Monday, August 26, 2013

Ezra Klein on The Most Qualified Candidate for Fed Chair

This is big. Wapo's Neil Irwin is floating the name of Stanley Fisher, for Fed chair. Irwin is not out there speculating wildly. By virtue of his position at WaPo, key players leak and talk to him. In other words, a very serious player is likely promoting Fisher.

Irwin writes:
It’s a quietly voiced frustration among current and former central bankers that the candidate best qualified to lead the Federal Reserve isn’t even being considered by the Obama administration.
The upcoming selection of a new chairman of the Federal Reserve is being cast as a three-way race, in the sense that President Obama mentioned exactly three names in discussing the choice with Congressional Democrats: Larry Summers, Janet Yellen and Donald Kohn. Beyond them, the dark-horse candidates include Roger Ferguson and Alan Blinder. 
But if the choice was being made by the central bankers and academic economists who attended a closely-watched conference in Jackson Hole, Wyo. over the weekend, there would be another name very much in the mix—and quite possibly the front-runner.
His name is Stanley Fischer (Wonkblog completists might remember that Dylan Matthews profiled him earlier this year). The short version: He is an outstanding academic economist; he was the No. 2 official at the IMF; and he did a virtuoso job leading the Bank of Israel until earlier this year, making him the central banker to one of the nation’s closest allies. Whether you’re looking for academic brilliance, crisis management or central banking experience, Fischer’s resume is sterling.
He is deeply respected, even beloved, in the community of central bankers, an intellectual leader among the group of men and women who guide the world economy. In fact, he was a mentor to many of them. As it happens, he was thesis adviser to both current Fed chair Ben Bernanke and European Central Bank President Mario Draghi. In the symposium Saturday, Fischer raised a typically thoughtful point about capital flows to emerging markets, posing a question to the panelists who had just presented a paper.
It fell to Terrence Checki, the influential international chief for the New York Fed, to take Fischer’s question. “I’ll just say that I would never presume to answer a question that Stan didn’t know the answer to,” Checki said.
So here, based on conversations in Jackson Hole (alas, with people who decline to go on-the-record on such a sensitive matter) is the case for Fischer.
Brilliance, without the rough edges. Fischer was among the premier macroeconomists of his generation at MIT, before pivoting to a career in public service. He has a lot  in common, in that respect, with Summers—also an academic who seemed on track to win a Nobel Prize one day who decided to shift to policymaking rather than research. But while Fischer and Summers share a brilliant mind for economics, their personal styles are very different. 
Where Summers is seen, even by some of his supporters, as arrogant and bull-headed, Fischer is a legendary nice guy, deploying a wry smile and persuasive arguments to get his way. That could come in handy if he was in charge of the Fed, where decisions are made by committee.
A crisis-management veteran. Fischer has faced trial by fire, most dramatically as the deputy managing director at the IMF from 1994 to 2001. He was on the front lines dealing with of a series of emerging market crises, including in Mexico, East Asia and Russia.
In other words, if there were to be a crisis in one or more of the emerging powers like China, India, or Brazil, it would be the sort of thing that Fischer has spent his career preparing for. That is doubly important right now, as money has been gushing out of emerging economies in the last few months, driving their currencies down and their borrowing costs up. That has become all the more clear in the last couple of months, as a sell-off in India’s currency and a gush of money out of a variety of emerging markets has shown how unstable the world financial system can be.[...] 
The reason Fischer is not viewed as a front-runner for the Fed chairmanship is that he is viewed as a foreigner. He was born in Zambia and raised overseas before becoming a U.S. citizen in 1976. More politically tricky is that he was a high public official of another country for the last several years while serving as governor of the Bank of Israel.
But Fischer has been an American citizen for a generation and maintained his U.S. citizenship while serving overseas.  And the politics around Israel are unique. Would Republicans really lead a charge against confirmation for Bibi Netanyahu’s top economic adviser?

As I have written before, it really doesn't matter who is in at the Fed as things deteriorate, all the candidates are likely to just print more money. That said, it would nice to have Fisher in as Fed chair. He is the guru for most of current monetary thinkers around the Fed (He was Bernanke's PhD thesis adviser) . Thus, when the crisis expands, it will taken down with it the head money printing guru.

Of note, while WaPo is just hoisting Fisher's name now, it should be no surprise to EPJ readers that he is being considered for the Fed position. See:

Will Stanley Fischer Become the Next Fed Chairman? Stanley Fischer for Head of the Fed

1 comment:

  1. Advantage of becoming a good very serious player who is likely promoting Fisher, need to have a leadership development training for getting most of the advantage of it. Irwin write that the candidate best qualified to lead the Federal Reserve isn’t even being considered by the Obama administration.