Wikinvest Wire

Summers to replace Bernanke?

Wednesday, November 26, 2008

At the end of Steven Pearlstein's excellent commentary on the world-wide bailout juggernaut that he aptly labels "Keynes on steroids" can be found this little gem.

What wasn't particularly helpful this week was the published leak from the Obama camp that former Treasury Secretary Larry Summers would be named the next chairman of the Federal Reserve when the term of Bernanke, the current chairman, expires at the end of January 2010.

A Category 4 financial crisis is hardly the time to undermine confidence in -- or confidence of -- the Fed chairman. Nor is it the time to create unneeded tension between the Fed and the White House, where Summers will be the president's closest and most powerful economic adviser. Whatever his original intentions, Obama would do well to announce publicly that there will be no change at the Fed until the crisis has passed -- and maybe not even then.
This does not appear to have been widely reported, but it is rather significant - January of 2010 is just over a year away. This also prompts the question, if this is a Category 4 financial crisis, what would a Category 5 possibly look like?



Unscripted Thoughts said...

What does at Cat 5 look like? Here's my laundry list: Heap a greater portion of the following on the steaming pile of crap that has become our financial system - 1) bank failures (and runs), 2) commercial real estate defaults which frighten the banks into even less lending (if that is possible), and 3) US dollar devaluation on the order of 50% in 1-2 yrs. That should just be enough to push the US into outright debt default and send interest rates to the moon.

fish said...

Category 4 - huge gusts of wind driven liquidity from the fed and treasury.

Category 5 - huge gusts of powder driven lead in the other direction.

Anthony J. Alfidi said...

Why not ask Bernanke to resign? His inflationary lending is not a prescription for long-term health, even if it's designed to monetize new debt issues.

Lincoln fired generals during the Civil War.

  © Blogger template Newspaper by 2008

Back to TOP