I won’t bullshit you. I have stayed out of all the lobbying over who should be the next chairman of the Federal Reserve because I don’t know that much about fiscal policy and I don’t know much about the candidates. While I was willing to advise against the appointment of Larry Summers, that was based on my political judgment and on the fact that I don’t particularly like what I know about Mr. Summers’ personality. As to his record during the Clinton administration, I think it is a disastrous record, but I also think some people on the left have made opposition to Summers into a symbolic fight. If I believed that defeating Summers would be a great victory for stronger regulation of the markets, I might have been on board the campaign, but I think there is a great deal more to consider than that. The markets moved up sharply yesterday in response to Summers’ withdrawal because they think Yellin is more likely to keep the cheap money flowing to the bankers.
Stock markets soared on Monday on the withdrawal of Mr. Summers. Many investors regarded him as less committed to the Fed’s monetary stimulus campaign than Ms. Yellen. In trading, the Dow was up 118 points and interest rates down in a show of increased confidence that the Fed would withdraw more slowly from its efforts to stimulate the economy, including bond purchases.
Another symbolic victory could be at hand if Summers is set aside in favor of a woman. While president of Harvard, Mr. Summers said that women may have less intrinsic aptitude for science and engineering.
Symbolic victories can be very overrated, but sometime they’re important. It’s just that I think people can be led astray when they invest too much in these battles. For one thing, you can mis- or over-interpret the ideological component of something if you totally dismiss the personal element. I think too many people thought the president was trying to send an ideological message when he chose Rahm Emanuel as his first chief of staff, when it was far more likely that he was chosen because of a combination of a close personal friendship between Emanuel, Obama, and Axelrod, and Emanuel’s immense influence over the House after having successfully run the campaign to retake control of it in 2006. Likewise, I have gotten the sense that Obama wanted Summers at the Fed because the two of them had forged a close personal bond during the height of the financial crisis, not because the president is ideologically inclined toward deregulation of the financial markets. He wanted Summers because Summers had earned his trust.
That’s why the following may be true, but probably shouldn’t be:
Administration officials and supporters acknowledged that the president would enrage his party’s base if he were now to reject Ms. Yellen and forfeit the chance to name the first woman to the most influential economic job in the world. On the other hand, with no obvious alternatives, the choice of Ms. Yellen — which months ago might have been celebrated as historic — is likely to be seen as Mr. Obama’s reluctant capitulation to his party’s left wing.
It probably is a reluctant capitulation to the party’s left-wing. Objectively, it’s hard to argue anything different. But it’s not clear that it would actually be any kind of ideological victory for the left. Wall Street seems happier with this outcome, and they have some actual reasons for feeling that way. If you insist on seeing Larry Summers as nothing more than a Clinton Era deregulator and arrogant male-chauvinist, then this looks like a clear-cut victory.
It isn’t.
Knowing what I know about Summers, it IS a clear-cut victory. His record, to use your word, is “disastrous”.
I’d just as soon hand the keys to a drunk driver.
Well, that’s kind of my point.
If you base it only on what you know, it may seem like a clear-cut victory. If you base it on what a banker knows, you may feel otherwise.
I think you miss something. It’s a victory. Why? Stiglitz, why I don’t know, or Krugman are never going to get the job. It doesn’t matter why at this point they just aren’t. Given all the bleating in the press, it’s obvious the president wanted Summers. Brad DeLong was all over the place sticking up for his buddy. Not to mention that, on economic policy, Bob Rubin gets what he wants from the president, when ever possible. Given the range of the possible, Yellen is indeed a win for us DFH’s. Heck, no one is even mentioning Summers helping to make a mess of post-Communist Russia/Soviet Union.
That was more Jeff Sachs (post USSR). But yes.
Krugman wouldn’t be good. He’s not really a monetary theorist anyway. Stiglitz has a lot in common with Summers when it comes to “smartest person in the room.” Of course the difference being that Stiglitz is almost always right. But he’s not a political person and isn’t as good at consensus building.
I’d prefer Romer or Michael woodford.
Krugman wouldn’t be good. He’s not really a monetary theorist anyway.
And Krugman doesn’t want the job anyway, just like he didn’t want the Treasury top job.
Stiglitz has a lot in common with Summers when it comes to “smartest person in the room.” Of course the difference being that Stiglitz is almost always right. But he’s not a political person and isn’t as good at consensus building.
