Summers withdraws from Fed consideration; Won’t be Rewarded for Beggaring Us All

Economist Larry Summers withdrew his name from consideration for chairman of the Federal Reserve last night, even though he had been increasingly considered the favorite for the job in the White House (not so much in the Senate).

It is a great mystery why Barack Obama even considered rewarding Summers for his role in increasing income inequality in the US and around the world and in allowing the non-banks to play banks and both to operate as casinos. Obama praised Summers for his alleged role in helping dig back out of the 2008 hole. In fact, Summers made the recovery far less robust than it should have been, by arguing against a bigger stimulus. Moreover, Obama did not note Summers’ role in helping cause it in the first place. Plus, since the recovery has been a recovery for rich people, Summers isn’t owed much thanks from the 99%. In fact, it is in part owing to his policies that Americans at the bottom of the economic ladder have begun calling themselves ‘lower class.’

10% of Americans at the top, i.e., the ‘friends of Larry,’ took home half the income in the country last year, something that hasn’t happened since F. Scott Fitzgerald wrote in “The Rich Boy” (1926): “Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft, where we are hard, cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand.”

On this happy occasion it is worthwhile reprinting my column from a few weeks ago reacting to a Vice report that Summers and Tim Geithner used thuggish tactics via the Treasury Department to impose their casino banking on the whole world, having engineered the destruction of the American middle class:

Reprint edition

Greg Palast at Vice exposes the way that Larry Summers, Tim Geithner and others in the Treasury Department conspired with JP Morgan and other pirate investment banks not only to destroy Glass-Steagall in the US but throughout the world, removing the difference between commercial banks. and investment banks. Basically, they used US financial muscle to leverage the world into letting banks play poker with your money and forcing regulators to treat toxic bad loans as ‘assets’.

It is not normal for moving money around, often in very shady and unsafe ways, to account for a fifth of the profits of the S&P companies,more than high tech, which actually makes something. Only a few decades ago, that sector was 10% of profits. In essence a small number of corrupt investment bankers (not all are) gained control of the Dept of the Treasury and then used it to ‘deregulate’ the whole world. In layman’s language, deregulating banks means firing the guards and unlocking the vaults.

Palast notes that Argentina, Greece and Spain are among the victims of this ploy, not to mention The millions of Americans who lost their mortgages in 2008 and after (if you see someone blame homeowners or consumers for 2008, know of a certainty that person is on the take.)

Deregulation fundamentalism in banking had already contributed to the 1997 meltdown in East Asia, where unregulated currency transfers were allowed and speculators just bounced billions around the world, leading to Thailand’s and then others’ vast currency depreciation. Malaysia refused the arbitrageurs and so weathered the storm well.

Palast explains why Obama never moved against Wall Street (we’re just about as vulnerable now as in 2008) and is even considering the sleazy Larry Summers to head the Federal Reserve.

One of the questions that Palast’s expose raises is the old one of how much autonomy the state really has in a society dominated by the business classes. The de Tocqueville tradition, revived in the 1980s by Theda Skocpol, emphasizes the government as an independent actor. The Marxist tradition famously sees the state as “the managing committee” of the rich.

Geithner’s memo favors Marx, not de Tocqueville. This is government as humble man-servant of the least savory sections of big business. Many of the ways that Obama has disappointed his base have to do with his being chairman of the managing committee rather than president, and so being captive to powerful interests whatever his own instincts. The billions it costs to become and stay president allows Wall Street to buy the presidency, regardless of which party wins.

You also have to wonder about hidden partnerships between US corporations and the NSA, which appears to do a fair amount of industrial espionage.

What Marx got wrong is that apparently people will put up with this sort of thing if you just provide them with some cheap consumer electronics and televised gossip about celebrity scandals.

9 Responses

  1. I saw a headline online that read, Only Larry Summers Can Save Us From Larry Summers. I can’t find it now, but it turns out to have been prescient.

  2. The Federal Reserve is a private corporation….
    A majority of Americans believe it’s a US Gorernment Department.

    President John F. Kennedy and his brother Robert both wanted to nationalize, close down the Fed. Both were assassinated.

    Criminal billionaires are controlling the US government, the corrupt financial industry(the FED and the IMF), the news media(propaganda media), all the major corporations, the FDA(the Federal Death Administration), the education industry, the entertainment industry, etc.

    Search: “federal reserve” “private corporation”

    • “The Federal Reserve is a private corporation.”

      The Federal Reserve is not a private corporation. Congress created it in 1913 to maintain the stability of the financial system. The President appoints, and the Senate confirms, the members of its Board of Governors. And it’s not out to make a profit after taking care of expenses. Any left over earnings go to Treasury after expenses are paid out. Moreover, the details of its responsibilities are subject to Congressional oversight.

      The Fed is classified as an independent central bank, as neither the executive nor the legislature branches get a direct say in its decision-making, and it pays for its own operations (primarily by acquiring U.S. government securities on the open market). I know this is confusing for some people who conclude that it is a private corporation, but it most assuredly is not. In short, the Fed is an independent entity within the US Government.

      • Bill said: “In short, the Fed is an independent entity within the US Government.”

        How about if we replace your term independent with the correct term, private.

        The Fed is not a sovereign bank of the US but is OWNED by private individuals, who in spite of the anointed government management, really set the policy for this privately funded institution.

        If you had money like the global plutocrats, you too could invest in the Fed…..right Bill? Pray tell us how that that makes it independent.

  3. Everything points to Summers withdrawal as the best possible outcome.
    Technically he’s apparently competent; but morally he’s a major fail.
    Moral failings are a hallmark of present day America…

  4. It is a great mystery why Barack Obama even considered rewarding Summers

    Not that much of a mystery. Summers has powerful friends and patrons in Washington who needed to be mollified. Given his interest in the position, for Obama to ignore him entirely would have been seen a snub – a well-deserved snub, by a costly one nonetheless.

  5. Let’s not make this all about Summers. Janet Yellen, the likely next Fed Chair, is a great deal more than Not Larry Summers. For example, she led the pushback against the racist Big Lie that the Community Reinvestment Act caused the financial meltdown.

  6. It is a great mystery why Barack Obama even considered rewarding Summers
    Let’s not make this all about Summers. Janet Yellen, the likely next Fed Chair, is a great deal more than Not Larry Summers. For example, she led the pushback against the racist Big Lie that the Community Reinvestment Act caused the financial meltdown.

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