"Larry Summers is one of the most important economists in the world. He’s been the chief economist at the World Bank. He was Treasury Secretary under President Clinton. He was director of the National Economic Council under Obama."
I am sorry Bari but with CV like this, Mr Summers is one of the most responsible for financial issues USA is…
"Larry Summers is one of the most important economists in the world. He’s been the chief economist at the World Bank. He was Treasury Secretary under President Clinton. He was director of the National Economic Council under Obama."
I am sorry Bari but with CV like this, Mr Summers is one of the most responsible for financial issues USA is facing now. He was one of biggest proponents of abolishing of Glass–Steagall Act, which lead to financial meltdown in 2008. He didnt "predicted" that. Consequences of this, we see still today.
His testimony as Treasury Secretary to Congress about effects of having permanent Normal Trade Relations with Chinas and its assentation to WTO in 2000 is legendary on how wrong it was. Entire thing can be found her
**There are, however, three crucial advantages to the United States in passing this bill, which I would like to focus on today:
-First, there are the direct and commercial benefits of the market opening agreement that we concluded last fall.
-Second, there are the economic and broader benefits to the United States of promoting economic and social change in China.
-Third, there is the ultimate enhancement of America's national security interests that comes from integrating China more closely with the community of nations.**
In reality only one thing happened, Wall Streat has outsourced all American Manufacturing to China, thus killing manufacturing heartlands of USA, and making us dependent on Communist Dictatorship.
Larry Summers is thus one of the "experts" that got us in this mess. He supported outsourcing of US manufacturing to China, then supported abolishing regulation that kept Wall Street in check. He didnt predict anything.
Larry Summers only gets respect because he is one of the few prominent lefty economists who is not a complete political hack or left wing nutjob. But, you are correct that he has been wrong about almost everything.
Thank you for that breakdown, I wonder what investments he has in his support of green energy and this new package that was just passed. I miss the days when a single bill was voted on.
Yeah, when I was young I thought we should trade with China, reasoning that if we needed each other then we were less likely to kill each other. Ah, the Naïve optimism of the youth. It did not occur to me that a kleptocracy clothed in a utopian ideology might grow stronger rather than change to become more free. Seems bloody obvious to me now.
PatriotD, I have a different take; the corporate capitalist saw an untapped market of 1.2 billion workers and consumers. And corporations cared more about their stockholders than their workers.
Pretty spot on Raziel. Milton Friedman is ultimately correct once again: the government controls the money supply and when there is too much money chasing too few goods you get inflation. Unfortunately for us rubes Biden completely shut down oil and gas which really is torch raising inflation.
How is printing more money during inflationary periods going to lower inflation? It isn't. The UniParty is just sending YOUR money to their patrons who are the richest people in the world.
Many good points, but you're incorrect to say that the repeal of Glass-Stegall led to the financial crisis of 2008. It was the mortgage industry in the US that caused that crisis, and Glass-Steagall never regulated the mortgage industry.
Glass-Steagall separated commercial and investment banking. If Glass-Steagall had remained in effect the crisis of 2008 would still have taken place, and the fallout would have been even worse.
Think back to 2008. Bear-Stearns had failed and its share holders were wiped out. Lehman Brothers had failed and was liquidated. Merrill Lynch and AIG were on the brink. Bank of America stepped in and saved Merrill Lynch, which was only possible because Glass-Steagall had been repealed.
What would 2008 have been like if a third major investment bank had failed? Glass-Steagall would have assured that.
Fannie and Freddie had a lot to do with causing that crisis, but Glass-Steagall wouldn't have prevented their gross irresponsibility either.
If Glass-Steagall was in place, actually crisis would be much milder, because it would be contained only to investment banks in USA. Commercial banks in USA would have been unaffected thus it would be mild recession and not meltdown that we saw 2008.
Reason for crisis started with mortgages, but it was spin out of control by collateralized debt obligations (CDO). Bassicly all banks started making bets that CDOs are all 100% safe with no risk because US housing market only goes up. These CDOs were packaged by newly merged commercial investment banks and old investment banks and then sold to pension fonds, banks abroad and others. This thing with CDOs was not possible during Glass-Steagall.
There was a reason why we never had similar meltdown before (since 1933), and that reason was Glass-Steagall, yes it was crude instrument, but it kept Wall Street in check, especialy speculations on Housing and Pension markets.
With Glass-Steagall Fannie and Freddie would have not have incentive to create and sell CDOs.
We never had a similar meltdown before because mortgage lending standards were higher. Do you remember the days when you had to put 20% down to buy a principal residence? The lowering of standards was done by Fannie and Freddie, which were landing pads for Democrats.
We had financial engineering while Glass-Steagall was in force. Junk bonds became a big thing in the 1980s. Investment banks would have created all kinds of dubious instruments if Glass- Steagall had been in effect.
Have you ever heard of Long Term Capital Management? It was a hedge fund that nearly brought down the entire international financial system in 1998 while Glass-Steagall was fully in effect. Glass-Steagall is not the magic wand you make it out to be.
While we can speculate what would or would not have happened if Glass Steagall had been in effect, one fact is clear. Bank of America would not have been able to rescue Merrill Lynch if it had been in effect and the crisis of 2008 would have been much worse.
