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Home Publications Blogs Beat the Press Gene Sperling Thinks Asset Bubbles Are Cool

Gene Sperling Thinks Asset Bubbles Are Cool

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Thursday, 06 January 2011 06:26

I will depart from my policy of not commenting on articles where I am mentioned to clarify the issues (to me) surrounding Gene Sperling's selection as a President Obama's national economic advisor. The primary issue is not that Sperling got $900,000 from Goldman Sachs for part-time work, although that does look bad. The primary issue is that Sperling thought, and may still think, that the policies that laid the basis for the economic collapse were just fine.

Sperling saw nothing wrong with the stock market bubble that laid the basis for the 2001 recession. The economy did not begin to create jobs again until two and a half years after the beginning of this recession and even then it was only due to the growth of the housing bubble. Gene Sperling also saw nothing wrong with the growth of that bubble. Gene Sperling also saw nothing wrong with the financial deregulation of the Clinton years which, by the way, helped make Goldman Sachs lots of money. And, he saw nothing wrong with the over-valued dollar which gave the United States an enormous trade deficit. This trade deficit undermined the bargaining power of manufacturing workers and helped to redistribute income upward.

In short, Sperling has a horrible track record of supporting policies that were bad for the country and good for Wall Street. This track record is far more important than his $900,000 consulting fee in providing my basis for objecting to Sperling's appointment. It is remarkable that it was not mentioned in this article.

Comments (11)Add Comment
...
written by izzatzo, January 06, 2011 8:09
From the LA Times article, this quote:
Greenstein touted Sperling as uniquely qualified to replace Summers, having done the job before during a Democratic presidency when Republicans had control of Congress. With Republicans taking over the majority in the House on Wednesday, the ability to work across party lines will be important, Greenstein said.

"It would be hard to find someone who is more experienced in the particular tasks this job entails," Greenstein said.


Exactly. When it comes to policy on asset bubbles and other essential economic issues, the two political parties conveniently merge into a single party, for which the sole objective is to preserve income inequality over all else. In this regard Sperling and Summers are two peas in a pod.
How would one get elected
written by Floccina, January 06, 2011 9:52
How would one get elected advocating bursting a bubble?
When it comes to the stock and housing bubble we have seen the enemy and it is the median voter.
The stock bubble was partly the result of the median voter owning stock directly of through mutual funds. The housing bubble was partly the result of the fact that there are always far more home owners that vote than people wish to buy a home cheap that vote.
Another Boat Missed
written by Ron Alley, January 06, 2011 10:36
President Obama's appointment of Gene Sperling is another boat missed. When I look at the number of competent economists who support the changes the President feature in his campaign rhetoric, I wonder how much damage Mr. Obama has done to the future of the Democratic Party by leaving so much talent on the sidelines. Even the best players benefit from time on the field.
OBTW
written by Ron Alley, January 06, 2011 10:42
For an interesting comment on President Obama's choice of Sperling and other of his persuasion, check out:
http://rortybomb.wordpress.com...tic-party/
Leaving the Waters Undesturbed
written by Benedict@Large, January 06, 2011 10:48
In fact, this is what's wrong with ALL economic hold-overs from the Clinton era. Clinton's economic prosperity was based on the dot-com bubble, and not upon an improvement in the economy's underlying fundamentals. This sort of economic prosperity may be good for Wall Street, but it tears at the fabric of the middle class by not allowing them to successfully plan for future financial needs.

Indeed, this is precisely what drives Goldman Sachs et al to pay Sperling (and others like him) to consult with them "on charitable donations": To keep him busy, idle, and available for the next Democratic administration (think, "farm team"), knowing that when he was next "called up", he would not disturb the waters that the Wall Street Titans swim in.
nice to see the libertarians and radicals speaking again
written by pete, January 06, 2011 10:53
This is like Barney Frank and Ron Paul going after the Fed. Such joy in the new year! Now go for the jugular...stop the destabilizing activist monetary policy now. Ditch the employment provision in the Fed charter.

...
written by PeonInChief, January 06, 2011 11:02
Maybe we'll get the same kind of horrors we got with welfare "reform," you know, the kind of legislation you get with Republican control of Congress.
Selectively quoted by The Times?
written by Anthony Banks, January 06, 2011 11:56
Dean-

Did you say all of this to Jim Puzzanghera when he contacted you for a comment? If so, he has clearly skewed the record and is busy making the (liberal) case for Sperling's appointment.
...
written by urban legend, January 06, 2011 5:54
Name names. By not naming names -- the reporters and editors who should be most responsible to establishing the correct tone and content of reporting on this subject -- it makes it much easier for them to continue shirking their responsibility. They deserve 1000 or 10,000 emails.
...
written by PeonInChief, January 06, 2011 8:00
I can't believe that the reporter noted Sperling's support for girls' education when it should be well known that the Clinton Administration was no more in favor of free education for girls than the Reagan and Bush Administrations were. A number of countries, Tanzania most notably, were forced to begin charging fees for education which, of course, meant that the number of girls in school fell precipitously.
Mind Reading?
written by Melissa, January 07, 2011 6:49
Aren't you violating your own principle about not assuming you can read someone else's mind here? You're quick to criticize NYT and WP authors for writing their articles this way. You don't know that he thinks those policies are fine. You only know what he said. Maybe he knew darn well that they would cause economic catastrophe, but he also knew that he and his friends would profit enormously before the collapse, and to him that was a "fine" outcome.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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