Which Way Wednesday – So Long Summers!

Larry Summers is out!

Hopefully this portends a shake-up of the Administration’s economic policy but that will very much depend on who is appointed to replace him.  It is, once again, the economy stupid and Larry’s stint as Director of the National Economics Council has given us far too much of the same at a time where we really needed — change. As Barry Rhitholtz points out:

He was one of the chief architects of the crisis. In addition to believing all of the usual foolishness about efficient markets, he bought into the radical deregulation arguments pushed by the free market absolutists.

Summers was Treasury Secretary when Glass Steagall was repealed. Instead of speaking out against the irresponsible Gramm–Leach–Bliley Act (Financial Services Modernization Act of 1999), he actively supported it. Instead of explaining to the public how Glass Steagall prevented Wall Street crises from spilling over into Main Street for 65 years, he rolled over for Citibank.  The repeal of Glass Steagall was not a cause of the crisis, but it allowed the net damage to be far, far worse than it would have otherwise been. And it was emblematic of the corporate takeover of the legislative process. For a fee (campaign donation) you could write your own regulations. How could that ever go wrong?

Even more ruinously, Summers oversaw the passage of Commodities Futures Modernization Act of 2000 that exempted financial derivatives from all regulatory oversight. The CFMA made the AIG collapse not only possible, but likely. It helped to set up both Lehman and Bear Stearns. CFMA allowed AIG FP to write over $3 trillion in derivatives, reserving precisely zero dollars in case an underwritten derivative needed to be paid.

Conservatives should not be celebrating the departure of Larry Summers, he was a guy who “played ball” with Big Business and it is very likely that his replacement will have a less friendly stance towards our Corporate Citizens, who made 60% of the income in this country in 2009 but paid just 6% of the taxes ($138Bn).

Larry has to get out of town before the Administration goes after his meal-ticket and begins asking Big Business to pay their fair share, an issue that is very likely to shape the next election cycle.  The chart on the left is a measure of taxes paid in relation to GDP and you’ll notice that corporations now pay 75% less than they did in the 50s.  Income taxes are now 6 times the level…

….ahhhhh end of the free article! Uncle Phil doesn’t let me post the entire article for free! Fortunately for you, I’m his nephew and can get you a special discount on his site! Just follow this link:

http://philstockworld.com/membership/signup.php?affiliate_special_signup=1&coupon_or_referrer=jad714

You see that link there? I earn commission for everyone who signs up and YOU get a discount. Want to be on the commission side of that deal? My Uncle has me signed up under the affiliate program and wants more people to do it as well. If you would like to refer people and earn commission, please e-mail me at jad714 at aol.com (******@aol.com). It doesn’t cost you a single penny and all it takes to earn money is to refer people using your personal link.

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About jad714

I'm 17 and freshly entering the world of stocks! I'm using my Uncle's website at www.philstockworld.com to get my information. His articles are fascinating!
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