Larry Summers: “I Don’t Know A Greater Threat To Our Prosperity” Than If Donald Trump Becomes President


In an interview to appear on FOX Business Network’s (FBN) Wall Street Week this Friday at 8PM/ET, hosts Anthony Scaramucci and Gary Kaminsky speak with Former United States Secretary of the Treasury Larry Summers about the 2016 Presidential election. When asked what a Donald Trump presidency means for the economy, Summers said, “It scares me.  I don’t know of a greater threat to our prosperity.  I think policy would be extraordinarily erratic” and that “I don’t think the U.S. government is meant to be run like a questionable real estate deal.” Summers went on to talk about the United Kingdom government possibly leaving the Eurozone saying, “A big mistake for Britain.  A big mistake for Europe.  A big mistake for the United States” and “a big mistake for the world.”

Larry Summers on what a Donald Trump presidency mean for the United States economy:

“It scares me.  I don’t know of a greater threat to our prosperity.  I think policy would be extraordinarily erratic.  I think there’s great risks to the global economy from the truculence that would be manifest.  I think there are great risks even going to the government’s credit. Domestically, I think it would put an uncertainty premium the likes of which we haven’t seen before into the markets.”

Larry Summers on whether people in the political community are confusing Trump’s mixed principles:

“Hey, anything is possible.  It’s an experiment I don’t want to run.  I don’t think the U.S. government is meant to be run like a questionable real estate deal.  And I think his experience and his way of doing things comes out of his past.  And that’s certainly an experiment we don’t want to run, the kind of volatility that his investments have had is not the kind of volatility that America needs.’

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Larry Summers on Donald Trump wanting to spend a lot of money on infrastructure spending:

“Stopped clocks are right twice a day.  That — he’s right to be for massive infrastructure spending.  Whether he’s going to know how to be focused on making it most effective for job creation…where he’s tried to do it with as few people as possible before.  Whether he’s going to be most effective on making it serve our social purposes.”

Larry Summers on Trump talking about the possibility of renegotiating some of the national debt:

“This isn’t the presidential election in Argentina or Bolivia.  It’s America.  It’s been a principle that our debt is always good. I can’t imagine renegotiating it.”

Larry Summers on whether Trump becomes President and he called him:

“I don’t do ridiculous hypothetical questions, Anthony.  When public officials seek my advice, I try to provide it.  But I would not be comfortable with, as I suspect many, many people would not be comfortable working in an administration where they were in profound disagreement with many of the basic policy thrusts.”

Larry Summers on whether he thinks Trump will be able to bring the party together:

“Oh, I’ll stick to economic prognostications.”

Larry Summers on how the economy would look under a Hillary Clinton presidency:

“Look, we know some things.  We know that over the last 60 years, when Democrats have been in power, the economy has grown faster, the stock market has done better.  The unemployment rate has been lower.  The fiscal performance of the country has been better and that’s a pretty consistent pattern. I first wrote a paper demonstrating that in 1988.  And the way you really test the relationship in economics and not to see whether somebody mined the data to find it, but after somebody said there was a relationship, what would happen going forward? And if you look at what’s happened going forward, pretty consistently, performance has been better with Democratic presidents…than with Republican presidents.”

Larry Summers on what happens if Bernie Sanders is the nominee:

“Oh, look, I’m not going to get into every possible hypothetical.  I think as a general rule markets and the economy do better.  I certainly am more comfortable with Senator Clinton’s policies than I am with Senator Sanders’ policies on a number of dimensions.  I think we do need to address inequality, but we need to do it together and we need to do it in the spirit of lifting all the boats, not deciding that some boats the tide should lift and other boats, the tide should not lift.”

Larry Summers on his thoughts about the U.K. government going to have a referendum next month about possibly leaving the Euro:

“June 23.  A big mistake for Britain.  A big mistake for Europe.  A big mistake for the United States…And a big mistake for the world…because it would represent a break of traditional ties that have generated large amounts of business and commerce….Because it would be a lurch toward, uh, protectionism, because it would threaten the city of London as, uh, the global financial center.”

Larry Summers on whether we are at the end of a recovery for the economy:

“I think you’ve got to think that we’re closer to this recovery’s end than we are to its beginning, just statistically.  On the other hand, I don’t see anything like a majority probability on a recession starting in the next year or so.”

Larry Summers on whether he thinks the Federal Reserve will raise rates this year:

“Oh, you know, the market is saying that it, saying it’s very unlikely that they’ll raise rates twice in the way the dots are and saying that the odds are close to half, not better than that, that they’ll raise rates this year.  I think that the market is telling you more about what’s likely to happen than the dots are.”

Larry Summers on secular stagnation:

“It’s a chronic excess of people want to save more than businesses want to invest, which means there’s always lower downwards pressure on interest rates, always the prospect of bubbles in existing assets, since people don’t want to create new ones, a tendency toward slow growth and low inflation. I think it’s the defining malady in the industrial world.”

Larry Summers on whether free trade is good:

“I think we want open — I think we want more open markets in general rather than less open markets…but free trade is not — free trade, it —free trade means laissez-faire.  If it means no rules, that’s certainly not the kind of trading system we want.”

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