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Posts tagged ‘Lawrence Summers’

Bernanke: Fed Could Have Done More During Crisis.

Image: Bernanke: Fed Could Have Done More During Crisis

Former Federal Reserve Chairman Ben Bernanke said the U.S. central bank could have done more to fight the country’s financial crisis and that he struggled to find the right way to communicate with markets.”We could have done some things on the margin to mitigate somewhat the crisis,” Bernanke, 60, said on Tuesday in his first public speaking engagement since he stepped down in January after eight years heading the Fed.

“Although we have been very aggressive, I think on the monetary policy front we could have been even more aggressive.”

Editor’s Note: Secret Wall Street Calendar Uses Strange ‘Crash Alert System,’ Gets 18.79% Annual Returns

Bernanke said he could now speak more freely about the crisis than he could while at the Fed — “I can say whatever I want” — and in remarks to over 1,000 bankers and financial professionals in the capital of the United Arab Emirates, he made clear that he had regrets.

The United States became “overconfident”, he said of the period before the September 2008 collapse of U.S. investment bank Lehman Brothers. That triggered a crash from which parts of the world, including the U.S. economy, have not fully recovered.

“This is going to sound very obvious but the first thing we learned is that the U.S. is not invulnerable to financial crises,” Bernanke said.

As the Fed provided tens of billions of dollars of emergency aid to the U.S. financial system, Bernanke said he felt the central bank was in a “terrible” political situation because it could be accused of bailing out institutions unfairly.

He also said he found it hard to find the right way to communicate with investors when every word was closely scrutinized.

“That was actually very hard for me to get adjusted to that situation where your words have such effect. I came from the academic background and I was used to making hypothetical examples and … I learned I can’t do that because the markets do not understand hypotheticals.”

He concluded that he should “try to simplify the message, but not simplify too much”.

Ultimately, Bernanke said, he wished the U.S. economy could have recovered faster but “we did good in a very complicated situation and in a very complex political situation, and the result is what it is.”

Bernanke received at least $250,000 for his appearance at the financial conference staged by National Bank of Abu Dhabi, the UAE’s largest bank, according to sources familiar the matter. NBAD did not announce the fee.

Because of Abu Dhabi’s oil wealth, state-controlled NBAD prospered during the global crisis caused by Lehman’s collapse, taking market share from hard-hit U.S. and European banks.

Bernanke’s speaking fee is similar to one received by his predecessor Alan Greenspan for an Abu Dhabi speaking engagement in 2008, the sources said.

Greenspan embarked on a series of lucrative speeches after he stepped down, and Bernanke now appears to be doing the same. He is scheduled to speak at an event in South Africa on Wednesday and in Houston on Friday.

Another former heavyweight in U.S. economic policy, ex-Treasury Secretary Lawrence Summers, spoke at the Abu Dhabi event and criticized some aspects of Fed policy under Bernanke, although he acknowledged that policy needed to be expansionary.

Ultra-loose monetary policy, known as quantitative easing, has diminished returns in the economy and there is concern about the way the impact of low interest rates is being transmitted through the economy, Summers said.

Bernanke, looking relaxed in a grey suit and tie, said that after stepping down, he would write more about his experiences in the crisis to explain his side of the story. “For the future, I’m in a mode of reflection.”

Editor’s Note: Secret Wall Street Calendar Uses Strange ‘Crash Alert System,’ Gets 18.79% Annual Returns

© 2014 Thomson/Reuters. All rights reserved.


Obama to Nominate Yellen as Bernanke’s Successor at Fed.

President Barack Obama on Wednesday will nominate Federal Reserve Vice Chairwoman Janet Yellen to succeed Ben Bernanke as head of the nation’s central bank, the White House said Tuesday.

The announcement is expected at 3 p.m. at the White House, Business Insider  and The Wall Street Journal report.

If she is confirmed by the Senate, Yellen, the Fed’s No. 2 since 2010, will take over when Bernanke’s term ends on Jan. 31, the reports say.

Urgent: Should GOP Stick to Its Guns on Obamacare? Vote Here. 

Yellen would be the first woman to head the Fed.

