A Few Worries Over Obama’s Choices
From Newsweek’s Michael Hirsch:
OK, enough with the Obamamania already. I have a major bone to pick with our all-praised president-elect. Where, Mr. Obama, is Joseph Stiglitz? Most pundits have pretty much gone ga-ga over your economic team: The brilliant Larry Summers as head of your National Economic Council. The judicious Tim Geithner as Treasury secretary. The august Paul Volcker as chair of the newly formed Economic Recovery Advisory Board. But lost amid the cascades of ticker tape is the fact that, astonishingly, you didn’t hire the one expert who’s been right about the financial crisis all along—and whose Nobel Prize-winning ideas will probably be most central to fixing the global economy.
And the New York Times’ Frank Rich, reminding us of the irony meant by David Halberstam in his title –”The Best and the Brightest” :
…it’s the economic team that evokes trace memories of our dark best-and-brightest past. Lawrence Summers, the new top economic adviser, was the youngest tenured professor in Harvard’s history and is famous for never letting anyone forget his brilliance. It was his highhanded disregard for his own colleagues, not his impolitic remarks about gender and science, that forced him out of Harvard’s presidency in four years. Timothy Geithner, the nominee for Treasury secretary, is the boy wonder president of the Federal Reserve Bank of New York. He comes with none of Summers’s personal baggage, but his sparkling résumé is missing one crucial asset: experience outside academe and government, in the real world of business and finance. Postgraduate finishing school at Kissinger & Associates doesn’t count.
Summers and Geithner are both protégés of another master of the universe, Robert Rubin. His appearance in the photo op for Obama-transition economic advisers three days after the election was, to put it mildly, disconcerting. Ever since his acclaimed service as Treasury secretary in the Clinton administration, Rubin has labored as a senior adviser and director at Citigroup, now being bailed out by taxpayers to the potential tune of some $300 billion. Somehow the all-seeing Rubin didn’t notice the toxic mortgage-derivatives on Citi’s books until it was too late. The Citi may never sleep, but he snored.
2 Comments »
RSS feed for comments on this post.
Leave a comment
Comment Guidlines: This space is for commenting on the post above, the ideas, the context,the author. Your ideas, strong but civil, are appreciated. Long cuts and pastes from elsewhere are not. This is NOT the place to create your own private BLOG. Links to other articles are fine, if appropriate. Line and paragraph breaks are automatic; e-mail address are never displayed.
HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>
December 7th, 2008 @ 10:48 am
Indeed, why not Joe Stiglitz? Stiglitz would have been the one progressive who would have been immune from the charge of too-little govt. experience (high position in Clinton administration and at the World Bank). Not just right-on about the meltdown but knows the globalization scene like nobody else. I’ve been hoping against hope for a month that Obama would tap him.
But here’s something that occurs to me: are we sure that Stiglitz wanted a position in the administration? Ignoring all the unsubstantiated scuttlebut in the Newsweek article, let’s just imagine for a moment that he feels he can make more of an impact OUTSIDE government - as an independent progressive voice. Perhaps defending the compromises that Obama will (rightfully) have to make is not the best role for Stiglitz right now. Someone has to be telling us what should be done, regardless of political wheeling and dealing.
I’m just musing here, don’t know what Stiglitz actually thinks. Anyway, I related to the title of the Newsweek piece: “Chasing Stiglitz”. I’ve been chasing Joe Stiglitz for a year. I’ll let you know if I catch him.
December 7th, 2008 @ 5:57 pm
Harvard alum Iris Mack, MBA/PhD requested a meeting with Larry Summers to express her concerns about how her HMC boss Jeff Larson used derivatives to manage an HMC portfolio. Larson eventually left HMC to start Sowood hedge fund with hundreds of millions of dollars of Harvard alums’ donations. Sowood was one of the first hedge funds to blow up during the subprime mortgage derivatives crisis.
Dr. Mack communicated with Summers’ office regarding such derviatives trades. Perhaps, she could have saved Harvard alums hundreds of millions of dollars if Summers had bothered to continue to hear her out before forcing her resignation. There is a wealth of information describing this derivatives whistleblowing case: correspondence between Dr. Mack and Summer’s office (emails, faxes, snail mail, phone records, etc.); legal documents; reports from FBI and DOJ interviews, etc.
Given all this, you have to wonder whether Summers was either too
(a) corrupt and wanted to coverup up something(s) at HMC.
(b) arrogant to think that Dr. Mack had anything of value to tell him about mathematical finance and derivatives. Please recall Summers’ comments about women and math. Also, please note that Dr. Mack has a doctorate in Applied Mathematics from Harvard and a Sloan Fellows MBA from London Business School.
(c) incompetent to understand what Dr. Mack was trying to warn him about regarding derivatives trades in HMC portfolios.
Did Summers try to silence Dr. Mack the way he, Rubin and Greenspan tried to silence Attorney Brooksley Born of the CFTC?