'This Week' Transcript: NEC Director Larry Summers

It restricts -- and this was the important point that former Fed Chairman Paul Volcker has stressed -- it restricts the so-called proprietary trading activities, some of the most risky activities of these institutions. So, yes, this bill is a direct attack on too large to fail by making failure a possibility, as it has to be in a market system, and by making these institutions much safer and much sounder. Senator Kaufman is exactly right.

TAPPER: Lastly -- we only have a minute left -- but there have been reports lately that you're -- you're thinking of leaving. Are -- I know you've -- you've said that the reports are not true, but are you committed to staying in your current position throughout at least November 2012?

SUMMERS: Jake, you know that in this town, when it comes to personality stories, usually it's the case that those who talk don't know and those who know don't talk.

TAPPER: Well, you know...

SUMMERS: I am very -- I am having an enormously satisfying experience working with this president, and that's what I'm committed to doing and serve at his pleasure.

TAPPER: Until November 2012? SUMMERS: Serve at his -- serve at his -- I serve at his...

TAPPER: Assuming that he would like you to serve until...

SUMMERS: I serve at his pleasure. I don't get into hypothetical questions. I'm having an enormously satisfying experience.

TAPPER: All right, Dr. Larry Summers, thank you so much.

SUMMERS: Thank you.

TAPPER: And joining me now, the former chairman of the Federal Reserve, Dr. Alan Greenspan. Dr. Greenspan, thank you so much for joining us.

GREENSPAN: It's a pleasure being with you, Jake.

TAPPER: I know that you agree with Dr. Summers that jobs will continue to -- job growth will continue to accelerate. Do you think it will accelerate enough that it will make a dent in unemployment, that is, that we see the numbers of 300,000 jobs created a month, as opposed to just 100,000, which basically is treading water?

GREENSPAN: I'm not sure, but I don't think it's impossible by any means. There is a momentum building up which is really just beginning, and it's got a way to go.

There are certain critical issues here. First, we have to remember that the capital gains on 401(k)s are $600 billion. And as we saw when money was being evaporated in those particular accounts, people pulled back their consumption. They're now moving forward in a more positive direction.

Secondly, capital investment, which had been extremely depressed, is still depressed for real estate, but equipment is coming back in a fairly substantial way.

But most important of all is this incredible increase in the difficulties -- I should put it this way -- the increase in the lead times that it takes purchasing managers to get new materials for inventories. What that necessarily means is that they're going to have to build inventories to protect their production lines at an ever-increasing pace. And that is a self-reinforcing cycle.

So I think the particular area of the economy which people are not putting enough -- I should say -- enough focus on is how significant this rebound of inventories is going to be after such an extraordinarily dramatic decline that occurred through all of last year.

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