Thursday, April 9, 2009

Summers: Economic Winter Is Ending

"There has been a substantial anecdotal flow over the last six to eight weeks of things that felt a little bit better," President Barack Obama's National Economic Council head Larry Summers told the Economic Club of Washington. "The sense of a ball falling off a table, which is what the economy has felt like since the middle of last fall ... we can be reasonably confident that that is going to end within the next few months and we will no longer have that sense of a free-fall."

Summers was responding to a question asked by Carlyle Group's David Rubenstein.

Orignally billed as an event where Summers would speak, the session instead was Q&A, with Rubenstein providing the questions and Summers the answers.

Rubenstein started off by telling the audience what a great tennis player the quite chubby Summers is. Rubenstein who appears a bit more fit than Summers indicated that it was tough to beat Summers on the tennis court, even when he employed a professional (I guess in doubles).

Before introducing Summers, Rubenstein recognized the Foreign Minister of the United Arab Emirates and the Ambassador from the United Arab Emirates who were in attendance. None other than the Treasury's Neil Kashkari was at the same table as the UAE delegates. During a break, Rubenstein rushed over to the table like a squirrel who had just spotted a huge acorn. He chatted with the Ambassador and the Foreign Minister for a bit.

Early in the Q&A, two protesters unfurled a pink banner reading, "We want our $$$ back," and shouted that Summers should resign because of the amount of money he earned from the financial sector last year before joining the Obama administration. Summers sat quietly while the protesters were removed.

Aside from the headline grabbing comment about the recession ending, Summers used every opportunity to bring up the Obama administrations desire for a healthcare plan. Whether the question was about the economy, unemployment or inflation, Summers ended up pointing out how a new healthcare program would help fix the problem.

When specifically asked about inflation and deflation threats, Summers said there was the risk of both. Deflation now and inflation down the road. For a government official to bring up the inflation threat at all is highly unusual. I took this to mean he knows there is a great inflation threat down the road. In fact, he said that the danger with inflation is that "you don't realize that inflation is a problem until it is already out of control."

1 comment:

  1. David Rubenstein's Carlyle Group sold two affiliates, Landmark Aviation and Standard Aero, to UAE's Dubai Aerospace in summer 2007.

    Senators Chuck Schumer and Joe Lieberman supported the sale.

    Rumors have the UAE interested in Textron, the defense contractor.