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Tag: larry summers

  • What Larry Summers Has in Common With Donald Trump

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    Lawrence H. Summers, the former Harvard president and one of the country’s most renowned economists, is facing the worst scandal of his career after newly released emails showed him seeking advice from Jeffrey Epstein on how to seduce a young economic mentee long after the notorious financier’s 2008 sex-crimes conviction. This isn’t Summers’s first time in the hot seat, as Richard Bradley knows all too well. The author detailed many of Summers’s past scandals, his subsequent comebacks, and his unlikely path to becoming Harvard’s leader in 2005’s Harvard Rules: The Struggle for the Soul of the World’s Most Powerful University. That book, with its account of Summers routinely butting heads with faculty and staff, largely predicted his resignation as president a short time later after public outrage over remarks denigrating women scientists. I asked Bradley to break down what the latest Epstein revelations tell us about Summers’s ascent to the top of academia and politics, his public fall, and whether or not this is really the reckoning that many think it is.

    By this point you’ve probably seen the video of Summers opening his economics class at Harvard this week by acknowledging his “shame” over his correspondence with Epstein. Which has brought us to this sort of viral moment where Harvard students are noting that their esteemed professor is standing before the class and admitting he is “in the Epstein files.” It feels like an unthinkable moment for the university — how damning is this, reputation-wise, for both Summers and Harvard? 
    Well, that’s the $64,000 question, because the answer to it probably determines whether Larry Summers can retain his status as a university professor or even a tenured professor at Harvard.

    And it sounds like he is planning on staying?
    Oh, it does. It certainly does. The fact that he obtained that position after he resigned as president of Harvard in 2006 was essential for him because it was a perfect position for him to rebuild his career and to rebuild his image. It’s not a position that requires a lot of work — Summers can teach a lecture course in his sleep. And I think the professional obligations of it, frankly, are not high.

    It would stand to reason that it would also be the position from which he would try to launch a comeback again. The funny thing is that Larry Summers has been so damaging to the Harvard brand, not just in 2006 but earlier when he was criticizing the antisemitism that he saw on campus. It’s an unusual thing for a former university president to criticize the university, and typically not done, because implicitly it’s a criticism of the current president and it certainly makes the work of the current president trickier. And now again with his association with Jeffrey Epstein. And of course, it’s not the first time that association has gotten him in trouble, but it’s certainly on another level now.

    The irony is that for someone who has always been so critical of Harvard, he needs Harvard. And so I think he will fight very hard not to lose that position. And it will be fascinating to see what Harvard does, because, you know, there are more emails to come. I expect that nobody knows. I imagine Summers doesn’t know what those emails might contain. Harvard certainly doesn’t.

    I know he’s come back from so many scandals, from backlash during his time at the World Bank over a memo about dumping toxic waste in poor countries to apparently questioning women’s cognitive abilities while president of Harvard. There are critics out there kind of celebrating this and saying, “Yeah it’s about time.” Do you think this is overdue?
    I don’t know that I see this as some kind of karmic justice. Look, there are a lot of people who think that Summers is a jerk. And a lot of times he is a jerk. It’s true. In my Politico piece, I went out of my way to include that anecdote about the Winklevoss twins, at the Aspen Institute, saying he called them assholes. Because it has bothered me for years, the idea that a former president of Harvard would make a joke about former students and call them assholes in a public forum. It’s like Trump calling someone “Piggy.” It’s not right.

    That was another thing you mentioned in your Politico column. There are some similarities between Trump and Summers. Barring any intellectual comparisons, they’ve both weathered all these scandals and managed somehow to come back. 
    They both appeal to a certain type of American constituency that is tired of nuance, tired of negotiations, tired of ambiguity. People who want a certain masculine, gendered masculine approach to clarity and “boldness,” and “vision.” There are people who like this style.

    The fact is Trump and Summers possibly have some overlap in terms of their criticism of both Harvard and universities in general. Summers hates “woke” faculty; he hates left-wing students. This is not new. Summers is, of course, much more intellectual and learned, and smarter in many ways.

    I don’t think this started for Summers with Jeffrey Epstein. I think he has always had this kind of boorish, vulgar, and sometimes sexist side of him.

    I don’t want to try and get inside his head too much, but why do you think he did turn to Epstein, of all people, for these personal matters in the first place? You got into it a little bit in your book, this idea that he’s attracted to power. 
    It’s celebrity. It’s a weird word to use in this context, but there are celebrities in the kinds of worlds that Larry Summers inhabits, and he’s one of them. He probably likes that more than he likes being professor, although I think he does enjoy teaching, and I think he values the field of economics and takes it very seriously. But if he took it really seriously, he wouldn’t have had the career that he’s had.

    To go back to your question, I do think I agree with you — his mind is a complicated place. So it is difficult to figure it out, but I think there’s a couple things. There is this side which does not want to be a geek. He wants to be cool. And he definitely wants to be seen that way, to be leading a life where he kind of gets to do these things that are taboo and get away with it. I also think that Summers might have seen in Epstein another individual who had broken the rules, violated social norms, offended women — I know Epstein did more than that to women — and being marginalized, to some degree, as a result. And I think there might have been some sense of solidarity there. And I don’t mean to suggest that Summers was engaging in the behaviors that Epstein was — there’s no sign of that.

    I think the most alarming thing about what he was saying to Epstein is that he described this woman as a mentee. How could he keep teaching at Harvard after that? 
    I think that is really kind of a hard stop. You have Summers clearly articulating a relationship in which he seems to have no moral qualms with violating a standard of behavior that professors really do take incredibly seriously, even though some of them do occasionally violate it. So I don’t see how he gets back. I think something that has not gotten enough attention was the fact that Summers and Epstein referred to her as “peril.” I don’t know how you get over that, either. It’s gross.

    Years after that scandal with the World Bank memo, he said he didn’t want to be seen as weak by telling people it was a member of his staff who’d written it, so he sort of fell on his sword. I do wonder if we’ll see the same thing here: He won’t want to be seen as weak and therefore won’t give up without a fight?
    There’s not a chance that Larry Summers wants the first paragraph of his obituary to read that he was forced to resign from Harvard twice.

    I think these two sides of Summers have always co-existed. I would say that there was always this quality of thinking that the rules didn’t really apply to him. He would try to comport with them when incumbent upon him.

    I see some of his critics arguing that he was wrongly exalted and that he has been wrong on economic issues plenty of times that just never got as much attention. He was portrayed as uniquely brilliant, but is there a chance that wasn’t true?
    When people say he’s brilliant or how smart he is, they never qualify that with any sense of in what way he’s smart, in what way he’s brilliant. Which is to say, I’ve seen Summers achieve two things: to be absorbing huge amounts of information, process it, come up with insightful conclusions about it, almost sometimes on the spot — it’s pretty impressive. On the other hand, that perception of his being exceptional is heightened by the kind of oddness of his presentation and the certitude of his manner. Summers never says, “This could be true, but it might not be true.” He says, “This is true.” That mixture of an unquestionably formidable mind with these personality quirks that sometimes in popular culture are associated with genius, with an unflinching certitude of personal correctness, gets woven into this big ball of “good.”

