FINANCE

The Reeducation of Larry Summers

He's become a champion of massive government intervention in the economy, and he's even learning how to play nice.

By Michael Hirsh and Evan Thomas | NEWSWEEK
Published Feb 21, 2009
From the magazine issue dated Mar 2, 2009

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  • Posted By: bittersweet @ 02/27/2009 3:16:00 PM

    One minor, but significant, litmus test of Summers' newfound openness to new ideas is whether he has apologized to Brooksley Born yet. Has he Mr. Panikar?

    • Posted By: John_Gault @ 04/05/2009 7:11:33 PM

      I would be interested to know the answer to this. I'm not much for gambling, but I'll bet he hasn't.

  • Posted By: Patrice Ayme @ 02/24/2009 7:53:35 AM

    It is astounding that the people who created the problem are back in charge. Except now they claim they have changed. But of course they did not, because why did they not get the banks restarted immediately? Beccuase they did not want the hyper rich to suffer more than the common folks.
    Patrice Ayme

    • Posted By: Osama Bin Login @ 02/24/2009 1:02:05 PM

      "It is astounding that the people who created the problem are back in charge. "

      Yes, the democrats and republicans caused the problems, but they are in charge STILL, not AGAIN.

      • Posted By: John_Gault @ 04/05/2009 6:49:30 PM

        They are back in charge is frightening. I admit they are though. Common sense tells me that the Clinton Administration created this mess with the repeal of the Glass-Steagall Act in 1999 (Clinton's last year in office). This act separated the commercial banking and investment banking. This repeal basically allowed gambling through derivatives. The gambling continued through the Bush administration unnoticed until gas hit $4/gal., this accelerated the financial crisis. Not to let the Bush administration off the hook. They should have done something about it too. "Modernization of the banking industry" a phrase that means nothing more than the banking industry lobbyist paid for political votes. They donated millions to the Senators campaigns. The Glass-Steagall Act passed 90-8 in 1999 under the Clinton administration. Truly shameful. I wonder, is congress always this accommodating. Huh, I doubt it. I am very proud of Byron Dorgan he did not vote for it. He also predicted the financial melt down (2004) if things didn't change. Meaning regulation needed to pass to prevent a melt down. It didn't. Look at the consequences.

  • Posted By: JohnMoore @ 03/03/2009 5:59:01 PM

    If you really want the truth about Summers, then forget about this propaganda.
    Check out articles about Summers and Harvard Mgt Co in Forbes, the Harvard Crimson, Boston Globe, abcnews.com, etc.

  • Posted By: davie divergent @ 03/03/2009 2:12:40 AM

    yeah, waterman, we all know how liberals have screwed things up over the past 8 years.

    Here's some liberal propaganda: Cutting taxes without cutting spending bankrupts the government.

    What's the big conservative plan? Cut taxes some more and then sit around on your butts while those without jobs spend their nonexistent tax cuts and don't stimulate the economy? Counter deflation by more tax cuts?

    Now we have to spend like crazy to avoid a disaster and when we're out of this mess we'll have to take care of all that debt run up by those republican economic geniuses who thought they could cut taxes without taking the difficult step of also cutting spending: Reagan, Bush Sr and Dubya the dingbat.

  • Posted By: waterman478 @ 02/22/2009 5:35:30 PM

    This is nothing more than liberal propaganda. It uses as a starting point the premise that those opposed to massive government intervention are somehow fundamentally flawed and require "re-education" (a very curious choice of words).

    Summers had no choice. He could oppose intervention (and get fired) or play nice and maintain his highest-echelon position with the Obama team. And I love how liberal publications like Newsweek, on discovering someone who has been "converted" to their way of thinking, suddenly discover their brilliance. Funny how when Summers was drummed out of Harvard for countering feminist orthodoxy, Newsweek's view of his intellect wasn't quite so glowing.

    This is a terrible piece of journalism.

    • Posted By: JGC1010 @ 02/28/2009 7:38:54 PM

      Perhaps what is required is relocation more than re-education. Relocation to the East.

  • Posted By: GregHere @ 02/24/2009 4:31:49 AM

    .........................What we see now is Real Life as the Obama Administration works to clean up the disasters and messes that Bush & Company created, what we see is not always pleasant to see but we are now getting to see more of the truth, much more transparency that Bush gave us. Bush conducted an ongoing Public Relations Administration with the lies and daily live Photo Opportunities as Bush operated his Clandestine Administration for 8 years. It will take more than one or two months to correct the blunders and poor policy that happened with Bush.

