Saturday, October 9, 2010

Why the Obama administration was never about Hope and Change

It was only two years ago--election night 2008.  I was the designated driver for a group that went from one happy party to another.  Visually, the change from uber-goof W. Bush to uber smooth Obama certainly looked like change.  But it wasn't long before it was obvious that the "change" promised by Obama was only going to be cosmetic.  And the most obvious sign of the sellout of his most avid supporters came with the appointment of Larry Summers to head his economic team.  And as the Obama administration destroys itself--mostly over its utterly inept handling of the economy--it is clear that listening to Summers is likely the greatest political mistake Obama ever made.
Larry Summers and the Subversion of Economics
By Charles Ferguson  October 3, 2010
The Obama administration recently announced that Larry Summers is resigning as director of the National Economic Council and will return to Harvard early next year. His imminent departure raises several questions: Who will replace him? What will he do next? But more important, it's a chance to consider the hugely damaging conflicts of interest of the senior academic economists who move among universities, government, and banking.
Summers is unquestionably brilliant, as all who have dealt with him, including myself, quickly realize. And yet rarely has one individual embodied so much of what is wrong with economics, with academe, and indeed with the American economy. For the past two years, I have immersed myself in those worlds in order to make a film, Inside Job, that takes a sweeping look at the financial crisis. And I found Summers everywhere I turned.
Consider: As a rising economist at Harvard and at the World Bank, Summers argued for privatization and deregulation in many domains, including finance. Later, as deputy secretary of the treasury and then treasury secretary in the Clinton administration, he implemented those policies. Summers oversaw passage of the Gramm-Leach-Bliley Act, which repealed Glass-Steagall, permitted the previously illegal merger that created Citigroup, and allowed further consolidation in the financial sector. He also successfully fought attempts by Brooksley Born, chair of the Commodity Futures Trading Commission in the Clinton administration, to regulate the financial derivatives that would cause so much damage in the housing bubble and the 2008 economic crisis. He then oversaw passage of the Commodity Futures Modernization Act, which banned all regulation of derivatives, including exempting them from state antigambling laws. (My emphasis-could there be any greater indicator that Predator Class economics was always about the casino and NOT about the problems of the real economy.) more

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