Archive for ‘Larry Summers’

June 8, 2009

Economy: Up, Down or Sideways?

Just got back this morning from Atlanta, where the economy sucks. The ripple effects of the housing meltdown are being felt especially hard in my hometown, which is national headquarters for Home Depot, a regional hub of banking and transportation, and site of a large number of undeveloped developments.

When I got back, my first task was to prepare the Monday morning business report for Mixed signals from the markets, but there was this weird New York Times story about “underlying tensions” among Obama’s economic advisers:

By all accounts, much of the tension derives from the president’s choice of the brilliant but sometimes supercilious Mr. Summers to be the director of the National Economic Council, making him the policy impresario of the team. The widespread assumption, from Washington to Wall Street, was that the job would be Mr. Summers’s way station until the president could name him chairman of the Federal Reserve when Ben S. Bernanke’s term expires early next year.
But Mr. Bernanke’s aggressive response to the crisis has so improved his reputation that people close to Mr. Obama increasingly suggest the president could well reappoint him in the interests of financial stability — just as Presidents Ronald Reagan and Bill Clinton retained Fed chiefs who had been picked by predecessors of the other party.
As for Mr. Summers, even as top administration officials acknowledge the occasional strains among economic advisers, they say the president is thrilled with the job Mr. Summers is doing in his current post.

Read the whole thing. Basically, it’s a round-robin of anonymous leakers trying to get rid of Larry Summers. And I’m appalled that Bernanke’s stock has actually risen in the past four months. I didn’t like Bernanke when he was Bush’s Fed chairman, and nothing he’s done during Obama’s tenure has improved my opinion of him.

That the anti-Summers cabal is praising Bernanke for being “aggressive” reminds me of my private-sector economist buddy who, two weeks ago, shook his head and said, “They’re trying to re-inflate the bubble!”

It appears to me that Team Obama (which includes the MSM) is playing an expectations game with the economy, trying to convince us that a recovery is underway. Unemployment is nearing double digits, the bond market is signaling higher interest rates, and given what I saw during my Atlanta trip, I’m deeply skeptical about the near-term economic prospects.

However, those are merely my opinions, and the numbers are whatever the numbers are. The Nikei was up this morning, which usually signals a good day for U.S. stocks, so don’t let my gloom spoil your day. Maybe I’m just suffering the opposite of “irrational exuberance.”

UPDATE: Charles Lemos at MyDD says Summers ” is viewed with suspicion on the progressive left” and describes him as “a right-of-center economist,” which is to say he’s not Paul Krugman or Robert Reich. Exactly what does an economist have to do before he’s not “viewed with suspicion on the progressive left”? Maybe if Larry Summers decapitated a few bankers on YouTube . . .

UPDATE II: Jehuda says:

Looks like the Left is going to need a bigger Sorosphere.