    If you step back and say, Where has he been right, where has he been wrong? What are his big ideas, how much has he changed the field of economics? In what ways is he smart, in what ways is he really not smart at all? In what ways would you look at things he’s done and say, “That was kind of stupid”? Then the question of Summers’s brilliance becomes much more nuanced.

    It’s the kind of brilliance that in a certain sector of the population is awarded primacy over other kinds of intelligence. For example, in the financial world, in certain parts of the university world, in the tech world, someone whose mind works like Summers’s does, which is kind of like a computer, is really valued and admired and respected regardless of personal failings. But if people had said, “Well, what about emotional intelligence, what about diplomatic intelligence, what about intuition,” they would look at you and say, “Why do those things matter?”

    So it’s not a well-rounded intelligence; it’s a very specific and kind of narrow sort of intelligence.

    I think that we have overlooked personal challenges and some of his intellectual mistakes because he walks into a room and we constantly award him that presumption of intelligence without really considering the nature and the limits of his particular kind of intelligence. So we’re looking at an incomplete data set and concluding that it’s brilliant.

    What does that say about the politics of power today? 
    I don’t think emotional intelligence is a particularly valued quality. The funny thing about this is that the kind of intelligence that Summers has, and that people like about him, is very much — and this is not my perception — a stereotypically male kind of intelligence. Like, “He’s an asshole, but he’s really smart.” And so when Summers talks about women’s kind of intelligence, to me the statement he’s making is, “It’s not my kind of intelligence.” He really is a product of an incredibly competitive, masculine-dominated academic gladiatorial arena.

    Two of his uncles were Nobel laureates, as you mention in your book, and I wonder if in some way he’s tried to defy that expectation of him. 
    One of my arguments in the book was that he’s realized that he was not as fine-minded and of the same caliber as his uncles. And also that maybe this wasn’t the life that he wanted to lead. One of the things I think really shaped him that people don’t talk about is the fact that he’s a cancer survivor. It was pretty serious, and he could’ve died. And he was young. So I think there’s a sense that he’s escaped his fate more than once: cancer, losing his presidency, scandal at the World Bank. He’s played with fire multiple times in his life. But I don’t think this one gets extinguished quite so easily.

    Can you see him fading for a couple years and then making a comeback? 
    There are people who would hire him. I’ve heard people make the argument, “Well, he didn’t commit any crimes — maybe he didn’t know the extent of Epstein’s behavior.” People inclined to like that sort of personality will find ways to whitewash this. I think the question is not whether he’ll be able to come back; it’s what that comeback will look like, and whether it will be satisfying for him, and whether Harvard has to be, psychologically, a part of that comeback. Because it still matters to him. As much as he criticizes Harvard, his relationship with the university and the prestige that it accords him still matters.

    As in “yellow peril.”

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    Allison Quinn

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  • Larry Summers’ Epstein Fallout Is Getting Worse | RealClearPolitics

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    Larry Summers' Epstein Fallout Is Getting Worse

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    Nia Prater, New York Magazine

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  • Disgraced Former Harvard President Actually Spent Honeymoon On Epstein Island

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    Former Harvard professor Larry Summers spent part of his 2005 honeymoon with his new bride, Elisa F. New, on a private island owned at the time by disgraced financier and convicted sex trafficker Jeffrey Epstein.

    Publicly available flight logs examined by the Harvard Crimson show that on Dec. 21, 2005 ― about 10 days after their wedding ― Summers and New flew south from Bedford, Massachusetts, on Epstein’s private plane to Charlotte Amalie, St. Thomas.

    The U.S. Virgin Island’s city is the place where visitors would grab a helicopter before heading off to Epstein’s island, the Crimson noted.

    The honeymoon flight was confirmed by Summers’ spokesman Steven Goldberg, who claimed it was just a brief visit long before Epstein was ever arrested.

    “Mr. Summers and Ms. New spent their honeymoon in St. John and Jamaica in December 2005, which was long before Mr. Epstein was arrested for the first time,” Goldberg told the paper. “As part of that trip, they made a brief visit of less than a day to Mr. Epstein’s island.”

    HuffPost reached out to Summers for comment on the vacation, but no one immediately responded.

    Summers and New weren’t the only passengers on the flight. The logs also show Epstein’s partner-in-crime, Ghislaine Maxwell, was there as well as the financier’s longtime pilot, Larry Visoski.

    The Crimson notes that Summers and New’s visit came months after Florida officials opened an investigation into Epstein and days after the convicted sex trafficker had started assembling a legal team that included Summers’ Harvard colleague Alan Dershowitz.

    The story about the honeymoon trip to Epstein’s island is just the latest revelation about Summers that has popped up since last week’s Epstein email dump, which showed their friendship went on longer and was deeper than previously known.

    Not only did Summers stay in contact with Epstein for years after the billionaire financier’s guilty plea for soliciting sex from underage girls in Florida in 2008, but he sent his last message to Epstein just one day before Epstein was arrested on federal charges of sex trafficking minors in July 2019.

    Among the cringiest revelations: The Harvard professor even asked Epstein for dating tips with a woman he described as a “mentee.”

    The outcry over the emails has been bad for Summers’ career, especially after Sen. Elizabeth Warren (D-Mass.) demanded he resign from Harvard and warned that he “cannot be trusted” with students.

    In addition, President Donald Trump ― who also appears in the Epstein files ―demanded that the Justice Department and FBI investigate Epstein’s ties to powerful Democrats like Summers and former president Bill Clinton.

    Summers tried to deal with the fallout by announcing on Monday he would step back from all public commitments so he can “rebuild trust and repair relationships with the people closest to me.”

    On Wednesday, he said he would be exiting the board of OpenAI.

    Still, Summers hoped to at least keep teaching, and told students attending a class on Wednesday that he thought that it was “very important to fulfill my teaching obligations.”

    Later in the evening, Summers changed his mind and announced he will no longer be teaching classes and that his co-teachers would finish out the term.

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  • Professor In Epstein Files Apologizes To Harvard Students Before Teaching Class

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    Summers has been facing fallout from last week’s Epstein email dump which showed that the former president of the university and former Treasury Secretary under Bill Clinton had a long friendship with the disgraced financier and convicted sex trafficker.

    But after President Donald Trump’s recent demand that the DOJ investigate the ties of prominent Democrats to Epstein, Summers said on Monday he is stepping back from all public commitments except for the classes he still teaches.

    “Some of you may have seen my statement of regret, expressing my shame with respect to what I did in communication with Mr. Epstein and that I’ve said that I’m going to step back from public activities for a time but that I think it’s very important to fulfill my teaching obligations,” he said.