Specifically, "The meltdown was the consequence of a combination of the easy money and low interest rates engineered by the Federal Reserve and the easy housing engineered by a variety of government agencies and policies. Those agencies include the Department of Housing and Urban Development (HUD) and two nominally private "government-sponsored enterprises" (GSEs), Fannie Mae and Freddie Mac. The agencies — along with laws such as the Community Reinvestment Act (passed in the 1970s, then fortified in the Clinton years), which required banks to make loans to people with poor and nonexistent credit histories — made widespread homeownership a national goal. This all led to a home-buying frenzy and an explosion of subprime and other non-prime mortgages, which banks and GSEs bundled into dubious securities and peddled to investors worldwide. Hovering in the background was the knowledge that the federal government would bail out troubled "too-big-to-fail" financial corporations, including Fannie and Freddie."
And my personal favorite: https://www.villagevoice.com/2008/08/05/andrew-cuomo-and-fannie-and-freddie/ - all about how Clinton's appointee, Mr. Andrew Cuomo, bragged about how he put these measures in place in the name of, wait for it... wait for it.... "Social Justice." 2008 folks. 2 years before the capture of most of the Ivy's by the Critical Theorists and SJWs. Ah... had we only known then what we know now.
As I recall, during the bailouts the government basically guaranteed, the home loans, and never stopped. Or something like that... I don't remember the detail... do you?
Additional support that repeal was a significant factor (from investopedia)
“On November 12, 1999, President Clinton signed the Financial Services Modernization Act that repealed Glass-Steagall.16 Congress had passed the so-called Gramm-Leach-Bliley Act along party lines, led by a Republican vote in the Senate.
The repeal of Glass-Steagall consolidated investment and retail banks through financial holding companies. The Federal Reserve supervised the new entities. For that reason, few banks took advantage of the Glass-Steagall repeal. Most Wall Street banks did not want the additional supervision and capital requirements.
Those that did became too big to fail. This required their bailout in 2008-2009 to avoid another depression.”
Well said. Bari dropped the ball when she didn't press him on exactly how this bill would reduce inflation.
It gives huge dollars to the producers of wind and solar power, both of which are flawed technologies that couldn't exist without govt subsidies, and if you watch Michael Moore's documentary Plane of Humans, produce as much carbon as they save. Same with EVs. And I don't see solar panels or EVs in middle class neighborhoods. So this bill provides huge dollars to the corporations that produce solar, the countries (mostly China) that produce the raw materials and/or batteries, and the mostly well off consumers of the products.
What troubles me more is creating an army of IRS agents to go after the middle class. Personal tax revenues have grown from $1.8T in pre-pandemic 2019 to $2.1T in 2021. But that's not enough? Where is the evidence that there is so much tax fraud going on that justifies this massive increase in auditors during a period where trust in our federal agencies has plummeted?
I always appreciate Bari providing alternate views, but this article caused my respect for Larry Summers, who I never really paid attention to, to plummet.
IRS won't be going after the middle class. Going after anyone who criticizes the regime, which includes most of us here (and especially Nellie Bowles). Also going after anyone who tries to circulate honest information, which is called "misinformation" by the regime that wants to keep people ignorant. It's not about money, it's about power.
Jon, I agree with you that huge subsidies will be lavished on solar and wind. A fool's errand? - time will tell.
But just as a point of comparison - by many accounts the fossil fuel industry received close to $20 billion in subsidies from US governments last year..
Bullet proof vests. Training. Guns. Ammo. Surveillance equipment. Expanded SWAT support. The creation of the "social credit score". The merger of social media comments and posts with tax records and banking information. The "...rules for thee not for me.." selective enforcement, the legal council you cannot afford, seizure of property, prosecution and incarceration of dangerous citizen "terrorist" offenders.
FYI, the tax gap is with underreporting by individuals, the so called under world economy and organized crime. That’s why the IRS agents will have guns, to investigate criminals. And I agree, they will also be pointed at middle class taxpayers. My preferred approach to the tax gap is to reduce spending. But democrats would rather increase taxes. Shameful.
Agreed on all counts. The IRS expansion piece is especially bothersome. I do wish she had asked him why they’re going to need to be armed?? And why we need more agents than the CIA, FBI and Border Control combined?
I’ve sold records for many years, I sell records in order to buy more records, sometimes the records I sell aren’t cheap and most of the records I buy aren’t cheap. This year, I received an email from PayPal informing me I have a tax code to connect my account to my tax filing. So now my obsessive collecting of records is earn income. Guess what happened this year, I was audited. Even though I pay quite an ungodly amount of taxes through my job, now I’m having to hire someone to sort this out for me. Wish I was one of the billionaires who could support my record collecting and stay out of trouble with the federal government.
New IRS agents will be seeking individuals who underreport their income. Underworld and organized crime. This is where the tax gap is. This is why they need guns.
The real joke here is that all the folks who really have money (Gates, Clintons, etc) are allowed to funnel their wealth into their own personal “charitable organization” thus exempting most of their income completely from the tax man. So they get to create their own empires and lobby for their own interest under the guise of good works. The billionaire tax is a myth.
Meanwhile “self employed” hard working individuals pay 15%, not 7% social security (7%which they won’t get back); and they often pay unemployment compensation to boot -which they can’t collect because who can lay themselves off?
And back at the ranch, large corporations, government entities and especially Congress (!!) have their own elitist, self-funded medical insurance programs, while individuals and small business are the ones who fund coverage for the poor, disabled and non working....
In the final analysis, ironically, working class folks who hold lower paying jobs find they simply can’t afford the one-size-fit-all Obama care policies. (And come yo discover that Obama care policies are actually quite a step down in coverage for most individuals and more expensive than previous private insurance.)
