Larry Summers is a famous, esteemed man who has had a finger in many pies over the past two decades, including several stints in the US government under multiple administrations both Democrat and Republican. He has served at Harvard, on the boards of multi-national corporations and within large financial firms. This time Lawrence H. “Larry” Summers is in line for one of the most powerful jobs in the US government.?
On the surface, Larry Summers appears to be a reasonable progressive, a man with an easy smile. He argues against continued austerity measures as being poor for the US economy. At the same time, as a covert advocate for the 1%, Larry Summers?sees the economy as being sound and bright. Summers said:
I believe our economic prospects now look as sound as at any time in the last 15 years.
Except for the one percent, inflation-adjusted income gains for the rest of Americans have been non-existent, since 1977 and especially since 1998. To anyone except the one percent there are no bright economic prospects.
Though Larry Summers?himself wrote papers that concluded that cutting Capital Gains taxes would primarily help only the rich, he lobbied for tax cuts for both corporations and for capital gains to do just that. At the same time, Summers argued against unemployment insurance and welfare. His argument against unemployment insurance was the effect it has on reported rates of joblessness. Meaning, if people were not forced to look for work by accepting unemployment, they would drop out of the labor force and, therefore, not be counted as being unemployed (Econlib.org). So, according to Larry Summers, the problem with unemployment insurance is that it makes the employment situation look bad by stopping people from giving up hope.
From 1991 to 1993, Larry Summers?worked as the Chief Economist for the World Bank. Despite his professional credentials being in the field of Economics, he made the following assertion on behalf of the World Bank:
There are no… limits to the carrying capacity of the earth that are likely to bind any time in the foreseeable future. There isn’t a risk of an apocalypse due to global warming or anything else.
Although upwards of 97% of the world’s Climate Scientists explicitly disagree with his assertions, he disregards their views because that might interfere with the agenda of the World Bank.
At the same time, he signed a memo that argued that the World Bank should encourage dirty industries to dump their wastes in poor countries. On what basis did Larry Summers?make this assertion? Because poor countries have the lowest incomes, impairing their health would have the lowest economic cost. They are already poor so damaging their health and lives has the lowest economic cost, according to Larry Summers. He also argued that poor countries are “UNDER-polluted” and rich countries need to remedy that, according to him. Finally, in the same memo, he argued that–since the poor already die so quickly, it’s okay to dump cancer-causing toxic waste there because they will already be dead before they get cancer. According to Larry Summers, all of these reasons argue in favor of funneling the world’s toxic wastes to the doorsteps of the world’s poor.
Two years after he signed the Defense of Dirty Industries memo, Summers went to work for the Clinton Administration, where he eventually rose to Secretary of the Treasury in 1999. Unsurprisingly, given his penchant for encouraging international trade in toxic waste, during his tenure at the Treasury Department Larry Summers?devoted himself to international trade issues. He had his fingers in the pie in many places including in post-Soviet Russia, where he pressed for “privatization”–encouraging the Yeltsin administration to sell Russian public utilities to Mafia-connected individuals like Anatoly Chubais for copecks on the Ruble–without bothering to mention that Larry Summers’ associates stood to make huge windfall profits from those same privatization moves. Though these privatizations robbed decades of public equity from the Russian people, leading to destitution and crushing poverty, they enriched the associates of Larry Summers. [Full disclosure: this author lived in St. Petersburg, Russia during this time and experienced the privations first hand].
Yet, Larry Summers?also thought the best plan was to “encourage investment” by gutting the already paltry Russian Social Security payments. Larry Summers?is always willing to advocate pain for the little people.
The excellent book Shadow Elite: How the World’s New Power Brokers Undermine Democracy, Government, and the Free Market by Janine R. Wedel has a section devoted to the modus operandi of our Larry Summers?in Russia:
To bypass all the established practices and procedures, the Harvard players?[headed by Larry Summers] employed?their flexion skills of personalizing bureaucracy and relaxing rules. With the help of [Summers] et al.,?the Harvard Institute sidestepped competitive bidding and was granted special permission that enabled it to?legally engage in “the conduct of foreign relations and the determination of foreign policy” an “inherently?governmental” function. The institute largely circumvented the usual bidding process for aid contracts?through waivers to competition supported by [Summers] and other benefactors in the administration,?according to veteran U.S. government procurement officers and officials from the GAO (Wedel).
