[lbo-talk] Why did Stiglitz endorse Volcker?

Doug Henwood dhenwood at panix.com
Sun Nov 9 19:50:37 PST 2008


On Nov 9, 2008, at 10:00 PM, Patrick Bond wrote:


> I trust you (and Leo) on many many points, Doug. On this, though, I
> trust Stuart Eizenstat (a jerk opposed to apartheid victims' use of
> the Alien Tort Claims Act for reparations, though he did a deal with
> German companies and Swiss banks to shake down several billion
> dollars of reparations for Holocaust victims), explaining why Carter
> chose him as Fed chair in July 1979: "Volcker was selected because
> he was the candidate of Wall Street. This was their price, in
> effect. What was known about him? That he was able and bright. And
> it was also known that he was conservative. What wasn’t known was
> that he was going to impose some very dramatic changes." And then
> post-Fed he got rich working for Wolfie.

Of course he was Wall Street's candidate - and the Fortune 500's too. They wanted someone to crush inflation, which meant in large part scaring the pants off the working class with a deep recession. That was Volcker's historical task, and he succeeded at it. But he wasn't really about deregulation, nor is he a market fundamentalist - and no doubt he didn't approve of the way Greenspan ran the Fed. He wouldn't have tolerated the bubbles, and doesn't believe that markets are self- regulating. He's a lot more like a European central banker, or a punch- bowl-snatcher of the Martin school. Markets need grown-up supervision. That's what Stiggy likes about him. That doesn't make him a friend of the working class.

Doug



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