And now Insult to injury-- the large pharmacy companies & many big corporations will only offer a 30 hour week to lower salaries employees because it allows them to totally side-step the cost of providing medical insurance to their employees.
In short, Obama care is a total bust in terms of providing cost effective health care- simply put, it’s a convoluted health INSURANCE plan - not a health CARE plan.
And more fallout: Many of the most efficient, independent doctors & medical providers have been economically forced to merge with a few super large bureaucratic healthcare organizations given the onerous requirements of Obama care. Result: now we see less choice, mega medical corporations; hospital administrators multiplying in number and salary level, and doctors pushed into being subservient, obedient employees. (Take notice: these days the best are NOT going into medicine.) Most of my best specialists have retired as soon as possible.)
Yes, more lower income folks have access to free or very low cost medical insurance, but look again . First, they only qualify for a lower tier of care and service. Second, there were far more efficient ways of assuring everyone gets decent direct medical care than setting up a the totally bureaucratic Obama care system of medical insurance to serve the poor.
How can I say this? Many nonprofit providers will give you an upfront 30% discount if you pay day of service and they can avoid cost & hassle of billing insurance.
So yep, that’s your cost of convoluted system ..at least a 30% surcharge. And still too expensive and out of reach for many Americans.
And this giant $$$$ bill is supposed to help?Yeah, this economist sounds pretty out of touch to me. The Morlock high tech overlords are winning.
Shirley, evidently, you’re unaware that you’re displaying your ignorance! Firstly, The CIA is not a law enforcement agency; as a rule, their agents are not armed. The approximate 20,000 armed United States border patrol agents who work for homeland security which employs 240,000 people, and the FBI employs approximately 35000 people, of them 7800 are special agents who carry weapons. The IRS employs around 80,000 people; a little over 2000 are armed special agents. So if we do the math: 20,000 border patrol +7800 FBI agents would be ten times the IRS special agents. Shirley, I have now armed you with the facts!
you're focusing on the "armed" piece it seems, but the numbers are still interesting. You say the FBI employs 35,000 people, but the IRS is about to hire double that number, doubling the size of their agency. Whether armed or not they'll be aiming their calculators at us to try to make up for the trillions of dollars of wasted spending. no matter how much we pay in taxes (and we already pay a lot) we will never make up for the excesses of the bloated US government. And given what we already know about a weaponized IRS, I'm not all that comforted by your numbers - it's still too many.
Shirley, my intent was never to comfort you; I simply presented the facts to the best of my knowledge. The IRS workers would be hired over the next decade and never grow by more than a manageable 15% each year; these people, for example, would help collect the uncollected 554 billion in 2019. There is only one reason I think people support tax cheaters: there are cheaters themselves!
Simple. To catch rich tax cheats who have been avoiding billions of their share of taxes because the IRS hasn't been enforcing the law, and to make them pay their share like the rest of us. Or are you in favor of tax cheating?
Rocky...simple, do you not see, they are not breaking law, the law is written and hence they use law to avoid. Bottom, in order to avoid a tax, people invest, which helps build the economy...come on!
Now for a Government to get more of YOUR money, they'll raise the cost of the companies that YOU buy from, hence those co. will raise the cost of goods that YOU buy...bingo. thanks. Rocky, it just sounds like "they got you"...again. take a breath.
Who do you think wrote the tax laws. They are designed to protect rich people. If you stacked the tax code as written on sheets of paper it would literally stand three feet tall. Rich people pay something like 70% of all taxes paid. They are not going to pay more. These agents are going after us. We need a flat tax. No write offs. Everyone below the poverty rate pays. It’s the only way. The current tax code is a social engineering mess. It isn’t a tax code.
I couldn’t have said it any better. I’m surprised Bari didn’t see the ultimate irony of her story that all these supposed experts play both sides and are all part of a cabal to destroy the middle class and enrich themselves. Because, of course, they are sooooo much smarter than all of us, just ask them! I’d rather pick a random group of people off the street than these “intellectuals” to run our monetary and fiscal policy. I also don’t appreciate the snotty disdain for Trump who is in fact the only person in my lifetime whose policies were focused on benefitting the little guy and focusing on America First vs last.
You are probably referring to the Shleifer affair. Not well known in the US. All too well known in Russia. Was L. Summers involved. Sad to say he was. For fun I Googled summers. I found no mentions of the Shleifer affair. Summers was tarred and feathered for referencing the GMVH (Greater Male Variability Hypothesis), not his ties to Shleifer.
If you think that anything that happened in Russia has to do with American advice you have no idea how former communist countries work. State assets were sold for cents on the dollar (or much less) because powerful, dangerous people hugely benefited. You’ve heard about the Russia privatisation story but not about other smaller countries. It went exactly the same way, without any American involvement or advice. You’re buying into some weird, Americano-centric version of history that everybody in Eastern Europe laughs at.
This comment is late, and I don't expect that very many people will see it. But I worked on the International Space Station in the mid-'90s. I worked with two Russian contractors, Khrunichev and Energia. The Khrunichev people were smart. They knew their stuff. They were, in my experience, as talented as any American or European company. I would have been proud to work alongside them. The other company was Energia. We all knew that Energia had government connections. Their work was crap. They didn't document things properly, and they frequently made changes in production that weren't documented. We learned, through hard experience, that their engineering drawings often did not reflect what was actually built. Guess how it came out? To keep a long story short, Putin forced Khrunichev to merge with Energia, and most of Khrunichev's employees and management were dismissed.
