Obama Names Volcker Man to Treasury

The growing influence of Paul Volcker in the Obama Administration continues to show. Prseident Obama has just announced his intention to recess appoint Jeffrey Goldstein for Under Secretary for Domestic Finance, Department of the Treasury.

Goldstein held senior management positions and worked with BT Wolfensohn (now J. Rothschild, Wolfensohn & Co) and its predecessor, James D. Wolfensohn Incorporated, for more than 15 years. Volcker became chairman of the firm after leaving as chairman of the Federal Reserve.

Goldstein also is a former Managing Director of Hellman & Friedman LLC, a private equity investment firm with offices in San Francisco, New York and London. He served at the World Bank from 1999 to 2004(while Wolfeson was the bank's president), where he served as Managing Director and Chief Financial Officer.

Goldstein was the Bank's point person on the International Development Association (IDA). He also helped lead the Bank's relationship with the G-8 countries. As Chief Financial Officer, he was responsible for the Bank's financial operations and budget. He was the Bank's representative on the Financial Stability Forum and on the International Monetary Fund's Capital Markets Consultative Group and Chairman of the Pension Finance Committee.

Prior to joining the World Bank, is when Goldstein was Co-Chairman of BT Wolfensohn and a member of the Bankers Trust Company Management Committee. He held senior management positions and worked with BT Wolfensohn and its predecessor, James D. Wolfensohn Incorporated, for more than 15 years.

Early in his career, Goldstein taught economics at Princeton University and worked at the Brookings Institution and the U. S. Department of the Treasury.

Goldstein received his Ph.D., M.Phil., and M.A. in economics from Yale University. He received his B.A. with honors in economics from Vassar College (Phi Beta Kappa) and attended the London School of Economics.

Goldstein is a member of the Board of LPL Holdings Inc., AlixPartners LLP and Grosvenor Capital Management and the Board of Trustees of the International Center for Research on Women. He is also on the Board of Trustees of Vassar College and is Chairman of the Vassar College Investments Committee. He is also a member of the Brookings Institution Global Leadership Council, The London School of Economics North American Advisory Board and is a member of the Council on Foreign Relations.

A Busy Thursday for Geithner Including Resurrecting Paul Volcker

This morning, Treasury Secretary Geithner will attend the President's Economic Daily Briefing at the White House.

Later, Secretary Geithner will join the President and the Vice President to meet with Presidential Economic Recovery Advisory Board Chair Paul Volcker at the White House. This is interesting. What's Volcker doing at the White House? Even he privately has admitted that he has just been "window dressing". What does Obama want from him?

Following the Volcker meeting, Secretary Geithner will attend the President's remarks on financial reform in the White House Diplomatic Reception Room.

In the afternoon, Secretary Geithner will participate in a discussion with the U.S. Conference of Mayors at the White House.

Later in the afternoon, Secretary Geithner will address members of the Financial Services Roundtable at their Mid-Winter Forum to discuss financial reform.

Big Spender Volcker Says Trillions Will Be Needed

President Obama is pulling out the heavy guns for today's confirmation hearing of Timothy Geithner. Paul Volcker was called upon to introduce Geithner.

On my list of delusional men of integrity, along with Colin Powell, is Volcker. These men clearly believe in their integrity to search and stand for truth, but when the final actions have to be taken, they always come down on the side of the power elite. Colin Powell tells the United Nations there are WMD's in Iraq and Volcker's review of the food for oil scandal found a flunky fall guy, and never came near Kofi Annan, or for that matter Condoleeza Rice, during his investigation. (Rice was a board member at Chevron and led its public policy committee, which oversaw areas of potential political concerns for the company, at a time when even Chevron later admitted that it should have known kickbacks were being paid to Saddam Hussein on oil it bought from Iraq.)

At the hearing today, Volcker threw out this bombshell during his remarks before the hearing committee. He said that to get through the crisis, “several trillions of dollars” will be needed to commit to various government programs. Some balanced budget, inflation fighter.

