September 30th, 2009

Ignoring the financial experts: where have you gone, Larry Summers?

With all the news swirling around lately it seems that Obama’s approach to the financial crisis, a topic that was the main focus of the early months of his presidency, has gone on the back burner. But as his more Leftist financial proclivities have become more obvious, I’ve wondered how some of his more moderate financial advisors are doing.

What, for instance, is going on these days with Larry Summers? He’s hardly a man of the Right, I know, but neither is he a conventionally wild-eyed tax-and-spend liberal. Oh yes, I note that in his recent public appearances Summers is hewing to the party line, praising the Obama administration’s agenda and making excuses for its failures. But I’ve wondered whether Summers (and others of his ilk, such as Volcker) haven’t become essentially Hillarized (or perhaps McChrystaled) by the Obama administration.

Is Summers (and the others) being consulted by Obama, and if so how much? Is he really in agreement with what’s happening, or is he being a hypocrite when he defends it?

Short of being the proverbial fly on the wall when Summers and the others speak privately, there’s no way to tell. But this recent article in the NY Post by Charles Gasparino tackles the question.

Gasparino reports what is essentially gossip, so his piece must be read with a caveat about unnamed sources But if you take a look at Gasparino’s profile it seems he may indeed have access to quite a bit of knowledge, and informants in high places.

His piece describes Wall Street’s general disillusionment with President Obama. Before the election many movers and shakers thought Obama would be a moderate on the economy—although to do so they must have ignored those statements about spreading the wealth or bankrupting the coal industry and making utility rates skyrocket.

But hindsight is 50-50 and all that. Gasparino reports that these financial wizards have come to say (in private conversation, not in public) that they feel as though they’ve been had.

Not surprising, although their initial naivete is. The meat of the article—as far as I’m concerned—is the following allegation:

I’m told that Treasury Secretary Tim Geithner and chief economic adviser Lawrence Summers have both complained to senior Wall Street execs that they have almost no say in major policy decisions. Obama economic counselor Paul Volcker, the former Fed chairman, is barely consulted at all on just about anything — not even issues involving the banking system, of which he is among the world’s leading authorities.

At most, the economic people and their staffs get asked to do cost analyses of Obama’s initiatives for the White House political people — who then ignore their advice…

As one CEO of a major financial firm told me: “The economic guys say that when they explain the costs of programs, the policy guys simply thank them for their time and then ignore what they say.”

In other words, the economic people feel that they have almost no say in this administration’s policy decisions.

Why does this not surprise me? I get the distinct impression that it’s Obama, Emmanuel, and Axelrod all the way, who don’t need no steenking experts.

Oh, and add Valerie Jarrett to that aforementioned threesome. Gasparino reports the following disclosure about Obama’s reliance on Jarrett from:

…a former Wall Street executive and longtime Democrat who anxiously recounted a recent conversation with Obama.

The executive said he told the president that he’s at a disadvantage because he’s relatively inexperienced in economic matters during a time of economic crisis. “That’s why I have Valerie,” came Obama’s reply.

“Valerie” is senior adviser Valerie Jarrett — a Chicago real-estate attorney and one of Obama’s closest friends, who has deep ties to the Windy City’s Democratic political machine.

Now you know why Wall Street is so nervous.

Not exactly reassuring, if true. Jarrett is an especially well-connected (in Chicago terms) lawyer and long-time friend and booster of Obama, but her financial background seems to be limited to having been head of a real estate company and Chairman of the Board of the Chicago Stock Exchange.

It is certainly in line with my own observations of Obama’s patterns of decision-making that she would be the person on whom he relies most for financial policy advice, rather than the more acknowledged experts in the field whom he has appointed to serve him. Her loyalty is not at issue; she has been devoted to the Obama cause for a long time.

Why might Obama have a tendency to ignore experts, even those he has appointed? Arrogance and hubris on his part would certainly be one explanation, and not a bad one at that. But another phenomenon may be in play, best summed up by this comment made by “Artfldgr” in the thread yesterday about Hillary Clinton [I’ve taken the liberty of making the punctuation, spelling, and capitalization more conventional for ease of reading]:

Expertise has no place in power. It is irrelevant and an opposing force. so no one under the despot can have expertise except for the lowest proles who have no other options and no way to leverage their expertise except in the service of the power above.