    • Posted By: John Dough @ 02/24/2009 11:08:30 AM

      Apparently you did not read the article - the Clinton years were dominated by de-regulation, in fact he was the top de-regulator, followed by Reagan, Carter and Ford. Both Bush's presidency's saw little in actual de-regulation but both lacked re-regulation efforst excluiding GWB's attempt to regulate Fannie and Freddie which was immediately shot down by the democrats. The only thing GWB was guilty of was becoming an overspending liberal with conservative tax policies. There is plenty of blame on both sides of this issue but the dark clouds were moving beyond the horizon while Clinton was still in office and hit right at the end of GWB's 2nd term. Clinton led the charge on de-regulation and free trade agreements even knuckling under on some issues that have hurt our economy to get them passed int law. The GOP congress went along with him too. To keep blaming Bush is lame, lacks evidence to support the claims, and is in fact untrue. We need term limits to get these guys out of Washington. Too much of this stimulus package is tailored for democratic districts and a lot of smells like payback. Like the light rail that displaced billions for new car rebates. This will bec constructed between Pelosi's and Reid's districts/states. This will benefit some construction workers but only in their states and will do nothing to stimulate the economy on a national level. IN fact, my guess is it will become like Amtrak and we will pay taxes to keep the system afloat to the benefit of gamblers traveling to Las Vegas on our dime. Great plan!!!

      • Posted By: JGC1010 @ 02/28/2009 7:34:57 PM

        Do you mean much more transparency THAN Bush gave us?

  • Posted By: JGC1010 @ 02/28/2009 7:31:13 PM

    In the first sentence of the last paragraph, entitlement reforms are described partly as "higher taxes on Social Security...." Does this mean higher income taxes on people who receive Social Security? Or raising Social Security taxes paid by employers and employees?

  • Posted By: plinius_caecilius @ 02/26/2009 3:18:45 PM

    Deregulation isn't the problem, people like Summers is the problem, especially when you foolishly give him government power.

    • Posted By: Osama Bin Login @ 02/26/2009 4:33:27 PM

      "Deregulation isn't the problem,"

      Hahahahahaha! Why, yes, it's been working just fine! That's why the banking industry is booming, and unemployment is at 3%! Right?

  • Posted By: Colin Oakes @ 02/25/2009 11:32:59 AM

    What's up with Larry Summers receiving a $1 million loan from Harvard University? Part V-B of Harvard's IRS FORM 990 for the year 7/01/06 to 6/30/07 still lists Mr. Summers receiving $580,000 in compensation, $30,586 in benefits, and $143,910 in expense accounts. (And this was after he stepped down as Harvard's President and before he took his position with the Kennedy School of Government.) But moreover, he's listed as receiving a $1 million loan. What for? Aside from his compensation from Harvard he's a managing director with the D.E. Shaw Group. Why does he need Harvard to lend him money?

    • Posted By: JohnMoore @ 02/25/2009 1:15:24 PM

      Summers got this deal because of his boyfriend Robert Rubin - who is his mentor and head of Harvard Corporation.
      Harvard alum should kick them both to the curve!

      • Posted By: Colin Oakes @ 02/26/2009 11:16:57 AM

        What evidence do you have to back up your claim? The only word Harvard has put out on this topic is that Mr. Summers received "access to a mortgage loan on a personal residence consistent with university practice." What makes you so sure Robert Rubin brokered the deal?

  • Posted By: Moldo_Zok @ 02/26/2009 9:35:45 AM

    So what? Cheer for Summers? Articles like this amaze me. Summers is a part of the problem, always has been, always will be.

  • Posted By: Dr. James @ 02/25/2009 11:38:24 PM

    This economic team is very bright. However, the system is broken. We need to destroy it and build a need model.
    it is like buying a used car, it will always have problems. We need a new car. We must re-set the economy. Nixon froze the economy to get a grip on it. Let us look at what works and then proceed with a Sharpe eye to the future.

  • Posted By: StrategicPlanner @ 02/24/2009 1:11:36 PM

    The key to continued American power and influence in the world, and to our own economic future, is to eliminate the trade deficit, rejuvenate domestic manufacturing, and regain the lead in major technologies. China is soaking up tech and mfg. capability and has the money. We borrow. Fact is we need a plan to achieve this. I see no one really discussing the issue and think that it is not likely to get proper attention unless there is an organizational grouping, as strong as the finance crowd, that focuses on manufacturing. There needs to be a counterbalance. The Treasury should not be responsible for anything to do with manufacturing except to provide some targeted financing. While we are at it, CFIUS should be made an independent commission and be taken out from Treasury.

