Markets don’t like Summers — not the doldrums, the man.
Add another to the long list of individuals and organizations that haven’t warmed to Larry Summers (left). The economist/college president/former Treasury secretary/alleged caveman appears to be outpacing Federal Reserve Vice Chairwoman Janet Yellen in a bid to replace Ben Bernanke as chairman.
And the news it isn’t helping ongoing efforts to stimulate the economy, with The New York Times reporting on Tuesday that some jittery analysts are betting that a Summers nomination could lead to slower economic growth, less job creation and higher interest rates.
The unease is the product of a little information and a lot of speculation, since Summers has said little about monetary policy in recent years, according to the Times. Investors are left parsing a handful of comments in which, the paper says, “he has expressed some doubts on the benefits and concern about the consequences of the Fed’s policies.”
“People don’t know what Larry might do,” PIMCO chief Mohamed El-Erian told the paper. “There’s a lack of a lot of information on Larry’s views. We don’t have enough information to make an assessment, just some second- and thirdhand accounts.”
Yellen has long been thought the likely successor due to her qualifications, as well the fact she would be the first female fed chief in an ongoing political era of firsts.
“Yellen does not have much managerial experience, which you need when herding the cats on the FOMC,” Merk Funds’ president and chief investment officer Axel Merk told ThinkAdvisor in July. “She did, however, gain kudos from the press when they recently released the transcripts of the 2007 meeting in which she pretty much predicted everything that happened in 2008.”
Calling Summers the greatest debater he’s ever met, Merk (and others) noted the “mark of scandal” for comments made while president of Harvard about women’s suitability for the higher echelons of science.
“Critics will ask why President Obama chose this ‘sexist’ over Yellen, even though Yellen was obviously qualified,” Merk concluded.
The Times concludes that the sense of uncertainty in a Summers chairmanship is heightened by the fact that “as many as five of the Fed’s seven governors may be replaced in the next year.”
Check out Axel Merk Predicts Japan as Next Crisis, Yellen as Next Fed Chief on ThinkAdvisor.