This is why these states fall apart… at first. Power loves a servant, and an independent capable person is a power of opposition, not servant. So they move incompetents into place. The incompetents owe all they have, since they can’t do that well on their own. So their morals are easy to corrupt and they know whom they serve.

Makes sense to me. Listen only to those loyal to you, but appoint and retain the experts for window-dressing, and then ignore and marginalize them. Figure they’ll be likely to stay on board through moral cowardice and/or the persistence of the “if Stalin only knew” phenomenon—that is, their thought that if only, if only they could get the undivided attention of the leader and plead their case so that he could truly hear, they’d finally have the influence they so rightly deserve.

21 Responses to “Ignoring the financial experts: where have you gone, Larry Summers?”

  1. expat Says:

    I’ve been wondering whether Obama’s failure to seek and absorb new info isn’t tied to his narcissistic belief that he possesses better info because of his unusual life experience. For instance, in Indonesia he learned from his mother how narrow-minded Americans are because she criticized his stepfather for associating with embassy types. Similarly, he would feel superior even to the Ayers types because they really don’t understand what it’s like to be black. Geithner and Summers lack his insight into the working class because his mother was once on food stamps. So Obama would cooperate with people who are in some way on the same wavelength, but he would always figure he knows better. Obama doesn’t see himself as a seeker of truth: he is a dispenser of it–above the crowd and looking down, even at the Harvard types.

  2. LTEC Says:

    You are surprised by Larry Summers? Don’t you remember how he proved himself to be a spineless jellyfish at Harvard?

  3. Gringo Says:

    expat: Yes indeed, he is looking down upon us all. Not just the Haavaad types, and Billy Ayers. ∅bama gives the impression that his world view has changed little from that of a 1980s college freshman trying to be cool and not a “sellout.” (recall from Dreams From My Father). He had made up his mind by then: no need to corrupt it with new facts and questions.

    Regarding the influence of Axelrod, Emanuel, and Jarrett (whose father-in-law was associated with Frank Marshall Davis in Chicago in the 1940s): I wonder when others will draw out the analogy of Jimmah and all the good ol’ Georgia boys in the inner circle of his Presidency. At the time the press certainly made a big deal of all the Georgia boys in Jimmah’s inner circle. Perhaps one difference this time is that the press is servile this time around.

  4. Occam's Beard Says:

    So people with economic and financial expertise were…uh…basically window-dressing? Color me surprised.

  5. Tournefort Says:

    “Listen only to those loyal to you, but appoint and retain the experts for window-dressing, and then ignore and marginalize them.”

    Now we know why there are so many “czars”.

  6. jon baker Says:

    Speaking of the financial crisis- Look who, of all people, highlighted something bad about Chris Dodd on MSNBC

  7. betsybounds Says:

    All these czars. Reminds me of an anecdote I once heard, quoting an old Russian babushka as saying, “Best government: Good Czar. Worst government: Bad Czar.”

    Well, yah!

    And I notice that we still keep circling back to. . . trying to figure Obama out.

  8. SteveH Says:

    This is universal for liberals. Do exactly opposite of whatever made America great.

    Free and prosperous peoples molding their own destiny is the pits don’t cha know?

  9. betsybounds Says:


    I appreciate your reference here, and in other posts as well, to artfldgr. He’s not easy to read, but I think he has an extraordinary understanding of what’s going on.

  10. Geo Says:

    Neo, I almost laughed out loud at the “if Stalin only knew” line. I just finished Robert Conquest’s “Stalin” and recognized more parallels to our current regime in his book and recent politics than I am comfortable with. Your comments are right on the mark for my money.

  11. Andrew_M_Garland Says:

    Liberal Economics: Money falls from heaven for everyone to use. But, the immoral and sneaky rich gather more than their share. The government can then step in and redistribute the money the way God intended. Sorry, I mean the way Gaia, or the Tooth Fairy, or whoever intended.

    The Political Dictionary

  12. Boots Says:

    Think about the millions of dollars Wall Street forked over willingly to Obama during the campaign…silly me, I used to think Wall Street was run by republicans, or at least conservatives.

  13. southpaw Says:

    Everyone seems to agree that Obama’s actions point to a profoundly arrogant, self-centered, person driven by ideology.

