Larry Summers — Next Fed Chairman?

Published on ZNet, by Jack Rasmus, September 07, 2013.

When mainstream press outlets, like the New York Times, Wall St. Journal, CNN money and others, issue front page articles on a topic related to the government more or less simultaneously, it usually means they have received confidential, not-yet-for-publication notice from the government of decisions made but temporarily embargoed.  

So it was on September 5, 2013, that all the above noted media sources printed lead stories on Larry Summers’ candidacy for the chair of the Federal Reserve Bank. The stories have continued to appear, with the New York Times editorial page on September 6, 2013 going so far as to say “Mr. Obama is expected to announce his nominee soon…”

Is an announcement of Summers’ appointment to replace current Fed chairman, Ben Bernanke, therefore imminent?

This writer has been predicting for weeks that Summers was the heavy ‘odds on favorite’ for appointment by President Obama to replace Bernanke for several reasons.

Is A Summers’ Appointment Imminent?

  • Summers’ appointment may come more quickly than some think. Again, the surge of front page press articles and talking heads electronic commentary in recent days suggests it may be imminent. While current Fed Chairman, Bernanke, doesn’t officially leave until next January 2014, Obama needs to ensure there is time for the new Fed Chair’s Senate confirmation.
  • Then there’s the need for Obama to get his full economic team on board before the coming fight over the debt ceiling with House Republicans begins in earnest again in October 2013. Emerging Markets economies are pressing hard for a quick decision on the Fed chair to reduce the uncertainty concerning the Fed’s reported plans to ‘taper’ its $85 billion a month free money injections into the global banking system. That pending decision, and the delay, has been causing severe economic stress among many economies, like India, Indonesia, Turkey, Brazil and others. International developments perhaps slowing the decision process include Syria. But there’s little reason to assume even that will significantly delay, and may even accelerate, Obama’s decision on a Fed Chair nominee—including Summers.
  • The likelihood that that nominee will be Summers is further supported by the widespread and deep endorsement for Summers by Obama’s ‘old boy’ network. It has been reported, for example, that current Treasury Secretary, Jack Lew, former advisor, Obama former chief of staff, David Axelrod, Rahm Emmanual, and McDonough, Obama’s current chief of staff, all have expressed to Obama that Summers is their preferred choice for Fed Chair.
  • Finally, and perhaps most importantly, it should be remembered that no one gets appointed to Fed chair, or the key New York Fed district governor, without a green light pre-approval from bankers, finance, and institutional investors. And Larry has been their ‘boy’ for decades. He has consistently proposed programs, taken positions, made recommendations, and always acted in their interests, even when doing so has meant an about face in policies and recommendations he’s made. For that, he’s been nicely rewarded over the years in terms of career advancement and income.

Summers’ Public Service Record: … //

… Summers: Chameleon Economist of Corporate America:

  • Summers was somewhere involved in all these policy fiascos—from the original $787 billion, business tax cut heavy stimulus, to the generous bankster bailouts, to failing to prevent the homeowner foreclosures (while subsidy mortgage lenders).
  • The point of this Summers’ policy history review is to show that Larry Summers has always done what the banksters have wanted—and he’ll do that again when appointed as Federal Reserve chair.
  • Therefore, contrary to what some pundits have been saying, there will be no ‘Summers Effect’ if he is appointed. Summers’ appointment will not spook the markets. Most assume it will happen. There will be no major departure under Summers from existing Fed policy under Bernanke.
  • There is no contradiction between what Summers as Treasury Secretary did for the banksters in the late 1990s in pushing financial deregulation and what Summers (or any future Fed chair) will do with QE and zero bound interest rates. Both result in rentier (i.e. super) profits for financial capitalists. In the former case, deregulation released banksters to achieve super profits by means of extraordinary asset price inflation; in the QE case, to achieve super profits by reducing interest costs to virtually zero, and by the Fed printing money, QE, to buy back bad subprimes at more than their busted market value (taking the ‘bad debt’ from private speculators onto its own Fed balance sheet.
  • Larry did their bidding back then, and if (when?) appointed, he’ll do it again. He’s always done it. And for that he’s been nicely rewarded over the years. In his latest personal financial records he admits a net worth of as much as $24 million. He didn’t accrue all that from his salary for service in government over the years, but from his connections to hedge funds and other corporate buddies.

Federal Reserve Policy: Past Failures & Future Tail Risks: … //

… (full text).

(Dr. Jack Rasmus is the author of the recent book, Obama’s Economy: Recovery for the Few, Pluto Press, 2012, and the Epic Recession: Prelude to Global Depression, 2010, Pluto Press. His website is Kyklos and the Blog Jack Follow him on twitter @drjackrasmus, or on his radio show, Alternative Visions, on the Progressive Radio Network, on Wednesdays, 2pm eastern).

(see also: Welcome to our new blog: politics for the 99%).

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