Summers in Time for Fall

Don’t you just love it when you’re going to throw a surprise party and there’s always one guest that fouls up and sets the cat amongst the pigeons to tell the person the party is being thrown for what is going to happen? Scuppered and had the ground cut beneath you before you know what’s hit you. That’s how President Obama must be feeling right now. The party by the way was the ironic way of telling us what was going to happen to the economy of the US and the guest that spilled the beans is a Japanese newspaper (Nikkei) that has reported today that Obama is in the ‘final stages’ of appointing Larry Summers as the next Federal Reserve Chairman when Ben Bernanke leaves by the back door after his unconventionally loose-monetary policy.

Larry Summers: Fed Head?

Larry Summers: Fed Head?

President Obama is supposed to be ready to publically announce the appointment of Larry Summers as the Chairman of the Federal Reserve some time next week. It will be just in time for Fall! So, maybe we will get an Indian Summer with this appointment: a heat wave in Fall. Well, maybe we will get the heat or the (tidal) wave, followed by dry and hazy conditions. Things will certainly look as if they are going to be drying up in the coming months with tapering that now might just happen way ahead of time with Summers at the head of the Federal Reserve. Indian Summers are not always good.

The appointment is believed to be scheduled for after the Federal Reserve’s rate-setting committee meetings that are scheduled to take place on Tuesday and Wednesday. The White House announced today that no decision had been made, but there’s no smoke without fire and perhaps the Japanese have been playing the Obama administration at its own game, intercepting communications in true National-Security-Agency fashion. If it’s good enough for the US, it’s good enough for the rest of us. President Obama must be riled. Let’s hope the Japanese have also passed that information (and more) on to third parties, just as the US has done with passing our private information and communications on unvetted to Israeli intelligence forces.

Just a few days ago the media was running alive with reports that it wouldn’t be Larry Summers that got nominated because of the possible war in Syria. Are we supposed to read into that that President Obama will back down on Bachar al-Assad?

Since the Senate Banking Committee must approve the appointment of Summers before it can be discussed in the Senate, there may be resistance from Democrats. Three Democrats are being reported to be opposed to the appointment of Summers: Elizabeth Warren, Sherrod Brown and Jeff Merkley. 19 Democrats are also reported to have signed a letter in favor of Janet Yellen as the head of the Federal Reserve. If the Syrian crisis is not resolved and President Obama faces a sticky patch in Congress over that issue, added to the debt-ceiling problem and the funding bill to save the government from going under financially, then a fight over Summers will be just another thorn in his side and should be at best avoided. Should we read something into the announcement of the appointment that there’s something not quite right somewhere? Somebody knows more than they are letting on.

Summers is a controversial figure and appointing him means that the US government will be open to being fired on at point-blank range. Summers was the principal defender of the repeal of the Glass Steagall Act, allowing banks to become ‘too big’ supposedly to fail. We hardly know anything about what Larry Summers thinks concerning monetary policy. The only thing that he has expressed himself on is the fact that he believes that Quantitative Easing is less effective than people think. We all knew that Larry, but it’s now the question of removing that while the economy in the US is still not growing. Appointing Summers would be a good signal to the economy (albeit the wrong one, perhaps) that President Obama believes that he has been successful enough with reformatory policy to now withdraw Quantitative Easing.

The Dollar rose on the announcement of the news that Larry Summers would be appointed.

Larry Summers is no lamb but we might certainly ask “Little lamb who made thee?” and the answer will most certainly come pinging back that it was Obama. Will Larry turn into the Tyger? If he does turn into the latter, we should remember that William Blake’s famous poem has absolutely no narrative movement at all. It’s a masterpiece but the poem only asks questions in mystic fashion. Will Larry Summers go from Lamb to Tyger at the head of the Fed?

I can see it all happening over again: asking questions and doing very little to change the situation in complete mystic fashion.

But, maybe Summers will be in time for the Fall as the green (-backs) disappear. I hope you’ve got your parachutes; the descent into hell may be a shock.  

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