All Things in Moderation

Morning Report – Party at the Fed 09/19/13

9 Responses

1. 

   Michigoose, on September 19, 2013 at 7:01 am said:

   Brent, wasn’t it you or jnc who speculated that floating Larry Summers was just to give cover to an eventual Yellen nomination? This was one of Ezra’s points in Wonkbook this morning:

   Yes, it will be Yellen. “Federal Reserve Vice Chairman Janet Yellen is the leading candidate to be President Obama’s nominee to lead the Fed as chairman, a White House official said Wednesday. Barring any unexpected development, that likely means that Yellen will get the nomination, perhaps as soon as next week…While some speculated in light of Summers’s withdrawal the president may consider other candidates, it appears he is focusing on Yellen.” Zachary A. Goldfarb in The Washington Post.

   Oh, and McWing: First!

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2. 

   Michigoose, on September 19, 2013 at 7:18 am said:

   From an interesting (to me, anyway) article by DeLong in The Financial Times:

   . . . When I first saw Ms Yellen up close and in action, it was late-1988. She was a professor at Berkeley and taught me something important, something that I had not previously known and would not have thought of on my own. In a conference room at the Brookings Institution, she explained just how the welfare benefits of lowering unemployment were of much greater value than the mere boost in production it brings. For example, it also means fewer people in the wrong type of job.

   When I next saw Ms Yellen up close and in action, it was the mid-1990s, and she had been appointed a governor of the Fed by Bill Clinton, then president. She was not in the business of showing she was the smartest person in the room. But she was in the business of making sure that the person in the room who had the most constructive thing to say got the floor. And she did know how to keep in check those who were trying to show they were the smartest person in the room whenever they grew attached to ideas because they were clever rather than because they were true.

   Those of us on the Treasury and the Council of Economic Advisers staff who had recommended that Mr Clinton recruit her to the Fed were very pleased. We had been worried that the culture of the central bank – where staff deferred to division directors, division directors sought to please the chair and governors largely stayed out of the loop – was not the healthiest of environments for encouraging sound debate. Ms Yellen (along with some others selected by Mr Clinton) helped to open the place up.

   Ideally, I would ask for more. I am in the faction of economists who think that what the Fed needs now is a regime change like the one that Paul Volcker imposed in 1979 as he launched the very painful breaking of the stagflation of the 1970s. It needs some of the bold leadership that President Franklin Roosevelt launched in the US in the 1930s and that Prime Minister Shinzo Abe is pushing in Japan right now. Ms Yellen is, to my taste, a little overinvested in the proposition that the Fed’s current policy consensus is the appropriate policy.

   When the two leading candidates were Ms Yellen and Mr Summers, everyone who was not crazy knew that the policy stakes were small: the two have very similar views of the economy and were likely to follow very similar policies. Now the policy stakes are actually significant – and a substantial chunk of America’s future prosperity may well ride on the outcome.

   DeLong mentioned earlier in the article that his first choice would have been Larry Summers, so I found his comment about her keeping in check “the smartest person in the room” somewhat intriguing.

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3. 

   Brent Nyitray, on September 19, 2013 at 7:19 am said:

   Well, at first I thought that was the case, but later on there were reports that Summers was the pick because he was willing to be more political and help the administration push Congress for further fiscal stimulus.

   Yellen is steeped in a Fed culture of political independence and would probably not go there.

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   • 

     markinaustin, on September 19, 2013 at 9:37 am said:

     Unrelated stuff:

     American-Statesman Staff

     The Third Court of Appeals, on a 2-to-1 vote, has reversed the criminal conviction of former U.S. Majority Leader Tom DeLay, once the second most powerful Texas in Washington D.C. before the criminal case forced his retirement from politics.
     —
     Ken Norton was two days older than I his entire life. He died. Tough fighter.
     —

     Note that Gates thinks it was a mistake to ever threaten war in the first place.
     —
     However, see this contra piece

     http://www.washingtonpost.com/opinions/david-ignatius-obama-is-criticized-for-right-result-on-syria/2013/09/18/b2a08acc-1ffb-11e3-b7d1-7153ad47b549_story.html?hpid=z3

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4. 

   Troll McWingnut or George, whichever, on September 19, 2013 at 10:12 am said:

   Team Anarchy, Fuck Yeah!

   I literally think children will starve in the streets with this miserly funding. Whatta buncha haters.

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5. 

   Brent Nyitray, on September 19, 2013 at 11:05 am said:

   You bear ’em, we scare ’em. Full service evil with a smile!

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6. 

   lmsinca, on September 19, 2013 at 1:15 pm said:

   We’ve probably talked this out to end of it’s usefulness but here’s one more bit on Yellen and why liberals think she’s a better choice.

   http://www.alternet.org/economy/janet-yellen-and-federal-reserve?page=0%2C0

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7. 

   jnc4p, on September 19, 2013 at 4:35 pm said:

   This sounds like the legislative process at work to me, not anarchy.

   “After the House takes its vote this week to approve a temporary resolution that pays for the government to keep running through mid-December — but defunds the health law — the measure will go to the Senate. Assuming 60 votes can be found to beat back the inevitable filibuster from Republicans like Mike Lee or Ted Cruz, the Senate will almost certainly approve the resolution minus the defunding language, sending the bill right back to the House.”

   There’s a value in recorded votes. Boehner and Reid need to agree that for the CR, whatever each body sends over gets a vote on the floor.

   And I have no idea why the NY Times believes that Cruz or Lee would filibuster a bill that defunds the PPACA.

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8. 

   Troll McWingnut or George, whichever, on September 19, 2013 at 7:14 pm said:

   And I have no idea why the NY Times believes that Cruz or Lee would filibuster a bill that defunds the PPACA.

   I think, to scare their readers, the NYT is required to mention Ted Cruz. He’s the left’s new boogeyman.

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