The widening circle applauding megamillionaire Larry Summers –of Harvard University, Washington, D.C. and Wall Street – agrees on one word to describe the colossal failure – Brilliant! That circle includes Barack Obama, who appointed Summers in 2009 to be his chief economic advisor, Bill Clinton, who made him Secretary of the Treasury, and the Harvard Board of Overseers, who named him president of Harvard University in 2001.
With Clinton and his promoter, Robert Rubin, who preceded him at the Treasury post before making over $100 million at Citigroup, Summers brilliantly deregulated Wall Street in 1999 and 2000 thus setting up one of corporate capitalism’s most harmful speculative binges.
With Clinton’s approval, these men pushed for the repeal of the successful Glass-Steagall Act of 1933, which separated investment banking from commercial banking. They then blocked the regulation of mounting speculation in complex, risky derivatives that led to the tanking of Wall Street in 2008. The collapse, caused by the plutocrats, cost 8 million jobs, drained away trillions of dollars in pension and mutual fund assets, and plunged the country into a “Great Recession”.
At Harvard, Summers remained brilliant in advising the University’s huge endowment into risky investments that lost it billions of dollars. His brilliance also led him to say that women just weren’t cut out for heavy duty scientific work.
Wall Street likes people labeled brilliant. It hides their greed. So firms like Goldman Sachs, JPMorgan Chase and Citigroup shelled out over $100,000 per visit to hear him speak his brilliance. While heading for bankruptcy and taxpayer bailouts (decided in one secret weekend in 2008 by Robert Rubin, Federal Reserve Ben Bernanke and Treasury Secretary Henry Paulson [fresh from the chairmanship of Goldman Sachs]) the shaky bank was receiving, according to Citigroup, brilliant “insight on a broad range of topics including the global and domestic economy.” Soon thereafter, Citigroup went belly up into the laps of you the taxpayers.
Clearly, Summers’ brilliance did not light a path toward banking prudence and productivity for the economy. But it sure did help Summers’ bank accounts. He reaped huge fees from the hedge fund D.E. Shaw, Silicon Valley startups, including equity positions in the Learning Club that charges its debtors interest rates reaching as high as 29 percent.
Summers has cultivated brilliance. He speaks fast and can be bombastic as he exhales his experience with international crises, government, Wall St. and academic life. He is quick with statistics and has a way of making vulnerable, smart persons around him feel inferior. That intimidating style did not work with former Federal Reserve Chairman Paul Volcker, who came to the Obama administration in 2009 with Summers, but as a lesser-titled economic advisor. So Summers worked the White House to marginalize Volcker who soon left. Later, when Volcker’s proposal to develop criteria to slow banking speculation with other people’s money started moving through Congress, Summers went ballistic. But his brilliance could not stop it from becoming law.
All the above matters because Larry Summers is one of the two candidates Barack Obama is considering for the Chair of the powerful Federal Reserve when Mr. Bernanke leaves in January. Many articles are being written about the pluses and minuses of Summers and his only competitor, Janet Yellen, the quieter vice-chair of the Federal Reserve who worried about the credit markets in 2007 pushing the US into a recession. She also worries about the government and the Federal Reserve not doing enough about unemployment.
The media commentary, thus far, has heavily focused on the personalities, pronouncements and establishment ties of Summers and Yellen. Who will get along with Obama best? The Federal Reserve is supposed to be defiantly independent of the White House but has become heavily politicized with its massive expansion of powers, including bailouts and printing money better known as quantitative easing.
Who will best supervise the banks? That goes to the level of the independence of the candidates’ character. Author Noam Scheiber, The Escape Artists: How Obama’s Team Fumbled the Recovery, who is often admiring of Summers, writes:
“My own view is that Summers is too fond of big shots – he’s always wanted to be part of the most exclusive club that will have him…. In my book, I describe the pleasure he took from attending dinners with top Wall Street executives as a Treasury official in the 1990s.”
Such awe of Wall Street – that has and will butter his bread – means that he would be more “credible” in the financial markets, though his brilliance may get under the skin of the Federal Reserve Governors who set interest-rate or monetary policy.
Obama’s White House circle is pitching for Summers with whom they have worked. Unfortunately, the typical Washington horserace is obscuring the many important policy issues regarding the Federal Reserve.