Not content to pick the pockets of average Russian citizens, Larry Summers?was always on the lookout for other suffering masses to squash.
At the turn of the millennium, Larry Summers?turned his intellectual firepower towards California, which was then suffering an energy crisis. For reasons unknown at the time, the prices for electricity in California had been skyrocketing and rolling blackouts were the norm. California Governor Gray Davis came to the Clinton White House asking for help. As Treasury Secretary, Larry Summers?swooped in to pass his wisdom to Governor Davis. He opined:
Your problem is regulations.?Electricity has been too cheap in California. You need to de-regulate your electricity markets and everything will be better.”
Of course, it became known later that neither “regulations” nor “cheap electricity” were the causes of California’s misery. Instead, a Houston company called Enron, whose energy traders had been screwing the state and “those poor grandmothers in California” were the cause.
Another example of Larry Summers’ tireless attention to inflicting pain on the world’s poor comes when he applied pressure to the South Korean government to encourage them–during a bleak recession–to jack up interest rates and balance the Korean budget on the backs of the suffering masses.
Acting as an expert in every area outside his specialty, Larry Summers quietly urged the Clinton administration to ignore that Kyoto Protocol and disregard the effects of so-called Greenhouse gases. In NSA Archive documents that only became public a decade later, Larry Summrs is seen positioning himself as a “realist”, saying it was too simply too expensive to pay attention to climate change, “suggesting that no target at all would be the preferred option” for ignoring climate change.
After Larry Summers succeeded in preventing any action by the Clinton Administration on climate change, he moved to the urgent issue of lowering Capital Gains taxes. According to Summers, the wealthy were in pain and needed immediate relief from paying Capital Gains taxes. In service of this need, Summers championed the Gramm-Leach-Bliley Act of 1999, which repealed the Glass-Steagal Act of 1933, a law that had divided commercial banking from investment banking for 60 years to that point. Larry Summers said:
Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century.
Many later observers of this action, including President Barack Obama, have pointed to this repeal as the central enabling cause of the 2007 subprime mortgage disaster. Not content to repeal Glass-Steagal, Larry Summers fought tooth and nail to prevent regulation of another central tenet of freedom: the right of banks and hedge-fund billionaires to trade unregulated credit derivatives, which became another major cause of the 2007-2008 finance crisis that destroyed the world’s economy.
At the time, Larry Summers argued there was no need to regulate derivatives, because:
The parties to these kinds of contract are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies.
When other economists at the time such as Raghuram Rajan argued about the inherent risks of unregulated derivatives, Summers ridiculed Rajan’s premise, saying:
The basic, lead-eyed premise of [Rajan’s] paper [is] largely misguided.
Years later on March 15th, 2009, when the world’s economy went to hell largely because of these same unregulated derivatives that Summers advocated, Summers devoted his energies to covering his trail. He explained to George Stephanopoulus:
?There are a lot of terrible things that have happened in the last eighteen months, but what’s happened at A.I.G. … the way it was?not regulated, the way no one was watching … is outrageous.
Though he himself had pressed the hardest against regulation–and ridiculed other economists like Rajan who argued for oversight–when the bottom fell out Summers pointed the finger at everyone but himself.
None of that stopped Larry Summers from taking a $5 million part-time job in 2006 with the hedge fund D.E Shaw & Co. During this same time, Summers also earned $2.8 million in a victory lap giving speeches to his co-conspirators Goldman Sachs, JPMorgan Chase, Citigroup, Merrill Lynch and Lehman Brothers, leading to a net worth of nearly $39 million at the time when he joined the Obama Administration in 2009.
