Paul Volcker the Campaign Advisor
Long time readers know that I am a tremendous admirer of Volcker, and this morning’s WSJ has a fascinating article about the relationship between former Fed Chair Paul Volcker and Presidential candidate Barrack Obama:
"Mr. Volcker delivers gravitas and credibility to Sen. Obama, people in the Obama camp say, as well as ideas and approaches to the economic crisis. "Volcker whispering in Obama’s ear will make even Republicans comfortable, because he’s a hero of the right and a supporter of a strong dollar," says John Tamny, a supply-side economist and Republican…
For Mr. Volcker, a connection with Sen. Obama could help burnish his record as Fed chairman. The cigar-chomping central banker from 1979 to 1987, he received blame for driving up interest rates and tipping the U.S. into the deepest recession since the Great Depression. But Mr. Volcker is just as well known for taming the runaway inflation of that era. His stock has risen in recent months as his gruff warnings about the risks of deregulating the financial sector have come to look prescient. His successor’s reputation, meanwhile, has come under a cloud. Alan Greenspan is under criticism that the low interest rates and deregulatory ideology of his tenure contributed to today’s crisis.
With nearly every day presenting a fresh financial emergency, Sen. Obama has persuaded Mr. Volcker, who travels the globe for economic meetings and occasionally disappears on fly-fishing trips, to be at the ready; Mr. Volcker now keeps a cellphone on him at all times. And though he still doesn’t own a computer (his assistant prints out emails for him), he’s gotten used to Sen. Obama’s rapid-fire messages sent from a BlackBerry device…
But for now, and going into the campaign’s final weeks, aides say Sen. Obama is increasingly relying on Mr. Volcker. His staff now routinely reviews policy proposals and speeches with Mr. Volcker. Conference calls and face-to-face meetings of the Obama economic team are often reorganized to accommodate his schedule. When the team discusses the financial crisis, "The most important question to Obama: What does Paul Volcker think?" says Jason Furman, the campaign’s economic-policy director."
From an economic perspective, I did not take the Obama candidacy seriously — until I heard about Volcker’s role. When one of the greatest Fed Chairs ever starts consulting for a relatively young candidate with limited fiscal experience, you notice it.
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Source:
Volcker Makes a Comeback as Part of Obama Brain Trust
MONICA LANGLEY
WSJ, OCTOBER 21, 2008
http://online.wsj.com/article/SB122454498635252109.html
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October 21st, 2008 at 7:12 am
I could sleep a lot better with Obama as president if Volcker was Obama’s only economic advisor. My concern with Obama’s economic team is that it also includes a member of the Committee To Save The World – Robert Rubin — the Clinton Administration’s point man for CFMA, Gramm-Leach-Bliley and the Basel Accords (which gave us VAR and allowed stupid levels of leverage).
On the other hand, the member of Congress who was the point man that allowed for all this toxic crap was Phil Gramm.
Volcker yes. Rubin and Gramm need to be dumped.
October 21st, 2008 at 7:32 am
Rubin AND Larry Summers. They will counsel Obama to try and blow up the bubble one final time, leading to national bankruptcy and the collapse of the dollar.
October 21st, 2008 at 7:49 am
Obama is his own man, you will be surprised at the lack of dogma in the next administration (assuming he wins). I think Rubin’s association with Citi puts him beyond the pale. We will see a whole new team of people under 50, but the presence of Volcker is comforting in a number of ways. First because of his wisdom and second because of his being an outsider to whatever group of advisors will be formed by Obama so that he can intervene with an independent voice.
October 21st, 2008 at 8:05 am
Surprised you didn’t hear about this earlier, Barry.
http://www.newsweek.com/id/163456
A piece on the two camp’s economic teams.
October 21st, 2008 at 8:48 am
“…one of the greatest Fed Chairs ever…”
How many great Fed chairs have their been?
October 21st, 2008 at 8:59 am
Let’s hope this is not just artfully leaked window dressing to appeal to people like us and that Obama has the balls to put some tough love on the bankers if he gets in.
I’m not optimistic. Even if he wants to and even if he has a favorable Congress, it will be tough to get through anything that is painful. The U.S. electorate has become too decadent and the Congress too venal. (Insert here references to ancient Rome and Parliament during the 17th-18th centuries.)
October 21st, 2008 at 9:26 am
Agreed with most of the comments. Rubin and Summers are very dismaying but Volker is awesome. Its good to see that he’s at least highly valued on the team.
