I should have qualified my remark about Summers with the word "streak" since that's what we were arguing.
But go read the wiki entry on summers and you'll find he's pretty much a top down economist in favor of tax cuts on capital gains and corporations, deregulation of markets, is opposed to unemployment and welfare programs.
He's right up your alley.
A few tidbits:
During the California energy crisis of 2000, then-Treasury Secretary Summers teamed with Alan Greenspan and Enron executive Kenneth Lay to lecture California Governor Gray Davis on the causes of the crisis, explaining that the problem was excessive government regulation.[12] Under the advice of Kenneth Lay, Summers urged Davis to relax California's environmental standards in order to reassure the markets.[13]
Summers hailed the Gramm-Leach-Bliley Act in 1999, which lifted more than six decades of restrictions against banks offering commercial banking, insurance, and investment services (by repealing key provisions in the 1933 Glass-Steagall Act): "Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century," Summers said.[14] "This historic legislation will better enable American companies to compete in the new economy."[14] Many critics, including President Barack Obama, have suggested the 2007 subprime mortgage financial crisis was caused by the partial repeal of the 1933 Glass-Steagall Act.[15] Indeed, as a member of President Clinton's Working Group on Financial Markets, Summers, along with U.S. Securities and Exchange Commission (SEC) Chairman Arthur Levitt, Fed Chairman Greenspan, and Secretary Rubin, torpedoed an effort to regulate the derivatives that many blame for bringing the financial market down in Fall 2008.[16]
Summers' role in the deregulation of derivatives contracts
On May 7, 1998, the CFTC issued a Concept Release soliciting input from regulators, academics, and practitioners to determine "how best to maintain adequate regulatory safeguards without impairing the ability of the OTC derivatives market to grow and the ability of U.S. entities to remain competitive in the global financial marketplace." [17] On July 30, 1998, then-Deputy Secretary of the Treasury Summers testified before congress that "the parties to these kinds of contract are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies." Summers, like Greenspan and Rubin who also opposed the concept release, offered no proof that the contracts would not be be misused by financial institutions. Instead, Summers stated that "to date there has been no clear evidence of a need for additional regulation of the institutional OTC derivatives market, and we would submit that proponents of such regulation must bear the burden of demonstrating that need." [18] This argument suggests that the default position in the disagreement was that Summers, Greenspan, and Rubin were right, and that anyone (i.e., Brooksley Born) who disagreed with them bore the burden of proving their position. In fact, subsequent events have proven that Summers, Rubin, and Greenspan misjudged the dangers posed by derivatives contracts.
The lack of regulation that allowed A.I.G. to sell hundreds of billions of dollars in credit default swaps on mortgage-backed securities was a direct result of efforts by the Treasury (first under Rubin and then under Summers), the Federal Reserve (under Greenspan), and the Securities and Exchange Commission (under Arthur Levitt) to deregulate the derivatives markets. The first response to the CFTC Concept Release was issued as a joint statement from Rubin, Greenspan, and Levitt who stated that they "have grave concerns about this action and its possible consequences." [19] Levitt and Greenspan have admitted that their views on this issue were mistaken. Levitt told WGBH in Boston that "I could have done much better. I could have made a difference." Greenspan told a congressional hearing that "I found a flaw ... in the model that I perceived is the critical functioning structure that defines how the world works." [20] [21] When George Stephanopoulos asked Summers about the financial crisis and in an ABC interview on March 15, 2009 Summers replied that "there are a lot of terrible things that have happened in the last eighteen months, but what’s happened at A.I.G. ... the way it was not regulated, the way no one was watching ... is outrageous."
At the 2005 Federal Reserve conference in Jackson Hole, Raghuram Rajan presented a paper called "Has Financial Development Made the World Riskier?" Rajan pointed to a number of potential problems with the financial developments of the past thirty years. [22] The problems that Rajan considers include skewed incentives of managers, herding behavior among traders, investment bankers, and hedge fund operators who suffer withdrawals if they under-perform the market. Rajan also discusses (on pp. 337-40) the problems associated with firms that "goose up returns" by taking risky positions that yield a "positive carry." This is how the infamous Joseph J. Cassano impressed his superiors at A.I.G. for a decade while sowing the destruction of the firm. [23] During the boom years of the housing market, the credit default swap contracts that A.I.G. Financial Products sold provided a stream of premium payments to the company with no expense stream. That's an example of what Rajan calls "goosing up returns" with latent risk. Rajan asks (on page 388) "If firms today implicitly are selling various kinds of default insurance to goose up returns, what happens if catastrophe strikes?" This is a fair question.
The flip side of the trade is equally problematic. Gregory Zuckerman in his book The Greatest Trade Ever about John Paulson's hedge fund recounts the difficulties that Paulson and others had holding on to their bets against the housing market. Even Paulson, whose timing couldn't have been better, spent a great deal of his time persuading investors to persist with the bet against the market. But month after month, millions of dollars were paid out on the credit default swap premia. The investors saw money spent and gone that could have been used to buy assets with rising prices, or at least held safely with a positive yield. As Rajan puts it (p. 338), "it takes a very brave investment manager with infinitely patient investors to fight the trend, even if the trend is a deviation from fundamental value."
Justin Lahart, writing in the Wall Street Journal in January 2009 about the response to Rajan's paper at the conference recounts that "former Treasury Secretary Lawrence Summers, famous among economists for his blistering attacks, told the audience he found 'the basic, slightly lead-eyed [24] premise of [Mr. Rajan's] paper to be largely misguided.'" This is strong criticism, especially given Summer's role in deregulation of the credit default swap market, and the collapse in 2008 of A.I.G. other firms with massive exposures to credit default swaps on mortgage-backed securities.
In a recent paper (on pages 285-87), Steven Gjerstad and Nobel laureate Vernon L. Smith describe more fully the contribution of derivatives to the flow of mortgage funds that supported the housing bubble, the concerns that Brooksley Born had raised about the dangers inherent in these contracts, Summers' contributed to their deregulation, and how these contracts precipitated the collapse of the financial system in 2007 and 2008. [25]
As for neo-stalinism and according to your assertions, I'll ask again when do the gulags and the killings begin?
