Where’s Volcker? Part II
Back in April, we asked Where’s Volcker? — about the noticably absent Obama advisor and former Fed Chief who seemed to have been pushed aside by either Tim Geithner or Lawrence Summers (or both).
Here it is, 3 months later, and the question remains: Where is the greatest Fed Chair of the modern era? The straight talking, cigar chomping, inflation fighter has been nowhere to be seen in the Obama White House.
Plenty of people who supported Obama in the 2008 election did so because of Volcker’s endorsement/involvement. His absence, and lack of a visible role, has been hugely disappointing.
The Deal reported:
“The most obvious speculation is that forces within the Treasury, or the White House effectively deep-sixed anything as fundamental as separating high-risk institutions to more traditional utility banks. In fact, that may well be part and parcel of the air of compromise and expedience that hangs over the entire reform process. With a few exceptions like the disappearing Office of Thrift Supervision, most of the lineup of regulators will remain the same. The Securities and Exchange Commission and the Commodity Futures Trading Commission will survive, a consumer products commission will be set up, and a council of regulators will sit over everything, like some regulatory board of directors. It’s still a little unclear how much power the Federal Reserve will accumulate, though it seems probable that it will get some role as a systemic overseer.
This entire setup appears fragmented and inefficient, the worst of both worlds. It’s also bound to be expensive. Why anyone thought that a council of regulators was a good idea beyond political expedience is beyond me. Nothing that’s been leaked so far, however, involves any kind of fundamental alteration in the financial system itself.”
This does not bode well . . .
>
Previously:
Where’s Volcker? (April 11th, 2009)
http://www.ritholtz.com/blog/2009/04/wheres-volcker/
Source:
So whatever happened to Paul Volcker?
Robert Teitelman
The Deal, June 15, 2009 at 4:22 PM
http://www.thedeal.com/dealscape/2009/06/so_whatever_happened_to_paul_v.php
Obama’s Economic Recovery Advisory Board To Hold First
JIM KUHNHENN
HuffPo, May 18, 2009 04:47 PM
http://www.huffingtonpost.com/2009/05/18/obamas-economic-recovery_n_204842.html
June 16th, 2009 at 8:22 am
Where should Volcker be? On the news more? Giving more speeches? Overshadowing Geithner in China? Bernanke at Congressional hearings? You need a back up quarterback, preferably one that knows the game. This is a whole lot of nothing.
And the reform process? Unless you want to break up the big institutions, you have to have a tailored system for them. BlackRock’s about to create another too-big-to-fail mega-institution. You can either have Justice stop this… then you go and break up break up JPMorgan, Goldman, Wells, Fidelity, State St. the CME, NYSE, etc… or have the regulatory function adapt to the way the world is.
June 16th, 2009 at 8:24 am
Didn’t reform the banks, won’t reform the regulators.
Rinse, repeat.
June 16th, 2009 at 8:30 am
Found him on the editorial page of the Journal today. A reprint of some overseas speech from the 11th.
June 16th, 2009 at 8:31 am
Volcker, as always, re: 44’s admin., was/ia a resume Rent op..
June 16th, 2009 at 8:32 am
Are we really going to learn nothing from this at all?
That’s a shame.
June 16th, 2009 at 8:34 am
We’re going to learn that the ‘Cained Peep are, truly, on The Road to Serfdom (regards F. A. Hayek)
June 16th, 2009 at 8:48 am
btw, if the M3 data series was discontinued, by the FedRes, b/c “it was too expensive”, where are they going to get the jack to afford additional “Regulatory” initiatives”?
sing it~ Sheryl !~
http://www.lyricszoo.com/sheryl-crow/strong-enough/
June 16th, 2009 at 8:51 am
Wasn’t the rumor going around that Volcker was working on bigger projects, such as figuring out a basket of commodities to back the dollar by or by revising the tax code? For a while after the Inauguration, that was the hot rumor. Anyone hear if that’s all done with?
June 16th, 2009 at 9:12 am
Maybe he’s being set up to be the scapegoat AGAIN.
