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Monday, September 26, 2005

Larry Summers or Robert Rubin for Fed Chair?

Caroline Baum is suggesting Larry Summers as a possible replacement for Greenspan.  While I agree there’s a good chance the choice will surprise us, that is not my main interest in the column.  She reports that 11 percent of 104 market professionals chose Robert Rubin as their best guess of Bush’s choice for the next Fed chair.  I would want to know more about the survey design before making too much of this, but what message is sent with the choice of Rubin?  I want to jump to the conclusion that it reflects the out of control deficit, but this is the Fed chair, not the Treasury Secretary.  It does signal a desire for a familiar and experienced face and, for many, a desire for a background in business:

Those Clinton Years Are Looking Better Every Day, Caroline Baum, Bloomberg:  While the Bush administration has been … mum on the subject of a successor to … Alan Greenspan, investors are already voicing their picks. A survey of 104 market professionals … put Ben Bernanke … in first place with 38 percent. … Martin Feldstein came in second, with 31 percent of the vote. In third place, with 11 percent, was (gulp) Robert Rubin, Clinton administration Treasury secretary par excellence… What are we supposed to make of investors' more-than-zero odds of an iconic, across-the-aisle choice? … The survey specifically asked who would be President George W. Bush's choice to succeed Alan Greenspan... It would be out of character for Republican tax-cutter Bush to appoint Democratic deficit hawk Rubin to a key economic post. For starters, Rubin stands for something. … [and his] image may be just what the Bush administration needs… Are investors onto something in imagining Bush could tap Rubin for Fed chairman? ... ''Someone who thought he could appoint … Wolfowitz to the World Bank is not going to cross the aisle to go to a Democrat.'' … My guess is that Bush will reject an academic like Bernanke for … someone with more real-world, market experience. Someone who isn't on anybody's short (and stale) list. Someone who isn't on the radar of the investors ... Someone, in short, like Bob Rubin. Calling Larry Summers? The Harvard University president and former Treasury secretary has an added appeal, having already alienated the politically correct Left.

    Posted by on Monday, September 26, 2005 at 12:01 AM in Economics, Monetary Policy | Permalink  TrackBack (0)  Comments (7)

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