question above is when do the rats starve themselves?

    2. Kurtismayfield

      Yep.. 2 trillion of liquidity pumped into the economy by the Fed, 2.3 Trillion in the CARES act.. not a peep about inflation on his Twitter. (I looked.. he fully supported all of the spending).

      But give $0.5 trillion directly to people.. inflation boogeyman comes out.

    3. Glen

      Yes, he is literally worried that ensuring people have FOOD and HOMES will cause PROBLEMS in the ECONOMY!

      Has the man even looked at Wall St and justified what is happening there? The Fed is spending a BILLION dollars a DAY bailing it out.

      Has the man looked at how the wealth of the billionaires mounts higher and higher during a pandemic and global climate upheaval? How apparently we have a system that massively rewards the elites leading us while the world literally gets sick and burns.

      What a complete POS!

  4. timbers

    Biden comes to the WH w/o Saint Obama’s halo, selling the same shit sandwich policies. Will be interesting to see how he fairs over 4 years. He certainly isn’t going to win over any Republicans based on the texts I see from my family relations mostly out west in California and other places. and NPR tells Team Blue Biden should seize the bipartisan moment and pass what Republicans want

    Trump’s sincerity regarding the $2,000 can be suspect but he has some skill at making the regulars in Washington look ridiculous hypocrites but that’s not hard to do

    1. Pelham

      Every single sign so far about the Biden administration points in catastrophically wrong directions. Still, he hasn’t taken office. So I figure there’s about a 1% chance he won’t be awful.

      But given those lousy odds, it should be incumbent on progressives and, really, practically everyone to come up with a plan of action now that will — to coin a phrase — build back a better Biden. What that would be, I have no idea. Massive marches on Washington don’t make much of an impression anymore, and Covid is still a mortal danger. So that’s probably out.

      1. Synoia

        I figure there’s about a 1% chance he won’t be awful.

        I don’t want to be rude, but I believe that optimistic, by a full 1%.

    2. Arizona Slim

      I predict that, unlike Obama during the spring of 2009, Biden will not have a honeymoon. The left flank of the D party is already fracturing and the Rs aren’t about to do him any favors.

      And, sorry to say, what just blew up downtown Nashville is going to be replicated in a lot of other places. People are angry.

      1. timbers

        Interesting. Will pay attention to that as it develops.

        If it turns out something like you suggest, perhaps the United Nations can issue a request for China and Russia to help out these potential moderate rebels with their air forces and conduct a bombing campaign directed forces loyal to the Trump/Biden regimes.

      2. ambrit

        Nashville! You don’t get much more “heartland” than that.
        There’s trouble in River City!
        I was going to put up a link to Preston Foster singing the eponymous song from “The Music Man,” but changed my mind because the town portrayed in the film is too American Pollyannaish. Nashville is a real place, not a fiction.

      3. Glen

        A Slim, you are right. Biden’s honeymoon is already over. And really, why does he even need one? He’s been in government since 1973.

        And even the phrase – HONEYMOON.

        The American people have been repeatedly {FAMILY BLOGGED} by their Presidents for a LONG TIME now. We don’t need anymore honeymoons. We’ve been sweet talked and date raped enough.

      4. Jay

        After the support of the fraudster bankers and corporations in 2008/2009, and then Obama’s support of 5 wars, I didn’t think the government and media could lose any more credibility. This last year has seen the power elite move to silence the Bernie left (with the ridiculous coronation of Biden/Harris) and the MAGA right (with the fraudulent election management). Very well most of the country may think the federal government illegitimate. I can’t figure out if the loss of credibility is intentional or due to being so out-of-touch. Trust is retreating from large institutions to those who are local to us.

  5. Ep3

    Yves, I wouldn’t trust him with a dog pound. The point is to rescue the dogs, not find ways to collateralize them into high risk derivatives. How about making him a greeter at Walmart?

    1. Pelham

      That points a nice, fine point on my initial reaction, which was a genuine and immediate recoil in horror (I’m not being facetious) at the thought of Summers going anywhere near a dog. Walmart greeter is a better idea. He could even put his gray matter to work answering customer queries about which aisles various products could be found.