    “And so, with your permission, I’m gonna … we’re gonna go forward and talk about the material in the class.”

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  • Elizabeth Warren Calls For Harvard To Cut Ties With A Key Figure After Epstein Revelations

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    Sen. Elizabeth Warren (D-Mass.) is calling for Harvard to cut ties with the school’s former president and former Treasury Secretary Larry Summers, after the extent of Summers’ friendship with Jeffrey Epstein was laid bare in a document dump from Epstein’s estate last week.

    Summers’ messages appeared regularly in Epstein’s inbox, even after the billionaire financier pleaded guilty to soliciting sex from underage girls in Florida in 2008.

    In several emails reviewed by The Harvard Crimson, Summers and Epstein discussed the possibility of the billionaire making financial contributions to the school, with a specific emphasis on a digital poetry initiative spearheaded by Summers’ wife.

    In dozens of others, Summers delves into his personal life, both soliciting and offering relationship advice.

    In another email, dated October 2017, Summers appeared to sympathize with Epstein, bemoaning an “American elite” that ostracizes someone who “hit on a few women” a decade ago, while offering a path to redemption for other seemingly worse misdeeds.

    “For decades, Larry Summers has demonstrated his attraction to serving the wealthy and well-connected, but his willingness to cozy up to a convicted sex offender demonstrates monumentally bad judgment,” Warren told CNN in a statement.

    “If he had so little ability to distance himself from Jeffrey Epstein even after all that was publicly known about Epstein’s sex offenses involving underage girls,” she continued, “then Summers cannot be trusted to advise our nation’s politicians, policymakers, and institutions — or teach a generation of students at Harvard or anywhere else.”

    Epstein donated around $9.1 million to the school between 1998 and 2008, overlapping with Summers’ tenure as president of the university from 2001 to 2006.

    Summers has previously said he “regrets” his relationship with Epstein.

    “I have great regrets in my life,” he wrote, in a statement relayed by The Crimson. “As I have said before, my association with Jeffrey Epstein was a major error of judgement.”

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    Your SupportFuelsOur Mission

    Your SupportFuelsOur Mission

    We believe our mission of independent journalism has never been more important. We face increasing pressure from politicians and billionaire media owners that is irrevocably impacting our industry. Yet HuffPost has never been more committed

    We remain committed to providing you with the unflinching, fact-based journalism everyone deserves.

    Thank you again for your support along the way. We’re truly grateful for readers like you! Your initial support helped get us here and bolstered our newsroom, which kept us strong during uncertain times. Now as we continue, we need your help more than ever. We hope you will join us once again.

    We remain committed to providing you with the unflinching, fact-based journalism everyone deserves.

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  • At Trump’s urging, Bondi says US will investigate Epstein’s ties to Clinton and other political foes

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    Acceding to President Donald Trump’s demands, U.S. Attorney General Pam Bondi said Friday that she has ordered a top federal prosecutor to investigate sex offender Jeffrey Epstein’s ties to Trump political foes, including former President Bill Clinton.Bondi posted on X that she was assigning Manhattan U.S. Attorney Jay Clayton to lead the probe, capping an eventful week in which congressional Republicans released nearly 23,000 pages of documents from Epstein’s estate and House Democrats seized on emails mentioning Trump.Trump, who was friends with Epstein for years, didn’t explain what supposed crimes he wanted the Justice Department to investigate. None of the men he mentioned in a social media post demanding the probe has been accused of sexual misconduct by any of Epstein’s victims.Hours before Bondi’s announcement, Trump posted on his Truth Social platform that he would ask her, the Justice Department, and the FBI to investigate Epstein’s “involvement and relationship” with Clinton and others, including former Treasury Secretary Larry Summers and LinkedIn founder and Democratic donor Reid Hoffman.Trump, calling the matter “the Epstein Hoax, involving Democrats, not Republicans,” said the investigation should also include financial giant JPMorgan Chase, which provided banking services to Epstein, and “many other people and institutions.”“This is another Russia, Russia, Russia Scam, with all arrows pointing to the Democrats,” the Republican president wrote, referring to special counsel Robert Mueller’s investigation of alleged Russian interference in Trump’s 2016 election victory over Bill Clinton’s wife, former Secretary of State Hillary Clinton.Asked later Friday whether he should be ordering up such investigations, Trump told reporters aboard Air Force One: “I’m the chief law enforcement officer of the country. I’m allowed to do it.”In a July memo regarding the Epstein investigation, the FBI said, “We did not uncover evidence that could predicate an investigation against uncharged third parties.”The president’s demand for an investigation — and Bondi’s quick acquiescence — is the latest example of the erosion of the Justice Department’s traditional independence from the White House since Trump took office.It is also an extraordinary attempt at deflection. For decades, Trump himself has been scrutinized for his closeness to Epstein — though like the people he now wants investigated, he has not been accused of sexual misconduct by Epstein’s victims.None of Trump’s proposed targets were accused of sex crimesA JPMorgan Chase spokesperson, Patricia Wexler, said the company regretted associating with Epstein “but did not help him commit his heinous acts.”“The government had damning information about his crimes and failed to share it with us or other banks,” she said. The company agreed previously to pay millions of dollars to Epstein’s victims, who had sued arguing that the bank ignored red flags about criminal activity.Clinton has acknowledged traveling on Epstein’s private jet but has said through a spokesperson that he had no knowledge of the late financier’s crimes. He also has never been accused of misconduct by Epstein’s known victims.Clinton’s deputy chief of staff Angel Ureña posted on X Friday: “These emails prove Bill Clinton did nothing and knew nothing. The rest is noise meant to distract from election losses, backfiring shutdowns, and who knows what else.”Epstein pleaded guilty in Florida in 2008 to soliciting prostitution from an underage girl, but was spared a long jail term when the U.S. attorney in Florida agreed not to prosecute him over allegations that he had paid many other children for sexual acts. After serving about a year in jail and a work release program, Epstein resumed his business and social life until federal prosecutors in New York revived the case in 2019. Epstein killed himself while awaiting trial on sex trafficking charges. Summers and Hoffman had nothing to do with either case, but both were friendly with Epstein and exchanged emails with him. Those messages were among the documents released this week, along with other correspondence Epstein had with friends and business associates in the years before his death.Nothing in the messages suggested any wrongdoing on the men’s part, other than associating with someone who had been accused of sex crimes against children.Summers, who served in Clinton’s cabinet and is a former Harvard University president, previously said in a statement that he has “great regrets in my life” and that “my association with Jeffrey Epstein was a major error of judgement.”On social media Friday night, Hoffman called for Trump to release all the Epstein files, saying they will show that “the calls for baseless investigations of me are nothing more than political persecution and slander.” He added, “I was never a client of Epstein’s and never had any engagement with him other than fundraising for MIT.” Hoffman bankrolled writer E. Jean Carroll’s sexual abuse and defamation lawsuit against Trump.After Epstein’s sex trafficking arrest in 2019, Hoffman said he’d only had a few interactions with Epstein, all related to his fundraising for MIT’s Media Lab. He nevertheless apologized, saying that “by agreeing to participate in any fundraising activity where Epstein was present, I helped to repair his reputation and perpetuate injustice.”Bondi, in her post, praised Clayton as “one of the most capable and trusted prosecutors in the country” and said the Justice Department “will pursue this with urgency and integrity to deliver answers to the American people.”Trump called Clayton “a great man, a great attorney,” though he said Bondi chose him for the job.Clayton, the chairman of the Securities and Exchange Commission during Trump’s first term, took over in April as U.S. attorney for the Southern District of New York — the same office that indicted Epstein and won a sex trafficking conviction against Epstein’s longtime confidante, Ghislaine Maxwell, in 2021.Trump changes course on Epstein filesTrump suggested while campaigning last year that he’d seek to open up the government’s case files on Epstein, but changed course in recent months, blaming Democrats and painting the matter as a “hoax” amid questions about what knowledge he may have had about Epstein’s yearslong exploitation of underage girls.On Wednesday, Democrats on the House Oversight Committee released three Epstein email exchanges that referenced Trump, including one from 2019 in which Epstein said the president “knew about the girls” and asked Maxwell to stop.White House spokeswoman Karoline Leavitt accused Democrats of having “selectively leaked emails” to smear Trump.Soon after, Republicans on the committee disclosed a far bigger trove of Epstein’s email correspondence, including messages he sent to longtime Trump ally Steve Bannon and to Britain’s former Prince Andrew, now known as Andrew Mountbatten-Windsor. Andrew settled a lawsuit out of court with one of Epstein’s victims, who said she had been paid to have sex with the prince.The House is speeding toward a vote next week to force the Justice Department to release all files and communications related to Epstein.“I don’t care about it, release or not,” Trump said Friday. “If you’re going to do it, then you have to go into Epstein’s friends,” he added, naming Clinton and Hoffman.Still, he said: “This is a Democrat hoax. And a couple, a few Republicans have gone along with it because they’re weak and ineffective.”__Bedayn reported from Denver. Associated Press writer Chris Megerian aboard Air Force One contributed to this report.

