Tuesday, April 07, 2009

Larry Summers, the "genius"?

Professor Summers' past is slowly but surely catching up with him.

In a widely read economics blog, Econospeak published online today, we learn of a financial analyst, Ms Iris Mack, fired by Harvard Management Company that manages Harvard's endowment for having written to Larry Summers, then President, back in 2002 warning him of the risks of derivatives the management company was getting into by fund managers who did not really understand those products. Ms Mack has a PhD in mathematics from Harvard.

Last fiscal year Harvard reported a decline of 22% in its endowment due to those derivatives blowing up. That story was published by Boston Globe: Here

We were also reminded that Summers was not forced out of his Harvard presidency only for his ill-considered comments on why women were not somehow constitutionally suited for scientific research. Rather he steadfastly supported his fellow Harvard academic, Andrei Schleifer, who had used his insider information as an advisor to the new Russian government to benefit from market trading under US government contract. Harvard had to reimburse USAID $26 million for Schleifer's fraudulent act.

Summers as Harvard's president not only did not terminate Schleifer's job at Harvard, he made sure he kept his tenure and gave him a prestigious endowed chair.

David McClintick, a writer at Institutional Investor, had written an exhaustive investigative report on that episode in Institutional Investor.

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