Bernanke, 59, who has been Fed chairman since 2006, said in June that he would be leaving the post. He was first nominated by President George W. Bush, and then by Obama in 2010.

Obama’s front-runner for the post, his former economic adviser Lawrence Summers, withdrew from consideration in September. He was opposed by many Senate Democrats on the Banking Committee.

Yellen, 67, a Democrat, has served as president and CEO of the Federal Reserve Bank of San Francisco, chairwoman of the White House Council of Economic Advisers under President Bill Clinton, and a professor at the Haas School of Business at the University of California-Berkeley.

She is expected to continue Bernanke’s easy-money policies, the Journal reports. Because inflation is less than 2 percent, the Fed could keep making credit easily available to stimulate further economic growth and hiring.

© 2013 Newsmax. All rights reserved.

By Todd Beamon

Report: White House Asks Dem Senators to Endorse Yellen.

The White House is asking Democratic senators to start offering their public support for Janet Yellen as Federal Reserve Chairmana Senate Democratic aide told Politico Friday.

A variety of media reports say that Obama administration officials are making clear that Fed Vice Chairwoman Yellen is Obama’s choice after former White House economic adviser Larry Summers withdrew from consideration Sunday.

The Wall Street Journal reported Thursday that Yellen’s name has come up in conversations between White House and Senate officials about the process for nominating the next chairman.

The Senate Democratic aide said the White House is urging senators to unite in favor of Yellen. “They are discussing a possible nomination and urging members to publicly defend her,” the aide said.

In July, Democratic senators sent a letter to Obama urging him to choose Yellen. About one-third, or 18, of the Senate’s 54 Democrats and their allies signed the letter, Senate aides told The Journal.

Even if Yellen gets all 54 of those votes, she’ll need the support of six Republicans as well to achieve the 60 votes needed for confirmation. And that may not be easy.

Related Story:

With Summers Departure, Liberals Push Yellen for Fed Chair


© 2013 Newsmax. All rights reserved.
By Dan Weil

Fed Delays Bond Tapering, Wants to See More Data.

The Federal Reserve has decided against reducing its stimulus for the U.S. economy, saying it will continue to buy $85 billion a month in bonds because it thinks the economy still needs the support.

The Fed said in a statement Wednesday that it held off on tapering because it wants to see more conclusive evidence that the recovery will be sustained.

Stocks spiked after the Fed released the statement at the end of its two-day policy meeting.

Editor’s Note: 
Obama Donor Banned This Message (Shocking) 

In the statement, the Fed says that the economy is growing moderately and that some indicators of labor market conditions have shown improvement. But it noted that rising mortgage rates and government spending cuts are restraining growth.

The bond purchases are intended to keep long-term loan rates low to spur borrowing and spending.

The Fed also repeated that it plans to keep its key short-term interest rate near zero at least until unemployment falls to 6.5 percent, down from 7.3 percent last month. In the Fed’s most recent forecast, unemployment could reach that level as soon as late 2014.

Many thought the Fed would scale back its purchases. But interest rates have jumped since May, when Fed Chairman Ben Bernanke first said the Fed might slow its bond buys later this year. But Bernanke cautioned that the reduction would hinge on the economy showing continued improvement.

In its statement, the Fed says that the rise in interest rates “could slow the pace of improvement in the economy and labor market” if they are sustained.

The Fed also lowered its economic growth forecasts for this year and next year slightly, likely reflecting its concerns about interest rates.

The statement was approved on a 9-1 vote. Esther George, president of the Federal Reserve Bank of Kansas City, dissented for the sixth time this year. She repeated her concerns that the bond purchases could fuel the risk of inflation and financial instability.

The decision to maintain its stimulus follows reports of sluggish economic growth. Employers slowed hiring this summer, and consumers spent more cautiously.

Super-low rates are credited with helping fuel a housing comeback, support economic growth, drive stocks to record highs and restore the wealth of many Americans. But the average rate on the 30-year mortgage has jumped more than a full percentage point since May and was 4.57 percent last week — just below the two-year high.