    Acceding to President Donald Trump’s demands, U.S. Attorney General Pam Bondi said Friday that she has ordered a top federal prosecutor to investigate sex offender Jeffrey Epstein’s ties to Trump political foes, including former President Bill Clinton.

    Bondi posted on X that she was assigning Manhattan U.S. Attorney Jay Clayton to lead the probe, capping an eventful week in which congressional Republicans released nearly 23,000 pages of documents from Epstein’s estate and House Democrats seized on emails mentioning Trump.

    Trump, who was friends with Epstein for years, didn’t explain what supposed crimes he wanted the Justice Department to investigate. None of the men he mentioned in a social media post demanding the probe has been accused of sexual misconduct by any of Epstein’s victims.

    Hours before Bondi’s announcement, Trump posted on his Truth Social platform that he would ask her, the Justice Department, and the FBI to investigate Epstein’s “involvement and relationship” with Clinton and others, including former Treasury Secretary Larry Summers and LinkedIn founder and Democratic donor Reid Hoffman.

    Trump, calling the matter “the Epstein Hoax, involving Democrats, not Republicans,” said the investigation should also include financial giant JPMorgan Chase, which provided banking services to Epstein, and “many other people and institutions.”

    “This is another Russia, Russia, Russia Scam, with all arrows pointing to the Democrats,” the Republican president wrote, referring to special counsel Robert Mueller’s investigation of alleged Russian interference in Trump’s 2016 election victory over Bill Clinton’s wife, former Secretary of State Hillary Clinton.

    Asked later Friday whether he should be ordering up such investigations, Trump told reporters aboard Air Force One: “I’m the chief law enforcement officer of the country. I’m allowed to do it.”

    In a July memo regarding the Epstein investigation, the FBI said, “We did not uncover evidence that could predicate an investigation against uncharged third parties.”

    The president’s demand for an investigation — and Bondi’s quick acquiescence — is the latest example of the erosion of the Justice Department’s traditional independence from the White House since Trump took office.

    It is also an extraordinary attempt at deflection. For decades, Trump himself has been scrutinized for his closeness to Epstein — though like the people he now wants investigated, he has not been accused of sexual misconduct by Epstein’s victims.

    None of Trump’s proposed targets were accused of sex crimes

    A JPMorgan Chase spokesperson, Patricia Wexler, said the company regretted associating with Epstein “but did not help him commit his heinous acts.”

    “The government had damning information about his crimes and failed to share it with us or other banks,” she said. The company agreed previously to pay millions of dollars to Epstein’s victims, who had sued arguing that the bank ignored red flags about criminal activity.

    Clinton has acknowledged traveling on Epstein’s private jet but has said through a spokesperson that he had no knowledge of the late financier’s crimes. He also has never been accused of misconduct by Epstein’s known victims.

    Clinton’s deputy chief of staff Angel Ureña posted on X Friday: “These emails prove Bill Clinton did nothing and knew nothing. The rest is noise meant to distract from election losses, backfiring shutdowns, and who knows what else.”

    Epstein pleaded guilty in Florida in 2008 to soliciting prostitution from an underage girl, but was spared a long jail term when the U.S. attorney in Florida agreed not to prosecute him over allegations that he had paid many other children for sexual acts. After serving about a year in jail and a work release program, Epstein resumed his business and social life until federal prosecutors in New York revived the case in 2019. Epstein killed himself while awaiting trial on sex trafficking charges.

    Summers and Hoffman had nothing to do with either case, but both were friendly with Epstein and exchanged emails with him. Those messages were among the documents released this week, along with other correspondence Epstein had with friends and business associates in the years before his death.

    Nothing in the messages suggested any wrongdoing on the men’s part, other than associating with someone who had been accused of sex crimes against children.

    Summers, who served in Clinton’s cabinet and is a former Harvard University president, previously said in a statement that he has “great regrets in my life” and that “my association with Jeffrey Epstein was a major error of judgement.”

    On social media Friday night, Hoffman called for Trump to release all the Epstein files, saying they will show that “the calls for baseless investigations of me are nothing more than political persecution and slander.” He added, “I was never a client of Epstein’s and never had any engagement with him other than fundraising for MIT.” Hoffman bankrolled writer E. Jean Carroll’s sexual abuse and defamation lawsuit against Trump.

    After Epstein’s sex trafficking arrest in 2019, Hoffman said he’d only had a few interactions with Epstein, all related to his fundraising for MIT’s Media Lab. He nevertheless apologized, saying that “by agreeing to participate in any fundraising activity where Epstein was present, I helped to repair his reputation and perpetuate injustice.”

