Obama's Economic Council may be on the way out, but the damage is done.

Good Bye Larry
By L. Randall Wray
http://www.benzinga.com/life/politics/10/09/501534/good-bye-larry

Isn't it remarkable that President Obama's economic team is suddenly itching to return to academia? The latest economic advisor to give in to the clarion call of the classroom is Larry Summers, following closely on the heels of Christina Romer, who surprised her department chair by announcing that she'd be teaching this year. To be sure, in Summers's case, it is not so clear that his Harvard colleagues are looking forward to his return—as President of the university he offended most of the faculty by arguing that women are inherently inferior when it comes to science. That was by no means the first time he behaved like a bull in a china shop. As chief economist at the World Bank he had argued that developing nations ought to serve as toxic waste dumping grounds for rich countries. He also wrongly claimed that California's energy crisis in 2000 was caused by excessive government regulation—rather than by fraudulent dealings of Enron.

Still in terms of the real damage he has done, nothing comes close to his actions when he was serving Wall Street's beck and call in the administration of President Clinton. He lobbied for repeal of the Glass-Steagall Act, letting banks get more involved in the securities business that blew them up in 2007. He also opposed regulation of the derivatives market, attacking the head of the Commodities Futures Trading Commission , Brooksley Born—perhaps the only member of the Clinton administration who had any sense about financial markets. Summers helped to ban the federal government from regulating credit default swaps, and helped to deregulate the commodities markets. Most importantly, he helped to make it possible for pension funds to speculate in commodities like food and oil. Thus, he contributed directly to the speculative frenzy that drove up gas prices at the pump, and inflated food prices that brought on starvation around the globe.

Wall Street immediately rewarded Summers with $8 million in consulting and speaking fees. Most amazing of all, President Obama thanked him for helping to create the global crisis by appointing him as top economic advisor in his administration. Summers was the gift that just kept on giving—to Wall Street. He helped to devise the bail-out that spent, lent, or guaranteed more than $20 trillion to rescue the financial sector. Whilst providing barely a few peanuts for main street.


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Two years on, there is still no hint that Obama wants change. Voters are tired of audacity. They were promised the audacity of hope, not the audacity to continue to shift income to the wealthy. And yes, the data are out. President Obama is presiding over the biggest wealth redistribution in favor of the rich the US has ever seen. Forty million Americans are on foodstamps; forty four million are living below the poverty line. And the rich are richer than ever before. This is not a coincidence—it was the Clinton strategy of shifting an ever larger share of GDP and corporate profits to the financial sector. The economy has collapsed under the weight of all that finance. And yet we still see no evidence that the President plans to change course.

http://www.benzinga.com/life/politics/10/09/501534/good-bye-larry