Saturday, April 11, 2009

Volcker Isolated from Obama Team

That Paul Volcker has been isolated from the Obama decision making process has been obvious for some time. WSJ makes the point clear, today.

In an Administration full of interventionists and opportunists, Volcker, by contrast, stands out as a man of sound reason. I was at the FFI conference when Volcker stood up and told the crowd that included everyone from Carlyle Group's David Rubenstein to George Soros and Arthur Levitt that all the talk about acting quickly to institute new regulations needs to be slowed down.

The isolation of Volcker is not a good sign. Larry Summers probably understands the danger of major interventions in the economy as well as Volcker, maybe even more so, but Summers doesn't strike me as the type that would stand up to a direction in policy that is promoted by the president. Summers is a political operative first and an economist second. Volcker didn't get to where he is by not being politically savvy, but he knows that the political games have to be stopped at some point and the economy needs to protected from being pushed over the cliff.

Obama is making a major error by not keeping Volcker close enough to play devil's advocate to the Obama Administration's more outrageous schemes.

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