The Baby Boomer’s Case for Gold

This summer saw another bifurcated performance by the markets as the current paradox of wealth and economics continues. Trading continued its impersonation of Fay Dunaway’s character Evelyn Mulwray answering Jack Nicholson, an obtuse Los Angeles private detective J.J. Gittes, in the1974 movie classic, Chinatown.

As investors demanded answers about the state of things, likewise as in the movie, the market’s binary answer to the question of recovery or not oscillated between the economy is producing – corporate profits/recession, corporate profits/recession, corporate profits/recession. Both answers are true.

This topography is tricky for Wall Street to navigate. The economy must appear fragile enough to ensure that the two trillion dollars Bush tax-cut is extended while both the market and economy isn’t bad enough to scare off investors. The calculus to suppress the price of gold is even trickier; until it’s time for the price to rocket upward. Meanwhile, the disappearing middle class assumes that their needs are a factor in these equations.

On Labor Day, President Obama announced a tiny $50 Billion long-term infrastructure program to rebuild roads, railways, and runways. Jobs are expected to materialize well after Democrats are expecting historic congressional defeats in the November election chiefly because of a U-3 unemployment rate at 9.6% and rising. The rising U-6 unemployment figure is 16.7%. High unemployment, the reciprocal to high labor cost, is good for businesses bottom line.

The American working class’s raison d’être, ascension to middle class status became an inconvenient pursuit for the application of supply-side economics. These upper deck fans of Gordon Gecko’s brand of parasitic capitalism, also, among some of the highest paid global workers, misses the obvious internal conflict for gleefully embracing the religion of Maximizing Shareholders’ Value (MSV).

Investors and upwardly mobile workers in the last three decades were convinced by politicians and Mad Men particularly that they were not one and the same. Unfortunately, unlike a centrifuge that can separate like densities in a tube, a MSV’s thesis is extracted from today’s well paid workers on the road to prosperity and from their future generations’ standard of living.

Given this environment, baby boomers face a cacophony of advice, a cornucopia of information, and a cavalcade of confusing and contradictory data as they sail into retirement.

Once prudent, now quant post Second World War standards concerning finance and money, inculcated into our middle class formula of ideas and value system, ceased producing acceptable results over the last decade. Regrettably, zero became the average annual return on equities during this period. The return on residential real estate is even worse.

As current interest rates on certificates of deposit stay below 2% and long-term treasury obligations pay below 4%, nominal yields are an insult. Corporate debt such as IBM is being issued a few basis points above its treasury counterpart. Other corporations are contemplating issuing 50 and 100 year maturities as the markets salivate.

This year, the winning income strategy has been a portfolio of dividend paying stocks over bonds. The current risk/reward parameter, in both stocks and bonds, and the premium being offered for such an undertaking, is a disproportionate proposition, whether we recover or sink into a global depression.

We continue to witness Modern Portfolio Theory and the Efficient Market Hypothesis lose its practical value for investors, as we did so in 2008 and 2009.

Furthermore, political gridlock circles the globe as one government after another is challenged by private market forces – hedge funds, principally through Forex and credit spread trading. Irresolute leaders are making shortsighted and timid decisions.

Each passing day takes us farther from a 20th century of calibrated knowable unknowns into a 21st century of mounting unknowable unknowns which historically leads to ad hoc mischief and turmoil.

The appropriate characteristics of gold bullion and precious metals are an imbued antidote to today’s financial crisis and the correct mid-term solution for alternative investments. Yet, gold is constantly ridiculed as a “gold bug” vehicle in the main stream media.

Every financial crisis produces real gold bugs. Eventually, the inflationary 1970’s created more gold bugs faster than Ben Bernanke can print dollars. In time, this will happen again. However, the price level for gold is unremarkable, given the sheer size of the aggregate global money supply of tens of trillions of dollars, even more in outstanding debt, and ubiquitous domestic and global political uncertainty.

Any serious talk about a new global reserve currency, partially containing gold, replacing the US dollar, would implicate a gold price in the five figures range. The ownership of gold today as a core portfolio holding is not only to hedge against inflation, a rise in prices, deflation from credit contraction, but also, hyperinflation, and a collapse in a nation’s currency, to preserve accumulated wealth.

