First let me make it clear that I am very biased against Larry Summers, and have been so since he pushed for repeal of Glass-Steagall, in 1999, as Bill Clinton's Treasury Secretary. Concurrently, Summers also supported the deregulation of the OTC derivatives markets. Additionally, Summers' well known sexism and his not-so-well known financial failure, related to the derivative markets, that resulted in Harvard University losing over a billion dollars are other factors that leads me to believe that the only position that Summers is qualified for is pooper-scooper - I would never want to subject a dog to being caught by this loser.
But what do I know about economics? Not very much. Very little compared to some of the economic wizards who post at Daily Kos. what little I do know I've learned from Paul Krugman's NY Times columns and from reading two books by Joseph Stiglitz: "Freefall" and "The Price of Inequality" - I highly recommend both.
So in some academic sense I'm sure the President Obama's economics knowledge dwarfs mine. Yet, that academic economic knowledge that Obama has is the same economic knowledge that Summers possess and it is the very same economic knowledge that thought that the repeal of Glass-Steagall and the deregulation of the OTC derivatives markets where the solutions to prepare America for a 21st century economy.
Well, we know how that turned out.
So then just what is the value of economic knowledge that is at odds with reality? I guess it depends on whether one is part of the 1% or if one is a part of the 99%. There's little doubt that Summers is "Of the 1%, by the 1%, and for the 1%". By his unfailing support for Summers, Obama makes clear just whose side he's really on. Pretty speeches notwithstanding.
Follow me over the kosschach ink blot for the reason why I'm now confused regarding the Janet Yellen or Summers choice for Fed Chair.
Today, while following the links generated from the NY Times article "As Summers' Odds Rise, Stimulus Easing Is Seen" I came across an CNBC article that literally had me saying WTF!
Wall Street wants Yellen, not Summers, as next Fed chief
Wall Street overwhelmingly believes President Obama will and should pick Janet Yellen to be the next chairman of the Federal Reserve, according to a survey.
Preliminary results of the CNBC Fed Survey for July show 70 percent of the 40 participants who responded believe Obama will pick Yellen, currently, the Fed's vice chair, to replace current Chairman Ben Bernanke, whose term is up in January.
Just 25 percent believe it will be the former Treasury Secretary Larry Summers.
{snip}
Yellen also beats Summers when CNBC asks participants who the president should nominate, with 50 percent choosing Yellen and 12.5 percent saying he should reappoint Bernanke. Even write-in candidate John Taylor, the Stanford University economist, beats out Summers on who the president should nominate [12.5% to 2.5%].
{snip}
In fact, Yellen got much higher grades from the Street on monetary policy expertise and concern about unemployment, which is a major issue for President Obama. Summers is seen having more respect from international leaders, greater concern about inflation and a higher level of financial market expertise.
See why this was a "WTF!" moment for me. But the idea that Wall Street is more concerned with unemployment than inflation flies in the face of the policies that "the Street" has pursued since the dawn of Reaganomics. It is also at odds with what I have learned from reading Krugman and Stiglitz. Stiglitz is a master at explaining in plain American the trade-offs in the Federal Reserves goals of maximizing employment and keeping inflation low. Stigliz's argument is that the Fed is too inflation phobic which keeps it from actually maximizing employment. As was pointed out in Laura Clawson's FP post "
Trumka: Yellen has a 'more balanced' and 'better' approach than Summers" Yellen is closer to Stiglitz than she is to Summers on the employment-inflation equation. I'm not sure how close she is to Stiglitz, but the closer the better - at least for the 99%.
I'm not sure how aware people are as to Stiglitz's long term interest in income inequality. In 1998, Stiglitz teamed up with Jason Furman for a presentation to the Federal Reserve Board in Kansas City on "Economic Consequences of Income Inequality". This is not a Vanity Fair article, so be prepared to receive a real post-graduate education. Furman and Stiglitz conclude:
One of the dramatic changes in the U.S. economy over the past quarter century is the marked increase in inequality. While we may not fully know the sources of that increase, and there is a strong indication that the trend of increasing inequality has been arrested, it is unlikely that this massive increase will be reversed in the immediate future.
We have argued that there are good reasons to believe that there are adverse economic effects of this inequality, some of which may be masked by other trends in the economy, and that there would be economic gains from active policies, both microeconomic and macroeconomic, that explicitly take into account this increased inequality and try to reverse it.
Ten years before the economic collapse of 2008, Stiglitz was warning about the adverse effects of income inequality. Too bad the Larry Summers of the world thought otherwise.
If Wall Street really wants Yellen, then should she be the choice of progressives? Or is this just a double-fake by the denizens of greed to dirty-up Yellen with their imprimatur? Wall street has one, and only one, goal. Increase the concentration of wealth in as few as hands as possible. Whatever it takes to accomplish this, not matter the cost to the broader society, is just the price the broader society has to pay. If this means "supporting" Yellen in order to present a facade that Wall Street really cares about Main Street then so be it. Hopefully, a Daily Kos economic wiz can clarify just what would be Wall Street's long-term plan in regards to supporting Yellen over Summers.
Right now, I'm gonna continue supporting Yellen; however, I hope that one day Joseph Stiglitz will be considered a valid candidate for Fed Chair. But America will have to undergo massive change if this hope is ever to be realized.