Put three Treasury secretaries in a room and you’ll get a variety of views about the U.S. economy and financial system. Make Lawrence Summers one of them while his name is being thrown about as the next Treasury secretary and you’ll get some carefully worded responses.

Mr. Summers is known for being opinionated, drawing criticism at times despite his intellectual reputation. At the Journal’s CEO Council conference Monday evening, he outlined his key principles around a stimulus package and danced around questions about specifics. The moderator, Journal editor Alan Murray, even prefaced his remarks at the session by noting that Mr. Summers (who is an adviser to President-elect Barack Obama) is speaking only for himself.

“Can you give us some specifics, based on your knowledge as an economist, what sorts of stimulus in the short term would work best?” Mr. Murray asked.

Mr. Summers then wondered aloud whether he was being asked about the specific quantity of stimulus or the specific programs he’d suggest. “I realized that I didn’t want to answer either question with specificity, so the distinction’s not that important,” he said, drawing laughter.

Mr. Murray tried again, asking how much fiscal stimulus would be enough to influence the $14 trillion U.S. economy.

“That’s going to be a very important number,” Mr. Summers replied carefully. “There’s been a rich and active debate on that question.”

Then he invoked Goldman Sachs, sitting next to Treasury Secretary Henry Paulson and former secretary Robert Rubin, both former Goldman executives.

“I was, I confess, modestly surprised to see the institution that both of my colleagues formerly led, that has a great reputation for fiscal probity, call for stimulus in the $500-700 billion range not long ago. Whether that’s an appropriate figure or not I think is something that’s going to be very much debated.”

The Obama team surely would be pleased with the restraint. – Sudeep Reddy

CEOs attending a WSJ conference in Washington said news about massive layoffs at Citigroup and the decision by Goldman Sachs executives to forego bonuses are just the start of more bad financial news to come in 2009. WSJ’s Phil Izzo reports.

Current Treasury Secretary Henry Paulson and predecessors Lawrence Summers and Robert Rubin locked horns over the best way to get the U.S. economy back on track. WSJ’s Sudeep Reddy reports.

Treasury Secretary Henry Paulson defended the Bush Administration’s $700-billion bailout plan, telling WSJ’s Alan Murray he doesn’t think he’s doing FDR-like experimentation with lqiuid assets.

At the start of the year, former Treasury Secretary Lawrence Summers urged lawmakers to pass a fiscal stimulus program that’s timely (enacted quickly), targeted (directed to the people who would spend it most) and temporary (to minimize the deficit impact). Congress and the White House concurred, enacting the $168 billion fiscal stimulus program in February that was designed to soften the threat of a recession.

Now, Mr. Summers says, “the situation has deteriorated very substantially from that point.”

Speaking at the Journal’s CEO Council conference Monday evening, he moved to the letter “S” and urged a stimulus plan that’s “speedy, substantial and sustained over a several-year interval.”

“I think we’re going to need some impetus to the economy for two to three years,” he said.

Mr. Summers, an adviser to President-elect Barack Obama, is one of several candidates to become the next Treasury secretary. Though he wasn’t speaking for the incoming administration Monday evening, he presented a view that fits closely with ideas expressed by Mr. Obama and other top Democrats: link stimulus programs to health care, renewable energy and other overall national priorities.

By properly timing the pieces, “one can generate substantial fiscal stimulus in the short run,” Mr. Summers said. He declined to suggest a specific dollar amount, but stressed that every $1 in stimulus spending would yield $1.50 in economic output, which then would generate higher tax revenue.

Former Treasury Secretary Robert Rubin, speaking at the same event, also pushed fiscal stimulus while stressing the importance of signaling concerns about the deficit. “The single most important thing we can do right now is a very large fiscal stimulus married with a commitment, once the economy is healthy again, to put in place a multi-year program to get back to a sound fiscal position,” he said, sitting alongside his Treasury successor.

With the government actions taken so far, and a large fiscal stimulus package under an Obama administration, Mr. Rubin said, “there’s a strong probability that the crisis piece of this” — the psychological crisis and pervasive anxiety — “will abate in a reasonable period of time.” Still, the economy will be under pressure “certainly well into next year,” he said. — Sudeep Reddy

Icelanders gather in one of the largest public protests in their history to express shock at the financial crisis and anger at the government. WSJ’s Andy Jordan reports from Reykjavik.

As President-elect Barack Obama prepares to take office, The Wall Street Journal is convening about 100 top CEOs and influential policy-makers to discuss what the new administration’s priorities should be.

Heavyweights expected at the Journal’s CEO Council, held in Washington, D.C., Monday evening and Tuesday, include: Rahm Emanuel, Treasury Secretary Henry Paulson and his predecessors Lawrence Summers and Robert Rubin; Goldman Sachs CEO Lloyd Blankfein; Google CEO Eric Schmidt; Carlos Ghosn, CEO of Nissan; Intel CEO Paul Otellini; and FedEx CEO Frederick Smith, among many others. A list of participants can be viewed here.

Throughout the conference, Journal reporters will be interviewing CEOs about their economic outlook and other topics. See the CEO Council blog for full coverage of the CEO Council.

Economists and politicians have been raising the stakes on fiscal stimulus to keep the U.S. out of a severe recession.

Yet very quietly, the cavalry has already arrived in the form of a roughly $90-a-barrel drop in oil prices over the past four months, slashing costs on everything from gasoline and home heating to business energy expenses. That translates into as much as $300 billion in stimulus - more than 2% of gross domestic product - without lifting a finger or adding to the budget deficit.

“I’m amazed that not more is being made out of it,” said Nariman Behravesh, chief U.S. economist at IHS Global Insight.

Behravesh’s forecasting rule of thumb is that every 10-cent drop in gasoline prices is equal to a $12 billion tax cut - one that’s aimed at lower- to middle-income households that pay a higher share of their incomes for energy. Businesses benefit, too, of course.

With gasoline prices now about $2 a gallon below their record highs, that translates into $250 billion to $300 billion for households and businesses, Behravesh said.

Chris Varvares, president of Macroeconomic Advisers, estimates the effect on consumers alone from the drop in energy prices at around $135 billion. Mark Zandi, chief economist at Moody’s Economy.com, estimates that if oil prices just stay under $75 a barrel - December crude settled just below $55 Monday - it’s worth the equivalent of a $200 billion stimulus. If oil prices were to eventually fall to around $50 a barrel, hardly a farfetched notion, the stimulus would climb to $250 billion.

“It’s not widely talked about,” Zandi said, since “that benefit is getting overwhelmed by all the other costs” from the credit crunch and negative wealth effect on asset values.

Still, economic officials are missing out on a golden opportunity to talk up the economy’s sole bright spot during the most critical spending season of the year, especially given that their policy actions seem aimed as much at improving psychology as anything else.

Though the drop in energy prices will likely stick, “it’s happened so quickly it still hasn’t sunk in people’s minds,” said Georgia State University forecaster Rajeev Dhawan, who pegs the stimulus at $200 billion for consumers and businesses.

It needs to sink in, and the sooner the better. So maybe some of Treasury’s TARP money would be better spent on full-page ads or mailers detailing how much lower energy prices are saving people each month. Along with directions to the nearest mall. – Brian Blackstone

Chart: AAA Daily Fuel Gauge Report (http://www.fuelgaugereport.com/)

The U.S. economy faces a “prolonged” recession beyond the first quarter of next year and further increases in the unemployment rate, according to a survey of economists released Monday by the National Association for Business Economics.

The Federal Reserve, however, isn’t expected to lower policy rates further, according to a majority of the 50 forecasters surveyed by NABE, though about one-quarter do expect more rate cuts.

