Filling the shoes of Alexander Hamilton, the Treasury Secretary has often been a titan of finance and policy. Think of the banker and industrialist Andrew Mellon, who worked for Harding, Coolidge and Hoover, ruling economic policy with an iron hand; Douglas Dillon, the patrician who expanded trade under Kennedy, or Robert Rubin, the head of Goldman Sachs who became Clinton’s highly influential Treasury Secretary. Whether one agreed with their policies or not, they brought unquestioned gravitas to the position.
Now comes Jack Lew, President Obama’s chief of staff, Washington insider, academic and, as chief operating officer of Citigroup’s Alternative Investments unit, oversaw a hedge fund that bet on the housing market’s collapse. Lew also played a big role in busting the graduate students’ union at New York University.
Meditating on Lew, Clyde Prestowitz, a trade negotiator for President Reagan, writes this of his background:
This type of insider can be extremely valuable. He/she knows how Washington works, where all the bodies are buried, what’s been tried before and what has worked and what hasn’t worked. He/she is not particularly well known to the public, but is known and trusted by all the people who count in the party and the broader policy and political world…Obama seems to like this Washington type.
So what Lew lacks in gravitas, he somewhat makes up with insider knowledge. Prestowitz wonders if he will be a Geithner clone or make some meaningful action to create jobs and address our massive imbalances, including in trade. I would add: Will he apply the rule of law to Wall Street and the Too Big To Exist Banks? Or will this be more of the same, as the contrived debt crisis rolls along risking default and global depression, and the banking sector remains extremely dangerous and counterproductive?
Given that Mr. Obama has been content to preside over four years where the banksters got away with it, trade has motored on with a broken paradigm and the imbalances remain, we shouldn’t expect much. Lew will be the nominal head of the president’s “economic team,” but one tightly controlled by the White House. Mission (apparently): Keep the oligarchs happy, make modest adjustments and hope things get better. That’s not good enough.
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Today’s Econ Haiku:
“A P.R. problem”
So they think in Chicago
But where there’s smoke, there’s…