Monday, June 08, 2009

Should I stay or should I go? 

According to the New York Times, new frictions have broken out between the Obama administration's economic team:
By all accounts, much of the tension derives from the president�s choice of the brilliant but sometimes supercilious Mr. Summers to be the director of the National Economic Council, making him the policy impresario of the team. The widespread assumption, from Washington to Wall Street, was that the job would be Mr. Summers�s way station until the president could name him chairman of the Federal Reserve when Ben S. Bernanke�s term expires early next year.

But Mr. Bernanke�s aggressive response to the crisis has so improved his reputation that people close to Mr. Obama increasingly suggest the president could well reappoint him in the interests of financial stability � just as Presidents Ronald Reagan and Bill Clinton retained Fed chiefs who had been picked by predecessors of the other party.
This comes atop repeated reports (most lately here) that the economic advisory council created for Paul Volcker has not given him access or even much respect from Goolsbee, Summers and the like. �

Summers has long been known to be a man who doesn't suffer fools gladly. �He once characterized himself thus:�"[I]f you thought about my speech pattern, you'd go through a lot of other adjectives before you got to 'restrained' and 'unprovocative."' �I honestly think he would not be the best fit at the Fed, because it's a place that tends to want consensus, and that doesn't appear to be Summers' long suit. �

Over on the sidebar you will see a new poll we'll run for at least a week (shorter if someone leaves, longer if interest builds.) �Who will be the first economist�kicked out who wants to spend more time with his family? �I tweeted with David Strom last night that I thought it a crime Volcker has had to watch the legacy of low inflation that he paid for (dearly, you will do well to recall) be squandered in such a short period, and by such an immature bunch. �Volcker's appearance with this group reminds me mostly of the poorly-run sports team that faces a crisis and chooses to bring back a former superstar of that franchise. �The superstar, now with flecks of gray in his hair and maybe beard, and with the same athletic swagger he had when he played, takes the job out of loyalty. �But the ownership has provided that hero as cover for its continued mediocrity which continues to disappoint the team's fans. �The former player must now figure out when is the best time to go. �

For Volcker, maybe now is the time, before the inflation that is almost surely coming stains his otherwise glorious career at the Fed. �But reading between the lines, you could easily bet it's Summers who might be first out the door. �What do you think? �Please vote in our poll.