Monday, July 29, 2013


Didn't happen Friday either so I broke the same promise two days on the trot.  Last week was all politics and I don't write about politics...well, hardly ever.  Today is about politics as well but with a very real financial bent; who is going to be the next Chairperson of the Federal Reserve.  We have two perfectly lousy front runners, Janet Yellen, the darling for west coast females and females all over the United States and Larry Summers hated by many females for suggesting quite innocently that females were perhaps not suited for the "hard sciences" whilst the President of Harvard.  Now the winner of this doggie race is going to be Yellen as the Leader will never make a decision running counter to his base or the gender politics of the day.  In fairness, Yellen is probably the safe choice for in addition to being the Vice Chairman of the Fed (continuity, old boy) she is probably the staunchest supporter of Bernanke's soft money policy which every one recognizes is the only thing holding the stock market up and, by extension, the economy up which basically stinks unless you consider growth under 1% as being OK.  Unfortunately, while Summers has never seen a market he really understood or tried to understand, Yellen has never seen a market.  As an academic, joined by the hip to the Fed economist she makes Ben look like a gunslinger away from the hallowed halls.  Conversely, Summers is far more fully versed in fiscal theory and would be a major pain in the bum to The Leader and his gaggle of near-incompetents and is generally on the right track except for the fact that he has been such a major pain in the bum all his life that nobody listens to him because they just don't like him.

Perversely, none of this really counts for anything because the problem is hardly at the Fed but squarely in the White House and in the divided Congress which simply is incapable of finding a direction in which to lead.  Where the next Fed governor will matter, however, is in the continued debate as to financial regulation and it is here where from my standpoint I would be much more comfortable with Summers who, while also clearly a political animal, is a far more pragmatic one having grown up at the feet of Bob Rubin and Bill Clinton---the King of all pragmatics.  With Crazy Lizzy Warren with tenure in the Senate running around out there it would be nice to have a few adults somewhere in the wings.  Think of it; the Chairperson of the Federal Reserve owing a Big One to Nancy Pelosi...kinda makes your blood run cold. don't it?

Anyway, the govs get together this week to yak at each other that the employment number is Friday (I think) and it appears that the two slugs on the Left and Right coasts are going off the front page for a while, so maybe there will be something we can write about otherwise we may have to delve into the "Phony Scandals" that have the White House so scared out of their wits.  I mean, these are really hard times.  I keep looking for something dramatic as a result of the Detroit Bankruptcy but other than the expected tightening in the Muni Market, nada.  I mean this is a big thing and yet it seems to have been taken in stride.  Perhaps that's a good thing indicating stability and confidence in domestic markets.  I hope so.  Surly, it couldn't be that people are not paying attention.  One thing hanging over this, however, is the interest rate environment which could play havoc if there is a steady rise.  Which is another reason why we get Yellin.  She and Ben are determined to prove that their idea works.  With her, the QEs go no where for a while.  I remain unconvinced.

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