Paul Volcker, the man who finally whipped American inflation, has been tapped by Obama for a special White House advisory role.
Volcker is a very, very smart man. It is probably heresy, but I wonder if the endowments, like steel gonads, needed to crush inflation with 20% short term rates, are the same endowments that make you good at battling collapsing credit markets. The man and the moment have to combine correctly--Churchill was very good at battling Hitler, and very bad at peacetime tasks like running the Bank of England, or post-war Britain.
The other worry is, of course, that he is 81, and the workload may shorten the lifespan of a national treasure. But if the national treasure is willing, who am I to disagree?
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But Megan, surely this man is too far out of the "mainstream" for the voters? He's almost 10 years older than McCain, a DECADE, and Obama thought McCain was ancient! Warren Buffet is another of Obama's buddies, he's ancient too. So I guess age only matters if the person in question refuses to kneel to the messiah.
Besides, I hate to tell you: its all symbolism over substance.
KM -- I agree with you this so called mainstream got us into this and then failed to recognize a solid candidate who did not fit their ideal; an older battered guy who maybe had their best interest at heart. Well as the saying goes be careful what you hope for ...you just might get it. This won't be the last old guy the new President calls upon, remember Obama had only 2 years experience before he started campaigning , he is going to need a new mentor , he fired his old mentor,(shh ..his Minister).
I suppose these comments can be compared to talking around the water cooler; that is when work places had water coolers.
My point seems so simple that it is almost silly.
No one made us, American buy homes we could not afford without any money down. No one made the car companies make low mileage cars, all of this bundling of loans is mind boggling, but has anyone called us out on our part of the economic debacle?
I am not one of the many American who purchased a home that I knew that I could not afford. I did take advantage of a refinance that cost me about 2500 dollars, I did not take any money out of my house I only lowered the payment. The American who attempted to profit from these silly insane loans should pay for this mess not as the newly elected President said " hard-working Americans". Many hard working American did not take out these loans because they had common sense. I believe that is what is missing in this whole mess.
Money is not being loaned because it was loaned improperly. Who is to blame for that? .. well start with all of the politicians both the Democrats and the Republicans who did not do anything about Freddie and Fannie; the newly elected President has his dirtied with this mess as well, since he represented ACORN which had a hand in the sub prime mess,as did Emanuel.
So the solution is just to print more money and then more and more and give it away. Why not just dump it from helicopters from the sky, oh yeah someone else had thought of that: Bernanke.
Maybe an old man like Volcker can make sense of this; I wish the American public had put their trust in another old guy , McCain.
Keep those money presses rolling....
Whoa, there - "finally?"
I might hesitate to tout the finality of Volcker's considerable achievement, even within his own time at the Fed.
Still, though, you have to admire his tenacity.
Well, he can get a lot of help from his top staffer, some guy named Austan Goolsbee: http://www.sacbee.com/830/story/1429497.html
I'd say it's definitely fair to believe that Goolsbee will be doing a lot of the behind the scenes heavy lifting.
It's also fair to say that Megan was jumping the gun big time on criticizing Obama for his economic team picks last week, based just on some rumor mongering in the National Journal.
Somehow I can always tell when Instapundit links here based on comments.
But if the national treasure is willing, who am I to disagree?
Do you want us to answer that?
"The other worry is, of course, that he is 81, and the workload may shorten the lifespan of a national treasure."
But a national treasure is useless unless it's, well, used. And at 81, realistically, what else is he going to do of "national treasure" importance? Not to be crass, but I have a hard time imagining a bigger economic hitting within the decade or two that he has left, and if it does we're probably well and truly screwed with or without him.
For that matter, what has he done at this level of importance since he left his term at the Fed? Which isn't to disparage what he did while there - I think he basically deserves his rep. My point is that to have a national treasure and NOT use it while you can would be a bigger tragedy.
