This setting reminded me of the fight between Nigel Lawson, the
brains behind the Thatcher Revolution, and Alan Walters, Thatcher's
favorite economist, in the late 1980s-a calamity I watched at close
quarters. Lawson was chancellor of the exchequer when Thatcher brought
Walters into 10 Downing St as her personal adviser. They disagreed
about monetary policy; after a period of friction Lawson decided he was
no longer trusted to do his job, and quit. You could plausibly argue
(and many did at the time) that this was the beginning of the end of
Thatcherism. Letting this happen-driving her most talented lieutenant
out of her government-was the biggest mistake she ever made.
Geithner and Summers appear to get along. But what I really want to
know is how they have managed it. My theory-that the secret of their
success, if they were going to have one, would be Geithner's modesty-is
somewhat undermined by Josh's piece. I find it frustrating that the
question is never really confronted head on, but the implication of the
piece is that Geithner ("confident and brash-almost unnervingly so")
and Summers have disagreed on some big questions, and that Geithner has
prevailed every time. This, frankly, I find hard to believe. The force
of Summers' intellect is such that he dominates a discussion even when
he just sits there brooding. And he knows it. Can he really have been
sidelined like this? By a former underling? If so, why is he still
there? I don't feel I understand this mysterious and pivotal
relationship any better than I did 15,000 words ago.
have liked to read much more, too, about the "Volcker rules" episode.
This again was most bizarre. There stood Geithner, Treasury secretary,
off to one side, while Volcker strode up to explain why the Treasury's
proposals for financial regulatory reform had missed the point. My
instant reaction, much as I admire Volcker, was that his
proposals missed the point. Many of those who initially celebrated them
now seem to have come around to the same view. But here I'm talking not
about the substance, but about the personal chemistry.
seemed to me at the time an instance of Geithner's modesty that he was
willing to stand there and be upstaged by one of Obama's other heavy
hitters. Without going into detail about how this initiative came to
be-details I will need, if I am to be convinced-Josh says this is not
how it was. Volcker's rules were devised by Geithner.
the Massachusetts loss, Obama made a show of introducing additional
"tough" new rules, bringing back Volcker to lend him credibility and
endorse constraints on future bank growth and on banks' ability to bet
on risky assets like hedge funds-an episode widely interpreted as a
rebuke to Geithner. For political purposes, it was. But in truth, the
new measures were relatively small ones rushed forward to appease a
hostile electorate. (And Obama had Geithner design them.)
that parenthesis. This makes Geithner the master architect, acquiescing
in his own seeming rebuke "for political purposes"-as he designs a
phony policy, and pushes Volcker forward as public-relations dupe to
Well, as they say, interesting if true.