Monday, March 30, 2009

Time Travels With Larry

Larry Summers, that is. He's going to take us all back in time. First only a fortnight or so, to his speech at the Brookings Institution:

In a speech at the Brookings Institution think tank, Summers, long considered one of the nation's smartest economists, outlined the factors that led to the economic crisis.

The over optimism that led to a bubble in prices for real estate and other assets which, once it collapsed, set off an economic chain reaction that led to job losses, lower incomes and foreclosures.

"Prices fall. People sell. Instead of an expectation of new buyers, there is an expectation of new sellers. Greed gives way to fear. And this ... fear begets fear."

Breaking the "vicious cycle" was something only the federal government acting decisively could do, Summers said.

"We need to do what's necessary to get us out of the crisis we inherited," Summers said "... This was not a set of economic processes that would simply automatically fix themselves if you didn't act."

Bolding by me. Are you ready for the next flight backwards? It will be a decade, this time, all the way to 1999. Here's Larry Summers then, commenting on the repeal of the Glass-Steagall Act of 1933 (which was all about keeping bankers and brokers separate so that they wouldn't breed banksters):

''Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century,'' Treasury Secretary Lawrence H. Summers said. ''This historic legislation will better enable American companies to compete in the new economy.''

Read the whole 1999 article. It's worth it for a few bitter laughs.

I don't think that you should say you've inherited something from yourself. Well, maybe in the Buddhist sense of no permanent self, but not in the sense of Larry Summers of 2009 and Larry Summers of 1999. He should take a bit more responsibility for this smelly kettle of fish, given that he was one of the original cooks. And now he's been invited to cook for us again...
Phila found the 1999 article.