You ask why trust gold now when most financial professionals are opposed to acquiring bullion at current prices? Before reviewing some macroeconomics metrics demonstrating the logic for this decision, ask yourself: why were financial planners parroting in 2001, 2002, 2003, 2004, and 2005, that over time all stocks rise in value; did stocks obey their wishes?

Why did stock brokers and investment advisers insist that you never want to be out of the market, as recently as the second quarter of 2008, but by 2009, it was “too late” to get out? In their mind, a “blue chip” bear market would not occur. Few investment professionals could even offer sound portfolio hedging strategies with options, as protection against the unthinkable.

Were you warned by advisers that the AAA ratings from credit rating agencies were being purchased by investment product packagers - euphemistically called credit enhancements - like two-for-one call drinks at happy hour?

Did you discuss the risk from opaque and unsecured packaged investments, be they, the gargantuan publicly traded ones or the bespoke private placements, during the roaring 2000’s by your registered investment advisory firm which had a fiduciary responsibility to work on your behalf?

If you were really fortunate in making money during the 1982-2000 secular bull stock market and your net worth rose in excess of seven figures, then you probably retained a hedge fund for the fee of 2/20 to lose a portion of your principal over the last three years.

Did your mutual fund or variable annuity company recommend dollar cost averaging? What is your net worth now? How often were precious or rare earths metals suggested as an alternative investment as these unloved stepchildren posted profits year after year? Are advisers suggesting bullion and rare earths metals now; at what percentage of your portfolio?

The credit crisis and market meltdown of 2008 has been officially named the Great Recession: to show investors that the event itself was manageable and that the extent of probable damages to the economy and the markets were quantifiable. Both of these conclusions were premature, then, and untrue now.

The carnage inflicted by the swift collapse of the 2003-2008 Structured Investment Vehicle (SIV) gold rush was unlike any market/economic contraction witnessed by contemporary investors. The last financial upheaval of this magnitude experienced by investors was the 1930’s Great Depression. Each event was unique. Mark Twain quipped once “History doesn’t repeat itself - at best it sometimes rhymes”.

The comparative “rhyming” components between 1929 and 2008 crashes includes the shift in wealth distribution to the top 1%, reckless amounts of leverage, and a underwriting frenzy of securities for fees over an organic economic benefit.

In 1928, the top 1% share of total pre-tax income was 23.9%. In 2007, the percentage was 23.5%. Prior to the 1929 crash, stocks could be margined up to 90%. In 2007, homes could be mortgaged up to 125%, with stated income, alone.

After the First World War, country bonds were issued by Europe, South America, and Asia, sold to everyone by Wall Street, and experienced massive defaults which exacerbated the 1930’s global depression.

In the roaring 2000’s, orgasmic inducing fees overrode prudence, as sublime to ridiculous derivatives were packaged and sold around the world by Wall Street, causing countries such as Iceland, Ireland, and Greece to become nearly insolvent. Yet, in 2009, Wall Street paid out $149 billion in bonuses, roughly 1% of our $13 trillion dollar annual GDP.

Worldwide demand for gold is rising. From gold bar dispensing machines at the Frankfort, Germany airport and the Abu Dhabi Emirates Palace Hotel, to Exchange Traded Funds (ETFs) such as GLD and SGOL.

The US Mint 2009 Ultra High Relief Double Eagle Gold Coin has sold out. Rust was discovered forming on the Bank of Russia’s 2009 "St. George the Conqueror" .999 fine coins. The supply/demand curve for gold is moving outward. New highs for the price of gold have been made recently in all major currencies.

The interest on debt and the debt itself, without raising taxes is unsustainable. This “new normal” will wreck the US economy and the government’s questionable AAA credit rating.

Not China, not Russia, not North Korea, not Iran, not terrorists...According to Admiral Mike Mullen, the Chairman of the Joint Chiefs of Staff, the "single biggest threat" to American national security is the US national debt, which is either $8.85 trillion (public debt), $13.4 trillion (total national debt), $20 trillion (total debt including GSE debt), or $124 trillion (total debt including unfunded obligations), depending on one's definition of the word "debt."
Washington Post: August 27

The amount of debt that the US has outstanding is troubling but our debt structure is even worse. In FY 2010, the US Treasury issued $2 trillion in treasury obligations. One and one-half trillion dollars was in rollover debt and $500 billion in fresh issuance. These numbers can only rise in the short term. We are a hopelessly credit driven, not cash oriented, transactional society.

