GOP didn’t sabotage Obamacare as Dems did Iraq War

Democrats will soon accuse Republicans against increased premium subsidy-spending under Obamacare, as indifferent to Americans with policies were cancelled by the (un)Affordable (Obama Crack Corn and he don’t) Care Act that Dems enacted into law with zero GOP votes. But this week former Clinton and Obama Administration cabinet member Lawrence Summers joined HHS Secretary Kathleen Sebelius in blaming Republicans for HealthCare.gov website glitches and other failures of | Read More »

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Bernanke’s successor will be caught between reality and a hard place!

Which ‘lucky’ economist will be the winner of the Bernanke Replacement Derby?  The United States financial system is long into a Fed induced economic infusion of dollars that has run into the trillions and had limited if any success. There has…

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Larry Summers Bows Out: “Advise and Consent” Triumphant

On September 15, 2013, the White House announced that Larry Summers, Barak Obama’s prior chief economic advisor and a Secretary of the U.S. Treasury during the Clinton administration, no longer wanted to be considered to fill the upcoming vacancy as chairman of the Federal Reserve. In the announcement, Obama (or an advisor) wrote, “Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today.”[1]Unfortunately, this statement suffers from a sin of omission, which admittedly had been minimized by the media as well. Accordingly, the Democrats in the U.S. Senate who had just come out against a Summers nomination can be regarded as done the nation a vital service. Moreover, the “check” of the “check-and-balance” feature of the U.S. Senate’s confirmation power worked.

With all its open points of access, democracy can have a splintering effect on a point worthy of public debate. The media dutifully plays its “scattering” role before any reasoned train of thought can gain traction in the public domain. For example, at the time of Summers’ retraction, the New York Times reported that a “reputation for being brusque, his past comments about women’s natural aptitude in mathematics and science, and his decisions on financial regulatory matters in the Clinton and Obama administrations had made [Summers] a controversial choice.”[2]A reader could be forgiven for concluding that personal vendettas, public gossip, and single-issue (not monetary policy!) political activists have points just as important as the matter of Summers’ past decisions on financial regulation. Any political interest having succeeded in getting to a microphone is deemed just as relevant or decisive as any other point.

       Alan Greenspan, Larry Summers, and Robert Rubin. In the late 1990s, they pressed Congress to keep financial derivatives unregulated. A case of government doing Wall Street’s bidding?   Image Source: pbs.org

Obviating the scattering effect, we can zero in on Obama’s attribution of “expertise, wisdom and leadership” and ask whether they apply to Summers when he joined Alan Greenspan and Robert Rubin in the late 1990s to lobby Congress to remove the CFTC’s authority to regulate financial derivatives. At the time, Brooksley Born, chairwoman of the CFTC, was recommending to Congress that mortgage-backed derivatives be regulated. That the unholy triumvirate, blessed by Clinton and supported by Wall Street, succeeded with the help of Sen. Phil Gramm in discrediting Born kept the financial system vulnerable to being blind-sided by a collapse in any of the securitized derivatives markets. It is difficult to fathom how financial regulatory expertise, wisdom, or leadership could pertain to Summers in his lobbying capacity, even if he did go on to help Obama mop up after the Lehman bankruptcy. Yet, sadly, Summers’ bullying of Born and being wrong on whether financial derivatives should be regulated before the financial crisis were barely mentioned in the public discourse leading up to Summers’ withdrawal. Fortunately, the public can rely on the informed advise and consent power of the U.S. Senate.  

[1] Annie Lowrey and Michael D. Shear, “Summers Pulls Name from Consideration for Fed Chief,” The New York Times, September 15, 2013.


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Doubling Down on Failure: Former Obama Official Calls for U.S.-Financed Keynesian Spending Binge in Europe

There’s an old saying that insanity is doing the same thing over and over again while expecting different results. This certainly is a good description of Keynesians, who relentlessly push more government spending as some sort of magic potion for the economy – notwithstanding a record of failure. The latest example if Larry Summers, the former […]

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