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And there was much rejoicing

Good news: Larry Summers has withdrawn his candidacy for chairman of the Federal Reserve. Just the fact that Obama keeps propping up this banker mentality for his economic advisors calls his judgment into question, but at least this is one rich gomer who won’t be calling the shots. Let’s have no illusions: the rich have gotten richer under Obama, and the poor have only gotten poorer at a slightly slower rate than under the Republicans.

We’re also spared the spectacle of seeing the lady bankers shooed away to play with little pink dolls.

Comments

  1. says

    It is becoming more and more obvious what a lot of liberals were saying in 2008 and 2012: the difference between the Republicans and the Democrats is the difference between someone who will break both of your legs and someone who will break only one.

    It would be nice if we could elect actual progressives to high office. I’m not holding my breath on that, though.

  2. says

  3. says

    Most detailed account of what’s wrong with Larry Summers:

    http://www.nationaljournal.com/magazine/the-case-against-larry-summers-20130912

    Excerpt:

    … The job [Federal Reserve Board Chairman] requires a person of great personal tact, subtlety, and self-control. It requires someone who knows how to build consensus at the highest levels for the right kind of policies—someone who possesses the maturity and character to admit error and shift course when needed.

    But, according to numerous accounts from those who have worked with him, Summers has often displayed the opposite attributes during his long career. Behind the scenes, he has used his power, combined with intellectual arrogance, to bully opponents into silence, even when they have been proved right. He has refused to allow his dissenters a voice at the table and adopted a policy of never admitting errors.

    And Summers has made a lot of errors in the past 20 years, despite the eminence of his research. As a government official, he helped author a series of ultimately disastrous or wrongheaded policies, from his big deregulatory moves as a Clinton administration apparatchik to his too-tepid response to the Great Recession as Obama’s chief economic adviser. Summers pushed a stimulus that was too meek, and, along with his chief ally, Treasury Secretary Timothy Geithner, he helped to ensure that millions of desperate mortgage-holders would stay underwater by failing to support a “cramdown” that would have allowed federal bankruptcy judges to have banks reduce mortgage balances, cut interest rates, and lengthen the terms of loans.

    At the same time, he supported every bailout of financial firms. All of this has left the economy still in the doldrums, five years after Lehman Brothers’ 2008 collapse, and hurt the middle class. Yet in no instance has Summers ever been known to publicly acknowledge a mistake. …

  4. jblumenfeld says

    So Lynna, OM provides some actual reasons not to like Summers. Fine. PZ has nothing except for the ‘banker mentality.’ And just what exactly do you think you’re going to get instead?

    I personally think Janet Yellin is much more qualified and will do a better job, but the policy differences between them are basically non-existent. Ditto every other possible candidate, from Roger Ferguson to Donald Kohn to Timothy Geithner.

  5. says

    http://www.salon.com/2013/09/16/larry_summers_finally_acknowledges_that_everyone_hates_him_and_he_should_go_away/

    Excerpts below:

    … There never actually was a great case for picking Summers over anyone else. At least, none of the many problems liberals had with the pick were ever addressed. Most of the case for Summers relied on direct experience with his unmatched brilliance, as well as the strange belief that he was simply owed the job. “The chairmanship of the Fed isn’t just a capstone to a career; it’s the perfect culmination of it,” Robert Lawrence wrote in the New Republic. It was as if all of America was expected to be personally invested in Summers’ career having a happy ending. …

    On Janet Yellen not being sufficiently manly for the job: Ezra Klein in Bloomberg News.

  6. jblumenfeld says

    Look, I’m happy he’s out, if only so I don’t have to listen to his ‘umm’-filled droning voice, and I think Yellin is far better for the job. I just think the policies, in the end, will be about the same.

  7. says

    jblumenfeld @4:

    PZ has nothing except for the ‘banker mentality.’