    Bondi, in her post, praised Clayton as “one of the most capable and trusted prosecutors in the country” and said the Justice Department “will pursue this with urgency and integrity to deliver answers to the American people.”

    Trump called Clayton “a great man, a great attorney,” though he said Bondi chose him for the job.

    Clayton, the chairman of the Securities and Exchange Commission during Trump’s first term, took over in April as U.S. attorney for the Southern District of New York — the same office that indicted Epstein and won a sex trafficking conviction against Epstein’s longtime confidante, Ghislaine Maxwell, in 2021.

    Trump changes course on Epstein files

    Trump suggested while campaigning last year that he’d seek to open up the government’s case files on Epstein, but changed course in recent months, blaming Democrats and painting the matter as a “hoax” amid questions about what knowledge he may have had about Epstein’s yearslong exploitation of underage girls.

    On Wednesday, Democrats on the House Oversight Committee released three Epstein email exchanges that referenced Trump, including one from 2019 in which Epstein said the president “knew about the girls” and asked Maxwell to stop.

    White House spokeswoman Karoline Leavitt accused Democrats of having “selectively leaked emails” to smear Trump.

    Soon after, Republicans on the committee disclosed a far bigger trove of Epstein’s email correspondence, including messages he sent to longtime Trump ally Steve Bannon and to Britain’s former Prince Andrew, now known as Andrew Mountbatten-Windsor. Andrew settled a lawsuit out of court with one of Epstein’s victims, who said she had been paid to have sex with the prince.

    The House is speeding toward a vote next week to force the Justice Department to release all files and communications related to Epstein.

    “I don’t care about it, release or not,” Trump said Friday. “If you’re going to do it, then you have to go into Epstein’s friends,” he added, naming Clinton and Hoffman.

    Still, he said: “This is a Democrat hoax. And a couple, a few Republicans have gone along with it because they’re weak and ineffective.”

    __

    Bedayn reported from Denver. Associated Press writer Chris Megerian aboard Air Force One contributed to this report.

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  • Trump responds to appearance in new Epstein emails by pushing DOJ probe of Clinton, Larry Summers, Reid Hoffman | Fortune

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    President Donald Trump moved aggressively to deflect scrutiny on Friday after a new batch of Jeffrey Epstein’s private emails — released this week by the House Oversight Committee — resurfaced his own long-scrutinized relationship with the disgraced financier.

    Hours after the documents circulated widely online, Trump took to Truth Social with a sweeping demand: he said he will ask Attorney General Pam Bondi, the Department of Justice, and the FBI to investigate Epstein’s ties to “Bill Clinton, Larry Summers, Reid Hoffman, J.P. Morgan, Chase, and many other people and institutions,” claiming that “all arrows point to the Democrats.”

    Bondi quickly agreed, posting on X Friday afternoon that she had assigned Attorney Jay Clayton to the case. Clayton is a high-profile figure among Republicans, having chaired the SEC during Trump’s first term and now acting U.S. attorney for the Southern District of New York. 

    Clinton has strongly denied that he had knowledge of Epstein’s crimes. In the emails, Epstein mentioned several times that Clinton was “never on the island.” However, the two knew each other in the early 2000s. Clinton did not immediately respond to a request for comment. 

    On the other hand, Summers had a seemingly close and unusually personal relationship with the disgraced financier who at times acted as his informal relationship coach. Newly released emails from 2017 to 2019 show the former Treasury secretary corresponding with Epstein regularly, sometimes multiple times a day, seeking advice about his interactions with a woman in London.

    In one exchange, Summers lamented that the woman had grown distant: “I said what are you up to. She said ‘I’m busy.’ I said awfully coy u are,” he wrote. Epstein replied within minutes, offering reassurance and strategy: “she’s smart. making you pay for past errors. ignore the daddy im going to go out with the motorcycle guy … annoyed shows caring, no whining showed strength.”

    Other emails show Summers forwarding Epstein notes from the woman and asking whether he should respond. “Think no response for a while probably appropriate,” Summers wrote in one case. Epstein encouraged the silence, replying, “She’s already begining to sound needy 🙂 nice.”

    Summers has previously said he regrets his past ties to Epstein. Summers did not immediately respond to a request for comment. 

    Hoffman, the LinkedIn co-founder, billionaire investor and major Democratic donor, had an established relationship with Epstein, according to documents reviewed by the Wall Street Journal. Schedules show Epstein planned multiple trips with him—including two visits to Epstein’s island, Little St. James in 2014—and arranged for Hoffman to stay overnight at his Manhattan townhouse before attending a “breakfast party” with Bill Gates and others the next morning.

    Hoffman now says he deeply regrets the interactions. “It gnaws at me that, by lending my association, I helped his reputation, and thus delayed justice for his survivors,” he told the Journal. “Ultimately I made the mistake, and I am sorry for my personal misjudgment.”

    Hoffman could not be reached for comment.

    Trump’s inclusion of JPMorgan comes after the bank paid out more than $450 million in 2023 across multiple settlements related to its historic relationship with Epstein — including a $290 million agreement with a class of victims and a $75 million deal with the U.S. Virgin Islands. The bank has repeatedly said it “deeply regrets any association” with Epstein and would not have kept him as a client had it known of his crimes.

    JPMorgan did not immediately respond to a request for comment. 

    Epstein repeatedly described Trump in blunt, often hostile terms

    The release of the files — which Trump framed as an effort to expose an “Epstein Hoax” that he claims Democrats are weaponizing to distract from the shutdown– show Epstein repeatedly discussing Trump. They contradict Trump’s own account of their split, and Epstein offers his private, often caustic assessments of the man who would become president.

    Across messages with lawyers, acquaintances, reporters, academics, and political figures, Epstein invoked Trump constantly, often bragging that he possessed insider insight into Trump’s private world. In one 2017 exchange, Epstein dismissed him sharply: “your world does not understand how dumb he really is. he will blame everyone around him.” A year later, he described Trump as “evil beyond belief, mad… nuts!!!” 

    The emails also directly challenge one of Trump’s most frequently repeated claims: that he expelled Epstein from Mar-a-Lago for inappropriate behavior. 

    In a 2019 message to author Michael Wolff, Epstein flatly rejected the story: “Trump said he asked me to resign, never a member ever.”In another email, Epstein claimed a woman who worked at the club had been involved with him and wrote, “Trump knew of it, and came to my house many times during that period.” The documents do not substantiate these assertions, and the White House has denied them.

    One of the most explosive lines appears in a 2011 note to Ghislaine Maxwell: “that dog that hasn’t barked is trump.. [Victim] spent hours at my house with him ,, he has never once been mentioned.” During a press conference, the White House pointed to the testimony of Virginia Giuffre, a prominent Epstein accuser who committed suicide earlier this year and said Trump did not participate “in anything.”