The unemployment rate is now 7.3 percent, the lowest since 2008. Yet the rate has dropped in large part because many people have stopped looking for work and are no longer counted as unemployed — not because hiring has accelerated. Inflation is running below the Fed’s 2 percent target.

The Fed meeting took place at a time of uncertainty about who will succeed Bernanke when his term ends in January. On Sunday, Lawrence Summers, who was considered the leading candidate, withdrew from consideration.

Summers’ withdrawal followed growing resistance from critics. His exit has opened the door for his chief rival, Janet Yellen, the Fed’s vice chair. If chosen by President Barack Obama and confirmed by the Senate, Yellen would become the first woman to lead the Fed.

Editor’s Note: Obama Donor Banned This Message (Shocking) 

© Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Collapse of Summers Bid for Fed Signals Liberal Revolt Against Obama.

Image: Collapse of Summers Bid for Fed Signals Liberal Revolt Against Obama

By John Gizzi

While most of Washington was caught off guard Sunday by the announcement that Larry Summers asked the president not to consider him as chairman of the Federal Reserve, older hands said that the former secretary of the treasury was the victim of one of the oldest games in the nation’s capital: Stop the Nomination Before the President Makes It.

“That’s the way the Washington game is played – and has always been played,” Stephen Hess, Brookings Institute Senior Fellow and onetime aide to four U.S. presidents, told Newsmax.

With Summers, a former president of Harvard University, widely considered President Barack Obama’s first choice for one of the most powerful appointments any president can make, opposition to him began mobilizing more than three months ago.

The opposition came almost exclusively from the Democratic Party’s left-of-center, which had never forgiven Summers for his support of deregulating parts of the banking industry while Bill Clinton’s treasury secretary – a policy, they felt, which was in part responsible for the Wall Street collapse in 2008.

Three Democrats on the Senate Banking Committee announced last week they would oppose a Summers nomination to succeed outgoing Fed Chairman Ben Bernanke: Sens. Jon Tester of Montana, Sherrod Brown of Ohio, and Jeff Merkley of Oregon. On August 28, AFL-CIO President Richard Trumka, speaking at the Christian Science Monitor breakfast, left no doubt among reporters he favored Fed Vice Chairman Janet Yellen over Summers.

On Sunday night, sensing a battle royal in the Senate awaited him if he was nominated, Summers requested the president not tap him for the Fed chairmanship.

“What happened to Larry Summers is not particularly unusual,” Hess said. “But in his situation, the opposition was more above board than in the past and certainly they were going for much bigger game.”

Hess added that because of “the rise of this darned social media, everyone is a pundit and they could be very public with their opposition.”

In the past, hoped-for nominations to high offices have been dashed. The difference between now and then is that, until recently, the “Stop the Nomination” game was almost exclusively a case of “insider politics.”

In 1968, President-elect Richard Nixon was anxious to woo a high-profile Democrat into his Cabinet and very much wanted Sen. Henry “Scoop” Jackson of Washington to be secretary of defense. A liberal on domestic issues, Jackson was also a hardline anti-communist with a superb knowledge of the Pentagon and the military establishment.

“What’s more he wanted the job,” wrote the late columnist Robert Novak, noting that this “seemed to be a way to cap a distinguished career. He gave Nixon a tentative yes.”

But when word leaked out, Jackson’s Democratic colleagues in the Senate strong-armed him into changing his mind before a nomination was made. Democratic Sen. Edward Kennedy of Massachusetts, Novak recalled, “warned that Jackson’s old colleagues in the Democratic cloakroom would make the Senate a living hell for him as Richard Nixon’s defense secretary. Jackson regretfully declined.”

That same year, Nixon’s secretary of health, education, and welfare, Robert Finch wanted to name Dr. John Knowles, head of Massachusetts Hospital in Boston, as assistant secretary for health. But the American Medical Association would have none of it, reminding its friends on Capitol Hill that Knowles had testified before Congress: “I do believe in comprehensive pre-paid health insurance for all Americans on a public and private basis – if the private basis will not do, then I think the federal government has got to do it.”

