Thursday, January 21, 2010
The Faces of a Financial Coup
Business Insider captured these great shots from President Obama's speech on proposals for new regulations on the banking industry. Paul Volcker is smiling, Larry Summers is not. BI narrows its focus to the Obama news conference and a Volcker victory over Summers on new bank regulations. But, I think it is bigger than that. Volcker may be the new top dog economic adviser at the White House. We'll know for sure in the days to come, as the Senate vote on Ben Bernanke's renomination looms. Will it happen, or is Volcker back?
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This is hardly a coup, its more like a revolving door. Volcker was part of the team that advised Nixon to end the government's dollar/gold convertability in 1971. This of course lead to the roaring inflation in the late 1970's (12%+ per year). Then Volcker was brought back to extinguish the inflationary fire he helped to start! Talk about job security!
ReplyDeleteBut now inflation is barely visable. So whats Volcker going to do? Perhaps he'll re-hire Greenspan so that he can correct the excesses caused by his failed policies. One thing is for sure - mal-investments for all.
I really, really don't like Volcker. With that said, Bernanke and Geithner are so horrifically bad, he doesn't look that bad at the moment. Without a real position, I still don't know what he can advise or do, though. Outside of somehow becoming Fed head again and engaging in the old school monetarist tricks that he used in the 1980's but intellectually disavows, there is nothing to be done.
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