Economically its the lesser of 2 evils. One with a couple of clowns and a solid guy and the other is headed up by the poster boy of the crisis Phil “mental recession/nation of whiners” Gramm.
October 21st, 2008 at 9:47 am
That’s a pattern I noticed with Obama, too. I noticed it first with the founder of Oracle and a couple other silicon valley guys. But basically there was this pattern that any time smart, respected, successful people met him, they walked away saying “I wanna do something with this guy.”
That’s why the experience arguments never truly stuck. Because smart, successful people kept saying “I would work for this guy.”
October 21st, 2008 at 9:47 am
for you urged out at 40 old-timer Jaycees;
I send you The Creed. TBP pertinent part repeated
“That economic justice can best be won by free men through free enterprise; That government should be of laws rather then of men;”
“We believe: That faith in God gives meaning and purpose to human life; That the brotherhood of man transcends the sovereignty of nations; That economic justice can best be won by free men through free enterprise; That government should be of laws rather then of men; That earth’s great treasure lies in human personality; And that service to humanity is the best work of life.”
OTTAWA JAYCEES #1
October 21st, 2008 at 10:06 am
Barry, try to spell Obama’s first name correctly, OK? One ‘R’, dude.
October 21st, 2008 at 10:09 am
Yeah, but this was a front page WSJ article.
October 21st, 2008 at 10:28 am
Oh great… The Great Man now has a Great Mentor. Surely He will be our salvation.
If Mr. Volcker has such a hold on the economic ear of the Senator, why did Mr. Obama vote for the bailout? I don’t know Mr. Volcker’s position on the bailout; but it does not sit well with me if Mr. Volcker either told Mr. Obama to vote for the bill, or if Mr. Obama ignored his advice and voted for it anyway.
Regards,
TDL
October 21st, 2008 at 10:29 am
Obama had an excellent economic team even before he started consulting with Volcker. Austan Goolsbee is widely considered to be one of the most talented economists of his generation and Jason Furman is excellent on tax and fiscal matters.
The addition of Volcker, Rubin, Buffet, etc adds a lot of market and policy experience. Compare this to the dolts on McCain’s team – he employs Don Luskin for Christ sake – and the choice on economics is easy.
October 21st, 2008 at 11:04 am
If youse guys (speaking as the Chicagoan here) think that Obama is going to be anything other than a standard liberal hack, well, you’re right. He’s going to be worse.
You think NY politics are bad/corrupt? Just look at Chicago, just once.
At least if you’re connected in Chicago, just wait a few months and you’ll be showered with more money than you ever thought possible. Thanks, tools.
D
October 21st, 2008 at 11:19 am
Volker was one of the greatest Fed Chairs ever? Sort of like saying Jefferson Davis was one of the greatest slaveowners ever.
October 21st, 2008 at 11:25 am
He may have “limited fiscal experience,” but he certainly has political skills and experience. He’s proven that with this campaign.
There’s this mysterious attitude among the certain members of the elite that politics is easy, that anyone could just do it if they tried.
It’s like watching sports, thinking that you could just jump into the screen and be a pro player.
October 21st, 2008 at 11:25 am
Obama listens to Volker. Maybe. But Obama is all about ‘spreading the wealth’ – redistribution. Wonderful tonic for a capitalistic system.
October 21st, 2008 at 11:53 am
I find it hard to believe that Volcker supports all of these bailouts, backstops and stimulus packages.
Surely he understands the benefit, from the long run perspective, of letting asset prices fall to their equilibrium price.
October 21st, 2008 at 12:44 pm
‘spreading the wealth’
I love these ‘spreading the wealth’ tirades by the right wingers to attempt to scare us away from O.
What do you call the last 8 years? The wealth has been spread, from us in the middle class to the super rich. I guess that’s a concentration.
We all do well when we all do well.
October 21st, 2008 at 2:08 pm
Please comment on Paul Rubins Op-ed in WSJ:
http://online.wsj.com/article/SB122455099434052597.html
October 21st, 2008 at 3:02 pm
Obama will start off with respectable names, but this election is about Change, man. Can’t have Change if you feature Clinton and Reagan (gasp!) retreads. We’re going to get a far more radical bunch in the end, because Obama himself is not a third way kind of guy.