Republican Sens. Everett Dirksen of Illinois and Strom Thurmond of South Carolina weighed in at the Nixon White House against the nomination. Republican Rep. Bob Wilson of California, who as chairman of the National Republican Congressional Committee had benefited from the AMA’s political action committee, told reporters: “Every time we get together with politically minded doctors, they say, ‘We certainly hope Nixon doesn’t nominate Dr. Knowles.'”

Finch eventually decided the anticipated battle was “just not worth it” and told Knowles he would not recommend him to the White House for nomination.

In the case of Larry Summers, the prospective nominee himself is the one who said it’s “just not worth it” and asked his nomination not to be submitted.

“It’s not terribly unusual in Washington,” Hess said. “And it will probably be used someday as a textbook example of how the Washington game is played.”

John Gizzi is chief political columnist and White House correspondent for Newsmax.

© 2013 Newsmax. All rights reserved.

Yellen Said to Top Obama’s Fed List Post-Summers Withdrawal.

Image: Yellen Said to Top Obama's Fed List Post-Summers Withdrawal

Federal Reserve Vice Chairman Janet Yellen is President Barack Obama’s top candidate to lead the central bank even after her supporters helped force his initial favorite to withdraw, according to people familiar with the process.Lawrence H. Summers, Obama’s former economic adviser, removed his name from consideration rather than face what he said would be an “acrimonious” confirmation process. Summers was targeted by Yellen’s backers who said he was too lax on regulating Wall Street and that Yellen, another candidate mentioned by Obama, was a better choice.

If selected by Obama and confirmed by the Senate, Yellen, 67, would become the first woman to serve as the Fed’s chairman.

“I think it would be very difficult now for Obama to back away” from Yellen, said David Zervos, a managing director at Jefferies & Co. in New York, who served as a visiting adviser to the Fed in 2009. If Obama chooses someone else, “then, it sort of turns very anti-Yellen from the Obama administration, which I don’t think he has been,” Zervos said yesterday on Bloomberg Television.

People familiar with the internal deliberations said that while White House officials don’t blame Yellen for Summers’s exit, there is resentment toward Yellen supporters who they say undermined Summers’s credentials.

The decision over who should take over when Ben S. Bernanke’s tenure as central bank chief expires on Jan. 31 coincides with Fed discussions over how quickly to wind down its $85 billion in monthly bond purchases.

Quantitative Easing

Traders had speculated that, given Summers’s past questioning of the effectiveness of quantitative easing, he might have reduced the stimulus faster than other candidates.

With Summers out of contention, stocks rallied yesterday with Treasuries and the dollar weakened against its major peers.

The Standard & Poor’s 500 Index surged 0.6 percent in New York, while five-year Treasury yields declined seven basis points to 1.62 percent. The dollar traded near the weakest level this month versus the yen.

Yellen also has the support of investors and a core group of more than 400 economists who signed onto letter supporting Yellen’s candidacy, including former Federal Reserve Vice Chairman Alan Blinder.

White House Press Secretary Jay Carney said yesterday that Obama’s timetable for announcing a choice had not changed from his earlier statement that he’d do it “in the fall.”

“We are still in the summer,” Carney told reporters at a daily briefing. The first day of autumn is next week, Sept. 22.

Other Possibilities

Obama, in meetings with congressional Democrats in July, named Yellen and former Fed Vice Chairman Donald Kohn as candidates, along with Summers, for the position. Former Treasury Secretary Timothy F. Geithner isn’t interested in the job, according to several people familiar with the process.

The president’s inner circle was split over whether Obama should expend political capital on a Summers confirmation fight. Unlike the drama playing out in public, it wasn’t a split along gender lines, according to the people, who asked not to be identified to talk about internal deliberations.

The split came down to those who figured that the battle would be too costly, including White House Chief of Staff Denis McDonough and senior adviser Valerie Jarrett, the people said.

While no significant opposition has emerged against Yellen, “our sense is that the President dislikes the notion that he is being forced into picking any nominee, including Yellen,” Isaac Boltansky, an analyst with Compass Point Research & Trading LLC in Washington, said in a client note.

