Paul Volcker

The crucial test - who Obama picks for Treasury Secretary

Who Obama picks as a Treasury Secretary is going to tell us just about all we need to know about how far Obama is willing to break with the unfortunately named “neo-liberal” economic policies of free markets and free trade that have dominated U.S. economic policy since Ronald Reagan – including even under Bill Clinton. Through most of today, there was a diary on the recommended list on DailyKos, Summers' call for poisoning Developing World?, on the news today that Summers was at the top of Obama’s list for filling the cabinet post of Secretary of the Treasury. The resulting Dailykos thread quickly turned into a discussion of who might be an acceptable Treasury Secretary. Unfortunately, scanning that thread, it appears to me not many people understand that this is the most important fight Obama can undertake right now.

A Trojan Horse brought to you by DailyKos

For the past few years, DailyKos is reportedly the most popularly read progressive political blog in the world. And on DailyKos, one “BondDad” has established a huge following for his posts on financial and economic matters, usually full of vivid graphs and concise explanations of events in the financial markets. Up until this past summer or autumn, “BondDad” presented his analysis from a perspective I fully agreed with: the U.S. economy was much weaker than it appeared to be because wages and earnings for the working and middle classes have stagnated since the 1970s, and a monstrous bubble of debt has been created to allow Americans to keep consuming despite their declining incomes.

But the past few months I have been increasingly distressed by BondDad’s postings, which have swung into alignment with Rubinomics – the Bill Clinton / Democratic Party version of “free trade’ “free market” economics which is unfortunately called “neo-liberalism.