October 21st, 2008 at 3:53 pm
There is a more complete list of Obama’s advisors here:
http://econ4obama.blogspot.com/2008/06/obama-economic-advisors-and-economic.html
And McCain’s here:
http://econ4obama.blogspot.com/2008/06/other-list-mccains-economists.html
And lots of policy discussions at the site, too:
http://econ4obama.blogspot.com/
Highly recommended.
October 21st, 2008 at 3:56 pm
And I am more than happy to spread my wealth. Right now, it is paying a friend’s car loan, who has been unemployed for over a year, my two son’s ridiculously high costs of college education, and their living expenses, since they can’t find any jobs, and an insane amount of money politcally trying to get sensible people elected in this country who understand that an economy that benefits only the rich is unworkable and hence collapsing. So STFU about “spreading the wealth”, jerk.
October 21st, 2008 at 4:35 pm
Those who say Obama did nothing during the bailout debate ignore the immense contribution of Volcker and other liberal critics associated with his campaign (including Summers) in changing the bill from the original 3-page Paulson plan to something that’s much closer to the Volcker plan.
Notice that Obama stayed out of the fray and let his experts do the heavy lifting. He didn’t gum up the works or steal the credit.
Getting the legislation to allow straight equity investments in banks was the only thing that allowed the Treasury to act quickly a week ago. Otherwise, well who the hell knows what would have happened….
Too bad Volcker wasn’t the one negotiating the deals with the banks… we might have gotten a better deal for the taxpayer (like Brown got in UK).
October 21st, 2008 at 4:44 pm
Quite simple really… Forget your odd non thinking associations with your affiliated political party. The last 8 years have been horrendous. Therefore the extreme risk is on electing the president who would be most like the previous 8 years.
I am voting for the first time for two reasons.
1. Finally the brain pool in this country has been unlocked. There are women and non-honkeys involved in our electoral process. Previously we have been choosing presidents from a small pool which means we weren’t necessarily electing our best minds.
2. Normally its a battle of the lesser of two evils or in the case of bush vs kerry evil vs a piece of jello. In this case its actually a battle of good vs evil. To risk continuation of the last 8 years and the policy of domination by the rich whom profit at any cost would bring us past the point of no return.
October 21st, 2008 at 4:48 pm
By the way BR you are the biggest closet Obama fan I have ever seen. You keep dropping all these hints that make it obvious you, like most thinking people are excited about his potential and possibly reaching a turning point in our near term history.
However you don’t want to get flamed out by your psychotic constituents who are Baghdad bobbing their take on the last 8 years.
Perhaps you should grow some man nodes and risk some ire like that buckley guy or colin powell and come out and say it.
October 21st, 2008 at 4:55 pm
Unless he reformed from his slavish adherence to the Milton Friedman line, I think we have a lot to fear from Volcker. I am not convinced that the Reagan-Volcker recession of 1981-82 as a principal point on your CV is very convincing.
Volcker simply took the economic fad of the time as the new testament and did a lot of damage. Dump Volcker, Summers and Rubin
October 21st, 2008 at 5:38 pm
Obama is thoughtful, curious, intelligent, organized, simpatico and COOL….
If you’re going to vote for a candidate based on the criteria of temperament, aptitude and intellect, need I say more….?
I don’t think that Colin Powell could have said it any better during his unrehearsed “Meet the Press” interview.
I’m voting for the COOL GUY…!
Best regards,
Econolicious
October 21st, 2008 at 6:37 pm
Unfortunately, the wise evidence of his advisors is nowhere to be found in his voting record. He has the most liberal voting record in the senate because he always listens to the special interests yelling in his other ear when he votes. Just look at free trade. He is for it in speeches. He is just against every trade agreement that is opposed by union special interests, which is ALL of them.
Obama has shown no leadership ability. His wise advisors are not going to be in charge of economic policy. Nancy Pelosi will be. And we all know how well the market reacted to Nancy Pelosi’s most recent speech.
October 21st, 2008 at 7:15 pm
Pelosi has made a joke of herself (i.e.) partisan grandstanding during the Bailout Bill vote. This lack of leadership issue has no bearing IF Obama surrounds himself with a knowledgable and well respected handful.
You can’t be an “expert” in all things simultaneously. McCain is more Bush and Palin is the Mayor from Mooseport.
October 21st, 2008 at 7:17 pm
“Non-honkeys,” oulous?
October 21st, 2008 at 8:59 pm
honkey, whitey, Caucasian, of euro lineage…. that kind of thing.
I am as pasty as they come just poking a bit of fun.
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