What will a new Fed Chair do to:
Establish legal limits to the expanded and legally dubious powers exercised by the Fed?
Improve the Fed’s own increasingly scary financial status?
Show commitment to enforcement of consumer protection laws?
Reconcile the Fed’s awkward position of pushing banks to be prudent while being funded by banks and governed by bankers through its regional offices?
Increase accountability by ending its refusal to be audited by Congress?
End the Fed’s chronic secrecy?
The answers to these questions should shape Obama’s selection of a new Fed Chair. What’s my choice? Either Nobel Prize winner economist Joseph Stiglitz or University of Texas Professor of Economics, James K. Galbraith who have brilliant records and writings as if people matter.
(For more information see http://forgetlarry.org/.)
Larry Summers and the Secret “End-Game” Memo
When a little birdie dropped the End Game memo through my window, its content was so explosive, so sick and plain evil, I just couldn’t believe it.
The Memo confirmed every conspiracy freak’s fantasy: that in the late 1990s, the top US Treasury officials secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet. When you see 26.3% unemployment in Spain, desperation and hunger in Greece, riots in Indonesia and Detroit in bankruptcy, go back to this End Game memo, the genesis of the blood and tears.
The Treasury official playing the bankers’ secret End Game was Larry Summers. Today, Summers is Barack Obama’s leading choice for Chairman of the US Federal Reserve, the world’s central bank. If the confidential memo is authentic, then Summers shouldn’t be serving on the Fed, he should be serving hard time in some dungeon reserved for the criminally insane of the finance world.
The memo is authentic.
To get that confirmation, I would have to fly to Geneva and wangle a meeting with the Secretary General of the World Trade Organization, Pascal Lamy. I did. Lamy, the Generalissimo of Globalization, told me,
“The WTO was not created as some dark cabal of multinationals secretly cooking plots against the people…. We don’t have cigar-smoking, rich, crazy bankers negotiating.”
Then I showed him the memo.
It begins with Summers’ flunky, Timothy Geithner, reminding his boss to call the then most powerful CEOs on the planet and get them to order their lobbyist armies to march:
“As we enter the end-game of the WTO financial services negotiations, I believe it would be a good idea for you to touch base with the CEOs….”
To avoid Summers having to call his office to get the phone numbers (which, under US law, would have to appear on public logs), Geithner listed their private lines. And here they are:
Goldman Sachs: John Corzine (212)902-8281
Merrill Lynch: David Kamanski (212)449-6868
Bank of America, David Coulter (415)622-2255
Citibank: John Reed (212)559-2732
Chase Manhattan: Walter Shipley (212)270-1380
Lamy was right: They don’t smoke cigars. Go ahead and dial them. I did, and sure enough, got a cheery personal hello from Reed–cheery until I revealed I wasn’t Larry Summers. (Note: The other numbers were swiftly disconnected. And Corzine can’t be reached while he faces criminal charges.)
It’s not the little cabal of confabs held by Summers and the banksters that’s so troubling. The horror is in the purpose of the “end game” itself.
Let me explain:
The year was 1997. US Treasury Secretary Robert Rubin was pushing hard to de-regulate banks. That required, first, repeal of the Glass-Steagall Act to dismantle the barrier between commercial banks and investment banks. It was like replacing bank vaults with roulette wheels.
Second, the banks wanted the right to play a new high-risk game: “derivatives trading.” JP Morgan alone would soon carry $88 trillion of these pseudo-securities on its books as “assets.”
Deputy Treasury Secretary Summers (soon to replace Rubin as Secretary) body-blocked any attempt to control derivatives.
But what was the use of turning US banks into derivatives casinos if money would flee to nations with safer banking laws?
The answer conceived by the Big Bank Five: eliminate controls on banks in every nation on the planet – in one single move. It was as brilliant as it was insanely dangerous.
How could they pull off this mad caper? The bankers’ and Summers’ game was to use the Financial Services Agreement, an abstruse and benign addendum to the international trade agreements policed by the World Trade Organization.
Until the bankers began their play, the WTO agreements dealt simply with trade in goods–that is, my cars for your bananas. The new rules ginned-up by Summers and the banks would force all nations to accept trade in “bads” – toxic assets like financial derivatives.
