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Larry Summers explains the banking crisis
On GZERO World, Ian Bremmer and former US Treasury Secretary Larry Summers discuss a range of topics, including the global banking system, the impact of AI on the labor market, and a controversial solution for rebuilding Ukraine.
Summers, an expert on inflation, provides valuable insights into recent bank failures that have caused concern among investors worldwide. He discusses whether the current situation constitutes a banking crisis, explores the role that inflation is playing in contributing to the banking problems, and makes predictions about the duration of the current financial turmoil.
He and Bremmer also touch on the impact of AI on the labor market, with Summers warning of significant changes that will cause profound shifts in traditional hierarchies and ways of thinking, which may make influential groups uneasy.
Summers also offers a provocative solution for rebuilding Ukraine: seizing frozen Russian assets.
Note: this interview was featured on an episode of GZERO World with Ian Bremmer on April 3, 2023: The banking crisis, AI & Ukraine: Larry Summers weighs in
Larry Summers: Russia should pay for Ukraine
On GZERO World, former US Treasury Secretary Larry Summers proposes a controversial solution to help rebuild Ukraine: seize frozen Russian assets and give them to Ukraine.
Despite some concerns about the legality of this approach and the potential for similar measures to be used against other countries, Summers argues that Russia's moral debt to Ukraine justifies such a move and that it would be a more effective means of support than relying on American taxpayers.
Furthermore, he believes that setting a precedent where aggressor countries have their assets seized could discourage future acts of aggression and mitigate the damage caused by them.
Watch the GZERO World episode: The banking crisis, AI & Ukraine: Larry Summers weighs in
The next economic crisis Larry Summers is worried about
On GZERO World, Ian Bremmer and former US Treasury Secretary Larry Summers discuss the policy response to the recent banking crisis involving Silicon Valley Bank and the Biden administration's actions.
Summers rates the government's move to step in and guarantee depositors in SVP positively but expresses concern over the high cost of the SVB bailout.
He also worries about the real estate sector, particularly the office building sector and corporate lending to mid-size businesses.
Watch the GZERO World episode: The banking crisis, AI & Ukraine: Larry Summers weighs in
Is your money safe? Larry Summers on the banking crisis
Banks, in many ways, are the backbone of the economy, but when Silicon Valley Bank and Signature Bank recently failed, it raised some tough questions about the stability and regulation of financial institutions. On GZERO World, Ian Bremmer and former US Treasury Secretary Larry Summers dive deep into the crisis and explore the complex factors that led to the banking turmoil.
Summers explains that the failures of these banks were caused by a combination of factors, including an increasingly digital world with high interest rates, risky investments, and long-term bonds that decreased in value as interest rates rose.
This led to depositors becoming alarmed about the security of their money and quickly moving it to other banks that offered higher returns. The banks' inability to manage these withdrawals sparked fears of a bank run and ultimately led to government intervention.
Summers also criticizes the management of Silicon Valley Bank for their "incompetence" and the Federal Reserve's regulation for not “stopping the accident that was waiting to happen.”
“In many ways, the financial system is like an anesthesiologist," Summers remarks, "nobody much notices a job that they're doing until something screws up."
Watch the GZERO World episode: The banking crisis, AI & Ukraine: Larry Summers weighs in
The banking crisis, AI & Ukraine: Larry Summers weighs in
The recent spate of bank failures has caused significant turbulence in markets and left investors jittery across the globe, from Silicon Valley to Switzerland. But is this a sign of a systemic banking crisis or of a more fundamental flaw in capitalism? In an interview with Ian Bremmer on GZERO World, former US Treasury Secretary Larry Summers provides an in-depth analysis of the situation.
Summers is critical of the management of Silicon Valley Bank and the federal government's intervention, which failed to prevent the banking turmoil. He also expresses concerns about the real estate sector, particularly when it comes to office buildings, and corporate lending to mid-sized businesses.
The conversation also delves into the impact of artificial intelligence on the labor market, with Summers cautioning that AI will "bring about significant changes" that will “profoundly alter traditional hierarchies and ways of thinking,” which may threaten influential groups. It’s even probable, he tells Bremmer, that we’ll see “restrictionist and protectionist policies that limit our ability to benefit from these technologies or slow down [their development].”