    We’ve discussed bankers and the perfidy of much of the financial world before. I don’t think PZ has to make the case again. Certainly, he should not have to make the case every damned time he posts about yet another problem that has roots in the banking industry. But if you want more background material, here are some additional links:

    http://www.rollingstone.com/politics/news/bank-of-america-too-crooked-to-fail-20120314

    http://www.rollingstone.com/politics/blogs/taibblog/16-major-firms-may-have-received-early-data-from-thomson-reuters-20130905

    http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620

    http://www.rollingstone.com/politics/news/how-wall-street-killed-financial-reform-20120510

  8. says

    Informational links from other sources, in case you don’t like Taibbi’s piquant style:

    http://www.newyorker.com/talk/2008/10/06/081006ta_talk_paumgarten

    http://www.newyorker.com/arts/critics/books/2009/06/01/090601crbo_books_lanchester Excerpt below:

    Say you’re in the grocery business, and feel gloomy about your prospects. Your immediate neighbor is in the stationery business, and he feels gloomy about his prospects, less so about yours. You get to talking, and one of you hits on a brilliant idea: why not just swap revenues? You take his earnings for the year, and he takes yours. The actual business doesn’t change hands, making the swap, in banking terminology, “synthetic.” The first currency swap took place in 1981, and allowed I.B.M. to trade surplus Swiss francs and Deutsche marks for dollars held by the World Bank. The two institutions exchanged their obligations to bondholders and their bond earnings without actually exchanging the bonds. The deal, brokered by Salomon Brothers, was worth two hundred and ten million dollars over ten years and ushered in a whole new field of finance. As Gillian Tett tells it in her book “Fool’s Gold” (Free Press; $26), by the time of the Boca Raton off-site, swaps had become a roaringly successful feature of the banking world: the volume of such interest-rate and currency derivatives was worth twelve trillion dollars, more than the entire U.S. economy.

    But competition was making those swap deals less profitable. The quest was for a new, and therefore newly lucrative, product to sell. What got the J. P. Morgan team rolling was this thought: instead of swapping bonds or currency or interest rates, why not swap the risk of default?…

  9. jblumenfeld says

    Lynna, OM – Let me repeat myself, then.

    What are you expecting instead? You’re not getting anything very different, that was my point. So rejoice that Summers is out, but keep in mind that even the very good Yellin will hardly be different.

  10. jblumenfeld says

    Well, I suppose its possible to make the case that someone else might actually be different and better. Can the case be made that, say, Janet Yellen will make the financial system more fair or less prone to abuse? I’d be interested in seeing that.

  11. Nerd of Redhead, Dances OM Trolls says

    Well, I suppose its possible to make the case that someone else might actually be different and better. Can the case be made that, say, Janet Yellen will make the financial system more fair or less prone to abuse? I’d be interested in seeing that.

    Gee, how about some evidence to back up your claim? Fair is fair.

  12. jblumenfeld says

    I’m sorry, what claim am I making? I was asked what I wanted to hear, and I gave an example of what would be interesting. No claim was made. You’ll notice that my post was in the form of a question: ‘Can the case be made’… not ‘the case can be made.’

  13. says

    What are you expecting instead? You’re not getting anything very different, that was my point. So rejoice that Summers is out, but keep in mind that even the very good Yellin will hardly be different.

    Well, I suppose its possible to make the case that someone else might actually be different and better. Can the case be made that, say, Janet Yellen will make the financial system more fair or less prone to abuse? I’d be interested in seeing that.

    I’m expecting that with an educated public, (with well-informed Pharyngula readers as a start), that we will recognize the depth and complexity of the issues the Fed Chair will face. I’m expecting discussion rather than an unsubstantiated claim that Yellen is no different from Summers.

    I did not expect to have to personally make the case for Janet Yellen. I did not expect to have to come up with another candidate that would be better than Yellen. What I do have to offer to the discussion is a fairly good background on what has gone wrong previously, and the idea of Elizabeth Warren as a template to use when searching for a Fed Chair.

