The blogospheric response to the appointment of Henry Paulson to replace John Snow has been generally, if not uniformly, positive. Max Sawicky
begs to disagree:
All this swooning over the new Bush appointee for Treasury Secretary, not least from leading Democrats like Chuck Shumer and Robert Rubin, makes me want to puke. I suppose some of it is relief that we didn’t get someone certifiable, like my pal Steve Moore. Standards continue to fall. …
Update: Menzie Chinn suggests that, whether he’s competent or not, Paulson’s accession isn’t likely to have much impact on administration economic policy. Nice graph.
Update: Paul Krugman offers Paulson some advice, and Mark Thoma kindly leaks a bit of it through the NYT paywall (thanks!).
Right now, you’re being flattered. You have a natural urge to be a team player. But if you play the game your new bosses want you to play, your credibility with the public will evaporate in no time at all. And when you’re no longer useful to your new friends, you’ll be tossed aside.
Paulson’s appointment signals a change that Bush was favoring industry appointments over Bankers. Bankers tend to favor a specific attitude to business cycles. Hence, Paulson is probably there to engineer a recession to deal with the bubbles in the economy. I would then think Paulson is actually going to have considerable impact upon the economy. News reports indicate Paulson got unusual agreement with Bush to have access to Bush. That translates to Paulson having more authority than other Treasury Secretaries.
thanks,
Doyle Saylor
Bankers (and in particular investment bankers), like the rest of Wall Street, tend to have a peculiar view of the economy. For example, the new (bad) employment report is “good news”, since it will tend to discourage more Fed rate hikes. Productivity growth is good, as long as the results show up in corporate profits and not employee paychecks.
As for Paulson, I think I’m with Chinn for now, but I hope it will at least be interesting to watch.