It didn’t take a crystal ball to see that the jockeying for who will be the next Fed Chairman would begin to heat up. On June 15, I pointed out that the assumption going around has been that either Bernanke will be reappointed or Summers would take over the reigns. In light of blistering testimony today, it is increasingly clear that Bernanke will not be reappointed. I can’t see Summers as Fed Chairman either. I do see Alan Blinder. I started my personal lobbying campaign for Blinder on June 16. He is the only sensible choice.
Now it seems to be within the realm of possibility that Geithner and Bernanke are both in jeopardy.
President Obama, here is what you need to do.
It should be obvious to you by now that Geithner is incapable of instilling confidence. He may or may not be competent, but that is less important than having the ability to instill confidence.
Although I am no fan of Summers, I think most people would agree that he is a natural choice for Treasury Secretary. After all, the transition will be seamless since he is basically running things already from behind the scenes.
That leaves Alan Blinder for Fed Chairman.
Now, if you really wanted to salvage your presidency (you know your political capital is waning quickly and you will need it for your other programs), then you might also consider appointing Volcker to head the NEC.
This dream team would instill tremendous confidence and I would once again be optimistic about the future of our economy:
- Secretary of the Treasury – Larry Summers
- Chairman of the Federal Reserve – Alan Blinder
- Director of the National Economic Council – Paul Volcker
This is a team that could carry us out of this crisis. It is not too late.
PS: Don’t let the recent jubilation fool you. As I told you before, the credit crisis is much larger than residential mortgages. Easy credit pervaded every aspect of the debt markets. We need to be prepared for the next round. The troubles have still only begun.
PPS: You might also kindly request that Greenspan shut up.