This piece deserves special recognition for wasting time with zero nutritional value.
On the one hand, the author assures us that it makes no difference who the Fed Chair is. On the other hand, the author says that "The rogues gallery of those responsible for bringing the world to its knees is a crowded space, but Alan Greenspan, the former Fed chairman, stands front and centre in any line-up," and that "The US Fed was fortunate in having Ben Bernanke to pick up the pieces." The author makes a lame attempt to reconcile this spectacular contradiction with: "At moments of great emergency, central bankers can make a difference." Thus, if it's not a moment of great emergency, it doesn't matter who the Fed Chair is. But - duh - the Fed Chair doesn't serve for "a moment." The Fed Chair serves for many years. The probability of such a "moment" coming on the Fed Chair's watch is high, as past experience indicates. When Greenspan was appointed, how many anticipated the "moment"(s) that would occur on his watch? Sometimes I wonder if people forward articles whose headlines match their prejudices without checking to see if there is any content underneath them. On Mon, Aug 12, 2013 at 5:03 PM, Marv Gandall <[email protected]> wrote: > (Further to our recent discussion on the alleged gap separating the two…) > > Summers or Yellen? The best Obama can do is toss a coin > By Philip Stephens > Financial Times > August 11 2013 > > Here is a small heresy. The brouhaha about Barack Obama’s choice for the > next chair of the US Federal Reserve is in inverse proportion to the > significance of the contest. It really does not matter whether it is > Lawrence Summers or Janet Yellen. The world – and the American economy – > will continue to spin. > > Now for a second piece of heterodoxy: Mark Carney’s headline-grabbing > monetary policy changes at the Bank of England are much ado about, well, > not very much. The new governor’s blueprint for forward guidance on > interest rates raises as many questions as it answers. Its impact on the > trajectory of the British economy will lie somewhere between negligible and > nil. > > Central bankers are the new masters of the universe. The mood of the > moment says politicians cannot be trusted and commercial bankers are > crooks. That leaves central bankers as the repositories of public trust. I > have nothing against them. They are too often beguiled by economic theory, > but, all in all, they are an intelligent bunch. Many (not all) prize > professionalism and public service above fame or fortune. > > The problem comes when they are invested with supernatural qualities. Much > of the debate about Mr Summers versus Ms Yellen and the fanfare that has > greeted Mr Carney’s arrival in London are founded on the silly assumption, > far too common in financial markets, that these folk are keepers of the > philosopher’s stone. In truth, their role is to try to prevent harm by > keeping an intelligent lid on the rate of inflation and by watching over > the stability of the banks and financial system. > > As we now know too well, they failed dismally in this second task during > the years before the crash. Their mistake was to worship at the altar of > the new financial capitalism – all would be well if markets were allowed to > operate freely. The rogues gallery of those responsible for bringing the > world to its knees is a crowded space, but Alan Greenspan, the former Fed > chairman, stands front and centre in any line-up. > > At moments of great emergency, central bankers can make a difference. The > US Fed was fortunate in having Ben Bernanke to pick up the pieces. Few > policy makers were as steeped in the lessons of the 1930s depression. Mr > Bernanke had the cerebral confidence and the character to make the right > calls. > > Elsewhere, some would credit Mario Draghi, the president of the European > Central Bank, with saving the euro by rescuing policy from political > paralysis among eurozone governments. I think that takes things too far – > the big decision was the political one taken by Germany’s Angela Merkel to > back the ECB over the Bundesbank. Mr Draghi certainty played his part, but > the future of the euro remains in the hands of politicians. Likewise, the > principal levers of national policy making. > > The appointment of Raghuram Rajan as head of India’s central bank is not > going to rescue that country’s economy. Likewise, barring a new emergency, > the decisions taken by the Fed will be at the margin. Mr Summers’ qualities > are well known, not least to Mr Summers. Ms Yellen looks the quieter > choice, but she too is said to be unafflicted by a lack of self-esteem. For > all the forests that have been felled and bytes consumed in the debate > about the succession, I have not seen any evidence that one or other would > strike out in a radically different direction. > > As for Mr Carney, he wants to become prime minister of Canada. He may have > a politician’s luck. He has tipped up in London just as the economy seems > to be reviving. He is fortunate in his predecessor: Sir Mervyn King never > shook off the charge of being asleep at the wheel during the credit boom > and too slow to react when it turned to bust. > > Mr Carney is right to signal to markets that British borrowing costs are > unlikely to rise for some time. But his formulaic linking of interest rates > to a precise level of unemployment necessarily includes so many forecasting > uncertainties and caveats as to more closely resemble forward guessing than > guidance. A general statement of intent would have been better. In any > event, the formidable structural challenges facing the British economy are > not going to be met through the odd tweak in interest rates. > > Back in Washington, Mr Obama has admitted that “you would have to slice > the salami very thin” to find policy differences between Mr Summers and Ms > Yellen. So who should he choose? Easy. Toss a coin. > > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > -- Robert Naiman Policy Director Just Foreign Policy www.justforeignpolicy.org [email protected]
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