    Here’s Warren on Janet Yellen (Warren being far superior to me when it comes to providing info on Yellen): http://www.politico.com/story/2013/09/elizabeth-warren-janet-yellen-would-be-terrific-96848.html

    Excerpt:

    “Janet Yellen, I hope, will make a terrific federal reserve chair,” Warren said on MSNBC’s “Morning Joe.” “I hope she’s nominated. She has great experience, she has great judgment. I think she would make a terrific Federal Reserve chair. The president will make his decision, but I hope that happens.” …

    “Well, I don’t think it’s any secret that Larry was not my first choice,” Warren said. “He’s a brilliant economist who has made many terrific contributions to the field of economics. I have no doubt that he’s going to continue to do that in the future. I think that the president is working through a difficult decision. It’s a reminder of the importance of the Federal Reserve chair…. I think the president is taking his time, he’s thinking through this and we’re having a good and thoughtful discussion, which is a good thing to have in Washington.”

    On the other hand, Donald Trump likes Yellen because he thinks she will keep interest rates low, which is good for developers like him. Donald Trump is not a reliable source on any subject.

  14. mx89 says

    jblumenfeld is probably right on this one. There will probably be very little difference between any Fed candidate Obama chooses policy-wise.

    Actually, Janet Yellen was regarded as more ‘dovish’ than Summers, meaning she’d be more likely to keep the programs of quantitative easing (and low interest rates) going for longer. Unfortunately, QE by design pumps up the stock markets (it drives down bond interest rates and makes investors look for a better return, pushing them into more risky assets), which exacerbates income inequality because the 1% own most stocks. It’s kind of strange to hear guys like Paul Krugman pushing QE for this reason.

    Anyway, there isn’t a chance that Obama is going to promote some sort of anti-bank warrior because Obama is owned by Wall Street just as much as Bush II, Clinton, Bush I, and Reagan were owned before him. So the choice was between a repugnant character who is going to help the rich or a “nice” character who is going to help the rich. If Yellen is picked, as a woman candidate she will probably be breaking barriers exactly like Obama did a a black candidate: ultimately superficially, giving hope that the system isn’t as corrupt and broken as it really is. The illusion of opportunity for disadvantaged groups will remain an illusion. Welcome to America.

  15. says

    jblumenfeld, this is what you wrote in comment #10: “keep in mind that even the very good Yellin will hardly be different.”

    So, you really are making some sort of claim regarding the policy or philosophical approach of Yellen (and perhaps of Summers). You can back that up (or refute it) yourself rather than asking others to either back it up or refute it.

  16. alkaloid says

    It’s probably hopeless to say this, but this’ll be the last time I try no matter what happens.

    @Gregory in Seattle, #1

    It is becoming more and more obvious what a lot of liberals were saying in 2008 and 2012: the difference between the Republicans and the Democrats is the difference between someone who will break both of your legs and someone who will break only one.

    Liberals weren’t actually saying that in 2012 with some exceptions: leftists were-and for saying it we mostly got excoriated even though much of what Obama has done and said since then (the warmongering, the defenses of the police state mechanisms, the attempts to promote well-connected misogynists for the banker class) was sadly predictable.

    It would be nice if we could elect actual progressives to high office. I’m not holding my breath on that, though.

    Electing actual progressives to high office necessarily means that Democrats who aren’t actual progressives are going to need to lose, though. Can you accept that?

  17. says

    Krugman on Yellen:

    So Larry Summers has withdrawn from the Fed race. No profound thoughts here, except that it’s really, really hard to see how Obama can justify not picking Janet Yellen at this point. Nobody else is as qualified; any other choice would look like spite.

    [From his NY Times blog.]

    I notice that some pundits are saying that Yellen is what/whom Wall Street wanted all along.

  18. says

    Good choice by Summers, since he withdrew. After experiencing his failed policies before, it was a stroke of insanity to consider appointing him.