Our credit structured economy, of which, 70% of GDP, is consumer driven. Income utilization for the bottom 95% is primary for debt servicing. Government policies favors continuously buying goods and services by consumers while optimistically believing such activity occurring increases wealth and while reduce debt.

This spiraling upward is the conveyor bell for individual upward mobility. Absent GDP growth, expansion quickly turns to contraction, then, disinflation, and deflation. Except for a few speculators, ultimately, a loss in personal net worth ensues.

Likewise, when the amount of debt becomes too great to service from current cash flows, the economy and asset prices will collapse to sustainable levels. That process can take years. Meanwhile, except for a few speculators, ultimately, a loss in personal net worth ensues. Rising interest rates someday will destroy this current economic model.

The critical mistake made in measuring the totality of legitimate outstanding debt leading up to the 2008 meltdown was underestimating the degree of dishonesty employed by accounting gimmicks, reckless amounts of leverage, lax regulatory supervision, and offshore transactions to hide levels of risk.

Another mistake make in addressing the problem, once uncovered, was paying off legally dubious derivative claims with the moral and ethical weight of Las Vegas betting slips, suspending mark-to-market accounting, or smuggling over two trillion dollars in worthless toxic debt onto the books of the Federal Reserve Board, thus, guaranteeing nasty consequences in the future.

In essence, saving individual companies instead of the financial system itself is delaying final closure to the financial crisis.

The looting of our economy was the gravest of matters and was performed with full knowledge and consent. These mortal sins were the exclamation mark on this recent period of greed and avarice.

A global economy so sophisticated, and so interconnected, and has the wherewithal to produce such wreckage compels us to abandon or greatly curtail our unfettered mercantilism policies. Otherwise, the next seismic event will be greater.

The unintended consequences of callous policies pursued by special business interest and executed by rented elect officials shall radically change who we are as a country over the next decade. We can recover from this tremendous hole we find ourselves in but it requires great leadership and political will. Until then, a greater financial divide will broaden and deepen between the haves and have not’s.

Rationing of goods and services will flourish. Political stability will deteriorate, as unemployment trends higher, tensions will build, and the first 21st century generation will be lost to economic depression cloaked inside an arithmetic mean. That is the price we shall pay.

Baby Boomers’ choices must mirror where we are going, not where we have been. Paper assets in 2000 and real estate in 2006 crossed over from being an ally to an enemy to wealth accumulation for the average investor, and will continue to do so, for years to come.

In anticipation of this global redistribution of wealth, and as global US market share declines to the benefit of emerging markets, the supply/demand curve for precious metals and rare earths will fundamentally raise the floor on the price of gold. The US dollar’s purchasing power will also decline over time.

Baby boomers planning on living for the next 20 years must really consider gold as a core long-term holding in one’s portfolio, and not just a short-term trade or a token position, to maintain your family’s net worth, purchasing power, and liquid asset needs.

Will the Price of Gold Reach $5,000?

All the current chatter these days on whether or not to reduce a portfolio’s exposure to gold is, to put it bluntly, a short term trader's conversation. A crowded trade, whales exiting a crowded trade, is it deflation or inflation? Gold is the inferior commodity to soft commodities such as wheat; gold’s current price elasticity, and more, all sound reasonable.

However, if you are a trend position builder and/or a long term investor of gold, we shall now review other important long term considerations that transactional traders omit from discussions.

If credit rating agencies have become less duplicitous, since the last decade, when they were arguably complicit in financial high crimes and misdemeanors, the US government’s credit rating must appear on someone’s credit watch list, inside of two years, if not, altogether downgraded to less than AAA. This is a plus for gold.

Between now and 2015, the global economy, measured in regional or national terms, will experience a protracted slowdown. In reality, a truer 21st century metric, for the production and consumption of goods and services, is seven billion individual, micro-economies. Nevertheless, the US will fair far worse than several developed nations and most emerging countries. The US 20th century debt structure is unsustainable with 21st century cash flows.

The US is also the largest component of the current global economy. Since the signing of NAFTA in 1994, US taxpayers has underwritten emerging markets’ growth through free-market supply-side economic policies. This change in industrial policy has stunted our internal ability to robustly expand our GDP. America’s only way out is discovering a transformative “next new thing”.

