Friday, November 28, 2008
One Old Superman Is On The Way
Black Friday, sounds pretty serious. Well, it is if you are a retailer. This is supposed to be the day that your profits, for the year, enter into the black, as opposed to staying in the red. The American people need to go out and buy what they need while not taking on too much debt, but we need a feeling of confidence. Help is on the way to fix our battered economy.
One old Superman is on the way, and his name is Paul Volcker. President-elect Obama has selected Paul Volcker to be Chairman of the newly formed Economic Recovery Advisory Board. This former Chairman of the Federal Reserve Bank is no rookie to the battles of the economy and money and banking. At 81, he is one of the few people in the United States with the combination of experience and knowledge to do this job and do it well. In August 1979, Paul Volcker took over as Chairman of the Fed from G. Wm. Miller, a guy who had no business being given the job in the first place. President Carter is not one of my heroes. When it comes to money and banking, former President Jimmy Carter, in my opinion, is an idiot. The Carter administration screwed things up so bad that President Carter was eventually forced to pick Paul Volcker to give our central bank the status it deserved in the world. Volcker inherited a mess. Volcker came into the position of head of the Fed at a time when inflation was running wild and he broke the inflationary spiral and put our economy on a sounder monetary track.
At the time of his appointment in 1979, I was working with the bond market every day and could feel the results of his work as interest rates were forced up and then the inflationary fever was broken and rates started their long path downward. His work set the course for the economy that took us to the Greenspan era (Volcker left the Fed in August 1987). Greenspan and his stupid ideology of deregulation along with the Bushes fucked this economy good. President Clinton did not stop Greenspan and the spiral of deregulation went on. Why stop a good thing, everyone was making money in the market, right?
President-elect Obama has said that he wants to hit the ground running on day one. Well, in my opinion, he has at least one guy with the experience and knowledge to do that. The rest of his economic team will need to be tested, but Paul Volcker has already been tested. In the battles of our economy from 1979 to 1987, Volcker ran the Fed and ran it well. He is smart and he is no nonsense. If President-elect Obama wants people that will give it to him straight, Volcker is his man.
A few years back, I ran into Paul Volcker at a private equity annual meeting in Washington D.C. I tried to tell him how much I felt he did to put this country back on track when he was Chairman of the Fed. He waved me off as if he did not want to hear my praise of the work he had done. Paul Volcker saved this country’s monetary system at a point in time when our position among the other major central banks in the world was going to hell. That is a fact. Some might say that is my opinion, but just look at the interest rate numbers and inflation numbers from the time he took over the Fed to the time he departed. Paul Volcker did one hell of a job for his country. In my book, Paul Volcker is a real American hero.