As for Geithner, Volcker says he has “unique qualifications” from hands-on experience, understanding of financial markets and support of President Obama.

Translation: Leave the kid alone, we have a lot of money to spend.

Pools of Oil and Money: An Object Lesson for Barack Obama

The recently released book Backstabbing for Beginners: My Crash Course in International Diplomacy by Michael Soussan is receiving little coverage by mainstream media. Could it be because the book provides an insiders look at the UN run Iraq oil-for-food operation and pulls no punches? The Paul Volcker lead investigation of the scandal found a scapegoat in Benon Sevon, and never went much further, despite indications that many others knew or benefited from the scam, including those close to the Bush Administration, then-UN Secretary General Kofi Annan and Condoleezza Rice.

Volcker, like Colin Powell, has what I call delusional integrity. You can always count on men like them to put on a good show about integrity. They both come across as straight shooting men of integrity, most likely because they are delusional and believe they are men of integrity. Yet, at the end of the day, the real insiders know that the Volcker types and the Powell types will deliver what the insiders want. Powell will deliver a bogus speech about Iraqi WMDs and Volcker will know when to stop his oil-for-food investigation. One of Volcker's top investigators resigned because he felt Volcker was protecting Annan in the oil-for-food investigation.

Soussan suffers no such delusions. It is clear from his book that he is a straight shooter and tells it like it is. He was literally at the center of the scandal and gives us a play-by-play of what went on, like few others could. In short, bureaucratic in-fighting put lives of UN workers at risk for no good reason and created huge opportunities for bribery and theft to the tune of billions of dollars. Saddam skimmed cash everywhere, had UN workers on the payroll and co-opted many countries including France and Russia through bribe after bribe. In this book, you learn the details of how he did it and how he got away with it. And you learn about the other players, across the spectrum, that pocketed skimmed cash.

Soussan does not take the lessons of the oil-for-food scandal beyond the scandal itself , and this is a good thing. But there is a lesson here far larger than just the oil-for-food scandal that the reader can extrapolate from the book. It is about bureaucracy and money. Fredrich Hayek in The Road To Serfdom titled a chapter Why the worst get on top. In the chapter, Hayek's basic conclusion is that the worst get on top because the ruthless will do anything it takes to gain power. A corollary could very well explain why the worst circled the oil-for-food scam, and likely will circle any huge bureaucratically created pool of money. The most evil will do what it takes to get at the money. The oil-for-food scandal, as detailed, is an object lesson in how that happens.

Given that President-elect Obama is about to create a huge new pool of "rescue the economy" bureaucratic money when he takes office, it would not be a bad idea for him to read this book to get a sense for how a bureaucracy can get away from its goals. "The rescue the economy" pool has some characterstics that are different from the oil-for-food scam, but it has the one key ingredient, the creation of a huge pool of bureaucratic of money. The vultures are most certainly already circling the pool.

Soussan is not John Le Carre nor Frederick Forsyth when it comes to weaving a tale, but he doesn't have to be. He has fact not fiction to guide him. His sense of humor, ability to create suspense and paint a picture are all more than passable. His powers of observation are superior. Only a great observer could write these words, for example:

Freedom may be a political concept, but it is first and foremost a feeling. A breath of fresh air. A smile on people's faces. The absence of fear in their eyes. The difference between the north and the south [of Iraq] was palpable.

I visited Germany a year before the wall came down, and spent time in both West Berlin and East Berlin. The difference between the two was striking. The difference between what I saw in East and West Berlin is exactly what Soussan observed in the difference between North and South Iraq and, in his writing, he was able to turn this observation into what I consider a great universal truth about freedom. Freedom is more than just a political concept, it becomes who people are and what happens to their lives

There's a lot of curious things that go on in this world, one of them is why this book is not getting more coverage. If you want a real life play-by-play explanation of how a bureaucracy can get out of control and lead to mass scamming, this book is must reading.

The Obama Mantra: "Things Are Going To Get Worse"

The influence of Rockefeller operative Paul Volcker on President-elect Barack Obama is coming through loud and clear.

