According to Ezra Klein, a major plus in the case for Larry Summers
as Fed chair is his experience dealing with financial crises. While it
is true that he took a leadership role in dealing with far more crises
than Janet Yellen, the other leading contender for the job, it is hard
to believe that his record in this area would be a plus if he was being
graded by the outcomes.
Starting with the Mexican peso crisis in 1994, Summers helped to negotiate a deal that protected big investors in Mexico’s debt, like Goldman Sachs. Mexico suffered a severe downturn in the immediate aftermath of the crisis and has had the slowest per capita GDP growth of any country in Latin America in the two decades since the crisis. That one doesn’t look like much of a success story.
Then we can go to the East Asian financial crisis in 1997. As even the IMF now admits, Summers and the rest of the Committee to Save the World (CSW) largely misdiagnosed the crisis. They saw it as a problem of economies that were badly misbalanced as opposed to being largely an issue of liquidity and confidence. Malaysia broke with the IMF and applied capital controls, which were roundly rejected by Larry Summers, and managed to escape some of the worst effects of the adjustment.
http://my.firedoglake.com/deanbaker/2013/08/01/larry-summers-and-financial-crises-is-he-being-graded-on-attendance/
Starting with the Mexican peso crisis in 1994, Summers helped to negotiate a deal that protected big investors in Mexico’s debt, like Goldman Sachs. Mexico suffered a severe downturn in the immediate aftermath of the crisis and has had the slowest per capita GDP growth of any country in Latin America in the two decades since the crisis. That one doesn’t look like much of a success story.
Then we can go to the East Asian financial crisis in 1997. As even the IMF now admits, Summers and the rest of the Committee to Save the World (CSW) largely misdiagnosed the crisis. They saw it as a problem of economies that were badly misbalanced as opposed to being largely an issue of liquidity and confidence. Malaysia broke with the IMF and applied capital controls, which were roundly rejected by Larry Summers, and managed to escape some of the worst effects of the adjustment.
http://my.firedoglake.com/deanbaker/2013/08/01/larry-summers-and-financial-crises-is-he-being-graded-on-attendance/
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