Yeah, not surprisingly as corrupt institutions are corrupt in part because they are based on cronyism and political beliefs and not merit or competence doing the job at hand. Appreciate your comment, late or not.
This reminds me of a statement made by Matt Taibbi on this topic in a Common Sense interview: “We [the Americans] practically owned the place [in the early ‘90s]”. Poor Matt, he lived in Russia at that time and still never learned that in Russia you don’t own anything unless you have a gun, very specifically the biggest gun. You can imagine the American economists in Moscow ordering around the local big guys in black leather jackets who were putting their guns on the table in business meetings (real case!) ?
This reminds me of a statement made by Matt Taibbi on this topic in a Common Sense interview: “We [the Americans] practically owned the place [in the early ‘90s]”. Poor Matt, he lived in Russia at that time and still never learned that in Russia you don’t own anything unless you have a gun, very specifically the biggest gun. You can imagine the American economists in Moscow ordering around the local big guys in black leather jackets who were putting their guns on the table in business meetings (real case!) ?
The “American advisors” for the “shock therapy” of abrupt privatization in the early ‘90s were just a simple smoke screen for powerful local interests, ready to physically eliminate anybody standing in their way. And what was the alternative? Supposedly keeping assets into the (corrupt) government hands until the ex-communist countries would reach a level of “civic and political awareness” that would have allowed honest privatisation? I lived in Russia too, and I know that will take much, much longer than our life spans, if ever. Just look where Russia is now, on the path to civic spirit and honest business. Same in my country. On the other hand, look at the Czech Republic, Hungary and Poland, they succeeded to do it reasonably right. Let’s stop blaming the deep historically rooted shortcomings of our people on the West.
You’re taking here about a completely different thing. In Soviet propaganda in the West, it was called “whataboutism”. How can you criticize our lack of freedom? What about the way you treat your black people?”
Two wrongs don’t make a right. Let’s put our own house in order first and then complain about the evil Western elites, who supposedly did us so much evil.
I would clarify, "Some are just as evil, cynical and narcissistic as the old Soviet elites were." That is very true, and they remain admired as the media doesn't cover their excesses, they ignore the obvious and celebrate the ideological pathology. Bill Gates is a good example - Mr. "math is racist" (I got that from his own website, it was his second largest education donation last year), he's selling climate change (e.g. telling everyone that we need to stop eating beef to reduce carbon emissions despite that being an infinitesimal carbon creator when compared to say coal or third world countries burning dung and wood)and buying up farmland. So he can now independently impact food production in the US - just deny or otherwise put restrictions on the land leases.
CL - at a macro level I guessed that the real power before and after the fall of the wall changed but by not more than half. Meaning that the party members (people) controlling most wealth (thinking monopolist/oligarch) before and after the fall didn’t change that much, but the political systems around them did. So the move was from one form of corruption/tyranny to another. You were there, do you know about that?
Thanks CL. I've read that USSR was full of true believers, but people are people, trade is trade, and the political beliefs mostly inform what they think is okay and not okay. Most of the money ends up in the top x% regardless. The question is how well can the majority do, how bad does the bottom have it, and how productive and moral are the societies. The West has no monopoly on morality but compared to its peers, it is easy to show it as more productive, less tyrannical, more equal, more diverse, etc.
Yeah, I see it too. Commenting here is my attempt to "do something." Other than voting, contributing to reasonable political campaigns, and supporting good media outlets -- like common sense -- I'm not what else to do.
Agree that this one certainly was. As usual, I learned a lot about Summer’s in the comments - none of it good. You have to admit this is better than most. Also, the investigative reporting can be very good here. Sometimes crap, but normally not. The team is full of recovering Democrats, I cut them some slack. And, I like really Bari and Nelly and what they are trying to accomplish.
To be fair - a large part of the ability for privatization and capitalism to properly function is a adherence to the rule of law. The Russians seem to have ignored that part
"Larry Summers is one of the most important economists in the world. He’s been the chief economist at the World Bank. He was Treasury Secretary under President Clinton. He was director of the National Economic Council under Obama."
I am sorry Bari but with CV like this, Mr Summers is one of the most responsible for financial issues USA is facing now. He was one of biggest proponents of abolishing of Glass–Steagall Act, which lead to financial meltdown in 2008. He didnt "predicted" that. Consequences of this, we see still today.
His testimony as Treasury Secretary to Congress about effects of having permanent Normal Trade Relations with Chinas and its assentation to WTO in 2000 is legendary on how wrong it was. Entire thing can be found her
https://www.wsj.com/articles/SB957377738406963350
Small excerpt of what he clamed is following
**There are, however, three crucial advantages to the United States in passing this bill, which I would like to focus on today:
-First, there are the direct and commercial benefits of the market opening agreement that we concluded last fall.
-Second, there are the economic and broader benefits to the United States of promoting economic and social change in China.
-Third, there is the ultimate enhancement of America's national security interests that comes from integrating China more closely with the community of nations.**
In reality only one thing happened, Wall Streat has outsourced all American Manufacturing to China, thus killing manufacturing heartlands of USA, and making us dependent on Communist Dictatorship.
Larry Summers is thus one of the "experts" that got us in this mess. He supported outsourcing of US manufacturing to China, then supported abolishing regulation that kept Wall Street in check. He didnt predict anything.
