Larry Summers On CNBC This Morning

I'm sitting here having a hard time believing what I heard out of Larry Summers' mouth for the past 10 or so minutes.

Summers' credentials as an economist have led him to a professional life split between Harvard University and various federal government administrations.

But this morning, Summers put the 'political' back into political economy, the original name of his chosen field of study.

In answer to all sorts of questions, Summers pounded away with just these themes,

-This administration is committed to fixing the disaster brought about by the last one which was solely a function of financial deregulation.

-There are pictures of Treasury Secretaries of former administrations sawing...SAWING....regulations in half. Clearly, this alone led to the 2007-08 financial meltdown.

-There are people in banks who have constructed algorithms to maximize the number of customers who will overdraw their account and, thus, pay overdraft fees. Their days are numbered.

-This administration will work with anyone from the other end of Pennsylvania Avenue who wants to meet our goal of doubling exports in five years.

It's hard to know where to start debunking Summers' obvious untruthful statements. In a post appearing tomorrow, I cite George Melloan's recent Wall Street Journal article noting that the Basel Accord's latest bank capital rules won't change the fact that the recent financial sector crisis was initiated by governmental agency actions involving risky home loans to lower income individuals.

Summers' contentions to the contrary, deregulation had nothing to do with the recent crisis. In fact, then-existing regulators had sufficient powers and obligations to have prevented, or at least identified, the crisis while it was building. They did not. This had nothing to do with their regulatory power.

Larry's wrong.

It's hard to understand, per Summers' statements, how some people "writing algorithms" at money center banks, can thus trigger overdrafts by individual consumers. But that's what Larry contends.

Again, Larry's wrong.

Finally, Summers baldfacedly misrepresented this administration's openness to the economic ideas of others. It's reasonable to believe that, right now, most Americans, including business owners and investors, think that job creation in the US should be government's economic priority. Whether that involves exports should be a decision left up to the companies which may elect to grow through exports.

Regardless of that, the administration's record for the past 19 months has been to ignore any ideas from the other political party, or those which weren't originated in the White House.

Jim Nussle, the guest host on CNBC in the final hour this morning, and a former budget director, rushed to say, immediately after Summers went off-air, words to the effect,

'Yes, just let Larry Summers direct the economy and choose investment priorities from Washington. That'll work.'

Nussle's glib comment underscored the reality of Summers' remarks. When Larry wasn't ignoring the truth, he was engaged in centralized planning of the worst sort.