    Epstein also imagined himself as holding leverage over Trump. In a December 2018 exchange, after someone suggested Trump’s critics were simply trying to “take down” the president, Epstein replied: “yes thx. its wild. because i am the one able to take him down.” 

    The White House did not immediately respond to a request for comment. 

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    Eva Roytburg

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  • Sam Altman Returns as OpenAI CEO in Chaotic Win for Microsoft

    Sam Altman Returns as OpenAI CEO in Chaotic Win for Microsoft

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    (Bloomberg) — OpenAI will bring back Sam Altman and overhaul its board with new directors, a stunning reversal in a drama that’s transfixed Silicon Valley and the global AI industry.

    Most Read from Bloomberg

    Altman is returning as chief executive officer and the initial board will be led by Bret Taylor, a former co-CEO of Salesforce Inc. and director at Twitter before it was acquired by Elon Musk. The other directors are Larry Summers, the US Treasury Secretary under President Bill Clinton, and existing member Adam D’Angelo, the co-founder and CEO of Quora Inc. OpenAI is now working “to figure out the details,” the company said in a post on X, formerly Twitter.

    The reworked board will not be final: its main priority is to select up to nine new directors, said a person familiar with the negotiations who asked not to be identified. Board composition proved to be a major sticking point in negotiations for Altman’s return after his shocking ouster on Friday.

    The decision to restore him to the world’s best-known AI startup marks a victory for biggest backer Microsoft Corp., which worked with fellow investors to reverse Altman’s firing. The two new board members also hold appeal for Wall Street and the Silicon Valley crowd. Summers, a Harvard academic and paid contributor to Bloomberg Television, sits on the board of several startups, including Jack Dorsey’s Block Inc. Taylor is a director at Shopify Inc. and helped steer the sale of Twitter to Musk last year, acting as a calming force.

    Parties are still determining which members — beside D’Angelo, who has been appointed — will stay on the new OpenAI board.

    Altman agreed not to take a board seat initially in order to get the deal done, said the person. It’s likely he’ll join the board eventually. He also agreed to an internal investigation into the conduct that led to his dismissal, another person said.

    OpenAI’s biggest backer celebrated Altman’s return to the helm, after briefly agreeing to hire him on Sunday to start a new in-house research group. Microsoft, whose AI strategy hinges on the startup’s technology, will likely have representation on the new board, certainly as an observer and possibly with one or more seats, one of the people said.

    OpenAI’s earlier board members included D’Angelo, OpenAI co-founder and chief scientist Ilya Sutskever, Tasha McCauley of GeoSim Systems, and Helen Toner, director at Georgetown’s Center for Security and Emerging Technology.

    Read more: OpenAI Negotiations to Reinstate Altman Snag Over Board Role

    The agreement followed four days of high-stakes negotiations, after nearly all of its employees threatened to quit if Altman was not reinstated. Much of the drama played out on X as notable financiers, Silicon Valley honchos and key players from Nadella to Altman himself posted declarations, exchanged messages, liked each others’ posts and otherwise advocated their position. Altman’s rehiring triggered swift congratulations on X from main characters in the saga, including former president Greg Brockman — who said he too is returning to the company — and Chief Technology Officer Mira Murati.

    In a statement Friday that triggered the furor, OpenAI said Altman was dismissed after an internal review by the board found the chief executive “was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities.”

    Negotiations for his return reached an impasse on Sunday in part over pressure from Altman and others for existing board members to resign, according to people familiar with the matter. Instead, the board named a new leader — former Twitch CEO Emmett Shear.

    Within hours, most of OpenAI’s 770 employees signed a letter to the board saying they might quit and join Microsoft unless all directors resigned and Altman was reinstated. Among the many who signed the letter was Murati, who had been named interim CEO on Friday, and Sutskever.

    The quick reversal could appease investors and reduce the threat of employees fleeing. But it also raises questions about the path ahead for the ChatGPT maker and other AI startups, which have tried to balance developing artificial intelligence responsibly alongside the need to raise vast amounts of capital from investors to support the expensive computing infrastructure required to build these tools.

    Investors were blindsided by Altman’s removal. Microsoft, which backed the startup with a more than $10 billion stake, had only a few minutes’ advance notice about Altman’s firing. The software giant began working with investors including Thrive Capital and Tiger Global Management to bring him back, according to people familiar with the matter who asked to remain anonymous discussing private information.

    Read More: OpenAI Leaders Tell Staff ‘Get Back to Shipping’ Amid Tumult

    More than any other figure, Altman, 38, emerged as the face of a new era of artificial intelligence technology, thanks to the viral success of ChatGPT. Altman was at the center of the industry’s efforts this year to work with regulators and he met regularly with world leaders, including US President Joe Biden and UK Prime Minister Rishi Sunak. On Thursday, he appeared on a panel at the Asia-Pacific Economic Cooperation conference, attended by other executives and world leaders, to discuss the future of AI and its risks.

    Behind the scenes, however, Altman clashed with members of his board, especially Sutskever, over how quickly to develop generative AI, how to commercialize products and the steps needed to lessen their potential harms to the public, people with knowledge of the matter have said.

    Alongside rifts over strategy, board members also contended with Altman’s entrepreneurial ambitions.

    He has been looking to raise tens of billions of dollars from Middle Eastern sovereign wealth funds to create an AI chip startup to compete with AI accelerators made by Nvidia Corp., according to a person with knowledge of the investment proposal. Altman was courting SoftBank Group Corp. chairman Masayoshi Son for a multibillion-dollar investment in a new business to make AI-oriented hardware in partnership with former Apple Inc. designer Jony Ive.

    The boardroom drama carried echoes of other coups in Silicon Valley history. Apple co-founder Steve Jobs was fired as CEO in 1985 only to return more than a decade later. Twitter co-founder Dorsey was pushed out in 2008 and came back as CEO seven years later.

    –With assistance from Dina Bass, Ashlee Vance, Ed Ludlow and Anne VanderMey.

    (Updates with board deliberations from the second paragraph. A previous version of this story was corrected to reflect Summers’ tenure.)

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    ©2023 Bloomberg L.P.

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  • Larry Summers warns U.S. economy is still ‘very, very hot’ with ‘pockets of distress’ in commercial real estate

    Larry Summers warns U.S. economy is still ‘very, very hot’ with ‘pockets of distress’ in commercial real estate

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    Former U.S. Secretary of the Treasury Lawrence Summers doesn’t think the U.S. fight against inflation is over yet.

    The U.S. economy is still “very, very hot,” he said on Monday at the Caixin Asia New Vision Forum in Singapore, where he attended via video link, according to Bloomberg

    “The United States is, today, an underlying 4.5-5% inflation country,” he said.

    Summers is a longtime hawk on inflation, arguing that the massive U.S. stimulus during the COVID pandemic would eventually lead to higher prices throughout the economy. He also argued that low unemployment and high wage growth were increasing prices, suggesting that cooling the economy and getting prices under control might require a 6% unemployment rate.