Another of his "pearls" can be found here :
https://www.deseret.com/1999/10/25/19472096/u-s-treasury-secretary-says-china-s-wto-entry-would-ease-disputes
For nice overview who Mr Summers really is check this old article (2013) in "The Nation"
https://www.thenation.com/article/archive/return-lawrence-summers-mr-spectacular-failure/
For his services to Wall Street in 2008 during financial meltdown, Mr Summers was paid $8 Million in speaking fees by Wall Street banks.
Larry Summers only gets respect because he is one of the few prominent lefty economists who is not a complete political hack or left wing nutjob. But, you are correct that he has been wrong about almost everything.
Thank you for that breakdown, I wonder what investments he has in his support of green energy and this new package that was just passed. I miss the days when a single bill was voted on.
Thanks for sharing those articles.
Admitting China to WTO was a colossal mistake, which haunts us today.
NAFTA's 1994 debacle wasn't much better. ("Better"? Did I say better?)
Raziel, you left out several co-conspirators that sold the American worker down the river, corporate America, Congress, and several presidents!
Yeah, when I was young I thought we should trade with China, reasoning that if we needed each other then we were less likely to kill each other. Ah, the Naïve optimism of the youth. It did not occur to me that a kleptocracy clothed in a utopian ideology might grow stronger rather than change to become more free. Seems bloody obvious to me now.
PatriotD, I have a different take; the corporate capitalist saw an untapped market of 1.2 billion workers and consumers. And corporations cared more about their stockholders than their workers.
Agree! And…
Money over country = no more country.
Always a thoughtful, reasoned, and fact based assessment. I always look forward to your comment, Raziel.
Raziel, when I see your name, I know I’m going to learn something.
Masterfully done Raziel. Thank you.
Amen Raziel!
Pretty spot on Raziel. Milton Friedman is ultimately correct once again: the government controls the money supply and when there is too much money chasing too few goods you get inflation. Unfortunately for us rubes Biden completely shut down oil and gas which really is torch raising inflation.
How is printing more money during inflationary periods going to lower inflation? It isn't. The UniParty is just sending YOUR money to their patrons who are the richest people in the world.
sounds pretty racist to me, not really but what isn't these days.
Haha!
Many good points, but you're incorrect to say that the repeal of Glass-Stegall led to the financial crisis of 2008. It was the mortgage industry in the US that caused that crisis, and Glass-Steagall never regulated the mortgage industry.
Glass-Steagall separated commercial and investment banking. If Glass-Steagall had remained in effect the crisis of 2008 would still have taken place, and the fallout would have been even worse.
Think back to 2008. Bear-Stearns had failed and its share holders were wiped out. Lehman Brothers had failed and was liquidated. Merrill Lynch and AIG were on the brink. Bank of America stepped in and saved Merrill Lynch, which was only possible because Glass-Steagall had been repealed.
What would 2008 have been like if a third major investment bank had failed? Glass-Steagall would have assured that.
Fannie and Freddie had a lot to do with causing that crisis, but Glass-Steagall wouldn't have prevented their gross irresponsibility either.
If Glass-Steagall was in place, actually crisis would be much milder, because it would be contained only to investment banks in USA. Commercial banks in USA would have been unaffected thus it would be mild recession and not meltdown that we saw 2008.
Reason for crisis started with mortgages, but it was spin out of control by collateralized debt obligations (CDO). Bassicly all banks started making bets that CDOs are all 100% safe with no risk because US housing market only goes up. These CDOs were packaged by newly merged commercial investment banks and old investment banks and then sold to pension fonds, banks abroad and others. This thing with CDOs was not possible during Glass-Steagall.
There was a reason why we never had similar meltdown before (since 1933), and that reason was Glass-Steagall, yes it was crude instrument, but it kept Wall Street in check, especialy speculations on Housing and Pension markets.
With Glass-Steagall Fannie and Freddie would have not have incentive to create and sell CDOs.
We never had a similar meltdown before because mortgage lending standards were higher. Do you remember the days when you had to put 20% down to buy a principal residence? The lowering of standards was done by Fannie and Freddie, which were landing pads for Democrats.
We had financial engineering while Glass-Steagall was in force. Junk bonds became a big thing in the 1980s. Investment banks would have created all kinds of dubious instruments if Glass- Steagall had been in effect.
Have you ever heard of Long Term Capital Management? It was a hedge fund that nearly brought down the entire international financial system in 1998 while Glass-Steagall was fully in effect. Glass-Steagall is not the magic wand you make it out to be.
While we can speculate what would or would not have happened if Glass Steagall had been in effect, one fact is clear. Bank of America would not have been able to rescue Merrill Lynch if it had been in effect and the crisis of 2008 would have been much worse.
Specifically, "The meltdown was the consequence of a combination of the easy money and low interest rates engineered by the Federal Reserve and the easy housing engineered by a variety of government agencies and policies. Those agencies include the Department of Housing and Urban Development (HUD) and two nominally private "government-sponsored enterprises" (GSEs), Fannie Mae and Freddie Mac. The agencies — along with laws such as the Community Reinvestment Act (passed in the 1970s, then fortified in the Clinton years), which required banks to make loans to people with poor and nonexistent credit histories — made widespread homeownership a national goal. This all led to a home-buying frenzy and an explosion of subprime and other non-prime mortgages, which banks and GSEs bundled into dubious securities and peddled to investors worldwide. Hovering in the background was the knowledge that the federal government would bail out troubled "too-big-to-fail" financial corporations, including Fannie and Freddie."
https://reason.com/2012/10/14/clintons-legacy-the-financial-and-housin/
And my personal favorite: https://www.villagevoice.com/2008/08/05/andrew-cuomo-and-fannie-and-freddie/ - all about how Clinton's appointee, Mr. Andrew Cuomo, bragged about how he put these measures in place in the name of, wait for it... wait for it.... "Social Justice." 2008 folks. 2 years before the capture of most of the Ivy's by the Critical Theorists and SJWs. Ah... had we only known then what we know now.
