Friday, October 17, 2008

My choice for Treasury Secretary

My vote for Treasury Secretary

The next Secretary of the Treasury is likely to be another Wall Street banker. It is already rumored that JP Morgan CEO, Jamie Dimon, is Obama's favorite pick. But do we need another Wall Street banker at this critical time? True, Dimon navigated JP Morgan through the current subprime mess better than most of his peers, but the real question is, does he have the background in economics and public policy that will be needed to bring forth the major changes and investments needed to save our economy? I doubt it. If appointed he'll likely go about his job the same way many of his predecessors from private enterprise did--preaching fiscal discipline and extending bailouts to large firms deemed "too big to fail."

My choice for Treasury Secretary is James K. Galbraith, economist and son of the late, John Kenneth Galbraith, one of America's foremost economists during the last century.

Dr. Galbraith understands why the ideology of unregulated free market capitalism ended up bringing us the current disaster. His ideas and policy prescriptions are ideally suited to the challenges we face. He does not subscribe to the myths about deficits. He is not mired in "gold standard" type of thinking.

Professor Galbraith is also a member of Barack Obama's economic advisory team (I am assuming an Obama win). Not surprisingly, however, Obama will probably go with the safe, but altogether inappropriate choice of Jamie Dimon when a real diamond is standing right along beside him. (Obama talks a lot about change, but his actions belie his words.) That's unfortunate for us.

Below is a link to a list of articles by Professor Galbraith:


Unknown said...

"His ideas and policy prescriptions are ideally suited to the challenges we face. He does not subscribe to the myths about deficits. He is not mired in "gold standard" type of thinking."

I profess little knowledge of the US election process. But, from afar, Mr Obama comes across as politicaly conservative. Certainly no radical. Would he have the political strength and economic savvy to make such an astute choice?

Again, from afar, it comes across that nothing more can/will be done about the economic crisis until the next administration is installed?

As a matter of interest:

"The Macquarie Japan report hunts down indicators for a bottom in the Japan bear and provides some insightful charts:

'Japan's P/BV, at 1.05x, is at 20-year lows, having fallen beneath the 1.25x level of September 2002. The latter was a time of intense financial system stress in Japan. Japan's dividend yield is blowing away its 20-year history, reflecting increased payouts on increasingly respectable corporate profitability.'

'With bank deposit rates near zero, the history relative to the yield on 10-year government bonds is shown below. The equity dividend yield is now materially above the bond yield.'"


"James Montier says, 'Only 2 stocks manage to pass our deep value screen in the US. However, 35 names in Europe pass and 125 in Japan. This emerging value presents me with the strangest feeling, I think it is called incipient bullishness! Obviously not on the overall market, but with respect to a basket of deep value stocks.'"

Value is starting to pop up around the world.

Via: Victor Neiderhoffer's Board.


Lew "Liars Poker" Ranieri on the difficulties of restructuring MBS debt.


(I have no affiliations with the above)


mike norman said...

>>Would he have the political strength and economic savvy to make such an astute choice?<<

That's essentially the question I posed and I think the answer is, "No" for reasons you alluded to.

However, change may come nonetheless, but the results are likely to be uneven and halting at times.

Unknown said...

Did Reagan tow the balanced budget line during his campaign?

On the short Euro trade. If the worst happens and the Euro ceases to function/exist would it be possible that countries like the UK and Switzerland get sucked into the chaos? If so, their soveriegn debt may get marked down? Presenting a possible play in a currency issuers debt, given that USD treasury debt would be considered the safe haven. Is this feasible or am extrapolating to far? I cannot find any data to confirm my thoughts.


mike norman said...

Reagan was for a balanced budget ammendment and it was passed in the Senate in 1982, but did not get by the House.

Could be collateral damage to all European currencies, however, Britain and Switzerland are both currency issuers.

The rating agencies are clueless. I wouldn't put anything past them. They're far more likely to downgrade U.S. credit rating due to recent bailouts. They rated Japan at a level equal to Botswana in 2002, but it had zero effect on their cost of borrowing and their currency actually strengthened.