Summers Exits.

by on September 16, 2013 in Uncategorized

Good.

Summers was the White House favorite. Obama held him in high regard because of the supposedly good job he did in the dark days of 2009. Along with Tim Geithner – who Obama also sounded out for the Fed – Summers was the primary architect of the Obama administration’s economic policy at the height of the crisis.

And that’s why there was so much opposition to Summers from the left.

We all thought that the policies of 2009 were timid, and far too biased towards Wall Street. There was no way the liberal wing of the Democrats were going to tolerate yet more weak policy. Obama could have pushed the appointment through, but it would have cost him dear. He has lost traction on the economy which languishes at very poor levels for a recovery this old. And that economic record stems exactly from the lack of strength the White House showed back in 2009.

Not only is this recovery a poor one, but it is the most unequal in recent history [if not ever]. Inequality is now our overriding domestic issue. About 95% of all wealth generated since 2009 has gone to the top 1% of income earners. That is an astonishing fact given that we have a Democrat in the White House. Not only this, but social mobility has collapsed – the US is now less a land of opportunity than most other western nations. We have a rapidly developing class system dominated by financiers and industrialists, despite the crisis that the banks brought upon us. Obama’s bank reform is a dud – it still isn’t completely implemented because of legal wrangling and bank lobbying, and what parts are in place are ineffective. I know no one in the industry who truly believes that reform has changed anything.

Meanwhile Elizabeth Warren is leading the charge for regular people and embarrassing Obama by highlighting his insipid policy making.

Why did Obama float Summer’s name so early? He did the same thing with Susan Rice. His approach is inept. He gave the opposition so much time to organize and undermine the favored appointment. Now he has to retreat. Again.

As for Summers: his record is that of a brilliant, self absorbed, self promoter. He gives the appearance of being on every side of every argument. His major achievements are mostly those of the Clinton era and 2009. From my perspective neither is much to be happy about. Deregulation, pro-business, and definitely pro-Wall Street characterize Summers body of work. Lately he was on record as being more of a monetary hawk than most of us want. He changed his tune when it appeared he might not get the Fed job. That confirmed his reputation as someone whose ambition matters more than the needs of the job.

Oddly this is one occasion when the left and Wall Street are in agreement: stock prices surged on the news of his withdrawal. Dovish monetary policy is the only thing propping us yup right now. Fiscal policy is working negatively. Yellen is now the clear favorite [ although I would  not rule out Roger Ferguson, CEO of TIAA-CREF and an ex Fed vice chairman]. She is a monetary dove. Good. That’s what the economy needs. Now if we could only get an expansionary fiscal policy…

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