Until the bankers’ re-draft of the FSA, each nation controlled and chartered the banks within their own borders. The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives “products.”
And all 156 nations in the WTO would have to smash down their own Glass-Steagall divisions between commercial savings banks and the investment banks that gamble with derivatives.
The job of turning the FSA into the bankers’ battering ram was given to Geithner, who was named Ambassador to the World Trade Organization.
Bankers Go Bananas
The Generalissimo of Globalization
GregPalastOffice on Nov 30, 2009
Why in the world would any nation agree to let its banking system be boarded and seized by financial pirates like JP Morgan?
The answer, in the case of Ecuador, was bananas. Ecuador was truly a banana republic. The yellow fruit was that nation’s life-and-death source of hard currency. If it refused to sign the new FSA, Ecuador could feed its bananas to the monkeys and go back into bankruptcy. Ecuador signed.
And so on–with every single nation bullied into signing.
Every nation but one, I should say. Brazil’s new President, Inacio Lula da Silva, refused. In retaliation, Brazil was threatened with a virtual embargo of its products by the European Union’s Trade Commissioner, one Peter Mandelson, according to another confidential memo I got my hands on. But Lula’s refusenik stance paid off for Brazil which, alone among Western nations, survived and thrived during the 2007-9 bank crisis.
China signed–but got its pound of flesh in return. It opened its banking sector a crack in return for access and control of the US auto parts and other markets. (Swiftly, two million US jobs shifted to China.)
The new FSA pulled the lid off the Pandora’s box of worldwide derivatives trade. Among the notorious transactions legalized: Goldman Sachs (where Treasury Secretary Rubin had been Co-Chairman) worked a secret euro-derivatives swap with Greece which, ultimately, destroyed that nation. Ecuador, its own banking sector de-regulated and demolished, exploded into riots. Argentina had to sell off its oil companies (to the Spanish) and water systems (to Enron) while its teachers hunted for food in garbage cans. Then, Bankers Gone Wild in the Eurozone dove head-first into derivatives pools without knowing how to swim–and the continent is now being sold off in tiny, cheap pieces to Germany.
Of course, it was not just threats that sold the FSA, but temptation as well. After all, every evil starts with one bite of an apple offered by a snake. The apple: The gleaming piles of lucre hidden in the FSA for local elites. The snake was named Larry.
Does all this evil and pain flow from a single memo? Of course not: the evil was The Game itself, as played by the banker clique. The memo only revealed their game-plan for checkmate.
And the memo reveals a lot about Summers and Obama.
While billions of sorry souls are still hurting from worldwide banker-made disaster, Rubin and Summers didn’t do too badly. Rubin’s deregulation of banks had permitted the creation of a financial monstrosity called “Citigroup.” Within weeks of leaving office, Rubin was named director, then Chairman of Citigroup—which went bankrupt while managing to pay Rubin a total of $126 million.
Then Rubin took on another post: as key campaign benefactor to a young State Senator, Barack Obama. Only days after his election as President, Obama, at Rubin’s insistence, gave Summers the odd post of US “Economics Tsar” and made Geithner his Tsarina (that is, Secretary of Treasury). In 2010, Summers gave up his royalist robes to return to “consulting” for Citibank and other creatures of bank deregulation whose payments have raised Summers’ net worth by $31 million since the “end-game” memo.
That Obama would, at Robert Rubin’s demand, now choose Summers to run the Federal Reserve Board means that, unfortunately, we are far from the end of the game.
Special thanks to expert Mary Bottari of Bankster USA BanksterUSA.org without whom our investigation could not have begun.
The film of my meeting with WTO chief Lamy was originally created for Ring of Fire, hosted by Mike Papantonio and Robert F. Kennedy Jr.
Further discussion of the documents I laid before Lamy can be found in “The Generalissimo of Globalization,” Chapter 12 of Vultures’ Picnic by Greg Palast.
Updated: Aug.27, 2013
Larry Summers End Game for America
TheAlexJonesChannel on Aug 27, 2013
Alex also welcomes New York Times-bestselling author and a freelance journalist for the British Broadcasting Corporation, as well as the British newspaper The Observer, Greg Palast. Greg talks about his latest article on the Larry Summers End Game memo covering a formerly secret plan between Treasury Department officials and the international bankster cabal to wage war on the global financial system.
from the archives:
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