Something tells me they’re waiting for inflation to rear its ugly face before taking him out of the woodwork!
June 16th, 2009 at 9:18 am
Lawrence Summers happened to Paul Volker. Obama has apparently relied on resumes instead of track records to choose who will right the economy. We are screwed.
June 16th, 2009 at 9:23 am
Paul Volcker has been replaced by an amazingly realistic-appearing robot, while the real Paul Volcker is sedated and locked in a closet in Larry Summer’s office, against the possibility that they might need to provide DNA identification at some future point in time. Proof? He no longer smokes cigars.
June 16th, 2009 at 9:24 am
@Barry Ritholtz — 8:32 am
“Are we really going to learn nothing from this at all?”
The lesson’s not over.
June 16th, 2009 at 9:29 am
I’m guess Paul Volcker probably is thinking like Roger Murtaugh in “Lethal Weapon”:
“I’m too old for this shit!”
HCF
June 16th, 2009 at 9:32 am
Wasn’t Volker in situ when the money supply went up by a factor of three? Isn’t that what causes inflation? How would having him do this again improve things?
June 16th, 2009 at 9:32 am
Lots of excitement over misleading month to month jump in new home starts. The 17% increases was largely due to multi family starts and better weather from month to month of course. Compared to a year ago starts are down about 50%
June 16th, 2009 at 9:34 am
Barry Ritholtz Says:
June 16th, 2009 at 8:32 am
Are we really going to learn nothing from this at all?
reply:
———–
Looking back on my formative months last year and before, I was even less of a Pollyanna than you appear to be at this time.
Of course we will learn something. It just won’t be what you are hoping for.
The glass is half full and it has a little hole at the bottom. A few sharpies always know where that hole is, they collect what drains, and keep what they collect for themselves. After all, anything they lay their hands on, in their minds, is abandoned property. And, since a hole is the same as ‘nothing’, making the hole bigger creates more ‘nothing’ and is perfectly legal if handled properly.
June 16th, 2009 at 9:38 am
My mistake, like Charlie Brown trying to kick the football, is that I keep going back to political processes looking for inspiration. I’m a middle-aged attorney and you’d think I wouldn’t give a shit about anything at this point.
Let’s change the semantics. To be more precise, I am looking for American politics to reflect the aspirations of the American people and I am looking to be heartened and inspired by what I see. Not all the time, just now and then to keep me going.
Instead, I’m seeing CYA technocrats cobbling together half-assed policies, taking the path of least resistance. I am afraid we have an Empty Suit Generation of non-leadership — both public and private sectors. At this point, I just want to see Obama’s group and Congress do something interesting. Is that too much to ask?
June 16th, 2009 at 9:39 am
Plenty of rubes supported a candidate who had never appointed anyone to anything believing he would appoint brilliant people to run everything.
What has Volcker accomplished since whipping inflation in the ’80s? The current economy is completely different,
and anything he tries to do now will only likely tarnish his reputation. He needs to be kept in the bull-pen so that he will still have some credibility left when the fed needs to start withdrawing liquidity in the future.
June 16th, 2009 at 9:40 am
17% increase in new home starts? On top of the moldering inventory already force-fed into the ass-plugged goose? This will get much worse after it gets a little better. Much worse.
June 16th, 2009 at 9:44 am
@ Marcus:
I’m equally flustered that the new homes starts is being construed as POSITIVE. Maybe I don’t have an economics degree, but isn’t adding more to an oversupply situation supposed to lower prices? =)
HCF
June 16th, 2009 at 9:46 am
U.S. Factory Production Falls; Capacity at Record Low (Update1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=a9SAcT5xW6SQ
The less emphasized statistic from this morning’s news. Green shoots, baby, green shoots.
June 16th, 2009 at 9:47 am
Housing starts were down 45% YoY and down around 70% of where they were in April 2006.
June 16th, 2009 at 9:48 am
HCF:
Maybe it’s a new take on supply-side economics. Apparently someone, somewhere, thinks this is a good idea.
June 16th, 2009 at 9:49 am
TZ:
Like banking, this industry should be in contraction. They’re still breaking ground. I see it every day.
