Little did I, nor even the world, realize the
absolute power of American economist Larry Summers. Of course, everyone
is very familiar with Larry’s involvement regarding the abolishment of
Glass-Steagall, and we certainly know about his direct influence concerning the
lack of oversight with over-the-counter derivatives. In addition, when it
came to Harvard’s loss of $2 billion, it was simply a Larry “walk-in-the-park.”
And who can ever forget the Larry-induced TARP program that kept most of
the banking credit destruction players in play? Moreover, regarding
Larry’s short stint at Citigroup, what’s a few million dollars among friends?
Nevertheless, all of these aforementioned activities are mere child’s
play in comparison to his most recent action — the withdrawal of his name for
consideration as Chairman of the Federal Reserve.
Once Larry made it official by formally withdrawing his name, the financial markets quickly responded, as hundreds of points were added to various averages worldwide. The thinking goes that Larry would continue to taper, yet this confuses me because Larry has always been a governmental Wall Street advocate. Apparently, with Larry now out of the picture, the road is clear for Janet, who has never seen a money printing press that she didn’t like. (My guess is that Obama will not select Janet, but will select Roger instead.)
Historically, before the most recent onset of QE, the advent of high-frequency trading (HFT), and the introduction of flash-crashes, the financial markets typically reflected economic conditions as they were anticipated to be several months into the future. Therefore, the upside reaction in the financial markets regarding the most recent news about Larry is clearly telling us, historically speaking, that this is truly a monumental moment in time. Specifically, the U.S. jobs problem has actually been solved without the implementation of accounting hijinks, the record number of food stamp recipients will somehow decline dramatically, and millions of starving U.S. children will suddenly receive nourishment. Furthermore, the economic implosions in China and in Europe are a thing of the past, and the young citizens of Greece and Spain will unexpectedly observe signs everywhere that say “help wanted.” Larry is certainly something, isn’t he?
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