  6. Rod

    Epicurean Dealmaker remarked

    WOW Blast from the past–some how, way back when things got crazy, I got Linked to the ED.
    I did not understand too much of the technical stuff, but looooved that writing.
    And that lead me, by reference, directly here, to NC–where I also did not understand too much of the Technical Stuff, but loved the writing and Comments.
    But I’ve been learning.

    On Summers from ED (could be the Biden Admin):
    It’s reassuring to see that Wall Street doesn’t have the market for organizational dysfunction cornered, after all.

    And it is snowing gently here, on Christmas morning, like a Miracle.
    Merry Christmas to one and All.

    1. Phil in KC

      A long-standing tradition in our country. Witness the career, if you will, of Robert McNamara, Harvard man, by the way. After abetting the war crimes of Curtis LeMay, he wormed his way to the top at Ford, but thankfully (for Ford Motor) was only in that office for a month before being tapped by JFK for Sec of Def. Bay of Pigs, Vietnam, World Bank (global poverty increased). Like I say, a tradition.

  7. The Rev Kev

    I was trying to find something redeeming on Summers Wikipedia page but without much success. I did find this nugget however-

    ‘During the California energy crisis of 2000, then-Treasury Secretary Summers teamed with Alan Greenspan and Enron executive Kenneth Lay to lecture California Governor Gray Davis on the causes of the crisis, explaining that the problem was excessive government regulation. Under the advice of Kenneth Lay, Summers urged Davis to relax California’s environmental standards in order to reassure the markets.’

    That’s our Larry.

  8. Tom Stone

    At least to me Larry Summers seems eminently qualified to take a high level position in a Biden Administration and the Fed seems like a natural roost for Larry.
    He’ll fit right in.

  9. Chris Herbert

    I agree that Summers should not hold any important position in any administration, based upon his consistently poor record to date. There are far more important economic advisors Biden should take some lessons from. Economist Stephanie Kelton comes to mind. As does L. Randall Wray, who among other accomplishments co-authored the new Macroeconomics with Australian economists Bill Mitchell and Martin Watts. The new textbook is in its third print in one year! Kelton’s book ‘The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy.’ A New York Times best seller, non fiction. And here’s Wray’s testimony before Congress: This old dog, Biden, is going to have to learn some new tricks. Otherwise the Democrats will end up handing over the reins of power in two, then four years. Snatching defeat from the jaws of victory.

  10. Shiloh1

    Didn’t Buckley say better to pick random names out of a local phone book than have “professionals” and “experts” run things?

    1. KLG

      He did: “I’d rather entrust the government of the United States to the first 400 people listed in the Boston telephone directory than to the faculty of Harvard University.”

      Notice he didn’t say “Yale” ;-) One of the two times in his life Buckley was right, and I forget the other one.

  11. Edward

    Given Biden’s penchant for lying, a year from now, when the country is up in arms over evictions and economic hardship, I expect Biden to swear up and down the country he was for a larger stimulus payment.

    Summers sounds a bit like Kushner, trying to run everything. I have to wonder what horse-trading was involved in securing his position as Harvard president.

  12. Lex

    Eff. I think of that guy as a fat tick on a dog’s hind end. I keep expecting him to fall off and scuttle away. Putting him in charge of a dog pound would just keep him in vittles.

    Let him run a rural recycling program in Nebraska, where hopefully we’d never hear from him again. At least until Kissinger dies and his ‘Stargate’ regenerative coffin becomes available.

  13. Bart Hansen

    Quoting someone else: Six hundred dollars are what rich people think poor people think is a lot of money.

  14. Psmith

    Last night I watched The Muppet Christmas Carol and Summer’s line of thinking could have come straight from the mouth of Ebenezer Scrooge. It just shows how modern and up-to-the minute Charles Dickens is! And the Muppets too, of course.