  • Posted By: rajarambojji @ 02/24/2009 2:02:03 AM

    How much I would wish to get attention of Mr Summers to the project to make USA free from oil imports and create a million jobs reducing carbon emissions by 3.5 b tons per annum , while the projects will be financially viable yielding 20 to 30% profits too! USA can have 210mph intercity transportation, 60mph urban metro transport and entire USA can have cargo containers delivered at 60 mph all automatically and using only 5 to 10% of current energy consumption. Gravity Power Towers will provide the driving force from the eternal gravitational force ever available and every where. Please peruse full presentation at http://www.youtube.com/atrilab Wish Newsweek editors take it to the notice of Mr Summers.

    • Posted By: Osama Bin Login @ 02/24/2009 1:03:08 PM

      " Gravity Power Towers will provide the driving force from the eternal gravitational force ever available and every where. "

      Hahahaha! Awesome! While we're at it, let's sell the silly bastard on a perpetual motion machine.

  • Posted By: JohnMoore @ 02/22/2009 6:55:46 PM

    This article is posted on the FINANCE section of the magazine. Where is the FINANCE? Michael Hirsh is a philosophy major? Does he have banking and finance expertise? There are lots of former Wall Street employees who are looking for jobs. Perhaps Newsweek can hire them to write more intelligently on FINANCE. Michael stick to fuzzy stuff please.

    • Posted By: wilsan @ 02/22/2009 9:57:27 PM

      Michael Hirsch is the so-called 'journalist' that claimed there was no negative aftermath to the Vietnam War withdrawal by American forces. He didn't know about the Khmer Rouge, re-education camps, and boat people...

      Hirsch & Newsweak epitomize the collapse of the journalist profession; No news, no facts, no integrity.

  • Posted By: JohnMoore @ 02/22/2009 6:45:00 PM

    This is like deja vu all over again! Remember how no journalists wrote opposing views when Bush tried to invade Iraq. That's how I feel when I read this piece of crap about Summers. Boy how Hirsh revises history. Maybe he should write fairytales or Dr. Seuss books.

  • Posted By: JohnMoore @ 02/22/2009 6:12:37 PM

    Come on, this article is not only a joke, it's a repeat of a recent New York Times profile of Summers. Can we get some original news here??

    And why are such key facts left out - like Summers' involvement in the Andrei Shleifer scandal and legal mess. Even wikipedia does enough research to include this information - http://en.wikipedia.org/wiki/Lawrence_Summers.

    No wonder Newsweek is loosing money. Have you seen the paper editions - they cost $5 and are about 10 pages long?

    Get some REAL finance and economics journalists please!

  • Posted By: JohnMoore @ 02/22/2009 6:09:48 PM

    Come on, this article is not only a joke, it's a repeat of a recent New York Times profile of Summers. Can we get some original news here??

    And why are such key facts left out - like Summers' involvement in the Andrei Shleifer scandal and legal mess. Even wikipedia does enough research to include this information - http://en.wikipedia.org/wiki/Lawrence_Summers.

    No wonder Newsweek is loosing money. Have you seen the paper editions - they cost $5 and are about 10 pages long?

    Get some REAL finance and economics journalists please!

  • Posted By: JohnMoore @ 02/22/2009 6:07:48 PM

    Come on, this article is not only a joke, it's a repeat of a recent New York Times profile of Summers. Can we get some original news here??

    And why are such key facts left out - like Summers' involvement in the Andrei Shleifer scandal and legal mess. Even wikipedia does enough research to include this information - http://en.wikipedia.org/wiki/Lawrence_Summers.

    No wonder Newsweek is loosing money. Have you seen the paper editions - they cost $5 and are about 10 pages long?

    Get some REAL finance and economics journalists please!

  • Posted By: JohnMoore @ 02/22/2009 6:05:38 PM

    Come on, this article is not only a joke, it's a repeat of a recent New York Times profile of Summers. Can we get some original news here??

    And why are such key facts left out - like Summers' involvement in the Andrei Shleifer scandal and legal mess. Even wikipedia does enough research to include this information - http://en.wikipedia.org/wiki/Lawrence_Summers.

    No wonder Newsweek is loosing money. Have you seen the paper editions - they cost $5 and are about 10 pages long?

    Get some REAL finance and economics journalists please!

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