Long time readers know that I am a tremendous admirer of Volcker, and this morning’s WSJ has a fascinating article about the relationship between former Fed Chair Paul Volcker and Presidential candidate Barrack Obama:
"Mr. Volcker delivers gravitas and credibility to Sen. Obama, people in the Obama camp say, as well as ideas and approaches to the economic crisis. "Volcker whispering in Obama’s ear will make even Republicans comfortable, because he’s a hero of the right and a supporter of a strong dollar," says John Tamny, a supply-side economist and Republican…
For Mr. Volcker, a connection with Sen. Obama could help burnish his record as Fed chairman. The cigar-chomping central banker from 1979 to 1987, he received blame for driving up interest rates and tipping the U.S. into the deepest recession since the Great Depression. But Mr. Volcker is just as well known for taming the runaway inflation of that era. His stock has risen in recent months as his gruff warnings about the risks of deregulating the financial sector have come to look prescient. His successor’s reputation, meanwhile, has come under a cloud. Alan Greenspan is under criticism that the low interest rates and deregulatory ideology of his tenure contributed to today’s crisis.
With nearly every day presenting a fresh financial emergency, Sen. Obama has persuaded Mr. Volcker, who travels the globe for economic meetings and occasionally disappears on fly-fishing trips, to be at the ready; Mr. Volcker now keeps a cellphone on him at all times. And though he still doesn’t own a computer (his assistant prints out emails for him), he’s gotten used to Sen. Obama’s rapid-fire messages sent from a BlackBerry device…
But for now, and going into the campaign’s final weeks, aides say Sen. Obama is increasingly relying on Mr. Volcker. His staff now routinely reviews policy proposals and speeches with Mr. Volcker. Conference calls and face-to-face meetings of the Obama economic team are often reorganized to accommodate his schedule. When the team discusses the financial crisis, "The most important question to Obama: What does Paul Volcker think?" says Jason Furman, the campaign’s economic-policy director."
From an economic perspective, I did not take the Obama candidacy seriously — until I heard about Volcker’s role. When one of the greatest Fed Chairs ever starts consulting for a relatively young candidate with limited fiscal experience, you notice it.
Volcker Makes a Comeback as Part of Obama Brain Trust
WSJ, OCTOBER 21, 2008