Après Ben Le Deluge: Summers or Yellen
There is anguish in the land at the thought of choosing a successor to Fed Chairman, Ben Bernanke.
The anguish makes sense because Mr. Bernanke’s policies have kept the corks floating on a rising stock market, one of the few bright spots in a well-spun economy.
He has kept the corks afloat with $85 billion of monthly paper infusions to the capital markets. The paper is called money but it is really more like paper than something spendable and it flows at the rate of about $500 million per hour, every trading hour of every month.
The original plan was to stave off certain disaster by propping up the markets and it might work, but it will only work if the plug can be pulled on the program without terrifying the spoiled brats who constitute Mr. Market.
Conventional wisdom, which excludes Paul Krugman, suggests it might be unwise to invent $85 billion per month forever. First the Fed will have to wean the spoiled brats of their monthly fix then it will have to stuff the assets it has purchased with the fake money back down their throats.
Only one skill is required of Mr. Bernanke’s successor: talking Mr. Market out of a panic.
There are two candidates for the job: Janet Yellen and Larry Summers. Ms. Yellen might or might not possess interpersonal skills, but she cannot possibly have less than Mr. Summers.
Mr. Summers was shoe horned into the Presidency of Harvard by Robert Rubin, now suspected by some of being a mole for Yale in an effort to knock America’s most prestigious university off the vexing top perch so coveted by the Elis.
The evil plot failed when Mr. Summers proved unable to deal with even amateur spoiled brats (a.k.a. the Harvard faculty) let alone the professional spoiled brats called Mr. Market.
Mr. Summers seems to believe that he is smarter than everyone else but he does not seem to have learned that it is unwise to lead with that card especially if you need to convince spoiled brats who have real money to replace your fake money with theirs.
Mr. Rubin continues has efforts to stuff Mr. Summers down somebody’s throat. Perhaps Yale has sold its mole to China?
David Irons, July 26, 2013 at 2:07 pm said:
Janet Yellen (full disclosure: former b-school colleague and friend at Berkeley) will not alienate the FOMC, the markets, the Congress, or the Presidents with whom she serves. Larry Summers (partial disclosure: I’ve met him once and was impressed by him) is almost guaranteed to irk all those constituents, some more quickly, more often and more consequentially than others. Aside from their personalities, Yellen knows the Fed much better and has sounder, more deeply considered views on monetary policy. I think Obama is as likely to appoint Summers to the Fed as he is to name Ray Kelly to Homeland Security.
Haven Pell, August 06, 2013 at 4:31 pm said:
Well, if offending is the required skill, Larry wins easily. It does not seem to be.