Submitted by Mark Grant, author of Out of the Box,
“Failure is a state of mind. It's like one of those sand traps an ant lion digs. You keep sliding back. Takes one hell of a jump to get out of it.”
-John Steinbeck, The Winter of Our Discontent
He didn't make it. I believe that can be said with accuracy. Larry Summers could not make the "one hell of a jump" and so fell back into the trap, renounced his intentions, sent the appropriate frothy note on linen stationary designed more for the public than the man who received it and so was allowed to walk out of the pit relatively unscathed.
It had become clear that the President's own political base in the Senate were not going to support Mr. Summer's ascendancy. The flourish of the epees will now retreat and public pronouncements affirming Mr. Summers' noted intellect and fine character will now be brandished about for public viewing. It is a time worn tradition and no reason to change it now. The larger question will be if this will influence the current Fed Chairman so that he cuts back on his taper intentions because of the additional note of uncertainty that is now present in the marketplace. Laurel and Hardy's "A fine kettle of fish," Mr. Bernanke might now recite.
The eye of the Press will now turn to Mr. Kohn, Ms. Yellen, who does not seem to have the support of Mr. Obama, and the long, though interesting shot, of Stanley Fischer. Some will also wave the red, white and blue banner at Tim Geithner but his reluctance seems quite real. Not back to square one perhaps but not so far from it.
The Drop Dead Day
I have answered the question of "WHEN" and it is fast approaching. It is but a scant three days away as the German elections take place. After Ms. Merkel is hailed and wrapped in the finery of European grandeur and the beer and bratwurst have been consumed; watch out. I expect a serious hardening in the German position as all of the quite serious problems of Europe begin show up. You can count the numbers as you like, you can pretend and extend and the sleights of hand have become common place but the real numbers, the real deficits, the real liabilities do not vanish even if the Europeans choose not to count them and so reality eventually arrives and must be reckoned with and it is coming.
From under the bed Portugal, Spain, Cyprus and Greece will all scurry about and salt water, labeled insecticide, will not work no matter what it is called. The Pied Piper cannot lead all of these vermin away and troubles aplenty are arriving on the horizon. Then Wednesday is also the scheduled day to vote on Mr. Berlusconi in Italy and Mr. Letta could soon find himself out of a job. The IMF who has kept mostly quiet until the German elections are over may now rear up and demand debt forgiveness in Greece or a refusal to lend so that the ropes may begin to bind around the Continent.
Whipsaw
There are so many political events, so many financial announcements and Syria still looms large in the background. Mr. Obama appears to be easing into a lame duck presidency far earlier than once thought and the reality of Obamacare will hit Main Street on October 1 which may tip the scales further out of his control. It may not be either the best of times or the worst of times but very volatile times that mark this week.
“He saw something that makes a man doubtful of the constancy of the realities outside himself. It was the shocking discovery that makes a man wonder if I've missed this, what else have I failed to see?”
-John Steinbeck, The Winter of Our Discontent
The yellow flag is out. I advise you not to throw caution to the wind!