As I recall, during the bailouts the government basically guaranteed, the home loans, and never stopped. Or something like that... I don't remember the detail... do you?
Subprime mortgages were the root of the problem, not CDOs and not repeal of Glass-Steagall.
Additional support that repeal was a significant factor (from investopedia)
“On November 12, 1999, President Clinton signed the Financial Services Modernization Act that repealed Glass-Steagall.16 Congress had passed the so-called Gramm-Leach-Bliley Act along party lines, led by a Republican vote in the Senate.
The repeal of Glass-Steagall consolidated investment and retail banks through financial holding companies. The Federal Reserve supervised the new entities. For that reason, few banks took advantage of the Glass-Steagall repeal. Most Wall Street banks did not want the additional supervision and capital requirements.
Those that did became too big to fail. This required their bailout in 2008-2009 to avoid another depression.”
That doesn't support the claim that repeal of Glass-Steagall caused the crisis: "... few banks took advantage of the Glass-Steagall repeal".
Repeal was the reason BofA was able to save Merrill Lynch.
Perfect. I snorted coffee out of my nose when I read this:
BW: If you could have dinner with any historical figure, who would it be?
LS: John Maynard Keynes.
Well said. Bari dropped the ball when she didn't press him on exactly how this bill would reduce inflation.
It gives huge dollars to the producers of wind and solar power, both of which are flawed technologies that couldn't exist without govt subsidies, and if you watch Michael Moore's documentary Plane of Humans, produce as much carbon as they save. Same with EVs. And I don't see solar panels or EVs in middle class neighborhoods. So this bill provides huge dollars to the corporations that produce solar, the countries (mostly China) that produce the raw materials and/or batteries, and the mostly well off consumers of the products.
What troubles me more is creating an army of IRS agents to go after the middle class. Personal tax revenues have grown from $1.8T in pre-pandemic 2019 to $2.1T in 2021. But that's not enough? Where is the evidence that there is so much tax fraud going on that justifies this massive increase in auditors during a period where trust in our federal agencies has plummeted?
I always appreciate Bari providing alternate views, but this article caused my respect for Larry Summers, who I never really paid attention to, to plummet.
IRS won't be going after the middle class. Going after anyone who criticizes the regime, which includes most of us here (and especially Nellie Bowles). Also going after anyone who tries to circulate honest information, which is called "misinformation" by the regime that wants to keep people ignorant. It's not about money, it's about power.
Yep.
And they will have guns.
Jon, I agree with you that huge subsidies will be lavished on solar and wind. A fool's errand? - time will tell.
But just as a point of comparison - by many accounts the fossil fuel industry received close to $20 billion in subsidies from US governments last year..
Kevlar is expensive.
Bullet proof vests. Training. Guns. Ammo. Surveillance equipment. Expanded SWAT support. The creation of the "social credit score". The merger of social media comments and posts with tax records and banking information. The "...rules for thee not for me.." selective enforcement, the legal council you cannot afford, seizure of property, prosecution and incarceration of dangerous citizen "terrorist" offenders.
Multiply it by 84,000.
FYI, the tax gap is with underreporting by individuals, the so called under world economy and organized crime. That’s why the IRS agents will have guns, to investigate criminals. And I agree, they will also be pointed at middle class taxpayers. My preferred approach to the tax gap is to reduce spending. But democrats would rather increase taxes. Shameful.
It's obvious that Manchin sold his soul to the high pressure assault from the Squad and others. His constituents will not appreciate that.
Well, we still owe him a debt of gratitude along with what’s her name for refusing to support “build back better”
I agree.
He talks about the bathtub with too much water and then he goes and puts MORE water in it thinking the bathtub will simply grow.
Larry Summers is not a good person IMO.
Just another in a long history of tax/spend bureaucrats. Sorry to be so cliché, but it fits. They are totally detached from the citizens they govern.
Agreed on all counts. The IRS expansion piece is especially bothersome. I do wish she had asked him why they’re going to need to be armed?? And why we need more agents than the CIA, FBI and Border Control combined?
I’ve sold records for many years, I sell records in order to buy more records, sometimes the records I sell aren’t cheap and most of the records I buy aren’t cheap. This year, I received an email from PayPal informing me I have a tax code to connect my account to my tax filing. So now my obsessive collecting of records is earn income. Guess what happened this year, I was audited. Even though I pay quite an ungodly amount of taxes through my job, now I’m having to hire someone to sort this out for me. Wish I was one of the billionaires who could support my record collecting and stay out of trouble with the federal government.
New IRS agents will be seeking individuals who underreport their income. Underworld and organized crime. This is where the tax gap is. This is why they need guns.
The real joke here is that all the folks who really have money (Gates, Clintons, etc) are allowed to funnel their wealth into their own personal “charitable organization” thus exempting most of their income completely from the tax man. So they get to create their own empires and lobby for their own interest under the guise of good works. The billionaire tax is a myth.
Meanwhile “self employed” hard working individuals pay 15%, not 7% social security (7%which they won’t get back); and they often pay unemployment compensation to boot -which they can’t collect because who can lay themselves off?
And back at the ranch, large corporations, government entities and especially Congress (!!) have their own elitist, self-funded medical insurance programs, while individuals and small business are the ones who fund coverage for the poor, disabled and non working....
