Trashing Obama's Economic Team
by Lloyd Grove
House budget guru David Stockman talks to Lloyd Grove about the
dangers of ignoring the deficit, why Bernanke, Geithner and Summers
must be fired ASAP and his support for Ron Paul.
Chairman Ben Bernanke is a math teacher, hes not a central
banker, former White House Budget Director David Stockman
scoffs. He is so caught up in his equations that I think hes
extremely dangerous the worst Fed chairman weve ever
In the flat,
dry accents of the Michigan farm boy he once was, Stockman tells
me: How can he believe that stimulating more credit creation
and more borrowing can possibly solve the problem of a housing sector
thats drowning in debt and a federal government thats
on the edge of insolvency?
the greatest enabler of Wall Street speculation and of the disasters
that brewed both before the financial crisis of 2008 and are brewing
again, and I would blame the Bush White House. I would lay this
right at the doorstep of Karl Rove. How did they vet the appointment
of a new Fed chairman and not even read the black-and-white writings
of this Bernanke fellow who said, If push comes to shove,
Ill print money until the cows come home. Ill drop it
out of helicopters! This is Republican doctrine? This is sound
money? Stockman concludes: The Wall Street casino is
simply a consequence of what Bernanke is doing, and for that alone,
he should be removed from office.
explains why Bernanke should be fired immediately along with
Treasury Secretary Timothy Geithner and President Obamas chief
economic adviser, Larry Summers he sips a cappuccino at The
Little Nell bar in Aspen, Colorado, site of the Aspen Institutes
weeklong Ideas Festival, which ended on Sunday.
Stockman continues, dispatching his next victim, has had in
his whole life only one idea and its wrong. The idea
is: No matter what state we are in the cycle youre
entering a recession, coming out of the recession or facing one
down the road stimulate the economy, add to the federal debt,
basically borrow from the future in order to create false gains
As for Geithner,
he has basically been a bag carrier for Wall Street
in fact, his shoulders are a little stooped, Stockman says.
I dont think hes really fit to occupy the office
hes in. He has no real philosophy. I dont see any evidence
that hes understood financial history or public policy going
back decades and decades. Its all seat-of-the-pants, make
judgments on the fly: Try something, and if it doesnt work,
try something else
He might make a third-rate investment banker,
but he certainly shouldnt be Secretary of the Treasury.
The other patrons
pay no attention to the silver-haired gadfly at the corner table
whos making smart remarks about the powers that be. At 63
casually dressed in a dark patterned shirt that is draped
over his belt to conceal his spreading belly Stockman looks
like any of the other wealthy senior citizens who populate this
posh resort town.
But he was,
in his day, President Reagans boy wonder and fiscal
hatchet man, the most famous (or infamous, depending on your outlook)
budget director in American history. In the notorious episode that
prompted an angry Reagan to take him to the woodshed,
as the encounter was spun at the time, Stockman confided his misgivings
about an intellectually dishonest, politically corrupt federal budget
process to William Greider in The Atlantic Monthly. "None
of us really understands what's going on with all these numbers,"
Stockman told Greider in 1981 an utterance so refreshing
and unprecedented, coming as it did from a top government official,
that a Washington, D.C., dance company presented an avant-garde
ballet inspired by Stockmans truth-telling.
government and politics in the mid-1980s, he has made millions as
an investment banker he was a founding partner, with Steve
Schwartzman and Pete Peterson, of the Blackstone Group and
later became the target of Justice Department and Securities and
Exchange Commission investigations into what the government alleged
was his fraudulent stewardship of a failed auto parts company. Criminal
charges were dropped last year for lack of evidence, and a few months
ago Stockman settled the SECs civil suit by paying $7.19 million
in penalties and fines.
a pleasant experience, but I also knew what the facts were,
Stockman tells me.
Does he believe
he was targeted because of his celebrity?
very hard to figure out how they pick and choose their cases,
he answers. Im just glad to have all this over to
have the Justice Department drop the case because they realized
they couldnt defend it, and to have the SEC drop most of the
charges they made. Im not going to second-guess why they got
involved, but after tens of millions of pages of documents and two
or three years of investigation and millions of dollars of legal
expenses, both the SEC and the Justice Department ended up dropping
the case. That says something.
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