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Now that Asia appears to be in fragile recovery, much of that criticism has turned to praise, and Summers has been receiving his share of the credit. Lim Chang Yuel, a former South Korean Deputy Prime Minister, has vivid memories of late 1997, when he and Summers often conferred until well after midnight seeking a solution to South Korea's economic woes. "I was surprised to see how energetic and hardworking he was. He was like a fireman putting out fires not only in Korea but throughout Asia."
So in December of last year, with economies settling down and currencies stabilizing, Rubin began to put in motion a long-contemplated plan to return to the private sector. Dining with Summers at the Jefferson Hotel, Rubin's Washington residence, he broke the news that he was leaving. Rubin felt strongly that the announcement of his departure and Summers' succession should be simultaneous. The Secretary also wanted to allow financial markets a full trading day to digest the news. Allaying market anxieties as well was an uncharacteristically non-opaque endorsement from Alan Greenspan reassuring Wall Street that Greenspan and Summers, whose friendship is well documented, have a close working relationship.
Rubin has been unequivocal in his praise for Summers, insisting that his former deputy has "a very good, practical sense of the financial markets. Larry is also self-aware, conscious of things he can do better, and works at it." Summers, who has made great strides in improving his people skills, has a reputation for brilliance, if not tact. "Larry Summers is to humility what Madonna is to chastity," wrote Paul Gigot of the Wall Street Journal. In diplomatic circles, his untucked shirts, mismatched socks and bluntness have seemed odd to some. But there is no doubt that he can deliver the conceptual goods.
Summers describes himself as a "market-oriented progressive"--his policies not that different from Rubin's. But unlike Rubin, he first made his mark in the relatively genteel realm of academia rather than on the trading floor. A product of the Cambridge crowd of economists--proponents of the so-called Third Way of economic policy, a sort of free-market advocacy with a social conscience--he taught at Harvard for 10 years. A father of three and an avid tennis player--he's a hard-serving, hard-hitting sort of player, as opposed to Greenspan and his cagey spin serves--Summers is a former cancer patient, found to have Hodgkins disease in 1983. He underwent a year of chemotherapy before battling the disease into remission.
The challenges on the domestic and international fronts will keep Summers' famously analytical mind busy--and he might have a hard time resisting the urge to tinker. Rising protectionism and Social Security reform could derail or further bolster the markets. And issues like currency instability and Russia's continuing crises should keep him jetting around the world. Even more worrisome are inflation fears that have driven the yield on the 30-year U.S. Treasury bond close to 6%.
But Summers does not lack confidence. Last week as he sat in his office joking with his Treasury aides, Summers ruminated on succeeding Rubin. He mused that it might be like replacing Yankee great Joe DiMaggio. And who remembers who replaced Joe DiMaggio? "It was Mickey Mantle," an aide answered. Larry Summers smiled. He already knew that.