FED chair. Does it really make a difference? Yes and no. A FED chair has pretty strong power in America as we live in a FIRE based economy. The new FED chair is going to have to clean up after his or her predecessor. Whomever takes over after Bernanke will have to react to Bernanke's actions. Perfect example is Greenspan's initial period as chair was dealing with the leftovers of Volkcer's ' 80s policies (confirmed August '87 + first term: crash in October '87 + S&L bank closures started leading to the RTC to fix it). I've already posted that I expect Larry Summers to be the next FED leader. The NY Times has released some rather interesting articles about the process for a new FED leader. They are interesting in how the decision is being framed. There is no retrospective on current or recent FED policy and plenty of talk of gender. These articles are sales pitches for Summers the man without talking about Summers' history.
Annie Lowrey and Binyamin Appelbaum have set up the story of Yellen the possible 1st female head of the FED vs. Larry Summers, that old Dem economic hand with White House support. On July 26th, they set the stage of gender undertones influencing the decision. Is there any analysis of Yellen's approach vs. Bernanke? Any comments on Summers' view of the FED's role in the system? Any mention of Summers and Yellen both being financial mandarins in charge of the system we endure now? Nope. Lots of quotes from women in Washington how it would be swell to see a lady in charge of the FED. The next article was released August 1st with scant mention of concrete policy ideas on either Yellen or Summers (with a throwaway mention of a third candidate, Don Kohn). This article is to calm the NY Times and HuffPo readers upset to see Summers in the mix by explaining how smart he is. The article even has a quote from Sheryl Sandberg, symbol of Brahmin women across America, that Summers is "a great person to work with". See, a woman approves of him. Forget that speech he gave revealing the uncomfortable truth about gender differences in science. People are quoted as saying he is super smart, so smart that people in the White House, who all want to pick him, use the term "Larry-smart" for wicked smart people. This is how they sell him to Times readers: women approve and he is very smart. We are smart and approve of him, so it is all good. This is the same rationale (super smart) behind Obama being a good potential POTUS despite no achievements or history.
The article does mention Summers' experience with the Obama team in '08/'09. Weird that the article does not go into detail about Summers guidance on how to handle the crippled banks, to break up Citigroup or not, to double and triple down on bailouts, and that this was a normal recession that America would snap back from quickly. Ezra Klein, husband of Annie Lowrey (sorry Annie), wrote an article right before hers on 7/31 called "The Case for Larry Summers". Ezra does mention Summers past, and completely misses critical points. If he was at the heart of the Obama team's response to the financial crisis, why hasn't anything been done? Klein rewrites things a bit to think '10 was a crisis year. It wasn't. The big deals started from the JPMorgan pick-up of Bear Sterns to the December '09 Citi tax deal (backdoor bailout). Were these moves right, Klein? Did Summers advise against breaking up Citi because his old boss was in charge at Citi? Here's a secret Ezra: I know one White House guy who laughs at you being anointed a genius policy wonk, but hey, you're easy to use. Klein goes into some substance, but is just selling Summers as a super smart guy who has been there before, and let Klein whitewash that history.
Some of the issues the journalists could ponder or explain to the educated masses that read the NY Times and Wapo are here. If bank size and complexity is an issue why are we bringing back one of the Treasury men who helped push the repeal of Glass-Steagall through? If relations with Russia mater, why bring a man who helped orchestrate the rape of Russia for Harvard's benefit? He did not support derivatives being regulated, which is the trillion dollar time bomb for our economy. How many moral hazard bailouts had Summers involvement in the '90s? Three, four, and can we review their validity? Mexico, Asia, LTCM, the Russia mini-loans. These issues all could be brought up, but they would be substantial detriments to his case. These issues would also tarnish the only positive story the modern left has economically: the Clinton era was a golden era of do no wrong prosperity. No one can discuss how the excesses of the 2000s were directly caused by the regulatory moves and capital gains tax changes of the Clinton administration.
All articles mention Summers receiving his support from within the White House, but the White House guys refuse to go on the record with support. Yellen has vocal, public supporters, so the White House, which will make the pick that will be confirmed easily, has to use their media assets to set the stage for Summers' arrival. Obama's economic team is so insular that they reached out to Tim Geithner for the FED chair position. After all that has been done and reported in the last five years, why would they ever consider Geithner? Geithner is Rubin's man. Summers is Rubin's man. The media wants to help make him your man. "Do not worry about him being a creator and enabler or our economic inequality and stagnation. Let's just discuss the gender tones, and boy, isn't Mr. Summers so smart?" The bank technostructure wants a FED chair that is a known quantity. Summers may be a brusque blowhard to common folks, but when the chips are down, the masters of Wall Street know they can count on him. The media wants you to rely on him, too.