What the US Treasury needs: magician and economic genius

15 November 2008

James Doran assesses the qualities needed to be Obama’s Treasury secretary at a time of unprecedented crisis, and wonders whether the front-runners measure up

As situations vacant go, the position of Secretary of the United States Treasury is unique. The job requires a politician of presidential fortitude, a world-class economist and a magician capable of making a $1 trillion national deficit disappear. Short of genetically engineering the unholy product of Nobel laureate Paul Krugman and conjuror David Copperfield, such a singularly qualified individual is almost impossible to find: no small wonder that Barack Obama was in no rush to make this crucial Cabinet appointment.

If every election hinges on ‘the economy, stupid’, as James Carville observed back in 1992, then this election was no exception. The American economy is in its worst shape since the 1970s; not as bad as the Great Depression of the 1930s, as many doom-mongers would have us believe, but bad enough to impose tight restrictions on the Obama administration throughout the coming four-year term.

The markets, eager to banish the bear back to its cave, forgot this in the first week of November, and forged the view that somehow confidence would be restored as soon as the political vacuum was filled. This is why the Dow Jones industrial average soared by more than 300 points on the day before the election in anticipation of an Obama win.

But the morning after, like a drunk regretting his indulgences of the night before, the markets plunged almost 500 points as the realisation dawned all too quickly that simply electing a new president was not enough to cure America’s economic ills.

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Herbert Thornton

November 13th, 2008 6:41pm Report this comment

"What the US Treasury needs: magician and economic genius."

Quite so. Hjalmar Schacht would have fitted the bill perfectly, but unfortunately he's dead.

Herbert Thornton

November 16th, 2008 8:06pm Report this comment

I see, from another web site, that the recent emergency summit meeting to discuss the world financial crisis included "a far broader range of countries than the elite, old-guard group that usually holds such summit meetings" and that they included "Leaders from 21 nations and four international organizations".

Was this "summit" any more than a extra large committee of very confused people?

In my experience, the slowest and least effective way to deal with any problem is to form a committee. In this case it sounds like that most useless of committees called the United Nations.

Apparently they called for things like "supervisory colleges" where financial regulators would "compare market notes across countries"; improved "cooperation between nations on regulations"; "standardization of accounting rules" on how business should value "potentially tricky assets"; and "new attention to credit-rating agencies."

The ideas may sound appealing, but how long will it all take and will they result in anything more than yet another layer of incompetent international bureaucracy? Will anything of real use come out of it? I doubt it.

I think that the situation is one where every country needs to put its own interests first - and that most countries - other than ones governed by fools such as Gordon Brown (or David Cameron for that matter if he is ever P.M.) - will do just that.

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