Twice during the opening moments of his interview Sunday on NBC's "Meet the Press." Barack Obama said the economic situation "is going to get worse before it gets better."

"It's going to be a tough period," Volcker said in a speech at the Urban Land Institute in late October. And Obama just named him to head his an economc advisory team.

What will it mean if Volcker has Obama's ear?

It likely will mean that Ben Bernanke will not be renamed Fed chairman when his term runs out in 2010, if he lasts that long. Volcker has been a long-time behind the scenes critic of Bernanke.

It will also mean more regulation of the financial industry, including hedge funds. Look for more power to shift to money center banks. Any changes will benefit Citi, Goldman Sachs, JPMorgan Chase and the like. Volcker has this absurd notion that the mortgage crisis was caused because there wasn't enough regulation. Here's the LA Times on his views:

Volcker feels that tremendous changes in the financial system have eclipsed government regulators, allowing excesses to go unchecked and subjecting the economy to ever greater shocks. Over time, the U.S. has moved from a system of highly regulated banks that funded the economy to a system of highly engineered financial markets that operated outside the scope of regulators.

For the true facts of the Housing Crisis be sure to read Larry White's column, which I first linked to below.

Volcker is correct in that financial engineering also played a role in the crisis, but as I argue here, it is absurd to think that government has the all knowing crystal ball that will direct the economy in the right direction.

Volcker and Obama, though, are going to use the mantra, "Things are going to get worse," to add more regulation and, thus, in a sense they are correct. Things are going to get worse by the new burdens that more financial regulation will create.

It will be crony capitalism at its worst, championed as though it was designed by wise men of high integrity. Volcker's integrity is probably self-delusional, Obama is just slick. What a team.

Paul Volcker and the October 1979 Saturday Night Massacre

Interactive video, graphics and front pages from NYT on the historic financial moment when then Fed chairman Paul Volcker announced the Fed would target money supply instead of interest rates.

Speculation Larry Summers May End Up Heading the Fed

It appears Paul Volcker will be one of Barack Obama's key economic advisers. And it should not be forgotten that it has been claimed that Volcker remarked some time ago that Ben Bernanke is a one term Fed chairman.

Which makes speculation by CNBC's Albert Bozzo that Summers will end up at the Fed very interesting.

Another Economic Team

President-elect Barack Obama has announced yet one more economic team and appointed former Federal Reserve Chairman, and Rockefeller operative, Paul Volcker to be the chairman of the new advisory board tasked.

University of Chicago economist Austan Goolsbee, one of Mr. Obama's longest-serving policy advisers, will serve as the board's staff director, along with his duties as a member of the White House Council of Economic Advisers. Members of the panel will be drawn from a cross-section of citizens outside the government, chosen for their independence and non partisanship.

The panel will be called the President's Economic Recovery Advisory Board.

Clearly, Obama is trying to get a cross section of advice. The man really seems to be taking the presidency seriously and trying, but given the penchant for inflationist and interventionist policies among the current members of these teams, yes even from Volcker, the more infighting that will go on between them, the better. Here's to interventionist gridlock.

The Obama Press Conference: John Maynard Keynes and the Oligarchs Are Alive and Well

John Maynard Keynes and Oligarchs appear to be alive, well and ready for the Obama Administration.

In Barack Obama's first press conference, since winning the presidential election, Obama sounded like a typical big spending Democrat. In opening remarks, he called for a "rescue package" for the middle class, unemployment extensions and other fiscal stimulus. He also said that something had to be done for the automobile industry since it is "the backbone of the country." Somewhere, John Maynard Keynes and Marx are blushing.

Obama did not address how any of these proposals would be paid for.

I took special note of some of the members of his "economic transition advisory team", most of whom stood behind him as he promised to do vasts sums more spending than Imelda Marcos ever did during a good shoe shopping trip to New York City. It was a politically correct mixed crowd that included many women, a Latino and even another African-American, interspersed with oligarchs. Just what you need to fight a downturn in the economy, a politically correct group and oligarchs.