June 16th, 2009 at 9:50 am
Correction: Like banking should be, but isn’t . . .
June 16th, 2009 at 9:56 am
@MA:
I’ll check the HUD site to see if they have figures on the number of homes that are “retired” each year. Also, you have to make some allowance for demographic shifts. Beyond that, of course you’re right.
In perspective, the briefing.com chart suggests housing starts are tracking probably at least a 20+ year low right now. So +17% MoM when you’re talking record lows ain’t much . . .
June 16th, 2009 at 9:58 am
Lesson is: Summer starts Sunday make sure you use a high SPF….
June 16th, 2009 at 10:00 am
Holy sh*t — check this out — try 42+ year low:
http://www.huduser.org/periodicals/ushmc/spring09/hist_data.pdf
June 16th, 2009 at 10:02 am
BR said: “Are we really going to learn nothing from this at all? That’s a shame.”
Not until the Second Crash, after which it will be even more difficult to put Humpty Dumpty back on the wall.
June 16th, 2009 at 10:13 am
found him giving a speech in Beijing:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Moral Hazard and the Crisis
Volcker: Hedge funds don’t need to be regulated like banks.
Editor’s note: The following is from the keynote address by former Federal Reserve Chairman Paul A. Volcker to a meeting of the International Institute of Finance in Beijing, June 11:
http://online.wsj.com/article/SB124511733241717573.html#mod=rss_opinion_main
June 16th, 2009 at 10:16 am
Barry Ritholtz Says:
June 16th, 2009 at 8:32 am
Are we really going to learn nothing from this at all?
That’s a shame.
____________________
Senor Barry, It is what it is….and will continue so!
To Wit (The Who): “Meet the New Boss, Same as the Old Boss…..”
(Will Rodgers): “A man only learns in two ways, one by reading, and the other by association with smarter people. ” [todays hint: And who the 'smarter' people? Amend the 'smarter' to 'powerful' & 'in control']
“Last year we said, ‘Things can’t go on like this’, and they didn’t, they got worse.”
(Gen George Patton): “Moral courage is the most valuable and usually the most absent characteristic in men.”
Your mileage may vary……..
June 16th, 2009 at 10:22 am
“We’re on a road to nowhere…”
Until we take the pain and learn the lesson. Said oft on this board, you cant drink yourself sober, nor can you solve a debt crisis with more debt. I get the feeling that Volcker is just the lame ass old guy in the room who wont drink at the party and tries to make everyone feel bad for doing so… he’s not going to be popular and he’s not going to have any sway. He’s just a token inflation fighter to those other asshats.
OT: Some thoughts on the tape…
The I is watching 932 on SPX, 93.20 on SPY as overhead resistance from yesterdays breakdown.
36.20 overhead on the Q’s.
SDS and QID could be nice swing trade setups if resistance holds, but the trend is gingerly still up, and if resistance breaks, then SSO and QLD could provide the nice opposite swing. With stops set according to those resistance levels… which we would deem cautious support.
Looking at UCO, might play this mornings gap support for a long day trade. Get long on a retest of gap support at 14.10… Stop set at 14.
Here at Dread Capital, our core is still short via QID, SRS, and FAZ… but we aint afraid of the trend based swing trade… gotta love those 15min charts in this tape. They have been money.
June 16th, 2009 at 10:36 am
Nice Breakdown I-man.
I am thinking we fail to go above 935 in the real short term, test the low 900’s, retrace/bounce upward from the low 900’s, then head for a test of 875-880.
Of course what I think does not matter but that sounds nice to me on paper.
If 875-880 does not hold, things will get interesting.
June 16th, 2009 at 10:40 am
@Barry Ritholtz — 8:32 am
“Are we really going to learn nothing from this at all?”
The lesson’s not over.
…..No kidding
The American Empire Is Bankrupt
http://www.truthdig.com/report/item/20090614_the_american_empire_is_bankrupt/
Posted on Jun 14, 2009
By Chris Hedges
This week marks the end of the dollar’s reign as the world’s reserve currency. It marks the start of a terrible period of economic and political decline in the United States. And it signals the last gasp of the American imperium. That’s over. It is not coming back. And what is to come will be very, very painful.
