Larry Summers, Shepherd of the World

Nov 10, 2015

- By Bill Bonner

Bill Bonner
Normandy, France

A family matriarch - such as Rose Kennedy - may speak for her entire clan.

William Donald Shaefer, as mayor, claimed to speak for the people of Baltimore.

Charles de Gaulle, grandly, spoke up for the French.

But only a leading economist, or a complete lunatic, would claim to speak for the entire planet.

The Great Fixer

Many adjectives can be applied to Larry Summers. Pompous. Foolish. Asinine. But not 'small-minded.' His mind is big...impossibly big.

Go ahead. Ask him anything. Really, there is no subject so complex, so remote, so gnarly that it can stump Mr Summers.

Former President of Harvard University, former Secretary of the Treasury, former chief economist of the World Bank, he now writes for the Financial Times.

In his columns, we find humankind's problems fixed...the world's challenges met...galactic issues resolved.

Yes, Larry - who was a candidate to replace Ben Bernanke at the Fed - is the Great Fixer. Never has a situation appeared for which he had no fix. And never has one of his fixes failed to fix a problem so miserably that he didn't come forth with yet another fix to fix the fix the faulty fix failed to fix.

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We will come back to Mr Summers in a moment. We pause briefly to let readers know what is going on in the markets:

'Wall Street indexes drop 1% as rate hike looms', says a Reuters headline.

One percent doesn't seem like very much. Not in a market that has gone up 150% since 2009. It will take another 149 days of that sort of drop in order to erase the gains wrought by the Fed's fix.

US equities went up so much largely thanks to rate cuts and quantitative easing. Rate hikes are likely to send it in the other direction. As interest rates rise, there will be a bit of 'quantitative tightening' going on too...as higher rates (albeit only slightly higher) will reduce the amount of debt outstanding.

This will all probably happen the way it always seems to happen...gradually, then all of a sudden.

Debt - particularly the weakest (subprime) links in the bond market - will stretch...and then give way. Equity, too, will lollygag around, not sure what to do. Then, it will rush for the exits.

At least...you should be alert for it. No one knows what will actually happen.

But that must be why we have people such as Lawrence Henry Summers. He knows things that other mortals don't. In fact, he has answers to questions the rest of never even considered worth asking.

Unlimited Competence

Take China, for example. Who knows what is going on in China? No one. Is that a problem? Not really. Why do we need to know?

The Chinese householder needs to figure out how to pay for his rice and fish eyes. The Chinese factory owner needs to bribe his local politician and put off paying his debt. The Chinese investor needs to guess which way markets are going - just like investors everywhere.

We all have our challenges, in other words...and tight limits on our range of competence.

But along comes Larry Summers. All of a sudden, the barriers of honest thinking and modest fitness are brushed aside.

No problem is too big for Larry's brain. And no detail is too small for his feet to trip over. He is not even thinking for himself. He has become the brain, the voice, and the shepherd of the entire world.

Summers in the Financial Times:

    ...the world lacks shared understandings regarding goals for the evolution of the Chinese economy, the objectives of China policy in the short and medium term, and the institutional structures needed to manage both co-operation and inevitable tensions...
We gasp for air!

What manner of man is this? When did the world ever have a 'shared understanding' of anything? How could you have a 'goal' for the 'evolution' of the Chinese economy? They let this guy into Harvard?

The whole idea of evolution is that it happens without goals...without conscious thought. It is a trip without a destination.

And it is the way economies actually work. They do not respond well to manipulation by self-important meddlers.

A World of Make-Believe

But if you are speaking for the entire Earth, you have already gone way beyond the theory of evolution.

You are in a world without theory...without science...without experience or history. You are in a world of make-believe, where pundits pretend to know what they are talking about and newspapers fill space with mythical claptrap:

    The world cannot expect economic co-operation from Beijing if its objective is to inhibit Chinese economic performance.
Why would 'the world' expect cooperation from Beijing? Why would 'the world' have any interest in inhibiting 'Chinese economic performance'? Why would 'the world' give a damn about any of this?

He also claims to know not only what is best for Larry Summers, the Summers family, the members of the Harvard Faculty, the people of Brookline, Massachusetts, the Yankees north of the Mason-Dixon Line, the citizens of the United States of America, and all the residents of the Americas, north and south ...but all the people of who live on Earth and the planet itself...presumably including its fauna...its flora...and its inanimate objects:

    The world is likely to benefit from recognising that its deepest interests lie in China pursuing more not less reform, even at the expense of modest reductions in its contribution to global demand over the next couple of years, and possibly more exchange-rate depreciation than we would prefer.
How does he know these things? Summers only knows

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

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