The oligarchs we were told included Warren Buffett (who, golly shucks, usually just represents himself) and Robert Rubin (former Goldman Sachs CEO, now running the Rubin/Citigroup wing of Goldman),but both failed to appear in chorus line fashion behind Obama for the press conference, as did the politically correct and other oligarchs and oligarch representatives.

At the press conference chorus line, the towering Paul Volcker was there, who has been a career long Rockefeller operative. The tiny Robert Reich was there, who was most likely invited as a reward for his regular bashing, on his blog, of Hillary, during the primaries.

An oligarch stepped a bit out of the shadows for the chorus line, Chicago-based Penny Pritzker, who was an early Obama backer, was there. Pritzker served as Obama's National Finance Chair. She and her husband hosted a $28,500 per plate fundraiser for Obama's campaign in Chicago with Warren Buffett and his wife, and Obama advisor Valerie Jarrett. She is also a member of the Council on Foreign Relations. She is 135th richest person on the Forbes 400 list of "America's wealthiest," with an estimated net worth of $2.8 billion US. If one was forced to come up with one name that Obama answers to, Penny Pritzker would not be a bad choice. They are on each others cell phone speed dials, guaranteed.

The Chicago Political Machine was well represented by Mayor Richard Daley's brother William, who also is a member of the executive committee at JP Morgan Chase.

Google's Chairman Eric Schmidt was part of the chorus line.

Much to my surprise, Los Angeles Mayor Antonio Villaraigosa was the token Latino. Readers will recall I had a Q & non-A encounter with the mayor, only a few weeks back.

In short, no one in this group strikes me as the type that understands Say's Law, never mind the business cycle. They all are very good, though, at protecting the very powerful interests that they are aligned with, nothing else. The oligarchs are sleeping very well tonight.

Alert: Obama Press Conference

US President-elect Barack Obama and Vice President-elect Joe Biden will hold a news conference at 2:30 EST on Friday after meeting with their team of economic advisers to discuss the transition to the White House.

Obama and Biden will be joined by economic advisers, including former Treasury Secretaries Lawrence Summers and Robert Rubin, former Chairman of the Federal Reserve Paul Volcker, former Securities and Exchange Commissioner William Donaldson and several others. Berkshire Hathaway Chairman Warren Buffett will participate via phone.

All major networks are expected to carry the press conference live.

Fed Chairmen I've Known (and Opposed)

Ron Paul speaks at the Mises Institute Supporters Summit, here.

Includes personal stories about Paul Volcker and Alan Greenspan.

Barack Obama, Paul Volcker and Warren Buffett

It appears that Paul Volcker will be a major influence in a Barack Obama Administration.

WSJ this morning has a front page article by WSJ reporter Monica Langley describing the development of their relationship. The Volcker connection should calm markets a bit if there is an Obama Administration, since he seems to be taking advice from Volcker and Warren Buffett. Volcker is even more respected on the Street than Buffett.

Volcker, however, as I pointed out recently, despite his image as an inflation slayer, is an inflationist and interventionist. Buffett is pretty much out of the same mold. He has supported the recent moves by Treasury Secretary Paulson and Fed Chairman Bernanke. Curiously, while supporting Treasury and Fed moves, Buffett in his recent WSJ piece even pointed out the inflationary ramifications of the policy:

Today people who hold cash equivalents feel comfortable. They shouldn’t. They
have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

The Global Inflationist, Interventionist Volcker

Paul Volcker, who as Fed Chairman, slayed the out of control inflation of the late 1970's-early 1980's, is, of late, showing that deep down his allegiances still belong to the insiders.

In today's Wall Street Journal, for example, Volcker hails the interventionist measures proposed by Henry Paulson at Treasury, and hails an increase in global inflation:

First of all, there is now clear recognition that the problem is international, and international coordination and cooperation is both necessary and underway. The days of finger pointing and schadenfreude are over. The concerted reduction in central bank interest rates is one concrete manifestation of that fact.

More important in existing circumstances is the clear determination of our Treasury, of European finance ministries, and of central banks to support and defend the stability of major international banks. That approach extends to providing fresh capital to supplement private funds if necessary.