Senators Uninformed

The Summers case underlines the difficulty the president’s staff has had reading how lawmakers in both parties will react to his initiatives, according to two Senate aides with knowledge of the matter. Yellen supporters have now made clear that it’s not just who Obama likes most that will get the job: It’s who can get confirmed by the Senate.

That the selection process is so contentious even before the president makes a choice is unusual for any nomination, more so for a traditionally non-partisan one.

“This nomination process and confirmation is not supposed to be a high media event extended over a period of months,” Mark Williams, a former Federal Reserve examiner, said in a telephone interview.

Senate Democrats weren’t given a heads up by the White House before the Summers withdrawal news broke, with most lawmakers and staff members learning of it through news alerts or Twitter, according to two Senate aides.

Warren’s Support

Lawmakers who had raised concerns with the White House about a Summers nomination were quick to tout Yellen yesterday. That she has a solid constituency in the Senate was evidenced by a July letter of support signed by 20 senators.

“I’m a big fan of Janet Yellen,” Senator Elizabeth Warren, a Massachusetts Democrat, said in an interview with Bloomberg Television. “I think she’s terrific. She’s got the right experience, and I think she’d make a terrific Federal Reserve chair.”

Democrats, who control the Senate 54-46, will need Republican votes to reach the 60-vote threshold that has become required to put aside a filibuster and move forward with most nominations. That means Republicans, most of whom have raised concerns about the Fed’s large-scale bond purchases under Bernanke, will be required for approval.

Some Republicans, including Texas Senator John Cornyn, the No. 2 party official in the Senate, have said they would oppose both Summers and Yellen. Senator Pat Roberts, a Kansas Republican, said the same.

“We continue to believe that Yellen will become the nominee due to both her experience and the relatively easy path to confirmation she would face, but caution that it may be premature for Yellen to start moving her belongings to the Chair’s office,” Boltansky said.

–With assistance from Kathleen Hunter, Cheyenne Hopkins and Ben Schenkel in Washington. Editors: Steven Komarow, Michael Shepard

To contact the reporters on this story: Phil Mattingly in Washington at; Julianna Goldman in Washington at

To contact the editor responsible for this story: Steven Komarow at

© Copyright 2013 Bloomberg News. All rights reserved.


Donald Trump: Unemployment Still ‘Dangerously’ High.

Billionaire real estate mogul Donald Trump tells Newsmax he disagrees with President Barack Obama’s assertion that the American economy has greatly improved, saying unemployment remains “dangerously” high.

The Trump Organization chairman and reality TV star also says Larry Summers did the right thing by withdrawing from consideration as the next Federal Reserve chairman; maintains that another economic meltdown could absolutely happen; and warns that Obamacare will “destroy the country.”

Monday marks the fifth anniversary of the financial crisis, and in a speech President Obama painted a rosy picture of how much better he believes the economy is doing now.
In an exclusive interview with Newsmax TV on Monday, Trump takes issue with that claim.

Story continues below video.


“Unemployment is amazingly high. The real number is probably 17 or 18 percent,” he says. “It’s very, very high, and dangerously so.

Alert: End of America’s Middle Class a Startling Reality. Read More Here.

“In the old days if you were unemployed, you were unemployed. Today if you stop looking for work, you’re no longer considered unemployed for purposes of statistics. So unemployment is really, really bad.

“As far as business is concerned, it’s very tepid. If you look at certain countries, as usual China and others are doing very, very well, but our country is moving along at a very slow pace, a snail’s pace.”

Larry Summers has withdrawn his name from consideration to replace Ben Bernanke as chairman of the Board of the Federal Reserve, and Federal Reserve Board Vice Chair Janet Yellen is now widely expected to replace Bernanke.

Trump comments: “You don’t know who’s going to replace him, but Yellen seems to be the person they’re talking about. She is respected, but we’ll have to see what happens.

“She believes in low interest rates. Some people agree with that and some people don’t. I have to speak somewhat selfishly as a developer — I like low interest rates. But as far as it is good for this country, that is yet to be determined.

