A year after the economic crisis shifted into high gear, financial scholars and policymakers gathered at Georgetown for the Global Finance Conference presented by the McDonough School of Business and the Financial Times.
Larry Summers, economist and the Director of the White House's National Economic Council for President Barack Obama, tells the audience that his concerns remain in commercial real estate and that the availability of credit and capital remain tight, but says there are signs of economic normalization.
"We know that our economy will be stronger than ever if we commit ourselves to the work that needs to done today," says Summers. "It would be irresponsible for us to not learn the lessons of what is happening."
John J. DeGioia
Since graduating from Georgetown University in 1979, John J. DeGioia has served both as a senior administrator and as a faculty member at the school. On July 1, 2001, he became Georgetown's 48th president.
Dr. DeGioia is a professorial lecturer in the Department of Philosophy. He earned a bachelor's degree in English from Georgetown University in 1979 and his PhD in Philosophy from the University in 1995. He has most recently taught "Ethics and Global Development," "Human Rights: A Culture in Crisis," and a seminar on "Ways of Knowing."
Prior to his appointment as president, Dr. DeGioia held a variety of senior administrative positions at Georgetown, including senior vice president, responsible for university-wide operations, and dean of student affairs. In 2004, he was presented with a Lifetime Achievement Award for Excellence in Academia from the Sons of Italy.
Lawrence H. Summers is the Charles W. Eliot University Professor at Harvard University, where he is also president emeritus. During the past two decades, he has served in a series of senior policy positions, including vice president of development economics and chief economist of the World Bank, undersecretary of the US Treasury for international affairs, director of the National Economic Council for the Obama administration from 2009 to 2011, and secretary of the US Treasury from 1999 to 2001. He is the recipient of the John Bates Clark Medal, given every two years to the outstanding American economist under the age of 40, and the National Science Foundation’s Alan T. Waterman Award for outstanding scientific achievement. He is a member of the National Academy of Sciences.
Larry Summers, Director of the National Economic Council, addresses accusations made in ads funded by the Chamber of Commerce attacking the White House's proposed agency to protect consumer rights.
Summers compares the advertisements to the "death panel ads" produced by opponents of healthcare reform. "Those with an argument, make it," he says. "Those without a good argument, try to scare people."
Process of raising funds or capital for any kind of expenditure. Consumers, business firms, and governments often do not have the funds they need to make purchases or conduct their operations, while savers and investors have funds that could earn interest or dividends if put to productive use. Finance is the process of channeling funds from savers to users in the form of credit, loans, or invested capital through agencies including commercial banks, savings and loan associations, and such nonbank organizations as credit unions and investment companies. Finance can be divided into three broad areas: business finance, personal finance, and public finance. All three involve generating budgets and managing funds for the optimum results. See alsocorporate finance.
This crisis, much like the 1930's, was a government failure.
It was created by not only allowing, but aiding and abetting fraud. Instead of going after these criminals like in the S&L crisis they changed the law to legalize fraudulent accounting; mark-to-market accounting rules were replaced with mark-to-myth. The major banks are still insolvent, all they've done over the last two years is dig themselves into a deeper hole; they are not too big to fail, they're too big to bail out without destroying the United states government.
Blaming fraud on greed is like blaiming airplane crashes on gravity. When the government is not involved greed is naturally balanced by fear of loss. Regulations must always come in pairs; if you're going to remove fear of loss you must also remove greed.
E.g. without federal deposit insurance the depositors care about the safety of the bank they are saving in; they don't simply go where the highest interest rate is. If the bank starts making investments that its depositors think are risky they will withdraw their savings and in a worst case scenario there might even be a run forcing the institution to close if insolvent(fractional reserve banks are _not_ inherently insolvent like some claim, because _properly_ made loans can always be sold into the market to recoup enough money to pay back all depositors). If you have something like the FDIC you MUST have the rest of the Glass-Steagal act; if the government removes the market mechanism for regulating greed it must regulate the greed itself.
Without the government a financial instution contemplating engaging in fraud would would face the specter of the free market way of dealing with fraud; having the responsible employees recieve a pitch-fork up their arse by an angry mob. The government steps in and says it will deal with fraud on behalf of the populace because mobs are messy and too indescriminate. So far so good; but if the government were ever to allow fraud to go unpunished the situation is now much worse because there is nothing keeping the fraud from growing well past the point where it would have been stopped with pitch forks and torches absent government intervention. I remind you that the FBI said in 2004 that there was an epidemic of mortgage fraud that would become the next S&L crisis if not curtailed; then they proceeded to do exactly nothing about it.
The US economy is now in a situation similar to severe radiation poisoning. There have been a few cases where people have recieved 10-50 Sieverts of radiation, e.g. criticality accidents among bomb designers; what happens is that you kill all the rapidly dividing cells, the intestinal wall and the bone marrow in particular. The initial sickness is followed by a period of apparent recovery lasting days before entering the terminal phase during which no amount of blood transfusions or bone marrow transplants can save their life. All the temporary stimulus will not help the US economy; it will only temporarily prop up the malinvestments that need to fail. The US economy is a walking ghost, it is not possible to avoid a very severe depression, it is only possible to make it worse(compare the depression of 1920-22 vs. the great depression).
Good lord! What a bunch of goobeldy goop. The US Dollar is doomed. Please continue to make preparations for collapse. I honestly believe he doesn’t have a clue regarding the governments own information. Please read the first two facts of the US Census press release, did he miss that?
The 78 million aging and retiring baby boomers are the economy!
One of the masters of creating bubbles within our economy. They have been using our tax dollars to put billions into the market thus driving up again the market so that these cartels (fed bankers) can continue to pay each other obscene amounts of money.
If Obama does not start listing to other economist on how to build our economy his presidency will become scene as a miserable failure. We have to stop saving millionaires and start saving the middle class. After all we are the ones who make this country run.
Summers is delivering a pretty conventional message. For possessing such a lively mind, he seems restrained in what he can say by his office.
The financial reform he's selling strikes me as a bit timid, or perhaps he just did not want to get into specifics. To Big To Fail needs to be addressed more completely...find a way to pull the taxpayers rug out from under the industry. We should be dropping FDIC insurance, too.
A consumer finance regulator makes some small sense. It'd better to require plain language contracts, then free the schools to teach better math. The stupidity wasn't all at the lender's level.
As a mainstream economist, he has a healthy appreciation for what finance has brought us - efficient allocations of capital and higher standards of living. He and Obama likely won't go too far wrong.
But, given his job, he cannot yet talk about the elephant in the room - the vastly underfunded retirement of the baby boomers.
While we can probably dig out from a speculative crash, it seems highly likely to me that broke boomers will crush US living standards over the next generation.
Summers, a convenient tool of The Fed, i.e., a consortium of
private bankers who have been swindling the American tax payer
since 1913, and part of the close-knit cabal directing Obama's
economic policies, can't be believed. Obama is being held hostage
by these smart thugs, and we'll pay for it until, if ever, he wakes up.