These comments clearly demonstrate that Volcker has no strong anti-inflation spirit deep in his soul. It is obvious, now, that he did not slay the inflation of the 70's, for the people and because it was the right thing to do, but because the Rockefeller grroup wanted that inflation slayed.

Volcker is a founding member of the Trilateral Commission, is the current Chairman of the Board of Trustees of the influential Washington-based financial advisory body, the Group of Thirty. He is also a member of the Trust Committee of Rockefeller Group, Inc. and also currently serves as Chairman of the Board of Trustees of the International House, an international Rockefeller organization designed to nurture future generations of Rockefeller operatives.

It's Time The Fed Adopts Volcker Religion

By Robert Wenzel

Federal officials and market players are struggling with the same issues, WSJ reports.Why haven't the steps taken so far calmed the system? What can policy makers do next?

In our book, the answer is simple. The boom was fueled by the Fed's money printing under Alan Greenspan and the early Ben Bernanke.

As we have been emphasizing in lone wolf fashion--with no regulator or other commentator coming close to mentioning this most important event of the current crisis environment--the Fed over the recent months has for all practical purposes stopped printing money. That's why the market continues to struggle.  The Fed has turned this from just a mortgage crisis, to the beginnings of a major full-fledged economic crisis.

Over the last three months M2 money supply has been growing at a 1.8% annualized rate. This can be compared to earlier this year when M2 annualized money growth was over 10%. In fact, as recently as March, three month annualized money growth was at 12.7%. Few seem to recognize the dramatic shift downward.

A lot of headline watching commentators are even reporting that the Fed is adding gobs of liquidity through their bailout operations, when in fact the Fed has been sterilizing its bailout operations, including the Term Auction Facilities, by either liquidating or loaning out the Treasury securities already in their portfolio.

WSJ reflects current beliefs when it reports:

The Federal Reserve has already slashed interest rates to counteract a deepening credit freeze and instituted its broadest expansion of lending facilities since the Great Depression to keep financial markets functioning.

As mentioned the lending facilities have been sterilized so as not to increase money supply. And we should have learned from the Volcker period that you don't target interest rates to impact the economy, you target money supply. The current Bernanke Fed has seemingly, without being completely aware, slipped into interest rate targeting.

At this point we must add that ideally the Fed shouldn't be monkeying and manipulating the money supply at all, but in realworld economik if the Fed is going to be messing with the money supply, they should be good at it. This means reverting back to Volcker's rejection of targeting interest rates, and instead targeting money supply. In Volcker's case, he targeted money supply to fight inflation, in Bernanke's case, money supply targeting is required to battle economic crisis.

This economy isn't going anywhere until Bernanke gets Volcker "Target The Money Supply" Religion. Failure to do so will lead to an enormous economic crisis which in one sense can be viewed as a cleansing of the mal-investments caused by the money manipulations of Greenspan and Bernanke. However, in the land of realworld economik, the crisis is likely to lead to untold suffocating new regulations, restrictions etc., given that the two current presidential candidates, John McCain and Barak Obama, display no knowledge of the fundamental workings of an economy. 

Robert Wenzel is an economic consultant and Editor & Publisher of EconomicPolicyJournal.com. He can be reached at rw@economicpolicyjournal.com.

Volcker Says Finance System `Broken'

"This bright new system, this practice in the United States, this practice in the United Kingdom and elsewhere, has broken down. Growth in the economy in this decade will be the slowest of any decade since the Great Depression, right in the middle of all this financial innovation. It is the most complicated financial crisis I have ever experienced, and I have experienced a few...

Changes are going to have to be made'' to the global financial system."

-Former Federal Reserve Chairman Paul Volcker in a speech today at a banking conference in Calgary

Is It Time To Put A Presidential Candidate In Your Pocket?

The presidential campaigns are going begging for super-CEO support, but keep in mind these CEO's know how to collect on a chit when it is time. If a CEO is on one of the lists of support below, he considers the candidate he is endorsing in his pocket. .