    Maybe Yellen offers us an opportunity for a different approach to managing our economic situation, but I’m not holding my breath. Male, female, this administration seems to have trouble with anything even approaching a swing to the middle, forget about to the left.

  19. says

    More views of Yellen, collated by the Los Angeles Times for their article on Summers pulling out of the race:

    … Yellen, who raised early concerns about the potential impact of soaring housing prices before the crisis, was viewed as being less friendly to Wall Street and tougher on financial regulation.

    She also was seen as being more concerned about the high unemployment rate, and more likely to address that as Fed chair than Summers. The Fed’s mandate is to maximize employment and keep prices stable, and Summers was viewed by many lawmakers and economists as being more concerned about inflation than unemployment.

    “The position of Fed chair is immensely important for our economy and the president has an opportunity to unify the country behind a candidate who understands the impact of the Federal Reserve’s policies on the middle class” said Rep. Maxine Waters (D-Los Angeles), the top Democrat on the House Financial Services Committee.

    In July, Waters organized a letter to Obama signed by 37 other female House Democrats, urging him to pick Yellen. Among other things, they argued that Yellen was more concerned about the impact of Fed policies on average Americans.

    In a poll last week of 47 Wall Street investment managers and strategists, Yellen was viewed as substantially more concerned about unemployment than Summers….

  20. jblumenfeld says

    Okay, Lynna, fair enough.

    Starting backwards, I think we agree that we can safely discount anything Donald Trump says without too much worry.

    As to my unsubstantiated claim, that’s true, I did not substantiate that claim. But the basic system in place, with the Federal Reserve regulating the banks and setting monetary policy, is not going to change because Larry Summers is out. Also, the current monetary situation, in which massive printing of money (so-called ‘Quantitative Easing’) has to be reversed, is very constraining on what can be done from here on out.

    Keep in mind also that President Obama is likely to be looking for certain features in a Fed Chair, so the list of people he’s choosing from is likely to contain names with a similar approach to monetary policy.

    Now, Larry Summers was a key player in the Clinton administration, which deregulated the financial markets very actively, and it is possible – even probable – that this contributed to the financial crisis. Summers is a well-known advocate of the banks, whereas Yellen is known mostly as a regulator and a Wall Street outsider.

    So to expand my original point, rejoicing that Summers is out is all well and good, but in my opinion it is unlikely that we will get anyone much different. My personal feeling is that Yellen will in fact be better, but not much. I didn’t actually claim that she would be ‘no better than Summers’ – I repeatedly said I prefer her in the job.

    It was never my intention to require you to do anything – but thanks for providing your detailed responses nonetheless. I, too, am looking for a discussion and I hope that expanding on my original abrupt statement of opinion faciliatates that. Keep in mind that my original post was in response to PZ’s joy that Summers is out, and I was trying to say what was more or less a ‘yes, but’ kind of warning.

  21. says

    What always gets me is that there are so many regular people that will support the obscenely rich, and will defend them no matter what the numbers say. There was a post on imgur last night listing CEO pay vs average worker pay in various countries and it did not take long for people to start appearing, saying they deserved what they are paid because they worked hard, etc. They did not seem to even stop and think about the ratios being so much more lopsided in the US compared to other countries. CEOs pay has been rising for decades, class mobility has been shrinking at a dramatic pace, and yet these people still rally behind the idea of the American dream, that you just have to work hard, without being able to consider that the cards are stacked against them. I know it is an overused term, but useful idiots seems to describe them well.

  22. consciousness razor says

    Electing actual progressives to high office necessarily means that Democrats who aren’t actual progressives are going to need to lose, though. Can you accept that?

    I’d not just accept it but welcome it, if they lose to actual progressives. If they lose to someone even more regressive, that’s not acceptable.

    You get “excoriated” from leftists like me when reality gets tossed out the window in the midst of complaining about the tepid Democrats. Typically, this is right before an election, because despite all of their whining and scolding about making tough choices, voting is apparently the only political action some people are willing to take.

