The Bungled Coronation of Larry Summers

[cali]

What a difference a week makes. A week ago, a carefully orchestrated series of leaks signaled that President Obama was on the verge of naming Larry Summers to succeed Ben Bernanke as chair of the Federal Reserve. Those leaks came from senior administration officials, including Obama himself. Now, a massive backlash from Senate Democrats makes Summers' appointment something of a long shot.


A lot of the news coverage has suggested that this controversy was mainly about gender -- Fed Vice Chair Janet Yellen, the previous front runner, being shoved aside by the upstart Summers, preferred candidate of the old boys and a man famously insensitive to women. But though gender was key in triggering the backlash by offended Yellen supporters, it is not the core part of the story.

Under Fed Chairman Ben Bernanke and vice-chair Yellen, with the strong backing of other progressive Fed governors such as Daniel Tarullo and Sarah Bloom Raskin, the Fed has championed the aggressive use of monetary policy to promote economic recovery, as well as tougher banking regulation. Traditionally the most conservative and Wall Street-friendly of government agencies dealing with the economy, the Fed has become one of the most progressive, at least compared to the Obama Treasury.

This independence has unnerved Wall Street moguls like Robert Rubin, as well as Obama's senior economic advisers, all of whom are Rubin protégés. The idea of installing Summers to lead the Fed would put the bank back in friendly hands, at a time when the government is belatedly increasing bank capital standards, cracking down on abuses with derivatives, and the idea of breaking up the biggest banks has growing bipartisan support. Rubin has also expressed alarm that the Fed's liberal monetary policy under Bernanke could be courting inflation.
A lot of the news coverage has suggested that this controversy was mainly about gender -- Fed Vice Chair Janet Yellen, the previous front runner, being shoved aside by the upstart Summers, preferred candidate of the old boys and a man famously insensitive to women. But though gender was key in triggering the backlash by offended Yellen supporters, it is not the core part of the story.


<snip>

http://www.huffingtonpost.com/robert-kuttner/summers-yellen-fed-chair_b_3668130.html

[LuvNewcastle]

1. The first paragraph repeats itself.

I hope enough people raise hell to keep Summers out of there, but he's got a lot of powerful friends. Who knows what to expect from Obama.

[SkyDaddy7]

11. The MEDIA are the ones...

throwing Larry Summers name around not the Obama officials. I think the media just wants to see the Democrats fight like the GOP is...We should not jump to conclusions.

[LuvNewcastle]

12. I didn't get the impression from the article that Democrats

are fighting among themselves over this. Looks to me like the party wants Yellen and Wall St. wants Summers and each side is trying to convince Obama to go their way. Obama has several options to choose from, but considering his previous choices for Treasury and his support for Bernanke all this time, it's more likely that he'll pick someone favorable to Wall St.

[Kolesar]

2. "President Obama was on the verge of naming Larry Summers"

That Huff Po editiorial column does not prove that.

[cali]

3. It's hardly a secret. do your own googling.

[Kolesar]

4. Is there a "fantasy" setting for the search engine? eom

[customerserviceguy]

5. I've heard it, too

on one of the weekend talking heads shows. I think it was Mort Zuckerman who mentioned it on the McLaughlin Group, and he certainly has his connections.

[cali]

7. this has zero to do with fantasy, hon.

you don't know much about D.C., do you? Do you actually believe that every economic writer is pulling his name out of thin air? How quaint. How sweet. How wrong.

[geek tragedy]

15. Would it also be naive to take the content of the leaks at face value?

I.e. believe the people who say that Obama had all but made up his mind to appoint Summers?

If Obama had truly made up his mind and it was a done deal, do you really think this would have been leaked all over the place?

[Babel_17]

16. Multiple sources confirm

http://www.salon.com/2013/07/24/sexist_larry_summers_will_destroy_the_economy/

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/23/right-now-larry-summers-is-the-front-runner-for-fed-chair/

[Kolesar]

28. That Huff Po editiorial column does not prove that.

Mr. Pleasant

[Amak8]

6. Reading the tea leaves.

So, here we are with inflation at a long-term low, many economists arguing that we need higher inflation expectations, and unemployment the overwhelming problem we face. Yet Obama appears if anything to give more emphasis to inflation-fighting than to unemployment reduction, and throws in stuff about bubbles; basically, he has a definite tight-money lean. I don’t know who it’s coming from.

http://krugman.blogs.nytimes.com/2013/07/29/fear-of-froth/?smid=tw-NytimesKrugman&seid=auto&_r=0

[appal_jack]

8. Wow, this speaks volumes:

Wow, this speaks volumes:

Under Fed Chairman Ben Bernanke and vice-chair Yellen, with the strong backing of other progressive Fed governors such as Daniel Tarullo and Sarah Bloom Raskin, the Fed has championed the aggressive use of monetary policy to promote economic recovery, as well as tougher banking regulation. Traditionally the most conservative and Wall Street-friendly of government agencies dealing with the economy, the Fed has become one of the most progressive, at least compared to the Obama Treasury.

Five years into a Democratic presidency, and the most progressive economic policy and action is coming out of the agency presently headed by Dubya's former Council of Economic Advisers (i.e.- Bernanke).



-app

[geek tragedy]

14. That's because Republicans control federal spending and taxation. nt

[MoonRiver]

9. I hope the backlash works and is not just a bump in the road towards Summers' installation.

God help us if that Wall Street insider gets the top US economic position.

[KoKo]

25. agree! n/t

[geek tragedy]

13. Perhaps the leaks were a trial balloon or even a preemptive strike against Summers.

I highly doubt that Summers's buddies were chatting with David Dayen and Robert Kuttner. More likely people wanting to blow up a potential Summers nomination, or people seeing how much support/opposition he would have.

[Babel_17]

18. I was hoping they were floating Summers while planning to not use him

I was hoping they were only floating his name to show they were sympathetic to his methods but then they would go for someone who would stimulate the economy.

And progressives would feel lucky to get that person.

[geek tragedy]

19. It could be that the real goal was to grease the skids for Yellen, who

is now considered the great progressive hope.

[Fumesucker]

20. Eleven dimensional chess

http://www.democraticunderground.com/10023342196#post12

[geek tragedy]

21. This is more like 2 dimensional chess.

Or, in basketball parlance, a head fake.

[Fumesucker]

22. I've used that term in relation to Obama before too

He head fakes to the left a lot, this time he head faked to the right I suspect.

[geek tragedy]

23. Of course, to avoid getting suckered by head fakes

people should keep their eye on the ball.

[Fumesucker]

26. It's usually something like a knuckleball or a slider high and to the outside though

Is Obama mentally able to put a fast ball over the end zone?

[geek tragedy]

29. Having seen him throw out a first pitch at baseball games,

I don't think he has a fastball.

[AllINeedIsCoffee]

17. There was never an official statement from anyone.

Just more "anonymous sorce" bullshit that led to nothing.

[ladjf]

24. Another dumb move! nt

[JEB]

27. Summers is part of our problems

as well as being lower than dogshit on my list.