It’s important for citizens to understand the philosophical approaches their government officials use in carrying out their public policy functions. Fortunately, Larry Summers spelled out his approach to financial regulation, and Marc Ambinder discusses it here. Full text here.
I have a slightly different view from Ambinder’s, based on the track record so far. As I understand it, we can summerize the core features of Larry’s regulatory philosophy as follows:
0. I will actively promote rules that create the conditions in 1 through 5.
1. Once I’m in charge, we will not interfere in the market until the horses are out of the barn and cause massive damage to the neighborhood.
2. In response, our goal will be to make the barn owner whole for his and his creditors’ losses and not hold him, his overseers, or ourselves accountable for leaving the barn door open even though escaping horses was entirely predictable.
3. We’ll require the American people to pay most of the costs resulting from our combined, willful negligence. This is called, hazardous morality.
4. Our overriding policy is to leave to barn owners the decisions about what to do with their barn doors, even though horses escaping pose systemic risks to the entire neighborhood.
5. When that fails again, as it inevitably will, repeat steps 1-4.
6. When I’m finished here, I hope to become a barn owner.
It’s hard to determine who posed a greater systemic risk to the American economy. Was it Larry Summers, Bob Rubin and Phil Gramm? Or maybe the team of Ronald Reagan and Arthur Laffer? Or any President and Alan Greenspan? Or . . . Nevermind.
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Can I vote for “all of the above”?
No, this is a democracy, and you have to choose. However, I’ve sweetened the deal by adding Bob Rubin.
rubin.
hands down.
edit to add: but summers is still going strong and may have the opportunity to pull ahead.
“(CBS) Sunday, June 14, 2009
THE MAN WHO KNEW – Harry Markopolos repeatedly told the Securities and Exchange Commission that Bernie Madoff’s investment fund was a fraud. He was ignored, however, and investors lost billions of dollars. Steve Kroft reports. Andy Court and Keith Sharman are the producers. “
http://www.cbsnews.com/stories…..3502.shtml
We can beat on summers but ‘where does the buck stop? and in reading Summers remarks, he is quite emphatic that the ‘current course’ is ‘the President’s plan’.
In keeping with the theme of beating on Summers, I offer the following:
“The second point on which the President has been unambiguous is that any intervention go with, rather than against, the grain of the market system. Our objective is not to supplant or replace markets. Rather, the objective is to save them from their own excesses and improve our market-based system going forward.”——–’the grain of the market system’ is but synonymous keeping the staus quo going that got us into the mess to begin with.
Macroeconomic policies can and have made a substantial difference. Policies that have led to higher incomes have led to greater ability to repay loans and a stronger financial system, leading in turn to more economic activity and higher incomes.——–higher incomes in real terms Larry? For whom?
We do not want to be owners; we want to be stewards to structural soundness and nothing more.”——-and the evidence for being ’stewards for structural soundness’ is where?
“Reasonable financiers in the context of bankruptcies do not provide finance so enterprises can repeat the mistakes that caused them to go bankrupt in the first instance.”———-oh,yeah? What was the PPIP? And where are the regulations associated with the derivatives that caused this mess in the first place?
“Our approach has been to insist on a restructuring of the board of directors in the case of troubled companies, and where appropriate to insist on changes in management.”———–EXCEPT when it comes to financial institutions, huh, Larry?
“Frankly, it is no accident that there are countless TV dramas about curative medicine and none, to my knowledge, about preventive medicine.”——once again,Larry, you show how your cloistered life and perspective is removed from actual reality.
“That is why President Obama has made financial regulatory reform a central legislative priority of this early phase of his Administration. While many of the details are complex, the necessary fixes come from the application of common sense in an area where complexity can blind sophisticated observers to the obvious.”——–well, isn’t it obvious that credit default swaps ought to be outlawed as Soros says? Why don’t you say so Larry??????
“Perhaps most fundamentally, I would venture this generalization: There has virtually never been a financial crisis in which leverage was not centrally involved.”———and yet regulations reflecting a distinct leverage percentage still wait to be effected and those that caused this mess are still behaving in a mannner consistent with how they behaved before this crisis !!!
between Clintonites and Bushites still ensconsced in gummint, I don’t have anything positive to share.
we can add that the horses in the barn are not the barn owners’ horses they are everyone else’s horse
we can also add that the barn owner allowed the horses out the barn but right into his own truck to be exploited at some time in the future
“We’ll require the American people to pay most of the costs resulting from our combined, willful negligence. This is called, hazardous morality.”
Hey Crow, Is this what Jefferson warned of. “Privilege corpo-aristocrats who under the color of law usurp constitutional checks and balances in the lust for endless profit.” The American people are not a mere means to some scumbags gross profit. The “Corporate Model” has replaced the slave-owner. The interests and profit for corporations are more important than life itself.
The “hazardous morality” we see today eviscerating liberty from the governed is no different from the logic of the disgusting Dred Scott decision, denying a “man” the right to petition the courts. The clear language of our Bill of Rights and constitution was not afforded a man of color because he was considered property of white men pitting one constitutional right against another, thereby relegating Mr Scott and his fellow men of color to servitude.
STATE SECRETS VS THE NATION / using state secrets to hide clear constitutional violations of law????
