Larry Summers:Circles and Cycles

Larry Summers,Chairman of the White House Economic Council,spoke last week at The Brookings Institution,a Washington think tank.Most recessions are a reaction to inflation-fighting policy,Mr.Summers observed.Others,such as the current one,are reactions to excess.Fifty trillion dollars of wealth have been lost in the past 18 months,leading to declining demand,Gross Domestic Product and employment.Fourteen million jobs have been lost.Our goal is to bring about an expansion that is fundamentally sound,not driven by excess.Without it,we cannot achieve any national goal.Sometimes the right economic metaphor becomes,not a thermostat,but an avalanche,as today.A weakened financial system creates a vicious cycle.These are not processes that are self-correcting,the President's advisor explained.