"KAREN FINERMAN INTERVIEW WITH LARRY SUMMERS" 3/1/2010
REALTIME TRANSCRIPT
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KAREN FINERMAN:  Larry, thank you very much for sitting down with us.  I've known you for a lot of years in a lot of different roles.  You're obviously one of the world's foremost and experienced economists, and you're facing here a multitude of seemingly intractable problems.  Now you're in a position to be able to affect policy.  How can you or how can this administration help lead the world out of this economic slump?

LARRY SUMMERS:  Karen, I think we've already made quite remarkable progress.  If you look back a year ago, people thought a depression was a real possibility.  There was talk of a complete meltdown in our financial system.  Because we took strong actions, because the President led the way in pushing a major recovery act and injected nearly $900 billion into the economy, encouraging other nations to do similar things, because we took strong actions to force much more transparency on the banking system, to set the stage for private capital raising, it's run to hundreds of billions of dollars, we've got a very different economic situation than we had a year ago.  Economy declined 6 percent in the first quarter; it rose by nearly 6 percent in the fourth quarter.  To be sure, we've got an enormous problem that will be with us for the next several years of excessive unemployment, people without jobs, that's got millions of people claudient (sp).  But we're in a very different situation.  You know, history is, that the first thing that comes is GDP growth.  Then comes increases in the number of hours per worker for the workers who are working, then comes increases in jobs, then comes reductions in unemployment.  We've seen the GDP growth, we're starting to see the increased hours; the other stages in the process will come.  But our problems weren't made in a day or a week or a year, they won't be solved in a day or a week or a year.

KAREN FINERMAN:  But we're now a year past what was really the worst of the storm and the jobs are absolutely the number one issue.  So, given that there is a lag, though, and those two things have happened, we've got to start to see jobs now -- right now -- for people to start feeling optimistic again to see economic growth.  And yet the jobs aren't there.  How does this administration form jobs now?

LARRY SUMMERS:  Look, jobs are priority number one for the President.  Let me say a word about the statistics.  Who knows what the next number is going to be.  The blizzards that affected much of the country during the last month are likely to distort the statistics.  And in past blizzards, those statistics have been distorted by 100 to 200,000 jobs.  So it's going to be very important to know, very important to look past whatever the next figures are to gauge the underlying trends.  I think those underlying trends are going to show job growth soon.  I think that, in large part, because of what is coming onstream.  Several thousand new projects are coming onstream:  building roads, repairing bridges and the like across the country.

You'll look at the data on business investment.  Businesses are starting to pick up their levels of investment.  The world economy has become a better market for U.S. exports than appeared to be the case six months ago, and that's going to be an additional source of job creation, and we've got a lot to do.  A lot is going to depend on what the Congress does with respect to the jobs legislation and the other measures that are before it, if we're able to invest more in infrastructure, if we're able -- and this is probably the most critical thing -- to do more for small business by eliminating capital gains on small businesses, by providing for expensing for small businesses, for -- by providing much more generous credit availability, working through community banks to small businesses.  The President has proposed and is up before the Congress right now, if we're able to take those steps, I think that's going to maximize the rate of job growth going forward.

KAREN FINERMAN:  You touched on a lot of different things, but let's talk about economic growth in the world.  Some say -- some on our show have said that Europe is collapsing.  They are in the middle of a crisis there.  Do you think they are in the middle -- the moment of their crisis, that here is the point for them to be able to reform -- it's a two-part question -- that, and have we missed our moment of crisis that allows us to reform?

LARRY SUMMERS:  Let's talk about Europe, and then maybe we can come back to the United States.  With respect to Europe, I am obviously very concerned about what's happening in Greece and Portugal, in Spain, in Italy, on the European continent.  On the other hand, I think there have been increasing signs of recognition both in Greece and in the major countries of Europe that this is a situation that has to be managed; that combination of getting the Greek budget under better control and providing more support is necessary to stabilize this situation.

KAREN FINERMAN:  You have roles in that?

LARRY SUMMERS:  But I think the moment of recognition, and obviously as Americans we're -- the European Union is a union that has a common monetary responsibility.  We're not part of that, but we're obviously very concerned and conveying our concerns to European officials and watching and monitoring the situation very, very carefully.  Because clearly, our prospects for rapid growth will be stronger in a more rapidly growing world economy, and Europe is a critical part of that.

KAREN FINERMAN:  So are you actively involved at all?  I know you said you're monitoring the situation.  But are we now a globalized economy where you need to be involved in -- I mean, if you were advising Greece now, what would you say about how to get their house in order, or for the EU, about how to help get Greece's house in order?

LARRY SUMMERS:  You know, it's a hypothetical question.  If I were not in the U.S. government and I were advising Greece, I would probably come on your show and talk about the advice that I was giving.  But any dialogues the U.S. government has on this are private for good reason.  And I think the main thing to say, though, is that this is between the Greeks, the European Central Banks, and the European authorities, and our state is less around how they defy the various burdens and challenges associated with the adjustment than it is around making sure that that adjustment takes place.  And certainly Secretary Geithner has been encouraged by what he has heard from European authorities.

KAREN FINERMAN:  So, with your economist hat on, if you were to forecast, then, you see Greece being able to get out of this current -- crisis that they're in?