Realistically, in 2010, the Chinese economy simply isn’t large enough to save the world from economic contraction and, subsequent, global political instability. Only the American economy, if it were still functioning properly, could do the job. But it does not and can not; another plus for gold.

Currently, wasteful spending on virtually every federal budget item, especially defense as reported by the Inspector General and Homeland Security‘s TSA - both scared cows, is criminal. Our $13 trillion economy is under taxed for the services and standard of living we once demanded for ourselves as Americans.

More than 40 out of 50 state budgets are upside down, regardless of their blue or red political hue. Education has been marked down from an investment to an expense. The privatization of public assets are sure to begin in 2011. This financial insolvency and economic uncertainty serves as a Petri dish for elevated gold prices, in the next five years.

Too many multinational and offshore corporations are allowed to skirt their legitimate financial obligations, while our military police the world, and our morbidly obese military budget consumes evermore anorexic tax receipts. The dollar and US debt will eventually be ostracized in the financial community by investors. Gold will be embraced.

Maximizing shareholder’s value is the petard we hoisted our middle class onto. The homicide of America’s 20th century economic miracle, will show, we participated as both perpetrator and victim. Leaving in place strategic assets - the building blocks for future generations, and their higher standard of living, is an anathema to short term maximization - and its cannibalistic fatal flaw. The dollar’s purchasing power will diminish relative to gold.

The references above indicts the value of the US dollar over the next five years. Already, waiting in the wings, are competitive conspirators such as China, Russia, France, and Brazil, orchestrating the dollar’s eventual replacement as the world’s currency. The de facto world reserve currency emerging today is gold bullion.

How high will the price of gold go? The inflation-adjusted price today for gold is more than $2,200 an oz. There are models with gold reaching $5,000, $6,000, and $8,500 dollars an oz. One outlier has gold pegged at $36,000 per oz. Pick a number. How much debasement will the dollar experience over the next five years; 5%, 10%, 25%? Will the dollar still exist in five years?

The global average annual income per person is rising. There are a billion people coming online in the 21st century who now can afford a second meal in their daily diet. Tens of millions of individuals with rising incomes can afford to save by investing in jewelry or ingots or coins that store value such as silver and gold.

These new participants in [supply] globalization economics and [demand] international consumption will, push precious metals’ supply/demand curve outward, thus, changing its price elasticity.

History has shown that economic catastrophes, from the Dutch tulip mania of the 1630’s, to England’s 1720 South Sea Bubble, and France’s 1720 Mississippi Bubble, are ultimately expressed much like three-act plays.

Returning to the present, Act I, for the sake of illustration, was the over leveraging of the US economy the previous three decades. The private sector, public sector, and the federal government all sinned. The spices of human greed and amorality, by way of packaging and repackaging asset-backed securities until synthetic derivatives were created from thin air, became essential to the final flavor of this recipe. This dish, then, served to investors worldwide induced the 2008 global financial meltdown.

Act II are the economic repercussions; business failures, personal bankruptcies, home foreclosures, new rules and regulations, the abortion of long standing public policies and programs, migration of populations, and the destruction of towns and neighborhoods.

Also, there is a desire for the criminal prosecutions of the apparatchiks supervising the economic meltdown (although, so far, they and their superiors seems immune from prosecution and jail time). In short, social progress based on past economic prosperity is thrown into reverse and anxiety, resentment, fear, and political anger swells. Gold becomes trustworthy.

Act III is just beginning; the comeuppance for disastrous political policies and financial ruin. Business and political leaders who were in charge will be accused of violating their respective trusts with constituents by failing to protect that which the masses worship and prize most - economic and national, identity and security, As sclerosis permanently invades once functioning markets, people will insist individuals be held accountable. Gold is the beneficiary in this environment.

If past is prologue, scapegoats will be created, politicians will be driven from office in disgrace, political parties and governments may collapse. History will turn another page, begin a new chapter, for better or for worse. Currencies will be debased, hollow sovereign debt and dubious private wealth will rot on the garbage heap of time.

The only constant now, as before, is change and gold, for the long term.

10 Reasons to Believe That We're in a Depression

As the economy drifts listlessly going into this holiday season, thoughts of sugar-plumbed call options and zombie companies (Fannie Mae (FNM), Freddie Mac (FRE), and Citibank (C)) are dancing in the heads of day traders, fund managers and CNBC.

