Sunday, September 15, 2013


Larry Summers haswithdrawn his name from consideration as Fed chairman. That's good news as far as it goes, though I doubt the president is going to pick Janet Yellen -- there are too many signs suggesting that he won't.

But I'll get to that later. First, I just want to respond to this quote from Brad DeLong in The Wall Street Journal. DeLong thinks Summers is misunderstood and would have been a good choice:
J. Bradford DeLong, a Summers backer at the University of California, Berkeley, said the decision to pull his name is "not something Larry would have done were he really the guy his adversaries claim he is."
Nonsense. One of the things the adversaries of Summers claim he is is a dick-swinging cock of the walk, someone who has to dominate every room he's in. A guy like that is damn well not going to allow himself to be humiliated by the U.S. Senate -- it would diminish his sense of authority. Sorry, but this is precisely what you would expect Summers to do.

So will Obama pick Janet Yellen? I doubt it. The Journal story tells us:
One leading candidate is Janet Yellen, the Fed's current vice chairwoman, who has garnered substantial support among Democrats in Congress and among economists. But the public lobbying on her behalf appears to have annoyed the president, say administration insiders, and may lead him to look elsewhere.
At Business Insider, we're told this about the chances of Obama picking Yellen:
Capital Economics' Chief U.S. Economist Paul Ashworth thinks the administration may not end up doing so....
The Obama administration has shown little, if any, enthusiasm for Yellen ... so we're not convinced she will necessarily get the nod. Summers candidacy was sunk by the opposition of many Senate Democrats, which would have made it hard, if not impossible, to get his nomination confirmed. Nominating Yellen now could make Obama look weak, kowtowing to the Democrats who have been openly campaigning for her.
I think I need to step outside. It smells like a locker room in here.

And DeLong worries about "the Obama administration tacking to the non-technocratic right in order to get Republican votes for confirmation."

I'm worried that Obama might pick former Fed vice chair Donald Kohn, about whom we learn this:
* James Kwak has written that Kohn was a proponent of the "Greenspan doctrine" that new financial instruments should be encouraged because they made institutions more "robust."

* In a speech at Jackson Hole in 2005, ... Kohn cited the repeal of Glass-Steagall as an example of successfully rolling back a regulation that stifled competition: " times rolling back regulation--for example, by lifting the Glass-Steagall restrictions on banking organizations--will benefit competition and help the financial sector deliver services more efficiently and effectively."

So I'm not opening any champagne just because Summers is out.

Meanwhile, on a trivial note, I love the insider-y way Chuck Todd slips and calls Summers "Larry" at 0:47 of this clip:

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I assume we'll never hear Chuck Todd slip and call Janet Yellen "Janet," 'cause she's not a boy.


Victor said...

AAAAAAAAAAAAAnd the punching of the DFH's, continues!!!!!

Jayzoos, is Obama now going to put someone even less capable than Summers in that Fed seat?


marieburns said...

I'm totally with you on your assessment of why Summers took his name out of the running for Fed Chair. He could not have relished the prospect of sitting before a bunch of Senators, all of whom he must consider way stupider than he: "May I remind you, Prof. Warren, YOU used to work for ME." After all, the last time Summers had to sit for a Senate confirmation hearing, he was a big star. (His confirmation hearings for Treasury Secretary came a few weeks after Time magazine ran a cover story, featuring him, along with Alan Greenspan & Robert Rubin, titled "The Committee to Save the World.")

I don't know, however, if you've accurately assessed President Obama. He proved pretty well over the past couple of weeks that he can handle being characterized as a weakling, so it doesn't seem likely he would get his shorts in a knot about Yellen. (He was reportedly mighty quick to accept Summers' resignation.) I figure Obama threw out Donald Kohn's name a month or so back so the Fed Chairmanship wouldn't look like a two-person contest. I hope the President isn't so small-minded that he would endanger his own wimpy recovery by appointing a Greenspan acolyte.

I wouldn't bet my first-born on it, but I do see Yellen as getting the nod. We'll see.

Marie Burns

Danp said...

Why is it that everything Obama does has to be measured in terms of how much testosterone he has? Do we really want another "resolute" president who has a puerile thought process?

Never Ben Better said...

What Danp said.

Steve M. said...

Well, the question is whether Obama himself sometimes has a puerile thought process. For the most part, I'd say he's quite resistant to that. On this, I'm not sure.

Kathy said...

marieburns, fingers crossed that you're right. Second the "what Danp said".

Unknown said...

About a month ago, Obama started signaling that he was looking at other people. I thought at that time it was to send the message, "If you don't let me have my golfing buddy, I'll stick you with someone really terrible."

I agree with you: it doesn't look good for Yellen. But if Obama doesn't pick her, he is going to look like a petulant sexist schoolboy. I'm not at all sure that isn't a fair characterization.