Saturday, September 07, 2013

Coming up: Head of the Fed

Sandy Levinson

Joseph Stiglitz, among other things a Nobel Prize economist, has an absolutely superb column explaining why Janet Yellen really is the clear choice over Larry Summers as the next head of the Federal Reserve Board.  It will be interesting to observe Congress's behavior in light of the President's stunningly inept presentation of his Syria policy (and, for that matter, his toleration of a perjurious Director of National Intelligence and general lack of openness, even to members of Congress, on vital matters of intelligence.  See, e.g., Alan Grayson's excellent column in the Times.)  As a formal matter, there is obviously no direct connection between these decisions.  But, as Mark Twain once quipped, the 13th chime of a clock puts into doubt the previous twelve.  The President is rapidly losing whatever charisma remained after his re-election (which one might argue was the result of an almost futuristic get-out-the-vote campaign than anything he particularly said). And policies inevitably get intertwined because of political realities, even if the punditry can properly separate them.  So I would expect that a greatly weakened President Obama, having been repudiated by significant numbers of his own party (and base) would have a harder time explaining why Wall Street's favorite is his pick to head the Fed.  One might even see a filibuster made up of other than obstructionist Republicans (e.g., Bernie Sanders).

In any event, if, as I hope, Congress refuses to authorize military action (i.e., acts of war) in Syria and then, by stipulation, rejects the nomination of Summers as head of the Fed, it really would be arguable that the President should resign and allow Joe Biden to take over.  I.e., he would have been humiliatingly rebuffed on key issues of both foreign and domestic policy by, again by stipulation, bi-partisan majorities.  (I.e., I would be more than a bit surprised if Elizabeth Warren would not take the lead in questioning the appointment of one of the key individuals behind the limitations of Obama's general take on the economy, as spelled out in Ron Suskind's excellent book Confidence Men.  As Stiglitz argues, Summers has a surfeit of confidence in his own capacities and an undersupply of sound judgment.  (I am, with great reluctance, beginning to believe that the same may be true of the President, though I still regard this as an open question.)

So, perhaps one consequence of rejecting the Syrian adventure will be the far greater likelihood of Yellen's appointment, which I assume would be easily confirmed.  In any event, hold on to your hats (and wallets) as the American system of separated powers and fixed-term presidencies continues to play itself out.


"which one might argue was the result of an almost futuristic get-out-the-vote campaign than anything he particularly said"

I would argue it was more about what Willard Romney said, especially the bit where he hired all of Cheney's favorite neocons to be on his war cabinet.

In fact, while I oppose action in Syria, I still thank the American voters every day for not returning the neocon cabal to the White House. What Obama is doing (like handing the matter of to congress, where it belongs) is so much better than what those bastards would be doing it's hard to even calculate.

What Scott Supak said, plus Romney's 47 percent comment.

As for Obama's resigning, I tend to agree that a parliamentary system would be better than what we have--it could hardly be worse. But we don't have one, and if everyone whom Obama nominates and everything he proposes gets voted down 435-0 in the House and 100-0 in the Senate, he won't resign, anymore than he'll start prosecuting war criminals and torturers instead of whistleblowers.

Why would any sane Senate confirm the appointment of either Yellen or Summers?

Both would continue the same Fed policies of printing massive amounts of fiat money which have grossly inflated the prices of world equity and commodity markets, setting both up for crashes. Yellen has championed this madness during her tenure with the SF Fed.

They both would continue the current unsustainable government borrowing and spending, which Summers helped design in the Obama administration.

They only differ in degree in advancing policies more familiar to Argentina than the United States.

Our SALADISTA, libertarian that he (on occasion) is, apparently yearns for an Ayn Rad-y head of the Fed in the nature of an Alan Greenspan who lost his economics embouchure long before his term expired, or who never really had the chops for the job.

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There is a reason why Greenspan served five terms as a bipartisan Fed Chair across nearly all of the Reagan Prosperity (1983-2007) - the Fed stayed within its proper role and competence of maintaining a sound currency.

Methinks our SALADISTA is a tad "irrationally exuberant" about the accomplishments of Alan Greenspan as Fed Chair and his not observing the "bubbles" he was blowing out of his economic sax with joyous refrains of markets in admiration of Ayn Rand, finally shrugging when an obvious bubble burst. OOPS!

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