Ben Bernanke will not attend the central bank junket known as the Jackson Hole meeting. Months ago, he claimed that there is a scheduling conflict. This was reported with a straight face by the media.
Bernanke is now a lame duck. I do not expect major policy changes before he departs in February 1. He oversaw TARP. He oversaw the greatest example of crony capitalism in our generation. He did it with academic verbal obscurantism, lots of footnotes, and hyperinflation of the monetary base. That legacy is built into the American economy: “no exit.”
If he can make a quiet departure, and the legacy does not blow up on him, the way it did not blow up on Greenspan, then his strategy will be successful. It will blow up on his successor, the way Greenspan’s legacy bomb blew up on him. He needs at least a year after he departs to transfer ownership to his successor. Greenspan had two years.
The talk now is all about who will succeed him: Janet Yellin or Lawrence “Woman Are Inherently Bad at Science” Summers. The smart money is on Yellin.
Yellin has voted with Bernanke from day one. She is a “known quantity.” She is a good, safe, bread-and-butter Keynesian. She will make no waves.
Summers is notorious for making waves. His gaffe about women — mentioning statistical reality in front of his peers — cost him the presidency of Harvard.
I think the Federal Reserve is happy these days with not making waves. It does not need publicity. It does not need Summers, who is abrasive.
Obama may throw a curve. He may decide to stir the pot. He has the power to do this. He makes the appointment. But he has generally been a team player. The Establishment prefers Yellin.