At this point, no more evidence is required to see that our Larry Summers is a friend of the rich and privileged, in every aspect of their world, and the enemy of the world’s non-wealthy and the environment.?But there’s more! Thanks to superb reporting by Greg Palast, an authenticated memo from Timothy Geithner to Larry Summers spills the beans on yet another financial atrocity. According to the memo, at the same time that Summers was working tirelessly to prevent derivatives from being regulated, he was also scheming with the World Trade Organization–the WTO–to roll back not only the banking laws in the United States but in every country on earth. At that time, Summers and his toadies held an economic knife to the throats of countries all across the world, threatening to boycott their exports unless they agreed to cancel their internal laws regulating derivatives. In the end, only one country held out–Brazil. That country alone weathered the 2007-2009 downturn without losing its shirt. In the leaked 1997 memo from Timothy Geithner to his boss Larry Summers regarding co-ordinated, worldwide lobbying efforts aimed to prevent regulation of derivatives, Geithner wrote:
As we enter the end-game of the WTO financial services negotiations, I believe it would be a good idea for you to touch-base with the [bank] CEOs…
Geithner ?conveniently added the direct phone numbers of the CEOs to Goldman Sachs, Merrill Lynch, Bank of America, Citibank and Chase Manhattan. Back in 1997, the fix was already in. Any sovereign nations that dared to oppose Larry Summers and his cabal of bankers on the subject of deregulating derivatives would be targeted and ruined.
At this point, is it time to explain the occasion for this romp through the list of atrocities committed by Lawrence H. “Larry” Summers. He is in line to be tapped as Ben Bernanke’s replacement as head of the Federal Reserve–the second most powerful job in the free world. I fervently hope, at this point, you agree that cannot be allowed to happen.
President Obama, honorable and just in so many other ways, seems not to see Larry Summers, for the embodiment of evil that Summers is.
So, there stands only one White Knight between the world and that horrific outcome that is Larry Summers as head of the Federal Reserve.
The name of that White Knight is Elizabeth Warren.
? ? ?O Captain! My Captain!
Summers, Lawrence H. Opening Remarks to Senate Budget Committee Hearing on “The Fiscal and Economic Effects of Austerity”, June 4th, 2013.
Cato Institute: Johnson, Jay; Pequet, Gary, Taylor, Leon. Potential Gains from Trade in Dirty Industries: Revisiting Lawrence Summers’ Memo. Cato Institute, 2007. [http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2007/11/cj27n3-6.pdf]
Econlib.org. [Summers, Lawrence H.] Unemployment. The Concise Encyclopedia of Economics. 2008. [http://www.econlib.org/library/Enc/Unemployment.html]
NYTimes, 3-18-1997. Yeltsin Shakes Up Cabinet To Speed Economic Change. [http://www.nytimes.com/1997/03/18/world/yeltsin-shakes-up-cabinet-to-speed-economic-change.html?pagewanted=2]
Rees, William. “Footprints to Sustainability”. University of British Columbia. UBC Reports, Vol. 52 No. 4 Apr. 6, 2006.
NSA Archive. Kyoto Redux? Obama’s Challenges at Cophenhagen Echo Clinton’s at Kyoto. [http://www2.gwu.edu/~nsarchiv/NSAEBB/NSAEBB303/index.htm]
Wedel, Janine R. Shadow Elite: How The World’s New Power Brokers Undermine Democracy, Government and the Free Market. New York, NY: Basic Books, 2009. Print
Sorkin, Andrew Ross. Too Big To Fail: The Inside Story of How Wall Street and Washington fought to save the financial system–and themselves. New York, NY: Penguin, 2010. Print.
Freeland, Chrystia. Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else. New York, NY: Penguin, 2012. Print.
Henry, James S. The Blood Bankers: Tales from the Global Underground Economy. New York, NY: Thunder’s Mouth Press, 2003. Print.
Bartlett, Donald J. and Steele, James B. The Great American Tax Dodge: How Spiraling Fraud and Avoidance are Killing Fairness, Destroying the Income Tax, and Costing You. New York, NY: Little, Brown. 2000. Print.
Senate.gov, “The Fiscal and Economic Effects of Austerity”, June 4th, 2013. [http://www.budget.senate.gov/democratic/index.cfm/committeehearings?ContentRecord_id=cb9e219e-a3e1-4e1f-b475-274d667abd1c]
Colton, Timothy J. Yeltsin: A life. New York, NY: Basic Books, 2008. Print.
Share of Total Income (By Income Percentile)
Income gains since 1947
Kurt Eichenwald, “Conspiracy of Fools”.
Bethany McLean and Peter Elkind, “The Smartest Guys in the Room”.