    The Federal Reserve came around to Summers’ hawkish view, and the U.S. central bank has increased interest rates at every one of its monthly meetings since March 2022. 

    The Fed will meet later this week to determine whether to change interest rates again. Most economists believe that the U.S. central bank will pause its interest rate hikes this month, notes Reuters, as rate hikes helped spur the banking crisis earlier this year, leading to a tightening in credit markets. 

    U.S. inflation continued to decline in April, with prices increasing 4.9% year-on-year, down significantly from a peak of 9% almost a year ago. Yet core inflation, which excludes volatile food and energy prices, remains elevated at 5.5% year-on-year. Core inflation hasn’t come in below 4.5% since September 2021.

    The Bureau of Labor Statistics will release its inflation figures for May on Tuesday morning. The Federal Reserve Bank of Cleveland projects a 4.2% year-on-year increase in the consumer price index for May, and a 5.3% increase in core inflation.

    ‘Pockets of distress

    Summers is also skeptical of the U.S.’s ability to achieve a hoped-for soft landingwhich he called the “triumph of hope over experience” on Monday. (A “soft landing” is when a country is able to get inflation under control without sparking a recession.)

    The former Treasury Secretary said he saw “pockets of distress” in commercial real estate, according to Bloomberg

    The shift to working-from-home is severely testing owners of office buildings, as tenants scale back their footprints due to having more remote employees. Increasing interest rates will also lead to a spike in loan payments for borrowers, sending some into default.

    A collapse in commercial real estate would then hit lenders, mostly small and medium-sized banks. Lenders with less than $250 billion in assets provide roughly 80% of commercial real estate lending, according to a recent analysis by Goldman Sachs. Banks are also lending less, which puts more downward pressure on property values.

    “What’s happening in the office sector is apocalyptical,” Fred Cordova, founder of real estate brokerage Corion Enterprises, previously told Fortune

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    Nicholas Gordon

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  • From Wile E. Coyote to edibles: Recession forecasts are getting weird | CNN Business

    From Wile E. Coyote to edibles: Recession forecasts are getting weird | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    Understanding the economy is a complicated task, and even the experts are struggling to answer seemingly simple questions like “Are we on the brink of a recession?” or “Why isn’t inflation falling faster?”

    Many have resorted to the use of metaphor to convey the current complexity of the economy.

    It’s a communications tactic that some Federal Reserve officials have long favored. In the early 1980s, Nancy Teeters, the first woman appointed to the Federal Reserve Board, came up with an apt metaphor to explain why she disagreed with steep rate hikes implemented by then-Fed Chairman Paul Volcker.

    Her colleagues were “pulling the financial fabric of this country so tight that it’s going to rip,” she said. “Once you tear a piece of fabric, it’s very difficult, almost impossible, to put it back together again,” she added, before remarking that “none of these guys has ever sewn anything in his life.”

    These days, economists and analysts are turning to increasingly outlandish metaphors to help translate their thoughts.

    Here are some of the most interesting descriptors used recently and what they mean:

    Wile E. Coyote

    If you think back to Saturday morning cartoons, you may remember the never-ending, and mostly futile, chase between Wile E. Coyote and his nemesis, Road Runner. That pursuit often ended with Wile E. running off a cliff and into mid-air.

    The toons were fun sources of entertainment in our salad years, but former Treasury Secretary Larry Summers says they now double as a case study for the Fed and the economy.

    “The [Federal Reserve’s] process of bringing down inflation will bring on a recession at some stage, as it almost always has in the past,” Summers told CNN last week.

    And for the US economy, it could likely mean a “Wile E. Coyote moment,” Summers said — if we run off the cliff, gravity will eventually win out.

    “The economy could hit an air pocket in a few months,” he said.

    Antibiotics

    When describing the state of the economy, Summers doesn’t just rely on Looney Tunes. He also borrows from the medical community.

    While describing why the Fed can’t end its rate hike regimen when inflation shows signs of showing, Summers has compared higher interest rates to medicine for a country sick with high inflation. The entire dose must be taken for the treatment to fully work, he says.

    “We’ve all had the experience of taking a course of drugs and giving up, stopping the drugs, before the course was exhausted, simply because we felt better. And then, whatever infection we had came back and it was harder to fight the second time,” Summers told Boston’s NPR news station WBUR in February.

    For what it’s worth, Before the Bell is also guilty of using this one.

    Fog report

    We may be driving in the fog, landing a plane in the fog or even just walking in it.

    What’s important in this oft-used scenario is that it’s hard to see and we’re doing something that typically requires clear visibility.

    Clients “facing the fog of uncertainty in financial markets, economic growth and geopolitics,” should “avoid unnecessary lane changes,” and “allow extra time to reach your destination,” advised Goldman Sachs analysts earlier this year.

    It’s essentially a fancy way of saying that no one really knows what’s going on in this economy. Instead of attempting to find a way out of the chaos, investors should slow down, stay the course and wait for recovery.

    Edibles

    Late last year, investment analyst Peter Boockvar used a semi-illicit metaphor to explain why he thought the Fed might be over-tightening the economy into recession. He compared the Fed to an inexperienced consumer of weed gummies, which can take a long time to kick in.

    During that waiting period, an eager consumer may think the drugs aren’t working and eat more before the effects of the first dose even set in. They then inevitably find themselves way too stoned and feeling not-so-great.

    Boockvar was careful to note that he himself does not indulge in this practice, by the way.

    Storm chasing

    JPMorgan Chase CEO Jamie Dimon should receive an honorary degree in meteorology for his recessionary weather predictions.

    The Big Bank exec has repeatedly referred to economic recession as a storm gathering on the horizon — occasionally he’ll update the public on how far away and how bad that storm is.

    Last summer Dimon spooked markets when he compared a possible upcoming recession to a “hurricane.” In November, he downgraded it to a “storm.”

    By January, his forecast was simply “storm clouds,” adding that he probably should never have used the term “hurricane.”

    Polyurethane

    Rick Rieder, BlackRock’s Chief Investment Officer of Global Fixed Income, has likened the economy to a bendable piece of plastic. Much like the economy, he wrote, polyurethane, “displays flexibility and adaptability, but also durability and strength.”

    He added that “the material’s ability to be stretched, bent, stressed and flexed without breaking, while in fact returning to its original condition, is what makes it so chemically unique. In recent years the US economy has displayed a remarkable resilience to stresses and an extraordinary ability to adapt to changing conditions.”

    Last week Senator Elizabeth Warren grilled Federal Reserve Chair Jerome Powell about American job losses being potential casualties of the central bank’s battle against high inflation.

    Warren, a frequent critic of the Fed’s leader, noted that an additional 2 million people would have to lose their jobs if the unemployment rate rises from its current 3.6% rate to reach the Fed’s projections of 4.6% by the end of the year.