Speaking of Goolsbee, from Obama's remarks this morning:
"I am also happy to announce that Austan Goolsbee, another one of my key economic advisors, has agreed to serve as Staff Director and Chief Economist of the Economic Recovery Advisory Board and act as the primary liaison between the Board and the Administration. I also plan to nominate Austan to serve as one of the three members of my Council of Economic Advisers.
Austan is one of America’s most promising economic minds, known for his path-breaking work on tax policy and industrial organization. He is one of the economic thinkers who has most shaped my own thinking on economic matters, and I look forward to continuing our close collaboration in the White House."
"For that matter, what has he done at this level of importance since he left his term at the Fed?"
He headed the investigation of the corrupt UN oil-for-food program a few years ago.
did someone in the above comment thread just compare Paul Volcker to John McCain, because they're both OLD?
that is like comparing Socrates to a chimpanzee, because they both have facial hair.
Raft,
During the campaign, a lot of Obama supporters in the blogosphere did attack McCain for being old, questioning is mental acuity because of it. The truth is that there are plenty of folks who remain mentally sharp and on top of their games in their 70s and 80s and older. In picking Volcker as an economic adviser, Obama has implicitly acknowledged this.
God spare us from Volker
His middle name should be overkill.
His tenure as Fed Chairman was questionable (did we really need 20% short rates and 10% unemployment to break inflation or was he just a fool?) Good thing they did not send him off to the IMF, he'd have loved to arm-twist 75% interest rates on the poor bastards out there
It is always easier for the Fed to slam on the brakes than to get things going. No doubt he and Obama will get credit for an economy that will accelerate anyhow (see "Policy lag" effect in any macro econ text)
He's may be too old to fly-fish anymore and perhaps his time with Barry O will be good for both of them but he's no more of a Miracle Man than was Big Al Greenspan.
Jozef,
You might find this essay by John Tamny to be of interest: "The Paul Volcker Myth".
DaveinHackensack:
It's because McCain was making decisions(like picking Palin) where it was in bounds to question if he was fit enough mentally. Hell, McCain took weekends(except for the last 3 or 4) off from campaigning. There are plenty of people in their 70's and 80's(Buffett, Volcker and Birch Bayh) among them who I'd trust a lot more than McCain. It has to do with the specific person, not the age in and of itself.
Too bad Volker wasn't running the fed for the last five years, as commodity and asset inflation accelerated while Greenspan made up excuses.
"He headed the investigation of the corrupt UN oil-for-food program a few years ago. "
That went more or less nowhere, as everyone knew it was corrupt, but nobody wanted to do anything about it.
Volker did what no modern central banker has ever done nor will ever do again. Apply the textbook rules off how central banks are supposed to behave. Albeit in new era of floating exchange rates and pure fiat (not used as a pejorative term) currencies.
It is politically impossible for central banks to kill inflation with super high rates, but he managed to do it. He did it with some ideological ju jitsu. Milton Freidman's monetarism was all the rage among Republicans at the time and had been for a decade or more and an obsession had developed with the money supply. Conservatives were wedded ideologically keeping the M's in check.
Volker announced he was basing his monetary policy on keeping the M's down no matter what the discount rate need to do it was. Well the rate setting was just the other side of the M growth coin so he wasn't really doing anything different than the Fed had ever done. However it paralyzed political opposition from the in power conservative GOP. So he raised rates again and again and again. Under no circumstance ever or ever again would a political regime allow such rates. Every in power politician from the dawn of money has wanted easy money, easy credit. Volker was able to pull it off because, as I said, he used a brilliat rhetorical strategy to defend it.
It those high rates was necessary to kill inflation is subject to debate. The end of inflation was coincident with the high rate regime. You decide. One thing is certain. The dollar regained it's strength.
The inflation of the 70's was a monetary phenomenon caused by the advent of floating non gold backed currencies.
Soooo.....the hope and change we voted for is a break from the failed policies of the past 8 years to........the economy of the Carter Administration?!?
Megan,
OT, but you might find this humorous: Atlas Shrugged Updated for the Current Financial Crisis.