The American people are being denied liberty by powerful corporate interests who place profit before nation, law and the governed. As Jefferson warned, the moral hazards of constitutional usurpation, once realized by the governed, creates not only the right but the duty and obligation for the people to act and protect the inalienable rights of men. The purpose and intent of the second Amendment and the right to bear arms is to protect the governed form the moral hazards created by despotism.
“It’s hard to determine who posed a greater systemic risk to the American economy. Was it Larry Summers, Bob Rubin and Phil Gramm? Or maybe the team of Ronald Reagan and Arthur Laffer? Or any President and Alan Greenspan? Or . . . Nevermind.”
I believe Dred Scott has come full circle. It is clear the American People’s standing in the eyes of corporate America is similar to Dred Scott’s unimaginable lack of legal standing to affirm his constitutional rights as a few man, denied for the economic benefit of
corporationsslave-owners.Noteworthy is how a constitutional amendment the 14th in addressing the inequities of Dred Scott and post civil war matters, also gave legal standing to corporations which Jefferson was vehemently oppose to! GO figure. “A Faustian Ace Card,” played by the old boy network, even back then? Corporate Servitude or slavery! No it is memeorex!!!
the sounds of silence…. cancer!
Send this to Summers and let him know we know we have been taken over!!!
http://www.globalpolicy.org/co…..46916.html
“Because of the unique frailties and depths of passion unique to humans, just after the U.S. Constitution was ratified Thomas Jefferson and James Madison began a campaign to amend it with a 12-point explicit statement that would clearly and unambiguously place humans — who had created government — above their creation. This was the birth of what would become the Bill of Rights, and it originally had 12 — not 10 — protections for citizens’ rights.”
“On Dec. 20, 1787, Jefferson wrote to James Madison about his concerns regarding the Constitution. He said, bluntly, that it was deficient in several areas. “I will now tell you what I do not like,” he wrote. “First, the omission of a bill of rights, providing clearly, and without the aid of sophism, for freedom of religion, freedom of the press, protection against standing armies, restriction of monopolies, the eternal and unremitting force of the habeas corpus laws and trials by jury in all matters of fact triable by the laws of the land, and not by the laws of nations.”
“
“Such a bill protecting natural persons from out-of-control governments or COMMERCIAL MONOPOLIES shouldn’t just be limited to America, Jefferson believed. “Let me add,” he summarized, “that a bill of rights is what the people are entitled to against every government on earth, general or particular; and what no just government should refuse, or rest on inference.”“
“The following year, Jefferson wrote about his concerns to several people. In a letter to Mr. A. Donald, on Feb. 7, 1788, he defined the items that should be in a bill of rights: “By a declaration of rights, I mean one which shall stipulate freedom of religion, freedom of the press, freedom of commerce against monopolies, trial by juries in all cases, no suspensions of the habeas corpus, no standing armies. These are fetters against doing evil, which no honest government should decline.”“
“Jefferson kept pushing for a law, written into the Constitution as an amendment, which would guarantee liberties for citizens, prevent companies from growing so large they could dominate entire industries or have the power to influence the people’s government and reduce the possibility of the nation being taken over……. “
my bold
Seems Jefferson’s concerns where more than legitimate, again!
“no standing armies” .. imagine that ..
this is a classic, Scarecrow, thanks.
It is truly amazing how the Obama Administration and the Democratic majorities have been just snoozing along while the greedy, criminal corporate speculators are jacking up the price of oil in the futures markets and thereby stealing millions of dollars each day from American motorists.
This greed-driven rigging of the oil futures market last year led to retail gasoline prices about $4.50/gallon in the summer of 2008. Why doesn’t President Obama order a crackdown on the oil futures markets? Hedge funds are criminal enterprises that bet against America. They should be put out of business. No one who is not able to accept physical delivery of thousands of barrels of oil should be allowed to participate in the oil futures markets. Keep the criminal speculators out of the oil futures markets.
The solution is more and better Democrats.
Be sure to open your wallets in 2010.
That’s it in a nutshell !! Shit !!!
Scarecrow’s interpretive skills are outstanding. I have barn doors and hinges for sale. No latches, however. In the next “Star Wars” movie, Summers will play Jabba The Hut.
He is beginning to look a little porky. It’s all those free lunches with lobbyists.
Blue America up at the mothership with Jonathon Tasini, candidate for US Senate from New York
The 2010 elections are as important for the progressive movement as were the 2008 Presidential elections.
Be ready for the fight as conservatives try to claw their way back into power.
Judging from the rhetoric coming from the right , the 2010 elections are bound to be a mud-slinging , sleaze filled affair
The taxpayer is left with the job of mucking out the barn.
Ok this sounds like what Herbert Hoover did only now the tax payers are stabilizing the economy kind of by bailing out the rich?
The rich of course just want the cash they do not want the government to have a say in how the money is spent.
The rich want the Government to just sit down and shut up just like their Stock Holders did all throughout this Crisis.
Helicopter Ben this bailout the Rich strategy is a Conservative approach to fix Herbert Hoover’s failed Lazzie Faire or government should not regulate business approach.
Ben realized the secret when unregulated Capitalism fails Socialize the Losses and bailout the Rich its Tickle Down Economics its Socialism the Rich would approve of.
This was a pretty good explanation, but it seems imperative — if a bit obvious — to extend the metaphor to leaving it to us taxpaying stable boys & girls to muck out the barn. Only you might find a better word than “muck.”
The Constant Weader at http://www.RealityChex.com