(cont.)…….
June 16th, 2009 at 10:53 am
It is disappointing that Mr. Volcker isn’t more front and center for the Obama administration about the economy and the president’s actions to be taken about it. Alas, it’s not apparent to me what impact he’s had on economic policy making. That’s too bad.
During the election campaign it was heartening to see Mr. Volcker as one of Mr. Obama’s important advisers regarding the economy and policy.
Where is Mr. Volcker, indeed?
June 16th, 2009 at 10:59 am
Space – This week marks the end of the dollar’s reign as the world’s reserve currency.
Hey there buddy, can you back up up that statement up with anything other than rhetoric? Facts would be super swell!
June 16th, 2009 at 11:03 am
I thought that was a bit dramatic as well… even for a Space Cowboy…
June 16th, 2009 at 11:19 am
Well we know where were goin
But we dont know where weve been
And we know what were knowin
But we cant say what weve seen
And were not little children
And we know what we want
And the future is certain
Give us time to work it out
Were on a road to nowhere
Come on inside
Takin that ride to nowhere
Well take that ride
June 16th, 2009 at 11:21 am
Long term I do not doubt that the USD stands a good chance of losing reserve status.
In the short term the argument that there is too much global debt denominated in USD’s makes the most sense imo.
Maybe when the majority of that credit is wiped out then sure
June 16th, 2009 at 11:32 am
Stitching together various postings and Volcker’s speech: “Empty suit management employing politically correct technical analysis verified by GS and JPM, has decided that the banking oligarchy’s bureaucratic pseudo-regulatory agencies provide adequate cover for the oligarchy’s continued existence and conduct of business as usual,requiring little more than mild sabre rattling and acknowledgment that the IBs can continue their highly leveraged computer-run hedging operations as they are the only substantial SLP source of liquidity in a highly toxic NYSE environment.
June 16th, 2009 at 11:37 am
Thor Says:
June 16th, 2009 at 10:59 am
Space – This week marks the end of the dollar’s reign as the world’s reserve currency.
“Hey there buddy, can you back up up that statement up with anything other than rhetoric? Facts would be super swell! ”
I-Man Says:
June 16th, 2009 at 11:03 am
“I thought that was a bit dramatic as well… even for a Space Cowboy… ”
____________________________________________
“A difference of opinion is what makes horse racing and missionaries.” -Will Rodgers
“There are three kinds of men.
The one that learns by reading.
The few who learn by observation.
The rest of them have to pee on the electric fence for themselves.” -Will Rodgers
As always……YOUR mileage may vary.
spcwby
June 16th, 2009 at 12:28 pm
No surprise here. Volcker is about taking the pain now and moving forward with a clean slate.
Obama, like most politicians, wants to push problems off into the future, even if it makes the problems a lot worse in the end.
June 16th, 2009 at 1:25 pm
Who needs him? There’s no inflation now or for the foreseeable future!! He doesn’t fit in with the “Let’s Continue the Monetary Expansion Group” that Obama has surrounded himself with. The Fed monetized some more debt today and everyone just yawned. Who cares? It’s all going to me just fine as our leaders have told us. LOL
June 16th, 2009 at 2:02 pm
[...] Where in the world is Paul Volcker? (Dealscape, Big Picture) [...]
June 16th, 2009 at 9:45 pm
Washington Post alerts banking regulation white paper being floated.
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/16/AR2009061601887.html?hpid=topnews
June 17th, 2009 at 6:01 am
I think Paul has gone fishing….
http://www.nytimes.com/1987/05/03/magazine/gone-off-fly-fishing.html?sec=&spon=&pagewanted=all
June 25th, 2009 at 1:46 pm
Bloomberg article today….
Volcker Gets Less Than He Wants in Curbing Wall Street Excesses
http://www.bloomberg.com/apps/news?pid=20601109&sid=atBbIcvSgrFs