The job no one wants

Zerohedge ponders why Larry Summers and Tim Geithner have both indicated that they don’t want to replace Helicopter Ben:

The next chairman’s main job is going to be deciding how soon and how aggressively to pull back on Fed programs; and as none other than Fed whisperer John Hilsenrath notes, Larry Summers’ withdrawal increases the likelihood of continuity in central-bank policy for the next few years – meaning any Fed wind-down of its easy-money programs will be slow and gradual. Of course he posits Yellen and Kohn as potential front-runners but throws Tim Geithner and Roger Ferguson back into the mix. Business-as-usual is back and the doves are in control – all the Fed needs now is bigger deficits to enable it to keep the pumps primed…

We can’t help but wonder why Summers really stepped away – is it perhaps that he knows (deep in his cold bloodless heart) just what a disaster this is all going to be and prefers to keep his ‘perceived’ legacy in place?  Now we have Geithner clearly not wanting to be touched with the Fed
s—– stick… seems like we will end up with the lowest common
denominator Fed head – great stuff.

I assume it’s going to be Janet Yellen, given Barack Obama’s fascination with his own historical significance. Also, women are less likely to feel they should be held responsible for anything they do, much less for anything that happens on their watch, and they also tend to place undue importance on being a Hultgreen-Curie candidate. So, unlike Summers and Geithner, Yellen is likely to discount the risk of catastrophic failure to her reputation. If that is true of her, and we’ll know it does if she doesn’t take herself out of the running fairly soon, then we can be fairly confident that she’ll take the system down on a conventional, consensual, and by-the-book basis.

This promises to be the ultimate Hultgreen-Curie scenario: the first female Fed Chairwoman is at the helm when the global financial system goes down.  And it would be a spectacular example if it took place while Christine Lagarde, the first female head of the International Monetary Fund, was still running the IMF.

Keeping in mind that I repeatedly issued warnings about the 2008 financial crisis beginning in 2002, here is what the current Fed frontrunner had to say about it after the fact.

“For my own part I did not see and did not appreciate what the risks were with securitization, the credit ratings agencies, the shadow banking system, the S.I.V.’s — I didn’t see any of that coming until it happened.”
– Janet Yellen, 2010

This should end well.