The 5 Dumbest Things on Wall Street This Week: Sept. 20
5. Losing Larry
Larry Summers withdrawal from consideration as the next Fed chairman creates only one big winner in our admittedly dumb point of view and obviously it's one of the Winklevoss twins.
Exactly which of the pair we aren't sure. Take your Winkle pick. But one of those Facebook
Allow us to explain.
The stock market immediately cheered Summers' exit from the race, rising half a percent Monday. As TheStreet's very own Herb Greenberg points out in his column titled Summers and Heroin, however, as much as the stock market reflects the so-called pulse of America, the country's bloodlines are tainted by heavy doses of Fed-dealt junk in the form of cheap cash. Since Summers was more of a threat than his rival Janet Yellen to cut off, or at least reduce, the supply of easy money into the system, his departure as the president's next pusher-in-chief garnered the expected relief high.
And as Herb astutely concludes, giving the addicts on Wall Street exactly what they want is not always a good thing. We learned as much the hard way when Lehman fell five years ago this very week.
"Low rates are wonderful for almost everybody but savers and retirees. They spur housing sales. They keep stock prices elevated. And, well, they make us feel good. Oh, and they also give an illusion that things are better than they really are," writes Herb (no relation) Greenberg.
In other words, ordinary Americans -- the plain old folks at home who save and retire -- lose by losing Larry Summers, and it's more than an economic matter. It's a hematologic one.
Of course, President Obama is clearly a major loser in the bloodsport that is politics as a result of Larry's concession letter. TheStreet's Jim Cramer says as much in his column thanking Summers for removing his hat from the ring to avoid a bloody battle on Capitol Hill.
"This candidacy -- which required Summers to bow out in order to save the president some political capital and avoid gut-wrenching hearings -- was so ill-thought-out by the president that one can only wonder how horrendous the battle will be with the Republicans in a few weeks," opined Cramer, adding that Obama must have been blind to the fact that Sen. Elizabeth Warren (D., Mass.) was gearing up to slam Summers on behalf of women everywhere, even those without Harvard degrees.
On that note, lest one think that American women emerge triumphant as a result of Summers ceding the Fed's top spot to a fellow female, well, we suggest revisiting that notion as well.
Even if Yellen does assume the position of America's top banker, she will always be remembered as Obama's number two choice. In the eyes of far too many, including the commander-in-chief, she will have won by default and as any competitor knows, that is often a fate worse than losing. Suffice to say it will make for some seriously awkward photo ops with Obama if and when Yellen does become the country's first Fed Chairwoman.
Summers quite clearly is a loser by definition. That said, he can be solaced by the fact that the President of the United States is on his side even while everybody else in the country hates his goddamn guts, especially the fairer sex.
Which brings us back to those Winklevosses. Or Winklevi. Or whatever those two kids call themselves when they are not daytrading bitcoins.
For those that may have forgotten, the Winklevoss brothers were smacked down by Summers when he was President of Harvard and they were lowly students seeking redress for Mark Zuckerberg's alleged crime of stealing their multi-billion dollar idea. The scene was famously reprised in the blockbuster movie "The Social Network" and brought up again in a subsequent interview where Summers categorized any student who pulls such a stunt as an "asshole."
He may be the only one, yet somewhere a Winkle asshole is smiling triumphantly right now.