    “If you could speak directly to the two million hardworking people who have decent jobs today, who you’re planning to get fired over the next year, what would you say to them?” Warren asked.

    Powell argued that all Americans, not just two million, are suffering under high inflation.

    “Will working people be better off if we just walk away from our jobs and inflation remains 5% or 6%?” Powell replied.

    Warren cautioned Powell that he was “gambling with people’s lives.”

    The discussion was part of a larger cost-benefit conversation that keeps popping up around the jobs market: Which is worse — widespread job loss or elevated inflation?

    CNN spoke with two top economic analysts with different perspectives to gain a deeper understanding of the debate.

    Below is our interview with Johns Hopkins economist Laurence Ball.

    Yesterday we published our interview with Roosevelt Institute director Michael Konczal, you can read that here.

    This interview has been edited for length and clarity.

    Before the Bell: Is it necessary to increase the unemployment rate to successfully fight inflation?

    Laurence Ball: There’s a trade off between inflation and unemployment. When the economy is very strong and unemployment is pushed down, inflation tends to be higher. Right now there are almost two job openings per unemployed worker, the supply of workers looking for jobs and the demand for firms to hire is out of whack. That’s leading to faster wage increases, which sounds good except that gets passed through to faster price increases and more inflation. So somehow the labor market has to be brought back towards a normal balance of workers and jobs and that means slowing down the economy, and that probably means raising unemployment.

    Can you explain the cost-benefit analysis of two million jobs lost to get down to 2% inflation?

    If we assume we have to get inflation down to 2%, then it’s just an unhappy fact of life that that’s going to require higher unemployment. But a lot of people, including me, think that if the Fed gets it down to 4% or 3%, that’s the time to declare victory or say, ‘close enough for government work.’

    It gets more and more expensive in terms of how much unemployment it costs to go from 3% to 2% inflation. Those last few points will have disproportionately large costs, and it’s very dubious if that’s really worth it.

    Now, the Fed has the political problem that they’ve been insisting on a 2% target rate for years. If they say right at this moment that 3% or 4% is okay that would be seen as surrendering or moving the goalposts. I think a likely outcome is that inflation gets down to 3% or 4% and the Fed continues to say their target is a 2% inflation rate but never does what has to be done to get it there.

    If you examine Fed history you see that 5% appears to be a magic number. When inflation is above 5% it becomes this big political issue. When it goes below 5% it disappears from the headlines.

    What do you think is important for our readers to know about this back-and-forth between Powell and Warren?

    Behind all of this, in a market economy there’s sort of a basic glitch. We have this thing called unemployment, we sort of chronically have not enough jobs for everybody and that’s a big problem. The problem can be reduced somewhat in the short run if you get the economy going very fast. But then that leads to inflation. Accepting that unemployment has to go back up is just recognizing that there’s this glitch in the market economy or capitalism. It’s not clear how we can get around that.

    CNN Business’ David Goldman reports

    In an extraordinary action to restore confidence in America’s banking system, the Biden administration on Sunday guaranteed that customers of the failed Silicon Valley Bank will have access to all their money starting Monday.

    In a related action, the government shut down Signature Bank, a regional bank that was teetering on the brink of collapse in recent days. Signature’s customers will receive a similar deal, ensuring that even uninsured deposits will be returned to them Monday.

    SVB collapse: live updates

    In a joint statement Sunday, Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and Federal Deposit Insurance Corporation Chairman Martin J. Gruenberg said the FDIC will make SVB and Signature’s customers whole. By guaranteeing all deposits — even the uninsured money that customers kept with the failed banks — the government aimed to prevent more bank runs and to help companies that deposited large sums with the banks to continue to make payroll and fund their operations.

    The Fed will also make additional funding available for eligible financial institutions to prevent runs on similar banks in the future.

    Wall Street investors were relieved that the government intervened as stock futures rebounded on Sunday evening, although the rally is fading Monday morning. Markets had tumbled more than 3% Thursday and Friday as investors feared more bank failures and systemic risk for the tech sector.

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  • Larry Summers: More likely the Fed can pull off a soft landing, but don’t get hopes up | CNN Business

    Larry Summers: More likely the Fed can pull off a soft landing, but don’t get hopes up | CNN Business

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    New York
    CNN
     — 

    After a shocking jobs report, Larry Summers, treasury secretary under Bill Clinton, said he is more encouraged the Fed can pull off a soft landing, but cautioned it is a “big mistake” to think the economy is “out of the woods” on Fareed Zakaria GPS Sunday.

    Friday’s job’s report saw an astonishing 517,000 jobs added in January and unemployment tick down to 3.4%, the lowest since 1969. Economists had predicted 185,000 jobs, expecting a slower jobs market after almost a year of aggressive rate hikes from the Federal Reserve.

    The Fed once hiked interest rates less aggressively this week, reflecting a sense inflation is cooling. It brings up the question: Can the United States pull off a soft landing, bringing down inflation without triggering a recession?

    Summers said it “looks more possible that we’ll have a soft landing than it did a few months ago,” but he has continued fears about inflation indicators that have come back to earth, but are still too high for his liking.

    “They’re still unimaginably high from the perspective of two or three years ago, and that getting the rest of the way back to target inflation may still prove to be quite difficult,” Summers said.

    Zakaria asked if triggering a recession was worth it to bring down inflation, if 3 to 3.5% inflation rates could become the norm.

    Summers said it’s a trade-off between short run reductions in unemployment, and permanent changes in inflation.

    “The benefit we can get from pushing unemployment low is on almost all economic theories and likely not to be a permanent one,” Summers said. “But if we push inflation up and those issues become entrenched, we’re going to live with that inflation for a long time.”

    The US has about 3 million people who have just stopped looking for work. Summers attributed it to older people who decided to retire earlier than normal patterns would suggest during COVID.

    He said there is a “grand reassessment” of the workplace post-COVID.

    “You don’t get to be a CEO if you don’t love being in the office,” Summers said. “And so CEOs want all their people to come back and be working, but lots of people like their dens better than they like their cubicles.”

    Summers also had advice for President Joe Biden as a debt ceiling crisis brews in Washington.

    “I would advise him that it’s not a viable strategy for the country to default on obligations,” Summers said. “That’s the stuff of banana republics, and that he’s not going to engage in any of that stuff.”

    The United States has an “utterly bizarre system” where Congress votes on budgets and then separately has to authorize paying the bills incurred by those budgets, Zakaria pointed out, adding a crisis could be on the horizon because House Republicans don’t want to pay the bills until President Biden agrees to spending cuts, even though budgets were set by both parties.

    Biden should insist “Congress do its job and approve the borrowing to finance the spending.”

    Summers noted it only takes a few responsible Republicans to raise the debt limit.

    “That some in the Republican Party may bow to the demands of the extremists does not mean that the President of the United States should do that.”

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