In the final analysis, ironically, working class folks who hold lower paying jobs find they simply can’t afford the one-size-fit-all Obama care policies. (And come yo discover that Obama care policies are actually quite a step down in coverage for most individuals and more expensive than previous private insurance.)
And now Insult to injury-- the large pharmacy companies & many big corporations will only offer a 30 hour week to lower salaries employees because it allows them to totally side-step the cost of providing medical insurance to their employees.
In short, Obama care is a total bust in terms of providing cost effective health care- simply put, it’s a convoluted health INSURANCE plan - not a health CARE plan.
And more fallout: Many of the most efficient, independent doctors & medical providers have been economically forced to merge with a few super large bureaucratic healthcare organizations given the onerous requirements of Obama care. Result: now we see less choice, mega medical corporations; hospital administrators multiplying in number and salary level, and doctors pushed into being subservient, obedient employees. (Take notice: these days the best are NOT going into medicine.) Most of my best specialists have retired as soon as possible.)
Yes, more lower income folks have access to free or very low cost medical insurance, but look again . First, they only qualify for a lower tier of care and service. Second, there were far more efficient ways of assuring everyone gets decent direct medical care than setting up a the totally bureaucratic Obama care system of medical insurance to serve the poor.
How can I say this? Many nonprofit providers will give you an upfront 30% discount if you pay day of service and they can avoid cost & hassle of billing insurance.
So yep, that’s your cost of convoluted system ..at least a 30% surcharge. And still too expensive and out of reach for many Americans.
And this giant $$$$ bill is supposed to help?Yeah, this economist sounds pretty out of touch to me. The Morlock high tech overlords are winning.
But hey, the Democrats got that passed and added a feather to their virtue signaling hat 😡😡😡😡😡.
Underworld types don’t file taxes. How will they know? They will be seeking us….
The honor system doesn’t mean much there I guess
Your neighbor could be underreporting income. Live above their reported income.
Or my neighbor could think that’s what I’m doing and report me
😡😡
Shirley, evidently, you’re unaware that you’re displaying your ignorance! Firstly, The CIA is not a law enforcement agency; as a rule, their agents are not armed. The approximate 20,000 armed United States border patrol agents who work for homeland security which employs 240,000 people, and the FBI employs approximately 35000 people, of them 7800 are special agents who carry weapons. The IRS employs around 80,000 people; a little over 2000 are armed special agents. So if we do the math: 20,000 border patrol +7800 FBI agents would be ten times the IRS special agents. Shirley, I have now armed you with the facts!
you're focusing on the "armed" piece it seems, but the numbers are still interesting. You say the FBI employs 35,000 people, but the IRS is about to hire double that number, doubling the size of their agency. Whether armed or not they'll be aiming their calculators at us to try to make up for the trillions of dollars of wasted spending. no matter how much we pay in taxes (and we already pay a lot) we will never make up for the excesses of the bloated US government. And given what we already know about a weaponized IRS, I'm not all that comforted by your numbers - it's still too many.
Shirley, my intent was never to comfort you; I simply presented the facts to the best of my knowledge. The IRS workers would be hired over the next decade and never grow by more than a manageable 15% each year; these people, for example, would help collect the uncollected 554 billion in 2019. There is only one reason I think people support tax cheaters: there are cheaters themselves!
"comfort you"? Weird.
Good luck with that audit Just Me. It's coming to you.
You still trolling? Figures. You never learn.
Uuuuuh. "facts"
That nasty "F-word", that gets the utterly uninformed going as the "N-word" does with the overly educated.
Bernd, a bizarre juxtaposition indeed!
Simple. To catch rich tax cheats who have been avoiding billions of their share of taxes because the IRS hasn't been enforcing the law, and to make them pay their share like the rest of us. Or are you in favor of tax cheating?
Rocky...simple, do you not see, they are not breaking law, the law is written and hence they use law to avoid. Bottom, in order to avoid a tax, people invest, which helps build the economy...come on!
Now for a Government to get more of YOUR money, they'll raise the cost of the companies that YOU buy from, hence those co. will raise the cost of goods that YOU buy...bingo. thanks. Rocky, it just sounds like "they got you"...again. take a breath.
Who do you think wrote the tax laws. They are designed to protect rich people. If you stacked the tax code as written on sheets of paper it would literally stand three feet tall. Rich people pay something like 70% of all taxes paid. They are not going to pay more. These agents are going after us. We need a flat tax. No write offs. Everyone below the poverty rate pays. It’s the only way. The current tax code is a social engineering mess. It isn’t a tax code.
Should read everyone above the poverty line pays
Bothersome? Lol, there aren’t that many billionaires. Who do ordinary Americans think they will go after when they run out of rich people?
I couldn’t have said it any better. I’m surprised Bari didn’t see the ultimate irony of her story that all these supposed experts play both sides and are all part of a cabal to destroy the middle class and enrich themselves. Because, of course, they are sooooo much smarter than all of us, just ask them! I’d rather pick a random group of people off the street than these “intellectuals” to run our monetary and fiscal policy. I also don’t appreciate the snotty disdain for Trump who is in fact the only person in my lifetime whose policies were focused on benefitting the little guy and focusing on America First vs last.
Exactly summers is part of the problems
He is back in so he considers himself the solution.