    The really interesting thing to me is how little basis there is for so much self confidence – as a leader/president that is. He is obviously good at getting a lot of people to THINK he’s a brilliant, gifted leader. But looking at his past achievements as a public and private figure, plus his present mishandling of nearly every issue since assuming office, it’s hard to believe he is anything but a below average intellect with a hyper inflated ego. And more than a little lazy.
    Instead of actually working hard on issues he claims to hold dear, he leaves the thinking and the details of difficult problems for others to solve. He has no health plan of his own, doesn’t even care much about anybody else’s works. He was either lying, or just too lazy to read what was actually proposed. No Iran policy, no Afghanistan policy, no woking energy policy, etc.
    He talks and talks but never really has anything original to say. He can’t prioritize between a war and an over-nighter to Copenhagen to charm more potential adoring fans.
    He ignores experts in their fields, having no education or experience in any of them himself.
    Is this an evil genius, or a lazy, incompetent goof-off who thinks everyone else is too dumb to see he’s got no answers?
    It’s hard to tell – is he too arrogant to believe he’s not a genius, or not smart enough to recognize he doesn’t know everything.

  14. Tom Says:

    I also wish to acknowledge my respect for Artfldgr.

    Southpaw: How about an evil, lazy, incompetent bullsh*tter? That about covers it.


  15. JKB Says:

    Interesting. Tuesday night I distractedly listened to Paul Volcker on Charlie Rose. It seemed odd as I thought his comments were less than “on message.” He directly refused to discuss the financial impact of health care reform with a tone I took to mean the impact would be a deep crater.

    Clinton was successful because he took Republican ideas and smoothed the edges. But also because Rubin keep the finances in order. It saddened me that Bush never found a Treasury Secretary with such talent. Going for fools with no real ideas instead. Obama has some talent on the bench but won’t use it, when it’s needed most. That we are hearing about this is a sign the talent is making their last play to get in the game before going free agent.

  16. DirtyJobsGUy Says:

    The selection and use of advisors is always difficult for a leader, but most of the time a confident person will somehow figure out how to make it work. Obama has two problems. The first is that he cannot rely on his truely trusted advisors from Chicago in public. They are too radical and/or corrupt. Plus he made a public show about surrounding himself with center-left people of experience to bolster his credentials. He doesn’t know these people personally and is not the type of man who can size up someone and create a friendship easily.

  17. Daniel in Brookline Says:

    Didn’t President Bush have a bad reputation for not listening to experts?

    I’d think that, if you run for office as the anti-Bush, you should avoid making the mistakes your party frequently accused Bush of making.

    Just sayin’…

  18. Artfldgr Says:

    if only they could get the undivided attention of the leader and plead their case so that he could truly hear, they’d finally have the influence they so rightly deserve.

    this situation is so common that one could pull up the micheal jackson interview as to how he thinks he could have talked to hitler better than chamberlain did and get him not to do what he did.

    obama also mimicks this, for mimic is how you get someon to like you in body language games. mirroring i think its called… i forget.

    so a lot of what obama does at leat on the surface has to do with all these crap games of influence.

    while his actions have everything to do with his goals when they mean something. often he is distracting locally, while otehr chips are moved internationally (and visa versa).

    rather than try to figure him out from a context and weedle his internal thoughts, it is easier to just know the ideology and tht will tell you what action he will take. none of these guys invent a new way to power, they just pick and choose the old parts reassemble them add a bit of their own decoration and plod along with that.

    if it werent for history, they would not know what to do.

    which is why they erase history for the rest of us, that way we dont know what they are doing.

  19. Artfldgr Says:

    Andrew_M_Garland Says:
    Liberal Economics: Money falls from heaven for everyone to use. But, the immoral and sneaky rich gather more than their share…..

    i think they are confusing economics with a skittles commercial. Come taste the rainbow… 🙂

  20. neo-neocon Says:

    Daniel in Brookline: I think Bush certainly didn’t always (or even most of the time?) do what his experts said. But I believe (I haven’t looked this up, though, and am doing it by memory) that he certainly heard them out rather than freezing them out as Obama apparently has. Bush’s advisers certainly were not window-dressing.

  21. Angst Says:

    Where have you gone Joe Dimaggio?

    plus this:

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Previously a lifelong Democrat, born in New York and living in New England, surrounded by liberals on all sides, I've found myself slowly but surely leaving the fold and becoming that dread thing: a neocon.

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