“Business economists became decidedly more negative on the economic outlook for the next several quarters as a result of the intensification of credit market stresses and evidence of spillover to the real economy,” said NABE President Chris Varvares, who’s also president of Macroeconomic Advisers.

According to NABE, 96% of survey respondents said the U.S. is in recession, with respondents split on whether it began in late 2007 to early 2008 or in the third quarter of this year. Gross domestic product contracted 0.3%, at an annual rate, during the third quarter. The NABE panel expects GDP to fall at a 2.6% rate this quarter and 1.3% in the first quarter of 2009.

Nearly three-quarters of NABE respondents think the recession will persist beyond the first quarter next year, with growth coming in at an anemic 0.7% for 2009 as a whole. That’s down from NABE’s October forecast of 2.2% GDP growth in 2009. The unemployment rate, meanwhile, is expected to rise to 7.5% by the end of next year, according to NABE. The jobless rate already sits at a 14-year high of 6.5%.

The NABE outlook survey is conducted four times per year. The latest survey was taken Oct. 28 to Nov. 7.

On Friday, Cleveland Fed President Sandra Pianalto became the latest Fed official to declare the current downturn as a recession, joining Richmond Fed President Jeffrey Lacker and San Francisco Fed President Janet Yellen in making that assessment.

However, the median forecast of NABE forecasters is that Fed officials won’t cut the federal funds rate below its current 1% level, though they do expect the fed funds rate to remain at that low level until the fourth quarter of next year.

NABE members expect the automobile industry to remain under “severe” pressure next year, with NABE’s 2009 sales forecast cut to just 12.5 million units from the previous forecast of 14.2 million units. The U.S. budget deficit, meanwhile, is expected to climb to $765 billion in fiscal year 2009.

In response to a special question about the effectiveness of Fed and Treasury Department efforts to support markets, NABE respondents said Treasury’s plan to inject capital into banks and the Fed’s commercial paper facilities “should most positively impact GDP growth in 2009.” Interestingly, over 40% of respondents thought Treasury’s now-scrapped plan to purchase mortgage-related assets would have had a “meaningful” effect on growth.

There was one nugget of good news from the survey. NABE forecasters “see housing demand leveling off fairly soon.” However, “with new home inventories running at 10-months’ supply, it appears that home prices will bear the brunt of adjustment in equilibrating demand and supply,” NABE said. – Brian Blackstone

The world is in danger of overestimating the impact of the financial crisis on Asia with China and India primed to help drive a recovery after a few tough quarters, according to a senior official at the Asian Development Bank.

Rajat Nag, the international lending institution’s managing director general, said that while China, India and the rest of Asia have been hit hard by the crisis — and will feel even more pain in 2009 — there is “absolutely no reason to go into a wake in Asia.”

“We think China and India will be hit, have been hit, but will still grow at a fairly healthy clip by the anemic standards of the rest of the world,” Mr. Nag said in an interview during a visit to the Indian capital.

The Manila-based ADB is forecasting that China’s economy will grow by between 9.5% and 9.7% in 2008 and by about 8.5% in 2009, down from an annual average of about 10.5% from 2002-2007. India’s growth this year is forecast at 7.8% and next year at 6.3%-6.5%, down from about 8% annually from 2002-2007.

“We believe China and India will provide the drivers for Asian economic growth and Asia in turn will provide the driver for world economic growth,” he said.

He noted that banks in Asia are well-capitalized overall and avoided involvement with many of the toxic securities that have plagued big banks on Wall Street and the City of London. Still, he said, Asian banks now are unnecessarily freezing access to credit, especially on big infrastructure projects that remain as viable and worthy of financing as they did six months ago.

“Six months ago, bankers were asking no questions and giving money away; now they are asking too many questions and not giving any money,” he said. “Today, if banks are getting liquidity injections, it is imperative for them to pass on that liquidity for sounds investments.”

He added that some infrastructure investments may even be more attractive now than before because of the sharp decline in the price of raw materials such as steel and concrete. –Paul Beckett