And Summers is good at consensus building? The only good thing Summers was good at was kissing up to the people above him on the ladder. And who likes a person who punches down?
Also, too, courtesy of Richard Kim(who is listed in his Twitter bio as executive editor of The Nation):
https://twitter.com/RichardKimNYC/status/379989313234010112
“Janet Yellen, chair of Bill Clinton’s CEA, is now an Obama “capitulation” to the left wing. Hahahahaaaaa. Sad.”
Uh, yeah.
This is a clear it victory. The markets are happy not because Summers wouldn’t keep the free money spigot going (he probably would have). It is probably a culmination of a few things, some more important and/or convincing than others:
As far as the victory is concerned, I think this is a good sea for the left to assert some muscle. Monetary policy has very much been almost ignored by the left until like the past two ears, but at almost as important, if not more important, than taxes on the rich. Having the Fed more focused in unemployment over inflation will not only raise more revenue than taxes in the rich but give us a damn lower unemployment number. Again, unlikely that Summers and Yellen differ significantly on policy, but style and personalities matter a lot here.
Also, Larreh is a disaster in any administrative role. He sucked at Harvard even if we ignore his sexist remarks. The dude is poison in almost any environment, and it goes beyond symbolic victories: he can go make millions of dollars and leave public policy to people who take others’ opinions seriously rather than gettig high on their own “genius”.
I still wonder how much of Warren’s opposition to Summers was about ideology, and how much was about the fact that she got an up-close view of his management style when he was President of Harvard.
Harvard, where he publicly said that women like her were incapable of understanding mathematics.
He’s sort of the Anthony Wiener of Economics.
It’s not an either/or.
Also Obama values trust, but I also think he suffers from the same “smartest guy in the room syndrome”. Not that he thinks he’s the smartest guy in the room, but that he likes that style and it appeals to him. To others, you’re just a dick and they want you to go away. I like a good mix, and I think Summers would appeal to me like he does to the president. But I’m also self aware enough to know that Summers and his personality and attitude are hated by the other 50% of the population be is pure poison. Nominating him would have been tone deaf.
You make some good points. Obama seems to like an aggressive intellect in the economics chair. Geithner and Goolsby come to mind. And when it was leaked a while back that Yellen was perceived as “cautious and prepared”, that would confirm this. If nominating Yellen is seen as yielding to the base, then that’s a plus. Obama does not have a bottomless barrel of political capital to spend. And the Syria debate clearly showed that he needs to keep his left flank on board. The Syria issue and NSA revelations have diminished Obama’s powers. Nominating a woman to the Fed chair who prioritizes employment can help reverse the momentum.
Janet Yellen is a fine choice. If the President requires another fine choice, Christina Romer is available.
Lol zero chance, but that would be a fantastic pick. Yellen was my pick the first time Bernanke was nominated. I’m curious as to Drew J’a pick.
I always liked Alan Blinder.
You’ll see Blinder in the Chair when he replaces the retiring Amartya Sen.
Didn’t say I expected him to get the Chair. Said that I always liked him. He seemed to care more about employment than inflation or fueling Wall Street.
Similarly, I still like Howard Dean for President although I think we are more likely to get Rahm Emanuel.
Why plump for Dean, instead of a progressive?
.
It’s less a victory for “the Left” than a victory for the reality based community.
Summers has been consistently wrong over the past five-fifteen years, whereas Yellin has been – at least closer to – right.
IF the Dow went up because of the announcement (a logically doubtful proposition), it would only be because they fear Summers would be more likely to tighten the money supply. Which would drive investors into bonds (and therefore out of the market).
Just because the market goes up doesn’t mean it’s a bad for the economy, or even for Main Street.
When it comes to ascribing particular interpretations to stock market behavior, I prefer tea leaves.
It’s less expensive, and there’s no risk of me taking myself seriously.
If you insist on seeing Larry Summers as nothing more than a Clinton Era deregulator and arrogant male-chauvinist, then this looks like a clear-cut victory.
It isn’t.
Would us DFH’s prefer Romer, Stiglitz or Krugman? Yes!! But we know hell would freeze over first. It’s a clear-cut victory given what the possible outcomes were. Was Romer ever on the list? If not, why not? But given what us unwashed masses know, Yellen was the best possible outcome.
