Congratulations to the President on his reelection. Time to move on and get to work.
First up is a short-term strategy to avoid the fiscal cliff.
Next is appointing a new Secretary of Treasury to replace Tim Geithner. Short list rumors? Larry Fink of Blackrock; Erskine Bowles, former chief of staff to President Clinton and co-chair of the National Commission on Fiscal Responsibility and Reform; and the White House Chief of Staff Jacob Lew. With Bowles the President gets a twofer: a new Treasury chief and credibility in negotiating a fiscal package.
Whoever he appoints the new Treasury chief will need to move quickly and cobble together a credible growth package, which includes long-term fiscal sustainability as a central component. Otherwise, you know, as they say, Greece is the word.
By the way, Larry Fink is not a proponent of negative real interest rates and understands how they distort capital formation and the economy. He thinks, or thought, the Fed should raise interest rates.
We posted this in October 2010,
Maria Bartiromo: ….Do you think the Fed should start raising rates?
Larry Fink: I actually suggested that to the Fed some time ago, but the economy has weakened a little bit since I made that suggestion. I believe low rates are going to be a problem in the long run. We’re seeing more and more investors, institutional investors, individual investors, are moving more of their money to emerging markets, to overseas… This is the money that is used to invest in America, in the long-term vitality of America, they’re now investing in Indonesia, investing in other countries… You need now to move that money overseas to get those returns… The problem, I see, with a long period of time with low rates , we are going to see a large sum of money moving out of the United States. It will continue to put pressure on our currency…..and we are going to have less available capital to invest in this country.
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