No Third Term For The Chairman
While the theater of the presidential election hits peak season, and InTrade odds for this candidate or that are approaching flash crash territory, the one person who truly runs not only the US, but the entire "developed" world, Ben Bernanke, is going nowhere. At least not until January 2014. At which point he may be going somewhere - retirement. Reuters cites the NYT: "U.S. Federal Reserve Chairman Ben Bernanke has told close friends he probably will not stand for a third term at the central bank even if President Barack Obama wins the November 6 election, the New York Times reported." In other words: the republican Fed Chairman who mysteriously became a Democrat president's bestest friend (and has been publicly threatened by every other GOP candidate, including Romney, although that would be merely to replace him with Bill Dudley, not Glenn Hubbard) that $4 trillion that the Fed will have in assets at the time of Ben's departure, and $5 trillion at December 31, 2014, just became someone else's problem. Good luck to that someone else unwinding a Fed balance sheet which as we explained previously, will at one point in the next 2 years hold well over half of the marketable US Treasury debt inventory. How the sale of this inventory will happen in a time of spiking rates (because that's what the Fed wants - inflation) is literally anyone's guess, because in practice it will never happen.
Republican presidential nominee Mitt Romney has already said he would not re-nominate Bernanke if he wins the presidency. Bernanke's term as chairman ends in January 2014.
The Fed's unconventional efforts to spur growth have been criticized by many who argue that they threaten future inflation and abet profligate spending in Washington.
Treasury Secretary Timothy Geithner has already made it clear he wants to leave by the end of the year.
Former Treasury Secretary Lawrence Summers would be at the top of Obama's list to replace Bernanke if he did not offer for re-nomination, columnist Andrew Ross Sorkin wrote.
Longer shots include Janet Yellen, the vice chairwoman at the Fed, and economist Alan Krueger, a former assistant secretary of the Treasury for economic policy -- or even Geithner, Sorkin wrote in his "Dealbook" column.
Glenn Hubbard, who headed the President George W. Bush's Council of Economic Advisers, is often mentioned as Romney's most likely nominee for the Fed job.
Nothing much to add here: when even the man who created this mess can't wait to get out, that's when it is time to finally lift the offer on that central European real estate in a quiet Tyrolean region you have been eyeing for some time.
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