  23. truthspeaker says

    consciousness razor

    16 September 2013 at 1:45 pm (UTC -5)

    I’d not just accept it but welcome it, if they lose to actual progressives. If they lose to someone even more regressive, that’s not acceptable.

    That’s not going to work then. It’s not enough to support progressive candidates in primaries and caucuses. Until the DINOs start losing general elections, the party leadership and the people who pull their strings won’t have any motivation to change their approach.

    We can certainly try to get progressive candidates to win in primaries in caucuses, but those systems are so rigged that it will be hard to get much done. I would have been happy to vote for Howard Dean in my state’s caucus but he dropped out the week before, because for presidential elections, only the very early primaries and caucuses matter. Even for state level offices the party machine has enough power to steamroll over anyone who isn’t in their club.

    Just as George H. W. Bush’s loss in 1992 caused the Republican leadership to start taking their constituents seriously, we’re going to need some high profile losses by Democrats from the war-monger-bankster-spook wing of the party in order to move the national party.

  24. PatrickG says

    @ Lynna, OM:

    I notice that some pundits are saying that Yellen is what/whom Wall Street wanted all along.

    I’m fairly sure that some pundits — not necessarily the same set as yours, but definitely overlapping — were also quite upbeat about Summers’ impact on the market. Consistency, hobgoblins, etc.

    Of course, I have to link this lil’ nugget. Not that either financial markets or pundits are bastions of reason.

    @ jblumenfeld:

    I can’t help but note the commentary on how the appointment of Summers was taken as a given just a little while ago, given that Obama was Super Friendly with him and Lurved him. However, the narrative has dramatically shifted (cf. I listened to NPR this morning) to [paraphrased] “Democratic constituencies (specifically women’s groups — I yelled at the radio every time I heard that: “I’m a MAN for fuck’s sake) have pressured three Democrats on the Senate Finance Committee to publicly state they wouldn’t vote for Summers, causing him to see the writing on the wall”.

    It’ll be interesting to see whether or not Yellen is actually nominated, given the acrimony Obama (by pundit reports, see above) feels. It will also be interesting to see — if she’s confirmed — whether she presses for further stimulus on a public level. The narrative so far is “she cares about jobs”. Does she? Bernanke’s been rather tepid on that front, will she, as you question, be substantially different on policy?

    @ both: It’s amazing how rapidly the narrative has changed. It’s also amazing (to me, at least) how much focus national media paid to issues of sexism than actual issues*. Win on one front, loss on another, but it’s something, at least.

    * Can only speak to the NPR I’ve heard during my constant driving over the last few months, but I very rarely heard about the role Summers played in deregulation — and if it came up, the conversation changed rapidly. That Yellen is a woman and faces special challenges in the Boy’s Club of Finance? Much, much more. Though from what I’ve heard, the latter is somewhat absent on network news.

  25. consciousness razor says

    That’s not going to work then. It’s not enough to support progressive candidates in primaries and caucuses. Until the DINOs start losing general elections, the party leadership and the people who pull their strings won’t have any motivation to change their approach.

    I guess the idea is that people have to see for themselves how fucking awful their lives are after they vote for Republicans? It needs to get worse before it gets better?

    Why wouldn’t it work to convince in the society at large to be more progressive, instead of simply convincing “party leadership” (I suppose that means Democrats, not just any progressive party) that they’re losing and need to find a new way to lead us all to the promised land? Why they might think they’re losing, and how they think they’ll change “their approach” (but not necessarily policies) to winning elections, is a total mystery to me. Maybe it’s just gotta work the way you think it does, whatever that might be, but I kind of doubt it.

  26. says

    PatrickG @28, thanks for the link to the article detailing the response of markets to the Yellen/Summers news.
    Excerpts below:

    … Global stocks rallied and the U.S. dollar fell Monday after Larry Summers took himself out of the race to be the next chairman of the Federal Reserve. …

    Asian markets closed with healthy gains. Stocks in Hong Kong advanced 1.5%, while Korea rose 1% and Singapore climbed 1.8%. Emerging markets in the region were even stronger, with Philippines shares surging 2.8% and Indonesian stocks up 2.6%.

