Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Larry Summers or Janet Yellen, Who will Obama Pick as Head of Fed?

Politics / US Federal Reserve Bank Jul 30, 2013 - 12:40 PM GMT

By: Money_Morning

Politics

Garrett Baldwin writes: With Ben Bernanke prepared to step down as Federal Reserve chairman within the next year, the human resource debacle of locating the next Federal Reserve chair is underway.

Despite reports of Timothy Geithner, Alan Blinder, or Roger Ferguson being modest replacements (the latter I personally endorse), it seems that the candidacy has been narrowed to two.


The next Federal Reserve chair will be a choice between one of the biggest enablers of the financial crisis, Larry Summers, and the more-qualified, but politically unknown, Janet Yellen.

Here's my insight on each candidate...

What a Summers Federal Reserve Would Look Like...

Summers was an enabler of the 2008 financial crisis. I noted recently
that Summers should not be given the keys to the kingdom, for his track record is abysmal.

Some policy wonks like Ezra Klein have said that the president and his administration value Summers for his ability to navigate a crisis. The Obama administration is masterful at public relations campaigns in the wake of a crisis, and advisors have shown deep concern that this economy could turn on its side at any time.

With concerns about China on the rise, European headwinds always on tap, and global unrest now a chilling warning to overpromising and underperforming governments, the Obama administration seems more concerned about handling a crisis than preventing it in the first place.

Hence the likely appointment of Larry Summers, who has a terrible reputation in regard to playing well with others, and a track record of bank-friendly policies like the gutting of Glass-Steagall. As I noted, Summers was also one of the key figures in destroying Brooksley Born's reputation in Washington in the late 1990s when she argued for greater oversight of the derivatives market. In addition, he ran the Harvard endowment fund into the ground and has a rather nasty record of misogynist opinions.

Some have argued that Summers has a better reputation than he actually does, and that he will provide stability in the markets because investors know him. But in my view, he's just more of the problem and less of the cure. Not only will his ego get in the way of his ability to cure market jitters, but he also is a principle subscriber to the notion that Keynesian alchemy will cure our woes over the long term.

Summers has noted that he thinks that the Fed's injections are not curing the problems in the nation's economy, which would be encouraging if not for this quote in 2011. Wrote Summers: "The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending."

It's impossible to take a statement like this seriously. With Summers, expect more of the same. More spending, more printing, and more false promises boosted by the ridiculous idea that expansion at the Federal Reserve will do anything to sustain this country in the long-term.

Summers represents everything that's wrong with Washington, a man who has never been held accountable for his actions, and we'll be the ones picking up the tab once his continued streak of "success" pummels the middle class. The Federal Reserve and Wall Street are now so short-term minded that it's becoming impossible to understand what to expect unless you're a part of their elite club.

What men like Summers don't understand is that the American economy is not a laboratory. It is full of human beings with hopes and dreams and goals and families. His friends on Wall Street will make out with huge bonuses and second yachts. A Summers' candidacy shows the staggering disconnect between Washington and the rest of the United States.

What a Yellen Federal Reserve Would Look Like...

Since 2010, Janet Yellen has been Vice Chair of the Federal Reserve, serving as Ben Bernanke's lieutenant.

Her supporters describe Yellen as a "soft-spoken, even-tempered, 100% mainstream academic economist who boils the world down to simplistic concepts such as aggregate demand shortfalls and wealth effects, justifies decisions with research papers that are steeped in dubious assumptions, and enjoys strong support from liberal Democrats."

She's a genius and certainly the more qualified to assume her boss's desk.

But that's not a good thing.

The primary case against Janet Yellen has been her lack of political involvement in the last two decades. Simply put, President Obama likely doesn't know anything about Yellen, which means that because she doesn't rub elbows with the political class, she doesn't improve the chances of her candidacy.

Despite her success in preventing crisis in the mid-1990s and her risk-adverse positions on regulation, she will provide some jitters to the market. Many have said that she will be tough on the banks, which is why many oppose her candidacy.

Everyone knows what they'd be getting from Larry, an enabler of crisis, and that's why the market wants him. Meanwhile, with Yellen, it's unclear whether she would live up to her longstanding "dove" reputation.

It is certainly problematic that Yellen comes from the academic mold that treats the American economy more like a video game than it does in understanding how its policy has real impact on the average American.

However, she has been ranked as one of the top economists for her ability to provide accurate forecasts, which would provide a bit more stability for key decision makers.

The world would be better off if it didn't have an enabler in Summers, or a pure academic who treats the markets like a laboratory in Yellen.

That said, the latter is the better of the two, and certainly Yellen would offer a far easier confirmation hearing than the Wall Street-connected Summers for the risk-adverse Obama administration.

Source :http://moneymorning.com/2013/07/29/larry-summers-or-janet-yellen-who-will-obama-pick-as-head-of-fed/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules