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Hilsenrath: Summers withdrawal assures Fed wind-down will be slow

  • "Any Fed wind-down of its easy-money programs will be slow and gradual," says Jon Hilsenrath, weighing in on the impact of Larry Summers withdrawing from the race to be the next central bank head. Remaining top contenders Janet Yellen and Don Kohn both helped shape and are supporters of current Fed policy.
  • Whoever takes the job has a "challenging task," says Hilsenrath, as pulling back from easy policy too soon could send the economy back into recession, but not moving fast enough risks inflation or another financial bubble.
  • Larry Summers is no dummy, and one can't help but wonder if it's the near-impossibility of normalizing policy without blowing something up that has him scurrying back to the safety of corporate boards, consulting gigs, and speaking engagements.
  • There remain a few dark horse candidates as well, and one - former Treasury boss Tim Geithner - remains firm he is not up consideration to the post, reports the WSJ.
Comments (4)
  • Hooray!!! The bull market continues...

     

    ...but when the music eventually does stop playing...look out.
    15 Sep 2013, 09:38 PM Reply Like
  • "Larry Summers is no dummy, and one can't help but wonder if it's the near-impossibility of normalizing policy without blowing something up that has him scurrying back to the safety of corporate boards, consulting gigs, and speaking engagements."

     

    There's also been a consensus among most that he would not be approved, and polls by the WSJ that 80% of economists polled think Yellen would be more positive for the economy. Why would he go through all the headaches of an approval process when it seems so bleak?
    15 Sep 2013, 11:00 PM Reply Like
  • If it was a desire to avoid something blowing up he would have never been a candidate in the first place. This looks more like him giving in to people complaining about how awful he would be.
    16 Sep 2013, 12:52 AM Reply Like
  • Summers is smart, and his mistakes are those a smart person makes, like thinking deregulation would conform to a hyper-rational view of self-correcting markets. That was a costly error, but in many ways Summers would be conventionally right about supporting a depressed economy. He would not be much different from Yellen on most questions. Also like Yellen he is aware that the Fed balance sheet will not "blow up", that for good or bad it's not a big deal. That presented no problem for him. His problem was that he's widely hated and his support was narrow and shrinking.
    16 Sep 2013, 01:24 AM Reply Like
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