  15. Susan the other

    So to my paranoid mind this all makes sense. Biden is the puppet that Larry and other rich like-minded people got elected. I think it was a coup. But we’ve never had secure elections, so we don’t seem to care. It now makes sense that Trump refused to sign the inadequate boondoggle of a “rescue” bill. I hope he sticks to his guns. There will be blood in the streets if Biden’s administration allows this sort of interference, using Biden himself to do the bidding of people like Summers. One fuzzy sense of things is that Summers, might be overplaying their hand. Their position might be far more fragile than they can imagine. I certainly hope so.

    1. Synoia

      But we’ve never had secure elections, so we don’t seem to care.

      I think we all care, but the skulduggery is well covered up by a rich layer of BS.

    1. Glen

      I keep wondering what I’m going to do when I retire and one of the ideas devolves down to the travel agency where one of the benefits is to visit certain “respected” people graves so one can show the proper respect for our elites (defecate on them). He’s definitely on the list.

  16. Dick Swenson

    What has Summer’s ever done or what has he ever been correct about that has resulted in him being seen as an economic VSP (very serious person)? Why is he a Harvard Professor? Why do so many listen to him?

  17. Jeff

    You can respect Krugman’s intellect, but keeping it real, why do you think he’s endorsing Summers?

    My take is that like Summers, Krugman’s inflated sense of self overrules his judgement. Krugman isn’t ignorant of his friend’s views or past actions.

    Krugman’s a political weasel with a phd, and like many in positions of power and influence, more often than not, he abuses it. Call out the enablers.

  18. Fazal Majid

    It’s not surprising Summers would find a kindred spirit in a fellow beneficiary of nepotism (quite literally in Summers’ case). Still, he is useful as a litmus test. I knew all I needed to know about the Obama administration when he appointed Summers as economic adviser before his inauguration.

  19. Cripes

    I resent the implication of the title. I have a dog who’s more likeable and much smarter than Larry Summers. Please reconsider.

  20. kiers

    Whenever someone shows that kind of Hubris like Summers, it’s because “the imperial deep state” in the US, has their back. Summers’ involvement in plundering Russia certainly qualifies one for earning the kudos of the imperial deep state. Wonder what DJT did? (Must be something.).

  21. chuck roast

    Larry Summers gives back the original meaning to useful idiot. Here is a fellow that has been absolutely wrong on absolutely every major economic issue of the past 30 years. And he probably could expound for 70 minutes in a graduate class in support of the loanable funds theory. So, Biden should hire him on as an economic advisor. If Summers recommends that the Prez do X, then based upon the Two Handed Economist theory the Prez can be reasonably assured that Y is the correct course of action. And like that.

  22. GlenninSac

    I’m beginning to think that the Biden-Sanders Unity Task Forces were all for show. I bet Stephanie Kelton wasn’t heard at all.

    There’s a minor literature for every time a D becomes president: “Prepare to be Disappointed.” Here we are at volume 3.

  23. John

    My theory is that Summers’s remarks on women and math were made in order to get fired on purpose. He was in such a mess at Harvard that getting fired for saying something politically incorrect was the one way he could get out of the situation. And come on, Larry is a very intelligent guy (horrible person, yes, but he’s a brainiac). Do we seriously believe that he wouldn’t know that making a remark like that would get you fired at a school like Harvard? Anyone who has made it to that level is well aware of what can and cannot pass as PC.

    And in response to the rest of the article: Summers is my go-to guy for explaining how awful some of these neoliberal technocrats who end up in positions of power are. Just one more piece of ammo.

    1. Yves Smith Post author

      I very much disagree with your reading of Summers. He’d said that sort of thing often. As I recall, his claim was that men were more represented in the tail end of brilliant mathematicians and physicists because Y chromosome.

      For instance, he had also told the Harvard faculty, with members of the various departments present, that Harvard should not teach humanities or most social sciences, that it should teach only math and science (and of course he includes economics as a science).

      I saw him speak a few times. The most notable was Martin Wolf interviewing him at a dinner at an INET conference. 300 to 400 people seated, so that gives you an idea of the space. I have never before experienced anyone filling a room with their arrogance, let alone a room that large.

      He is the nephew of two Nobel Prize winners, Paul Samuelson and Ken Arrow. At the time, the youngest person named a full professor at Harvard. Winner of the John Clark Bates Medal. He is dazzled by his own brilliance.