“Larry Summers is a smart guy who frankly is very controversial, and a lot of people [were] going to be voting against him. So he did the right thing by withdrawing. He didn’t have a lot of support, either Republican or Democratic. In fact, the Democratic senators were saying we’re not voting for him, a number of them, so it would not have been easy for him.”

Bernanke this week is expected to announce the beginning of the Fed’s tapering of quantitative easing after pumping $85 billion a month into the markets, but Trump cautions: “Janet Yellen might feel differently about that.”

Former Treasury Secretary Henry Paulson warns the crisis that brought the world to the brink of financial collapse five years ago could be repeated.

Trump says he “absolutely” agrees.

“It can always be repeated,” he says. “Lots of different things can happen both good and bad and lots of things will happen both good and bad, so absolutely. It can happen again, and it can be as bad as it was, or it can be worse.

“I don’t see it happening but you never really see it happening. Nobody thought the last one was going to happen.

“It’s been very much a false economy. So we’ll see what happens. We hope it doesn’t happen but certainly it could.”

Congress and the president are on track for a standoff over funding Obamacare and preventing a government shutdown. Asked if he believes Republicans should go for a shutdown if necessary, Trump responds: “I do. They have to because, ultimately, it’s going to destroy the country anyway. Obamacare is going to shut down government in a much worse way.

“It’s just not affordable and it’s not good insurance. It’s not good for people that need it. So we should come up with a plan for great healthcare, better than Obamacare provides, but we can’t use Obamacare. It’s a disaster.

“I have many people that are very good friends of mine who are closing businesses. I know so many people that are either closing or they’re hiring part-timers or they’re telling people that have been with them for 20 years, ‘listen, you’re going to have to go part-time.’ It’s terrible what’s happening.

“Obamacare is, in a way, ultimately going to lead to a shutdown of government. So what’s the difference between doing it now or doing it later? You’re better off doing it now.

“Whether it’s defunding or just terminating it in some form, the Republicans have a lot of strong cards, much stronger than people are saying and much stronger than a lot of the Republicans themselves are saying. This is a good opportunity to do something that really would be good for the country.”

Editor’s Note: Should ObamaCare Be Repealed? Vote in Urgent National Poll 

As for President Obama’s handling of the Syrian crisis and the chemical weapons agreement brokered by Vladimir Putin and the Russians, Trump tells Newsmax: “It’s been a very, very rough couple of weeks for [Obama], and Putin is looking very, very strong. He’s really looking like the world leader. The deal that was made assures that Assad is staying in power and that if you look at Putin, he’s going to be the one that is helping and controlling Syria. Assad owes everything to Putin and to Iran.

“We should stay out of Syria anyway. We should invest and take care of our own country. This country has so many problems. We have $17 trillion in debt. Our country is a disaster right now. The last thing we need to do is go into Syria where people truly hate us. It just doesn’t make sense.

“So certainly our country has been hurt from a public relations standpoint, and certainly the president’s prestige has been hurt. I would say about Putin, whether a good man, bad man, or somewhere in the middle, his stock has certainly gone up.”

Looking toward the elections in 2014 and 2016 and the role he might play, Trump says: “I’ve been very active in supporting people all of my life and only recently did I start thinking about other things. But I’ll be helping people in 2014 and we’ll see what happens, we’ll see where this country is, where the world is.

“But the big things are the elections coming up in 2014. [They’re] going to be very, very vital. The Republicans have a great opportunity to do something very dramatic.”

© 2013 Newsmax. All rights reserved.

By Jim Meyers and Kathleen Walter

Summers’ Exit Underscores Fed’s Peculiarities.