Monca Langley at WSJ reports:

In the contest for business approval, the campaigns are lining up "poster CEOs." Sen. McCain has FedEx Corp. Chairman Fred Smith, private-equity guru Henry Kravis and Merrill Lynch & Co. CEO John Thain.

McCain plans to release the "Tech 100" -- high-tech executives who back his economic plans, a list the campaign says includes Cisco Systems Inc.'s John Chambers and Scott McNealy, chairman of Sun Microsystems Inc...

[F]ormer chief executives Carly Fiorina of Hewlett-Packard Co., or Meg Whitman of eBay Inc., back up Sen. McCain on the stump.

In Sen. Obama's camp are investor Warren Buffett, former Federal Reserve Chairman Paul Volcker and Robert Wolf, president of UBS Investment Bank...

The Obama campaign is also enlisting [other] heavy hitters. A few weeks ago, the Obama campaign, led by billionaire Penny Pritzker and J.P. Morgan Chase & Co. executive William Daley, invited a group of business executives to a meeting in New York, including some who had supported Sen. Hillary Clinton, such as former deputy Treasury Secretary Roger Altman and private-equity financier Steve Rattner

Henry Kravis is campaigning for McCain for one reason and one reason only, he doesn't want Obama in with his heavy tax hand on the rich. It would impact Kravis big time.

I don't have a clue why Paul Volcker is supporting Obama, but it does mean one thing. If Obama gets in Ben Bernanke is a one term Fed chairman. Volcker has no respect for Bernanke.

The Pritzkers are the real big money, early money behind Obama.

Obama supporter, Warren Buffett is kind of an idiot savant, he is an investment genius, but when it comes to economic understanding or basic common sense, he has none. The man has bllions, and still lives in the same house as when he only had $10 in his pocket, which means he is also a very odd duck. Obama can have him.

Obama's Economic Brain Trust?

Barack Obama plans to meet a panel of advisers today to examine his campaign’s ?economic policies. The gathering will include Warren Buffett, the billionaire ?investor, Eric Schmidt, Google’s chairman, Paul ?Volcker, the former Federal Reserve chairman, and ?both Lawrence Summers and Robert Rubin, the former Treasury secretaries.

Obama told NBC on Sunday that the team would discuss a second potential stimulus package, ways to shore up the housing market, and energy and infrastructure initiatives.

Let's see what comes out if this group. You have Goldman Sachs represented through Robert Rubin. You have the great investor Warren Buffett who turns into an economic idiot whenever he talks about economic policy.

Can You Know an Economist By The Redistributionist Commies He Supports For President?

The following is a list compiled by Economists for Obama, of Obama supporters:

Economic policy advisors:

Austan Goolsbee (chief advisor), University of Chicago tax policy expert
Karen Kornbluh (policy director)
Jeff Liebman, Harvard welfare expert
David Cutler, Harvard health policy expert
Michael Froman, Citigroup executive
David Romer, Berkeley macroeconomist
Christina Romer, Berkeley economic historian
Richard Thaler, University of Chicago behavioral finance expert

Other economists who support Obama:

Paul Volcker, Chairman of the Federal Reserve 1979-1987
Brad Delong, Berkeley macroeconomist
Joseph Stiglitz, 2001 Nobel laureate
Edmund Phelps, 2006 Nobel laureate
Ray Fair, Yale macroeconomist

Prominent finance people who support Obama:

(not technically economists)
William Donaldson, Securities and Exchange Commission (SEC) Chair 2003-05
Arthur Levitt, SEC chair 1993-2001
David Ruder, SEC chair 1987-1989

The heavy Berkeley influence doesn’t come as any surprise, but what is a Citigroup exec doing on the list? Et tu, Paul Volcker?

Tons of SEC chairmen are big Obama supporters. SEC chairmen who have increased securities regulation from chairman to chairman but never managed to nip an Enron or a housing securitization crisis,before they exploded into national crises.Strikes me a lot as to what an Obama Administration might look like: Lots of regulation and no success at solving any problems.