Saturday, January 30, 2010

Summers Says Fourth Quarter US GDP Report Shows Obama Economic Policies Working

A totally manipulated economy that still ,has unemployment in double digits and the private sector dragging, has President Obama's top economic adviser, Larry Summers, crowing as to the wonderful recovery the Obama Administration has created.

In Davos, Switzerland at the World Economic Forum in a wide-ranging interview with Charlie Rose, Larry Summers, vigorously defended the Obama administration’s economic policies and regulatory proposals.

Summers argued that the latest US GDP report, which shows the economy expanded at a 5.7% rate in the fourth quarter, demonstrates that the massive fiscal and monetary stimulus measures proposed or endorsed by the administration have “pulled the [US] economy back from the brink of a depression, and created a basis for economic growth.”

There was no mention of all the projects that weren't started because funds were redirected to the stimulus projects and its government favored businesses.

The interview included an extensive discussion of the administration’s proposed reforms in financial regulation, which Summers said would increase capital standards, create a new system for handling the failure of non-bank lenders, and limit the ability of commercial banks (which benefit from federal deposit insurance and access to the Fed’s discount window) to own hedge funds and certain other alternative investment vehicles, or engaging in purely speculative proprietary trading.

There was no mention of how these regulations will mean even more government control of the financial sector.

Summers rebutted suggestions that the administration is seeking a confrontation with Wall Street as a way to shore up its popular support, but criticized the financial industry for opposing proposed bank fees that would reimburse the US Treasury for the cost of the Troubled Asset Relief Program (TARP) – the US$ 700 billion package of loan guarantees and bank capital injections approved by Congress in 2008.

Asked to comment on French President Sarkozy’s recent call for an alternative global reserve currency, Summers said any change in the US dollar’s role would be brought about by market forces – including decisions made by foreign governments and Central Banks with sizable foreign exchange holdings. “I believe the dollar is going to have a very central role in the international financial system for a very long time to come,” he said.


  1. Isn't it interesting that Summers, etc., never insist the dollar will be important forever?

  2. What a fanciful idea. An extraordinarily optomistic opinion about the effects of Obama's policy, particularly since it can't be proven.

    Common sense suggests that Obama's policy of stealing from peter to pay paul can't possibly create new wealth but will certainly benefit paul, a/k/a Summers.