I seldom agree with Joseph Stiglitz on anything, but I agree with him that it would be a bad idea to name Larrry Summers new Fed chairman. So both Stiglitz and I should be happy today as Summers has redrawn his candidacy for new Fed chairman.
This is Summers’ letter to president Obama:
Dear Mr. President,
I am writing to withdraw my name for consideration to be Chairman of the Federal Reserve.
It has been a privilege to work with you since the beginning of your Administration as you led the nation
through a severe recession into a sustained economic recovery built on policies to promote employment
and strengthen the middle class.
This is a complex moment in our national life. I have reluctantly concluded that any possible
confirmation process for me would be acrimonious and would not serve the interests of the Federal
Reserve, the Administration, or ultimately, the interests of the nation’s ongoing economic recovery.
I look forward to continuing to support your efforts to strengthen our national economy by creating a
broad based prosperity and to reform our financial system so that no President ever again faces what you
and your economic team faced upon taking office in 2009.
And the market reaction? Well, the US stock market is up, the dollar weaker and yields are lower. Said in another way US monetary conditions are easier today than on Friday.
So by redrawning from the Fed race Summers has done more for a “sustaine economic recovery” and more “to promote employment” than by staying in the race. That is not my verdict, but the verdict of the markets.
Don’t ever mess with Chuck Norris!