“Stocks Soar on Summers Withdrawal” is the headline on The New York Times website. It appears over a Reuters dispatch reporting that Wall Street and global market indices were rising after Lawrence Summers withdrew his name from consideration to be chairman of the Federal Reserve.
Reuters explained that Professor Summers was “widely regarded as more eager to taper the Fed’s $85 million a month bond-buying program” than was Janet Yellen, another leading contender.
As a result, “In early trading the Standard & Poor’s 500-share index gained 0.9 percent, the Dow Jones industrial average 1 percent and the Nasdaq composite 0.8 percent. Wall Street was following global markets higher. In afternoon trading in Europe, major bourses were as much as 1.3 percent higher. Hong Kong’s Hang Seng closed with a gain of 1.5 percent.”
The idea that the world’s companies would be worth hundreds of billions of dollars more without Professor Summers at the head of the U.S. central bank might be considered a point, or hundreds of billions of points, against him. Another way of looking at it, though, is that the dollars in which the value of those stocks are measured will be worth less if a Fed chairman or chairwoman with a looser policy than Professor Summers gets his, or her, hands, on the monetary policy levers.
As a legal matter, the Federal Reserve’s mandate is not to fuel the stock market, but to “promote effectively the goals of maximum employment” and “stable prices.” But as a practical matter, there’s a risk that in pursuing maximum employment, the Fed will foster inflation that undermines stable prices. For that reason and others, plenty of market players spend lots of time and energy and money trying to figure out what the Fed’s actions will mean for their investments.
It’s possible, I suppose, that Reuters is wrong in its assessment of an explanation for the day’s market outcome. If Professor Summers had not withdrawn over the weekend, and if the markets had still gone up, the wire service would have had to come up with some other reason to explain it. And Reuters, like its competitors, is certainly not infallible; just a few days ago its headline was, “Obama to Nominate Summers as Fed Chief: Nikkei.”
Aside from the fallibility of the press, though (with the exception in this particular case of this column, which confidently predicted in its Office Pool 2013 question on the Fed chairmanship, “Sorry, Lawrence Summers, it’s not going to be you”), what’s the takeaway from the Summers story?
The public search for a successor to Ben Bernanke is being described as an embarrassment to President Obama. But in a strange way, the contest — something like the economic version of a cross between the Pillsbury Bake-Off and the Miss America contest — only highlights the strangeness of the structure. A Washington Post editorial described the “mini-circus” as “dragging the Fed itself into Washington’s toxic political fray.”
Heaven forfend that something as important as coining money and regulating the value of the dollar, which the Constitution in Article I enumerates as a power of Congress, become a question of political discussion.
What the flap over the Fed chairmanship, in a best-case scenario, has the possibility of doing is to inspire people to question the underlying set-up. The Federal Reserve Act gives considerable discretionary powers over the money supply to an unelected bureaucrat who is only indirectly accountable to either Congress or the executive branch.
In a country skeptical of elites, central planning, and large, self-funding bureaucracies, the Federal Reserve is an outlier. No wonder the president is having such a hard time finding the right person to run it.
Bill Gates once paraphrased Warren Buffett as saying “You should invest in a business that even a fool can run, because someday a fool will.” Maybe there is a central banker or academic economist or other candidate for the job out there so brilliant that he or she can manage the exit strategy and unwind Chairman Bernanke’s trade without ruining the economy.
But if success at the Fed requires a chairman smarter, smoother, and better-connected than Larry Summers, maybe it’s time to rewrite the job description, rethink the institution, or revise the legislation that established the position to begin with. Because if President Obama doesn’t pick a fool for Fed Chairman this time around, some president after him will, and we will all be at his, or her, mercy.
Ira Stoll is editor of and of Read more reports from Ira Stoll — Click Here Now.


© 2013 Newsmax. All rights reserved.

By Ira Stoll

With Summers Departure, Liberals Push Yellen for Fed Chair.

Now that Larry Summers, President Obama’s former economic adviser, has removed himself from consideration for the nomination as head of the Federal Reserve, progressive groups are going to do all they can to make sure Janet Yellen gets the nod, Politico reports.

The current Fed vice chairwoman has long been the favored candidate of left-leaning groups to replace Fed Chairman Ben Bernanke, whose term ends in Jan. 31.

If confirmed, Yellen would be the first female to head the Federal Reserve.

Her supporters also say she would make a concerted effort to push for policies to help the poor and middle class.

Progressive groups were readying to lobby the Senate Banking Committee this week to reject Summers and support Yellen and now, those efforts will go into overdrive.

“The confirmation hearings would’ve been a nightmare for Summers, but now we turn for Yellen,” said Robert Borosage, president of the left-leaning Institute for America’s Future.

