The Intoxication of Larry Summers By BILL MOYERS and MICHAEL WINSHIP

[leftchick]

Changing the Rules of the Blame Game

http://www.counterpunch.org/moyers04082009.html

By BILL MOYERS and MICHAEL WINSHIP

A cartoon in the Sunday comics shows that mustachioed fellow with monocle and top hat from the Monopoly game - "Rich Uncle Pennybags," he used to be called - standing along the roadside, destitute, holding a sign: "Will blame poor people for food."

Time to move the blame to where it really belongs. That means no more coddling banks with bailout billions marked "secret." no more allowing their executives lavish bonuses and new corporate jets as if they've won the megalottery and not sent the economy down the tubes. And no more apostles of Wall Street calling the shots.

Which brings us to Larry Summers. Over the weekend, the White House released financial disclosure reports revealing that Summers, director of the National Economic Council, received $5.2 million last year working for a $30 billion hedge fund. He made another $2.7 million in lecture fees, including cash from such recent beneficiaries of taxpayer generosity as Citigroup, JP Morgan and Goldman Sachs. The now defunct financial services giant Lehman Brothers handsomely purchased his pearls of wisdom, too.

Reading stories about Summers and Wall Street you realize the man was intoxicated by the exotic witches' brew of derivatives and other financial legerdemain that got us into such a fine mess in the first place. Yet here he is, serving as gatekeeper of the information and analysis going to President Obama on the current collapse. We have to wonder, when the President asks, "Larry, who did this to us?" is he going to name names of old friends and benefactors? Knowing he most likely will be looking for his old desk back once he leaves the White House, is he going to be tough on the very system of lucrative largesse that he helped create in his earlier incarnation as a de-regulating Treasury Secretary? ("Larry?" "Yes, Mr. President?" "Who the hell recommended repealing the Glass-Steagall Act back in the 90s and opened the floodgates to all this greed?" "Uh, excuse me, Mr. President, I think Bob Rubin's calling me.")

That imaginary conversation came to mind last week as we watched President Obama's joint press conference with British Prime Minister Gordon Brown. When a reporter asked Obama who is to blame for the financial crisis, our usually eloquent and knowledgeable President responded with a rambling and ineffectual answer. With Larry Summers guarding his inbox, it's hardly surprising he's not getting the whole story.

[leftchick]

1. ...

i am a kickin because this is a great piece

[damasterwc]

2. bill moyers and daisuke kotegawa are on the same page

it's totally screwed up that obama only listens to this clown. he was right by greenspan's side promoting these derivatives all these years. why the hell is he one telling the president what to do, and why the hell did obama send volker to the corner cuz he spoke up against it?!

rise up people! you put this president here, and here he is, siding with bushesque imperial policies!

this is financial imperialism, the elites are taxing our very existence to bail out computer formulas that are worth NOTHING with our tax money, and it's going to enslave many generations of us if they get away with it!!!

there will be NO MORE BAILOUTS until the banks have their toxic assets written down. the banks can be recapitalized after these toxic assets are dealt with, because there are in the size of hundreds to thousands of trillions of dollars in size! now they're bailing out life insurance!! this will not stop, there will be hyperinflation, we will be using wheelbarrows to buy bread if you do not rise up now and stop this lunacy!!!! the cancer is killing the patient and the "doctors" are trying to save the cancer even if it means we all die.

we need a real investigation, and we need it now. we need action.

echoing this, a leading japanese economist, daisuke kotegawa, currently the executive director representing japan at the IMF, has called for an urgent, simultaneous, government-sponsored inspection of all the major banks, to evaluate and write down the entire gamut of securitized products. these toxic assets should either be valuated at zero and taken over by a "bad bank," he said, which would return funds to the original bank only if the assets proved to have some value in the future, or written off by the banks themselves. only if and when a bank could survive this process, should a government infusion of funds be considered. the current bail-out policies can do nothing to cure the crisis, he insisted.

kotegawa presented this policy at several university presentations in the US in the past month. in the 1990s and early in this decade, he was in various leading positions in the japanese ministry of finance, where (he told a recent gathering at brookings) he was considered the leading enemy of finance minister heizo takenaka, the primary architect of the koizumi regime's disastrous privatization and deregulation policies.

kotegawa argues that any approach to a bad bank which buys toxic assets from the banks at a discount, rather than taking them over at zero price, will eventually simply transfer huge debts to the taxpayer. he says that banks must be forced to conduct a self-evaluation of these assets, under federal guidelines, but that this must be followed by official inspection by government authorities, since left alone, banks have no incentive to honestly disclose assets, adding that lack of cooperation by banks should trigger criminal charges of executives.

[Karenina]

3. Bingo!