On Monday, President-elect Barack Obama announced his economic team, noting that Lawrence Summers would be the director of his National Economic Council. In touting Summers, Obama praised the former treasury secretary for his work during the Clinton years

Larry helped guide us through several major international financial crises – and was a central architect of the policies that led to the longest economic expansion in American history, with record surpluses, rising family incomes and more than 20 million new jobs. He also championed a range of measures – from tax credits to enhanced lending programs to consumer financial protections – that greatly benefited middle income families.

As a thought leader, Larry has urged us to confront the problems of income inequality and the middle class squeeze, consistently arguing that the key to a strong economy is a strong and growing middle class....And as one of the great economic minds of our time, Larry has earned a global reputation for being able to cut to the heart of the most complex and novel policy challenges.

While some of that might be true, Summers has been a controversial figure, and it's likely no accident that he is being handed a position that does require him to be confirmed by the Senate.

But despite Summer's intellect and experience, it's worth remembering that he did blow one of the major calls of the 1990s: what to do about financial derivatives--those esoteric financial products (such as credit default swaps) that helped grease the way to the subprime meltdown. Not only did Summers oppose greater regulation for those financial instruments; he led the opposition against it.

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Today, as Obama introduced his economic team, the Institute for Policy Studies (IPS) released a new report (.pdf) adding some context to the sheer sums of money being thrown at the financial-industry bailout. The top-line finding? The US and Europe have committed about $4.1 trillion so far, or about 40 times as much as they've spent on combating climate change and global poverty this year. The report, called "Skewed Priorities," speculates that Western governments will use the economic crisis as an excuse to pull back from their commitments to climate and development programs.

According to IPS Director John Cavanagh, "The financial crisis is only one of multiple crises that will affect every nation — rich or poor. Skyrocketing poverty and unemployment in the developing world will mean even more brutal global competition for jobs. Climate change imperils the very future of the planet. And yet thus far, the richest nations in the world appear fixated almost entirely on responding to the financial crisis, and specifically, on propping up their own financial firms."

Yes, the bailout seems necessary (at least that's what they tell us... and, as any of my childhood math teachers would attest, I am not one to make a judgment on that issue), but the IPS report does at least let us know what we're sacrificing in the name of righting our financial ship. From a press release announcing the report's publication:

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Overheard last week in DC at a right-wing legal convention: "We've all but confirmed that Ken Starr is going to take the case."--Jordan Lorence, senior counsel, Alliance Defense Fund.

The involvement of the former Clinton special prosecutor in efforts to preserve California's new ban on gay marriage really wouldn't come as much of a surprise. Two years ago, Starr, now dean of the Pepperdine law school, represented a bunch of anti-gay marriage groups, including the Mormon Church, in amicus briefs in some of California's gay marriage litigation. He's been involved in the issue for a while, now. Given the intense interest in other people's sex lives that Starr demonstrated during his investigation of the Lewinsky scandal, he seems a perfect fit for the job.

Of course, when I asked him at the Federalist Society conference to confirm the gossip, he said with a laugh, "No comment." Later, I asked Lorence whether he had indeed confirmed Starr as counsel. Looking a bit shocked that he'd been caught blabbing out of school, he pleaded ignorance, suggesting that he had no intelligence on the matter whatsoever, despite his earlier boasts to a Harvard law student about his inside line to Starr. He did confirm that he would not be doing the arguing himself, nor would another lawyer from the alliance who has argued such cases before. I take all this to mean that Starr is likely to take the case.

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Barack Obama's reported latest cabinet pick shows that even the collapse of the U.S. economy is not enough to challenge the unbridled power of the Federal Reserve. The president-elect's choice for Secretary of the Treasury is Tim Geithner, head of the New York Federal Reserve Bank, the most powerful bank in the system. The nation's leadership in both parties spent the better part of two decades unquestioningly following the man they called "the Oracle"—Fed chair Alan Greenspan--down the road to ruin. Now, they eagerly await the arrival of another Fed insider to lead them back into the light.

Clearly, the new administration and the Democratic Congress do not plan to in any way challenge the fundamentally undemocratic and fatally compromised nature of the Fed, which is not a government agency, but a "quasi-public" system effectively owned and run by the banking industry itself. It's no surprise, then, that the Fed so often operates in the interests of the private banks, even when they run counter to the public interest—as it did under Greenspan, when its policies fueled, rather than reigned in, the credit bubble and accompanying fiscal disasters. What is more suprising is the fact that those sworn to serve the public still show so little inclination to demand more transparency or accountability from this all-powerful institution.

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