Progressive economists have one piece of advice for President Barack Obama when it comes to replacing top economic adviser Larry Summers: No more Robert Rubin disciples.
Summers, who served as head of the White House's National Economic Council, a position created by former President Bill Clinton and first filled by Rubin, was a key architect of the administration's various economic policies to combat the biggest financial crisis and economic downturn since the Great Depression.
Those policies -- the bailout of Detroit automakers, an $814 billion stimulus package, subsequent programs under TARP, Cash for Clunkers and the administration's unlimited backstop of Fannie Mae and Freddie Mac -- arguably saved an economy that many considered to be on the verge of collapse.
But while the recession officially ended last year, it hasn't for most American households. The unemployment rate has risen nearly two percentage points since Obama took office, Labor Department figures show. Private-sector job creation is anemic. Growth has stagnated. Incomes have barely risen. Unpaid debts are being written off. And household wealth is lower today than where it was last December, according to Federal Reserve data through June.
Treasury Secretary Timothy Geithner refused to say Wednesday during a Congressional hearing whether the U.S. is officially out of the recession.
Large banks and corporations, on the other hand, are thriving. Corporate profits have risen to pre-crisis levels, according to the Commerce Department. Company balance-sheets haven't been this strong since 1956, Fed data show. Firms with access to the capital markets are taking advantage of record-low interest rates and refinancing expensive debt, and pocketing the difference. Last month, IBM sold three-year notes to investors, offering 1 percent interest. On Wednesday, Microsoft Corp. sold three-year notes at 0.875 percent interest to help fund share buybacks and increased dividends for shareholders. It's reportedly the lowest interest ever offered by a company looking to sell three-year debt.
A key lieutenant to Rubin after the former Goldman Sachs head and Citigroup chairman became Treasury Secretary under Clinton, Summers eventually succeeded him in that post. Together, the two men advocated for the repeal of Glass-Steagall, a Depression-era law that separated commercial banking activities from investment banking, and fought to deregulate the derivatives market. They aggressively fought back against other regulators who wished to rein in risky derivatives activities.
http://www.huffingtonpost.com/2010/09/23/summers-replacements-rubinites_n_735453.html
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