Hooray, hooray, everything is OK! Well, not quite. While Wall Street is feasting on the greatest secular bear market bounce in history, Main Street is experiencing persistent and formidable economic famine, the likes of which, have not been seen the Great Depression – which recorded the second greatest secular bear market bounce in history.

10. Look at the macroeconomic data.

Tuesday’s retail sales number, up 1.37 %; excluding autos, were up .2%. The year-over-year number was -1.74%! The world ended September 15, 2008, with the demise of Lehman. Financially, October 2008 was the dark side of the moon, yet, October 2009 still lags? The GPD is in a funk.

9. Look at the market’s technical data

On CNBC’s Fast Money last week, a dazed and beaten Louise Yamada pointed out there are “green shoots” of stock distribution appearing in the market; rising volume on falling days and falling volume on rally days. Additionally, the market’s chart pattern still roughly traces 1932-1941 period. We are near the 1938 bounce during the Great Depression. Money was and can be made in a depression.

8. Look at the market’s fundamentals

On November 6, the Wall Street Journal reported that, with 88% of companies reporting earnings, year-over-year was down 15%. However, earnings estimates by analysts were beaten by 80% of the reporting stocks. Sales are down but layoffs and cost cutting are allowing the market to believe in this Immaculate Conception rally. At some point, currency exchange manipulation by international corporations and lower wages, or fewer workers employed, invariably leads to the destination of painful contraction and negative growth.

7. Consumers

Consumers are toast and retailers are beginning to blink for the holidays. The housing index is rolling over; flat in November at 17, revised downward in October from 18 and September recorded its high of 19 since falling down into single digits. Wednesday morning, housing starts showed a drop of 10.6%, on a seasonally adjusted annual rate, to 529,000 units. In 2006, housing starts were closer to 2,000,000 units. Unemployment is 10.2% ( for U-3; for U-6, the unemployment figure is 17.5%), the housing ATM machine is gone, wages are weak (except on Wall Street) and the market rally has helped institutions more than retail. Credit card lines of credit are truncating, loans are for those who don’t need them and many consumers are too gun-shy to use credit if they could.

6. Municipal Governments

John Maudlin latest piece did a brilliant job dissecting the bleak future of state income shortfalls. A jobless recovery with missing sales taxes will create at minimum 10 more California fiscal basket cases in 2010. The first round of stimulus money actually bailed out states – that’s why new job creation was so muted. Municipal defaults will emerge next year to terrorize investors.

5. Federal Government

Washington doesn’t have the stomach to break up banks that are too big to fail and to seriously reregulate the financial industry. The reverse merger of Washington DC by Wall Street in 2008 makes this so. Much of the financial products that the feds have guaranteed, to the tune of $24 trillion, are so complex that they are only understood by their creators - the borrowers. This ensures that we can sweep our current problems under the rug today to inflict more pain tomorrow. Even if we do not bring back mark-to-market anytime soon, at some point the battered dollar will force interest rates to rise and drive the economy down. Also, certain people in high places need to be replaced. Sadly, they will keep their jobs.

4. The global economy

Countries are diversifying away from the dollar and into gold and other hard assets. So should we (SGOL, SIVR, GDX, GDXJ, IAU, and GLD). They recognize that our fiscal and monetary policies are out of whack and no one in the US, either businessmen or politicians, is putting country before profits or reelection. This is the mindset that formed the greatest generation. South America, circa 1980s, here we come. Also, many countries are recovering faster than the US because their actions in the crisis aimed at repairing their economies, not individual companies.

3. Baby Boomers and retirement

Baby boomers who’ve lost jobs in this period realize their chances of finding one last job before retirement, at their last income level, are extremely low. The “severance package” class of unemployed, and the employed but leery worker, will not return to their previous spending habits. Years ago, they were told to save long-term in the stock market through index funds and to dollar-cost average, to buy more real estate than you could afford because both stocks and real estate rise over time, to fund their retirement accounts and buy company stock, to trust municipal bonds, and they would be alright. Unfortunately, as they near retirement, too few baby boomers are alright.

2. Income and wages

Either global competition, or inevitable draconian changes in fiscal policy to address our growing federal debt, or both, will reduce US wages for many years to come. To increase productivity, wages have been flat for the past 10 years. It was masked by the irrational stock and real estate markets. Without America discovering the “next new thing” our previous standard of living will accelerate downward. State and federal governments will desperately tax income sooner rather than later. These factors enhance the chances of the next leg of our depression.

