Dean Baker: The Economy Is Awful and Larry Summers Should Not Be Fed Chair

[marmar]

The Economy Is Awful and Larry Summers Should Not Be Fed Chair

Monday, 05 August 2013 09:59
By Dean Baker, Truthout | Op-Ed


In his recent defense of Larry Summers President Obama appeared to be badly confused about the state of the economy. This apparently leads him to believe that the country should be grateful to Larry Summers for his successes, as opposed to furious at him for his failures.

Obama’s story is that the economy was in a free fall when he took office and the program that was in large part designed by Summers helped turn it around. While it is true that the economy was in free fall, there was no reason to expect that to continue regardless of what policies were pursued. Note that in every single wealthy country the sharp drop in output at the end of 2008 and the beginning of 2009 was stopped and reversed by the end of the year. Other countries were not able to rely on the genius of Larry Summers in setting their policies.

This doesn’t mean that the stimulus package that President Obama pushed through did not help. According to the estimates of the Congressional Budget Office and a number of independent economists, the stimulus added between two to three million jobs. The problem is that the economy needed between 10-12 million jobs. The stimulus was far too small and did not last nearly long enough.

How much should we blame Larry Summers for an inadequate stimulus? That’s hard to say. It’s not clear that President Obama could have gotten a larger stimulus through Congress at the time, but it is clear that his team (presumably including Summers) badly underestimated the severity and the duration of the downturn. .....................(more)

The complete piece is at: http://truth-out.org/opinion/item/17978-the-economy-is-awful-and-larry-summers-should-not-be-fed-chair

[geek tragedy]

1. Picking Summers would be incredibly stupid.

Obama has done a few incredibly stupid things, but hopefully the odds will win out and he won't be stupid here.

Picking Summers would not only give women the finger, it would also undermine his economic messaging.

[truedelphi]

4. As far as I can tell, Obama's economic

messaging has been: Geithner policies, Geithner policies and more Geithner policies. (Except for those huge moments when it is all about Bernanke's policies.)

Which is why we now have a huge unemployment rate in many counties here in California.

Back at the tail end of summer 2010, Our governor,. Arnold Schwartzennegger went hat in hand and asked this Administration for a 20 billion dollar loan. Geithner said sharply "No - such a thing would be disastrous for the nation's deficit." (Bear in mind the state has 37 million people - and traditionally, the state has gotten, in terms of taxation, only a 73 cent return out of every dollar it offers up to the Fed government.)

Yet over the next 13 month the nation spent 255 billions of dollars on weaponry, modernizing the military etc. Somehow blowing things up is better than getting the fifth largest economy in the world on its feet again?

Then to make matters worse, we find out from the Bernie Sanders-insisted upon audit of the Fed Reserve that some 15 to 16 TRILLIONS of dollars were digitally created by Bernanke created and handed over to the Biggest Financial Institutions on earth. Experts state that some 4.7 trillions of those dollars will never be repaid.

The states needed help, and yet the Paulson/Getihner/Bernanke clowns gave up the nation's financial largesse to their buddies on Wall Street.

[geek tragedy]

5. His messaging has been fairly populist, actually, it's his policy and appointments

that have been status quo times 10.

[truedelphi]

6. That is a very good point. n/t

[woo me with science]

13. [phone]

[Xipe Totec]

2. An image flashed through my mind of feeding Larry Summers the Chair nt

[on point]

3. It is not about crediting Summers w/ recovery, it is about blaming him for it's creation

He is a wallstreet de-regulation, supply side animal and is one of the people that foisted the economic disaster on the country.

Obama was wrong to include him in his team in the first place and he would be a fool to ignore the good advice pouring in against the appointment to the fed.

Summers has the wrong philosophy for the country (ie he is one of the people pushing it in the wrong direction), and isn't really competent anyway. This is just gift by Obama to a crony.

[PETRUS]

7. K&R

[1StrongBlackMan]

8. Wow, Mr. Dean …

While it is true that the economy was in free fall, there was no reason to expect that to continue regardless of what policies were pursued.”

Really? Quoting from the rightwing frames? Talk to any republican (at the time) … Any Austrian School economist (at any time) and they would’ve/will tell you that the markets will self-correct so best to do nothing.

How much should we blame Larry Summers for an inadequate stimulus? That’s hard to say. It’s not clear that President Obama could have gotten a larger stimulus through Congress at the time, but it is clear that his team (presumably including Summers) badly underestimated the severity and the duration of the downturn.

The advantage of being a pundit … you can always be right in your criticism being you can point to your rightness, with the benefit of looking back, without having to be concerned with having to worry about when you get it wrong.

Further, whatever you think about Summers’ economic world view, few would deny that he is among the best and the brightest, with access to others of the best and brightest, and with access to more data than anyone imaginable … and he got the amount wrong; what’s to make Dean think that ANYONE in that seat would have been anymore accurate?

Finally, Dean’s pondering, all wide eyed, that “It’s not clear that President Obama could have gotten a larger stimulus through Congress at the time …”, either is flat out lying, or he wasn’t paying attention to the comments, statements and votes, at the time. (We know he was paying attention, because he was commenting on it at the time:

… @3:37)

[truedelphi]

9. Uh, the Dean in the OP is Dean Baker, a separate person from Howard. n/t

[1StrongBlackMan]

11. Damn ... Bamn ... Damn ...

now where's that egg on face thingy.

You are absolutely right!

[truedelphi]

12. If this is the worst thing you do in your life this year -

Or even this month, you are in pretty great shape!

[1StrongBlackMan]

14. Well ...

I have to admit ... I do/have made a mistake or two. Yeah ... I know ... admission of error is a DU taboo.

[NuclearDem]

10. No One Should Be Fed Chair

...I've heard it's not very tasty.