You are probably referring to the Shleifer affair. Not well known in the US. All too well known in Russia. Was L. Summers involved. Sad to say he was. For fun I Googled summers. I found no mentions of the Shleifer affair. Summers was tarred and feathered for referencing the GMVH (Greater Male Variability Hypothesis), not his ties to Shleifer.
If you think that anything that happened in Russia has to do with American advice you have no idea how former communist countries work. State assets were sold for cents on the dollar (or much less) because powerful, dangerous people hugely benefited. You’ve heard about the Russia privatisation story but not about other smaller countries. It went exactly the same way, without any American involvement or advice. You’re buying into some weird, Americano-centric version of history that everybody in Eastern Europe laughs at.
This comment is late, and I don't expect that very many people will see it. But I worked on the International Space Station in the mid-'90s. I worked with two Russian contractors, Khrunichev and Energia. The Khrunichev people were smart. They knew their stuff. They were, in my experience, as talented as any American or European company. I would have been proud to work alongside them. The other company was Energia. We all knew that Energia had government connections. Their work was crap. They didn't document things properly, and they frequently made changes in production that weren't documented. We learned, through hard experience, that their engineering drawings often did not reflect what was actually built. Guess how it came out? To keep a long story short, Putin forced Khrunichev to merge with Energia, and most of Khrunichev's employees and management were dismissed.
Yeah, not surprisingly as corrupt institutions are corrupt in part because they are based on cronyism and political beliefs and not merit or competence doing the job at hand. Appreciate your comment, late or not.
This reminds me of a statement made by Matt Taibbi on this topic in a Common Sense interview: “We [the Americans] practically owned the place [in the early ‘90s]”. Poor Matt, he lived in Russia at that time and still never learned that in Russia you don’t own anything unless you have a gun, very specifically the biggest gun. You can imagine the American economists in Moscow ordering around the local big guys in black leather jackets who were putting their guns on the table in business meetings (real case!) ?
This reminds me of a statement made by Matt Taibbi on this topic in a Common Sense interview: “We [the Americans] practically owned the place [in the early ‘90s]”. Poor Matt, he lived in Russia at that time and still never learned that in Russia you don’t own anything unless you have a gun, very specifically the biggest gun. You can imagine the American economists in Moscow ordering around the local big guys in black leather jackets who were putting their guns on the table in business meetings (real case!) ?
The “American advisors” for the “shock therapy” of abrupt privatization in the early ‘90s were just a simple smoke screen for powerful local interests, ready to physically eliminate anybody standing in their way. And what was the alternative? Supposedly keeping assets into the (corrupt) government hands until the ex-communist countries would reach a level of “civic and political awareness” that would have allowed honest privatisation? I lived in Russia too, and I know that will take much, much longer than our life spans, if ever. Just look where Russia is now, on the path to civic spirit and honest business. Same in my country. On the other hand, look at the Czech Republic, Hungary and Poland, they succeeded to do it reasonably right. Let’s stop blaming the deep historically rooted shortcomings of our people on the West.
You’re taking here about a completely different thing. In Soviet propaganda in the West, it was called “whataboutism”. How can you criticize our lack of freedom? What about the way you treat your black people?”
Two wrongs don’t make a right. Let’s put our own house in order first and then complain about the evil Western elites, who supposedly did us so much evil.
I would clarify, "Some are just as evil, cynical and narcissistic as the old Soviet elites were." That is very true, and they remain admired as the media doesn't cover their excesses, they ignore the obvious and celebrate the ideological pathology. Bill Gates is a good example - Mr. "math is racist" (I got that from his own website, it was his second largest education donation last year), he's selling climate change (e.g. telling everyone that we need to stop eating beef to reduce carbon emissions despite that being an infinitesimal carbon creator when compared to say coal or third world countries burning dung and wood)and buying up farmland. So he can now independently impact food production in the US - just deny or otherwise put restrictions on the land leases.
CL - at a macro level I guessed that the real power before and after the fall of the wall changed but by not more than half. Meaning that the party members (people) controlling most wealth (thinking monopolist/oligarch) before and after the fall didn’t change that much, but the political systems around them did. So the move was from one form of corruption/tyranny to another. You were there, do you know about that?
Thanks CL. I've read that USSR was full of true believers, but people are people, trade is trade, and the political beliefs mostly inform what they think is okay and not okay. Most of the money ends up in the top x% regardless. The question is how well can the majority do, how bad does the bottom have it, and how productive and moral are the societies. The West has no monopoly on morality but compared to its peers, it is easy to show it as more productive, less tyrannical, more equal, more diverse, etc.
Yeah, I see it too. Commenting here is my attempt to "do something." Other than voting, contributing to reasonable political campaigns, and supporting good media outlets -- like common sense -- I'm not what else to do.
Agree that this one certainly was. As usual, I learned a lot about Summer’s in the comments - none of it good. You have to admit this is better than most. Also, the investigative reporting can be very good here. Sometimes crap, but normally not. The team is full of recovering Democrats, I cut them some slack. And, I like really Bari and Nelly and what they are trying to accomplish.
same.
Both you and Andy are correct. Both things and more happened to make that mess.
Many, if not most, are totally ignorant of that historical fact of which Larry Summers had a big role. He is just another sociopath.
To be fair - a large part of the ability for privatization and capitalism to properly function is a adherence to the rule of law. The Russians seem to have ignored that part
The Ivy’s now pump out SJW lawyers — you ain’t seen nothing yet.
And we seem to be following that precedent.
'create a system of tycoon capitalism run for the benefit of a corrupt political oligarchy'
Which is the new Democrat strategy for maintaining power in our country.