1. The 21st Century

Every champion, eventually, must retire from the ring. The US is no different. And that is the primary reason most professionals have gotten some portion of the last three years wrong. Any data set from the 20th century is obsolete without significant adjustments. Linear extrapolation of historical patterns of growth, revenue, and consumption, without correctly modifying credit, demand and demographics, plus the impact of technology, domestic tariffs and regulations, and Realpolitik, is like placing a compass inside a magnetic field. Good luck.

No one can take away the fact that America owned the 20th century. However, in the 21st century, cheap land, cheap labor and a younger demographic profile, suggests that in 20 years, the reins of power will be in the adolescent hands of a rapidly growing Asia. So, we invest in their currency (CYB, ICN, and BZF), finance their growth (DRF), and sell them the raw materials (DBN) that they will need to build tomorrow.

For now, besides military weaponry, our number one export is entertainment (DIS).

Replace Ben Bernanke with Paul Volcker

Last week, the Federal Reserve statistical release (G.17) reported on industrial production and capacity utilization for the economy.

“Industrial production rose 0.7 percent in September after an upwardly revised gain of 1.2 percent in August. For the third quarter as a whole, output advanced at an annual rate of 5.2 percent, the first quarterly gain since the first quarter of 2008 and the largest gain since the first quarter of 2005. Production in manufacturing increased 0.9 percent in September, and the index excluding motor vehicles and parts rose 0.5 percent. Mining output strengthened 0.7 percent, while the output of utilities fell 0.7 percent. At 98.5 percent of its 2002 average, total industrial production was 6.1 percent below its level of a year earlier. In September, the capacity utilization rate for total industry increased to 70.5 percent, a level 10.4 percentage points below its average for 1972 through 2008.”

The Los Angeles Dodgers skipper, Joe Torre, when recently asked what the difference is managing during the regular season versus the post-season playoffs replied, to paraphrase Joe, in the regular season, you think about making a change; you consider it, then you follow your gut instincts. In post-season, you don’t consider making changes – you make changes. The inference here is years of experience are superior to rationalization.

Conventional wisdom said that no other American was more qualified to be Chairman of the Federal Reserve Board, if America found itself heading into another great depression, than Ben Bernanke. I submit that with interest rates nowhere to go but up; a weakening dollar, and massive budget deficits for years to come, the best person to run the Federal Reserve over the next two years is Paul Volcker.

At first blush, this idea may seem radical, but these are not ordinary times. What are the benefits if President Obama figuratively walks out to the pitcher’s mound, take the ball from Bernanke, and say, “Ben, you threw one hell of a game for eight innings. We can take it from here; the economy is heating up.” Then, Obama turn towards the bullpen forms his hand into the shape of a clam, opens, and closes it twice, to signal for his major league inflation closer – Paul Volcker.

This is presidential managing.

For starters, the world will know any future inflation in the US will be tame. When the cover of Barron’s is instructing the fed chief and the FOMC to raise rates at their next meeting, November 3-4 from 0.15% to 2.00%, perhaps he is hard-wired for fighting depression and we have gotten his A game – just when we needed it. But now, crisis accomadative monetery policy must give way to normal accomadative monetery policy.

The price of gold and our money supply is at all time highs. The SPDR Gold Shares (GLD) is now the second largest ETF behind the SPDR S&P 500 Index, holding $35 billion in assets. Only four central banks and the IMF control more gold, according to the World Gold Council. As the economy expands, do you really need a guy hanging around nicknamed “helicopter Ben”, named for vowing to spread money from helicopters to stop a depression from occurring, when too much liquidity is making too many people nervous?

This also sets a precedent. It was logical, I suppose, to move Tim Giethner from the Federal Reserve Bank of NY to Secretary of the Treasury to help thaw the frozen major center banks. The FDIC insurance fund is in the red, the (Unofficial) Problem Bank List at Calculated Risk show 479 names, therefore, most of the action over the next two years will occur in local and regional banks. Moving FDIC Chairman Sheila Baird to Secretary of the Treasury will maximize the power of the treasury to minimize the next leg of the banking crisis. On the other hand, maybe Volcker has a short list of candidates.

Cabinet members come and go all the time. Moreover, no one believes that it has to do with spending more time with the family. At least these are strategic reasons to point to if anxiety grows over persistent problems in the economy.