Summers also proposes a contentious solution to rebuild Ukraine: seizing frozen Russian assets.
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Getty Images/Chip Somodevilla
Podcast: Larry Summers breaks down the banking crisis
Listen: On the GZERO World podcast, Ian Bremmer and former US Treasury Secretary Larry Summers discuss the recent bank failures that are disrupting global markets and worrying investors worldwide. They discuss whether the current situation constitutes a banking crisis and explore the role of inflation in contributing to the problems. As an inflation expert, Summers provides valuable insights and predictions on the duration of the financial turmoil.
Additionally, he warns of the significant changes that AI could bring to traditional hierarchies and proposes a controversial solution for rebuilding Ukraine: seizing frozen Russian assets.
Subscribe to the GZERO World Podcast on Apple Podcasts, Spotify, Stitcher, or your preferred podcast platform, to receive new episodes as soon as they're published.- Podcast: Inflation nation: How Larry Summers predicted skyrocketing prices in the US ›
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Larry Summers: Which jobs will AI replace?
Which jobs are most at risk of being replaced by AI? GZERO World caught up with former US Secretary of Treasury Larry Summers about how technological advances in artificial intelligence could change the labor market. The transformation, he says, could come slowly, then all at once.
“I suspect there's going to be less impact than many people fear in most sectors over the next three years,” Summers tells Ian Bremmer in the interview, “and more impact over the next 10 or 15 years.”
AI will affect some jobs more than others, Summers predicts. For example, AI will likely change the role of doctors, who diagnose people based on large amounts of data before it impacts the jobs of nurses, who provide daily medical care and human compassion. A personal touch is still hard to replace.
More broadly, Summers believes that "traditional hierarchies and ways of thinking" face profound change. And that’s what could make some influential groups nervous. Because AI is likely to affect people who have access to power before regular workers. It’s even probable, he tells Bremmer, that we’ll see “restrictionist and protectionist policies that limit our ability to benefit from these technologies or slow down [their development].”
Watch all of Summers' interview in the upcoming episode of GZERO World with Ian Bremmer, airing on public television across the US - check local listings.
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Demonstrators call for US President Joe Biden to cancel all student loan debt in Washington, DC.
Biden forgives (some) US student loan debt
The White House on Wednesday unveiled President Biden’s long-awaited plan to tackle soaring student debt in America, which currently sits at a whopping $1.6 trillion.
What’s in the package? In a one-time deal, the government will cancel $10,000 in federal student loan debt for borrowers making less than $125,000 annually or couples with a joint income under $250,000. Recipients of Pell Grants for low-income undergrads are eligible for an extra $10,000 write-off.
The Biden administration also extended for the last time a pandemic-era pause on payments, which was going to expire on Aug. 31, until the end of 2022. It also wants to cap monthly payments at 5% of earnings. That would cover unpaid interest for Americans who'd owe zero because their income is too low, so their loan balances won’t grow.
Who’ll get the relief? All former students who borrowed money from the government under its higher education financial aid program for college, and current ones who took out a loan before July 1st of this year. With a stroke of his pen, the White House estimates that Biden will wipe out the student debt of some 20 million eligible Americans, almost one-third of the total.
The assistance applies to neither private loans, which account for the lion’s share of accusations of predatory lending, nor to already paid debts, even if they were federal loans.
Who's happy? Students who’ll benefit, obviously. That explains why more than a million Americans are now googling “student loans” and searching online for how to apply for debt relief.
Most progressives within the Democratic Party are thrilled, although some senators want Biden to go even bigger and cancel $50,000 per borrower with no income cap. Biden hopes it’ll energize young voters deep in student loan debt ahead of the November midterms, with Dems’ chances looking better than a couple of months ago.
Who’s not so happy? Most economists. Clinton and Obama administration veteran Larry Summers warns that debt forgiveness will further drive up inflation by giving some Americans extra cash to spend when prices are already high.
Who blew a gasket? Many students and their parents who saved money to pay their debt. But mostly the GOP.
"Republicans see the chance to point out that taxpayers are subsidizing the borrowing of college-educated Americans, who tend to have higher lifetime incomes and the most job opportunities," Jon Lieber, US managing director at Eurasia Group, says in this week's US Politics in 60 Seconds.