    The Tokyo Stock Exchange was closed for a holiday. At the same time, the U.S. dollar was weaker against most major currencies.

    Markets in Europe followed the upbeat trend. Germany’s benchmark DAX index led the way, gaining 1.3% to post a new record high. French stocks were 0.85% higher in morning trading, and U.S. futures pointed to a strong open. …

    Expectations of less aggressive Fed tapering could have the biggest impact in emerging markets, where investors had been pulling their money and returning to the U.S. in search of higher yields. …

    “As market expectations adjust to less aggressive Fed tapering, this should reduce the immediate risk of significant capital outflows from Asia, providing significant relief for those economies with current account deficits that have faced balance of payments pressures,” Nomura economists wrote in a note. Those countries include India, Indonesia, Malaysia and Thailand.

    The U.S. dollar’s drop is “probably more of a knee jerk reaction,” Liang said. “By taking less aggressive monetary policy, this will support U.S. economic growth, which in turn will support an even stronger dollar.”…

  27. PatrickG says

    @ Lynna, OM:

    I just linked that for fun, though I’ll note I heard that bald statement on NPR this morning as well. The statements from “emerging market” Asian economists are certainly interesting, though.

    It’s hard to attribute the stock market response to simply this announcement. The developments re: Syria may have had a large impact as well (e.g. pipelines/energy supply). Or, y’know, everything else that happens in the world.

  28. zhuge, le homme blanc qui ne sait rien mais voudrait says

    I remember fondly that time Al Gore lost by the margin of progressive voters who went for Ralph Nader instead. In the aftermath the party swung to the left, nominating the most progressive candidate possible in 2004, and were swept to victory by an American public disgusted with far right warmaking, social policies, and economic stagnation. Losing the election in 2000 was the best thing that ever happened to the Democratic party.

  29. Suido says

    @zhuge #32

    False equivalence. Not every political landscape is the same, and getting a better mix of progressive vs centrist Democrats in congress is completely different from choosing an electable president.

    In this thread, the focus has seemed to be much more on the former – the political landscape could be changed dramatically if the Democrats were to utilise their safe seats to elect more progressives than centrists. Yes, there’ll still be plenty of districts that, like the presidential election, would benefit from having centrist or blue dog democrats running against their republican opponents, and that’s fine. It’s not incompatible with getting a much stronger progressive faction into government.

  30. says

    @zhuge, 32:

    Well, really, your argument answers itself, because in the case you mention, the 2000 election, there were ten times as many registered Democrats who voted for Bush than for Nader, meaning that the right-wingers in the Democratic party were — insofar as those who voted Green are to blame — vastly more culpable, yet not blamed in any way by party partisans. Somehow, people like you just have to blame the people who are further to the left, even when that makes no sense.

  31. zhuge, le homme blanc qui ne sait rien mais voudrait says

    You miss my point. The claim was that if people vote for the progressive candidate and it leads to a loss in the election, the natural result will be a swing to the left. This is just obviously false. As far as I can tell it has pretty much always been false.

    The strategic use of conferences and primaries absolutely works. I did not suggest otherwise, and I don’t believe otherwise. I give money and volunteer for many progressives in primaries, I just don’t believe in the magic that losing a general election will lead to a better result in the future. It seems lazy and untrue.

    Which is to say, I am not blaming anyone for the loss of Gore in 2000, except maybe the Supreme Court. I am saying that it is a fact that the “far left”(ha!) once voted third party in enough numbers to sway an election and lost, and the results were not beneficial for progressives nor the country.

    Explicitly I was responding to 27, which made the claim that doing the primary work was not enough. I disagree strongly, and it isn’t clear to me by what means losing a general could help, barring very very limited circumstances.(Deep blue seats with corrupt incumbants. Even then a primary is almost certainly better.)