      And he didn’t want to be fired. That was humiliating and if he’d had the self-awareness to know the faculty would give a vote of no confidence, he would have found an excuse to resign in an orderly manner.

  24. Dick Swenson

    When will we get rid of the halo attributed to the misnamed Swedish Central Bank Prize in Economic scholarship in Memory of Alfred Nobel?

    Just for kicks, look at the certificate and medal awarded. The phrase “Nobel Prize” is on neither. And the Nobel Foundation itself who adminsters the real Nobel Prizes as well as the economic prize for a fee doesn’t use the phrase “Nobel Prize” when announcing the economic winners.

    “Nobel Prize” when used in the economic case is like “Electoral College,” a useless shortening that avoids making readers think. It enables publishers to charge more for books written by economists.

  25. Raymond Price

    Larry Summers is Harvard personified: supremely confident but empty.

    I remember talking to a Harvard M.B.A. about that program. He said, “LIFO. FIFO… who knows and who cares. You hire people to handle that stuff. What one instead learns at Harvard Business School is leadership.”

    I would NEVER hire someone who attended Harvard, and many of my colleagues have mentioned the same thing.

    So it’s not coincidence that Harvard chose a d-bag like Larry Summers as it’s leader.

  26. KD

    Biden was right about the election: it was all about restoring dignity to the White House. That is to say, replacing one corrupt, incompetent bloviating liar with another corrupt, incompetent bloviating liar who won’t issue mean tweets. The only distinction between Larry Summers and Kushners is that Summers can afford better legal talent and has successfully avoided the need for a Presidential Pardon so far.

    This whole election was a national farce, and I don’t see how anyone could take it seriously who doesn’t stand to benefit from federal contracts or corporate welfare.

  27. gwb

    Looks like Larry recorded this in the laundry room of a suburban garden-apartment rental. Nice touch, Larry — I see you’re slumming again

  28. Sound of the Suburbs

    Lobbyists from the private sector helped the US politicians draw up the Cares Act.
    The big corporations got their bailouts nice and early with the Cares Act in March; a $2.2 trillion stimulus package
    The lobbyists looked after the big corporations they represented and gave very little to small businesses and the general public.

    Tough luck, buster.

  29. run75441

    Hi Yves:

    Excellent review of Larry Summers. I would like to add to it as I wrote about Brooksley Born and also Iris Mack more than a decade ago, some original and some pulling from writing of knowledge. Both women suffered from the insecurity of Summers’s ego in listening to their superior knowledge and intellect to which Harvard and the nation suffered later. I am a nobody in the scheme of things; however, I took the time to write than President elect Barack Obama about his thoughts on appointing Summers to the position of Secretary of the Treasury(?). I objected to it.

    *’The messenger wore a skirt,’ says Marna Tucker, a Washington lawyer and a longtime friend of Born. ‘Could Alan Greenspan take that?’”

    A little bit about Iris Mack.

    Larry Summers has been present throughout much of this change, supporting it, denigrating the opposition, and claiming his experience at D. E Shaw gave him an insider’ knowledge as to how the derivatives market works.

    While President of Harvard University; Larry received a letter (May 12, 2002) from Iris Mack, a new employee of the Harvard Management Company managing Harvard’s endowment funds. A Doctorate in Mathematics from Harvard and a former employee of Enron who dealt in derivative trades, she expressed concern about the trades (swaps and other complex financial instruments) being made by the funds and the lack of understanding of the trades by the traders.

    On July 1, Iris was called into the office of Jack Meyer, the chief manager of Harvard Management.

    On July 2, Iris was fired for making what Harvard Management termed as: ‘baseless allegations against HMC to individuals outside of HMC.”Ex-Employee Says She Warned Harvard of Risky Moves” Boston Globe, April 3, 2009. While Harvard Management Company claims above normal returns on its endowment funds, it has spent much of last year selling off private equity and investments to raise cash to pay for losses.

    I would hope Larry Summers stays on the sidelines relegated to watch from afar. He played to big of a role in the collapse of the economy in 2008.

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