Richard Whalen

The debate between Hillary Clinton and Barack Obama Thursday in Austin, Texas was a bit of a bore and it is unclear whether Clinton’s performance at all slowed Obama’s surge and the momentum Obama seems to be building in Texas and Ohio which hold crucial primaries on March 4.

More importantly, we have learned that in a dramatic departure, Paul Volcker, the 80-year-old former Federal Reserve Chairman who rarely gives his name to politicians or causes, gave this arresting Obama endorsement in an e-mail statement released by his office starting 1/30/08:

“It is only Barack Obama, in his person, in his ideas, in his ability to understand and to articulate both our needs and our hopes that provide the potential for strong and fresh leadership.”

Volcker said he had been “reluctant to engage in political campaigns,” but added: “The time has come to overcome that reluctance.”

“We haven’t faced up to the need for coherent budget, tax and other policies that will encourage savings, innovation and investment,” he declared, “and free the U.S. from its “heavy dependence on foreign capital and maintain a stable dollar.” Volcker expressed confidence that Obama will listen closely to the best advice and act effectively.

In an interview, Volcker told me he had met February 20th with Obama’s chief economic adviser Professor Austan D. Goolsbee, an economist at the University Of Chicago Graduate School Of Business. “Potentially, the next subprime crisis is the issue of credit card debt,” says Goolsbee and Obama’s view is that the U.S. needs to improve oversight in the credit card market.

Obama has ideas about reforming the minimum wage annually and says: “If you work in America, there’s no reason for you to be poor.

“I’m confident that Obama is serious-minded as well as energetic, and that he will listen to the best available economic advice,” said Volcker.

The Brooklyn-born Democrat, who worked in the Chase Bank and served in the Nixon Administration as Under Secretary of the Treasury, was appointed to the Federal Reserve Chairmanship by President Jimmy Carter. But he did not hesitate to fight potential hyper-inflation with double-digit interest rates during the 1980 campaign at the cost of a V-shaped recession in 1982 and 10.8 percent unemployment.

The economy rebounded strongly under newly-elected President Ronald Reagan, who in 1983 reappointed Volcker at my private urging. I served as confidential liaison with Volcker from 1979-82 and believe that Volcker did more to defeat Carter than anyone else and that he then rescued the dollar that benefited Reagan.

Volcker’s endorsement carries unusually valuable weight because he is the world’s most respected central banker.