Friday, June 12, 2009

Larry Summers at CFR

President Obama's Chief Economic Adviser gave a shout out to private equity underwriters (PEU's) in his speech at the Council on Foreign Relations. Larry Summers knows how to read his audience. Many PEU's sit on the influential council. He pandered to David Rubenstein, Pete Peterson, and Henry Kravis.

Summers smiled repeatedly as he spoke of the important role of private equity underwriters. He said the government wouldn't manage like PEU's. Hank Paulson's sovereign debt fund conducted equity injections, short term in nature. PEU's have a "long term focus."

PEU's have a legitimate right to impact board, management, and influence strategy. Larry sold the government wants to get the team set prior to public investment, then remain hands off. History shows this not to be the case.

Summers stressed that government tools imitated private sector solutions. Yet, the plan is get out as soon as possible. That fits with "socialize the losses, privatize the gains."

The Council on Foreign Relations works to spread American branded multinational corporations throughout the world. Larry noted in his opening remarks that countries with "Golden Arches" don't attack each other. Can morbidly obese people serve in a military?

Did portly Larry Summers improve his chances for Fed Chief with his speech? Someone's gunning for Ben Bernanke. The Fed Chief has been remarkably absent from the airwaves, given accusations of heavy handedness on the Merrill Lynch deal.

Larry's talk is a prism, reflecting the Obama team's core beliefs. Government does not exist to perform functions the private sector can't or won't. It exists to send huge chunks of work to the private sector, while paving the way for increased corporate profits, domestically and internationally. A golden era for the PEU boys, sad...