The man once known as "Mr. Yen" was at it again last month. Japan's former vice finance minister, Eisuke Sakakibara, was offering his two cents worth on the yen's slide against the dollar.
If the government's reforms fail to make progress, he said, it's "not unlikely that the yen will reach 150 to 160 [per dollar] by the end of the year." Moments later, the yen plunged as his views spread through the currency market.
Rather than trading off Sakakibara's comments, markets might've asked a question: Who cares? Almost three years after he left office, can he really offer more insight on the yen's outlook than analysts at, say, Daiwa Bank Holdings Inc or Goldman, Sachs & Co? Probably not.
Call it LDS -- Limelight Deprivation Syndrome -- but somehow Sakakibara and assorted other has-beens continue to extend their 15 minutes of fame long after they had anything meaningful to say.
"The media's need for the economic equivalent of a rent-a-cop gives these people life after government," says Simon Ogus, chief executive at DSG Asia Ltd in Hong Kong.
Sakakibara used to be a bigwig at the Finance Ministry during his July 1997-July 1999 stint as its currency czar. His tenure was riddled with market-moving comments about the yen's value. He seemed to raise verbal intervention in currency markets to an art form -- hence the nickname.
The attention that is still drawn his way ignores a couple of things.
First, the years he spent in government weren't Japan's finest hour from an economic standpoint -- banking crises, extreme volatility in markets and a bond-issuing binge that will be paid for by future generations. Second, are we really to believe Sakakibara has inside knowledge about Tokyo's yen policies? Even current officials don't seem to know what they are.
The trend isn't limited to Japan
The attention paid to the Who's Was of global economics is hardly unique to Japan. One can find it pretty much anywhere.
In the US, for example, reporters and currency traders still get excited when C. Fred Bergsten steps to the microphone. He heads the Institute for International Economics, a Washington think tank.
Before that, he was President Jimmy Carter's assistant US Treasury secretary for international affairs.
Never mind that Bergsten hasn't held a full-time Treasury job in more than 20 years. Or that the Carter Administration didn't exactly distinguish itself in the area of economic policy. Many folks still think Bergsten, whose office is a 10-minute walk from the Treasury, is in the know about US dollar policy.
In Europe, market participants growl about seeing has-beens such as Oskar Lafontaine basking in the limelight now and again.
Lafontaine is the former German finance minister whose resignation in March 1999 sent stocks and the euro higher. Investors cheered the exit of a combative figure whose constant attacks on the European Central Bank roiled markets.
Former German Finance Minister Theo Waigel also pops into the news a bit more often than many Europeans would like. Ditto for former French finance minister Dominique Strauss-Kahn and former UK Chancellor of the Exchequer Norman Lamont.
The US, though, seems to be a particularly lucrative -- and accepting -- market for those who don't realize they've passed their use-by date.
A highly unscientific poll of economists, investors and fellow reporters points to a variety of former officials who seem wildly over-exposed relative to the amount of insight they provide.
One name that came up myriad times was Manuel Johnson, who's been eating out for years on his 1986-1990 stint as Federal Reserve vice-chairman. He co-founded Johnson Smick International, a consulting firm that purports -- emphasis on purports -- to offer insights into Fed Chairman Alan Greenspan's mind. Markets still get whipped around now and again on word Johnson's firm is saying this or that about Fed policy. The question is: Should they? Richard Medley, chairman of Medley Global Advisers, also has made a post-government career of offering clients the inside track on Washington -- or at least claiming to. Once upon a time, he was chief economist for the House of Representatives Committee on Banking, Finance and Urban Affairs and the Senate Democratic leadership. His tips haven't also served clients well, however.
Last December, the Treasury took the rare step of shooting down one of Medley's reports that US officials weren't opposed to Japanese proposals to purchase foreign bonds and also were comfortable with further weakening of the yen. "This report doesn't represent Treasury's position," the Treasury said.
Other Fed alums also came up. Wayne Angell, for example, went to Bear, Stearns & Co in 1994 after eight years as a Fed governor.
In the lead-up to Federal Open Market Committee meetings, Angell long has been a regular fixture for television outlets. Angell recently left Bear Stearns to open his own firm.
Yet even his former boss, Bear Stearns Chief Executive James Cayne, admitted under oath that it wasn't so much Angell's skill as an economist the firm wanted as his name recognition. Angell, he admitted, didn't have a real job description. "I don't know how he spends most of his time," Cayne told a federal jury in New York in June 2000. "He travels a lot and visits people and has lunches and dinners and he is an entertainer." Now that Angell has hung out his own shingle, some long-time Fed watchers hope that means he's quietly fading away.
Blinded by the blinder syndrome
Ditto for Alan Blinder, an economist who had an unusually rocky turn as Fed vice chairman between June 1994 and January 1996. Once he returned to Princeton University, Blinder immediately became a staple of journalists' rolodexes. To this day, those writing on Fed policy routinely ring Blinder, hoping he'll offer clues about what Greenspan &Co are thinking.
The irony, of course, is that Blinder wasn't even an insider when he worked at the Fed. The central bank's powerful research arms kept him out of the loop. Blinder's misgivings were exposed in a 1996 article in The New Yorker. And yet Blinder's phone still rings off the hook whenever Greenspan is in the news.
There are exceptions to the has-been rule. Former Fed Chairman Paul Volcker is one, and it's easy to understand why. It was his handiwork from 1979 to 1987 that drove down inflation and paved the way for the US boom of the 1990s. Greenspan did a fine job maintaining things, but Volcker did the heavy lifting.
Volcker, meanwhile, is hardly an attention-seeker; it can take considerable legwork and patience to interview him. One wonders if Arthur Andersen LLP, fighting for its life amid Enron Corp's meltdown, wouldn't have collapsed had not Volcker signed on to help.
Volcker's integrity alone seems to be sustaining the world's most infamous accounting firm.
Hans Tietmeyer, who headed the Bundesbank between 1993 and 1999, also maintains the air of gravitas so many former economic officials crave. Since his departure, Tietmeyer has chosen his media contacts carefully and managed to keep his reputation intact.
Former Treasury chief Robert Rubin's own walk-on-water status unraveled along with Enron's fortunes. Ill-conceived phone calls by Rubin, now chairman of the executive committee and Citigroup Inc, to current US Treasury officials to bolster support for Enron weren't his finest moment. The affair dented his fabled run at Treasury from 1995 to 1999.
The knowledge and experience one amasses while in government can indeed provide interesting insights in the years that follow.
Too often, though, the ones that have the least to offer tend to be the ones from whom we hear the most.
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