It’s not a complete victory because the ‘bros’ can use her appointment as an example of gender appointment over merit, and diminish her both personally and professionally. ‘Affirmative action’ yadda yadda yadda,
It’s the same ‘ol shit women have faced for thousands of years, the man shows himself to be….well, a dick…..so the woman only got the job because she was second choice.
Who in hell knows what the Genius would have “done” or tried to persuade the other governors to do monetary policy-wise? It’s quite unlikely he would have advocated for some massively new monetary policy, given the weakness of the macroeconomy.
Wall Street goes up and down 1% over meaningless things every month. This is just the usual bullshit of the equity markets. To the extent there is anything rational there, it’s an acknowledgment that lower rates provide at least some Keynesian stimulation and maybe Summers wasn’t on board with the low rate regime. But as Bernanke has said a dozen times, the Fed has no power to actually restore economic conditions after a massive recession using interest rate moves alone, especially increases.
Rates have been kept low and they are still not “stimulating” any real new economic activity. Consumers are still indebted. Unemployment reigns. Suppliers still prefer having most of our useless shit made overseas, not here. Housing price are recovering, but of course people’s wages are still flat, so they aren’t that much more likely to be able to afford today’s $350,000 house than Bushco’s $400,000. Our economy is still a house of cards, but with a ton more federal debt. There’s no room for error anymore.
America is an economically declining nation whose economy doesn’t work for 80% of its citizens. Nothing is being done about that except celebrating high tech gizmos and heroic plutocrats and “destabilizing” 1%ers.
Rentiers don’t like low interest rates, they don’t pay them anything. Bankers like to borrow low from the Fed window, but they don’t like to have to lend low. As far as I can tell, the finance boyz have been complaining about these historically low rates and making anti-Keynesian arguments about why they should be increased even in the face of a weak economy and terrible employment. Krugman has been all over this. The truth of the matter is that without actual fiscal stimulus by the various state and fed gub’mints, i.e. more spending, there isn’t going to be a recovery in employment, job, wages.
Summers is apparently a genius who just can’t seem to get anything right in real life. He spent his public life being a talking stooge/bright bulb for lettin’ the Free Market rule in finance, rewarding heroic Wall Street with ever less demonic regulashun. He was dead wrong, to spectacular effect. He doesn’t need to be given every top economic job in America, even if the prez trusts him for some personal reason.
He’d be in his Fed perch long after Obama was gone, and the last thing needed at the Fed is some academic who thinks he’s never wrong who “used to” openly blather that Free Market Bankers didn’t need regulators or can “self-regulate”. Goodby and good riddance, Larry. You ain’t gonna make any more history, thank God….
We replace the retiring Chairman of the Board of Governors of the Federal Reserve with the serving Vice-Chairman of the same board, and it’s a tremendous victory.
Because Janet Yellen is going to call on us to expropriate the expropriators, and begin the process of seizing the commanding heights of the economy in the name of the workers.
Or something. I’m not sure quite what.
t the risk of stating the obvious, I don’t think that’s a realistic criterion for “victory” in this hypercapitalist wonderland in which we live.
You don’t read DailyKos much, do you? 😉
Over there the defeat of Summers — because it was a defeat, and they did it — and presumptive elevation of Yellen is being treated as the modern equivalent of the shots fired from the cruiser Aurora in St. Petersburg.
Pretty much the only time I read Daily Kos is when somebody links to it, or I find something from it in a web search.
But I actually am very happy about the comeuppance of Larry Summers. We’ll soon see if this Janet person is any better. I don’t think she could be any worse.
Yeah, but getting a Fed Chair that the political left could really cheer for would be a wildest dream kind of miracle. I’m happy to see the symbolic victory. It’s probably the best win we can get.
I’ve always been dismayed that Summers had a place in the government – especially with the Democratic Party – after his remarks on women in science. To me it’s long, long past time the bigot was let out to pasture. I don’t care if it’s just symbolic. The man needed to be gone 15 years ago, and it’s finally happened. That Elizabeth Warren played some role in his defeat just makes me think the arc of the universe bends toward justice.
That Elizabeth Warren played some role in his defeat just makes me think “Revenge is Sweet”. BTW, that’s not a knock on Warren. I’m very pleased to see her just revenge. It puts order back into the Universe.
Keeping neo-liberals the fuck out of the Fed is a victory.
Period.