“Progressives have to be pleased because this is a result of the leadership in the Senate from” Sens. Sherrod Brown, D-Ohio), Jeff Merkley D-Ore., and Elizabeth Warren (D-Mass.), who were all expected to oppose Summers if he was nominated.

Many progressives were turned off by Summers’ deregulation policies during the late 1990s, which they believe contributed to the 2008 financial meltdown and took issue with controversial remarks he made as president of Harvard University in 2005 about women’s aptitude for math and science, which contributed to his 2006 resignation.

“It allowed for a real debate about the policies that drove us off the cliff — several of which were done in the Clinton administration, and how we bailed out the banks during the Obama administration,” Borosage said.

“There’s a wing of the Democratic Party that is now prepared to fight on these issues going forward.”

National Organization for Women President Terry O’Neill said that “Larry Summers did the right thing in withdrawing and it clears the way for Janet Yellen.”

“For many, it was just anti-Summers, but for me the issue was really there’s a glass ceiling.

What I saw happening was the better-qualified woman being passed over for a less-qualified man.

Women have seen that happen over and over again where a better-qualified woman is passed over by a less-qualified man who is friends with the employer.”

O’Neill is committed to putting all her energy into making sure Yellin heads up the Fed.

“I’m not stopping until Obama shatters that glass ceiling over her head.”

One Democratic strategist put it this way: “If Obama did nominate someone else who happened to be a man — I think he would catch holy hell.”

© 2013 Newsmax. All rights reserved.

By Matthew Auerbach

Team Obama Marks Crisis Anniversary with Bid for Credit.

The White House on Sunday marked the fifth anniversary of the financial crisis with a new bid to claim credit for “bold” emergency economic rescue measures it said worked better than anyone expected.

Officials also used the public relations push, including a 49-page report on the administration’s response to the meltdown, as a political warning to Republicans of the “self-inflicted wound” threatened by a new debt showdown.

President Barack Obama’s top economic advisor Gene Sperling argued that the administration’s difficult calls across the banking sector, auto industry and in housing and finance had stabilized the US economy.

“The president undertook a series of bold, unprecedented and politically difficult measures in 2009 that have performed better than virtually anyone at the time predicted,” said Sperling, director of the National Economic Council (NEC).

Ironically, Sperling spoke to reporters just before news broke that one of the architects of those policies, Lawrence Summers, a former NEC chief, said he was withdrawing from the race to be the head of the Federal Reserve.

Summers, a polarizing figure in Washington, said he feared his Senate confirmation process would be too contentious.

The new economic crisis report touted Obama’s speedy response to the crisis when he took office in January 2009, at a time when the economy was losing 800,000 jobs a month and the possibility of a depression loomed.

It said measures like the Troubled Asset Relief Program (TARP) inherited from the Bush administration had stabilized the financial system while recouping the Treasury‘s investment and keeping credit and lending open.

The report argued that stress tests established for US banks by the Treasury had saved the banking system and were now a model for the rest of the world.

And the report also touted the US auto bailout, controversial at the time, which has seen GM and Chrysler emerge from bankruptcy and create 340,000 jobs since 2009, in a new period of prosperity for the iconic US industry.

Sunday’s report was released as Obama seeks to turn the focus away from foreign policy — specifically Syria and Egypt — to the economy.

The president will make a speech on the crisis at the White House on Monday, address businessmen on Wednesday and visit a Ford plant in Kansas City on Friday.

The latest initiative, on the fifth anniversary of the collapse of Lehman Brothers investment bank which triggered the worst crisis since the Great Depression, also coincided with the opening shots in a new fiscal showdown in Washington.

Obama warned Sunday he would not negotiate with Republicans seeking concessions in return for lifting the $16.7 trillion US borrowing limit, without which the government will go into default.

“What I haven’t been willing to negotiate, and I will not negotiate, is on the debt ceiling,” Obama told ABC News.

Sperling added that it would not be responsible to risk progress made since the recession with a spell on the “high wire” of a threatened default.

“We came back from the brink, we avoided a second Great Depression — but we all agree that we have a lot further to go to get jobs growing, to get unemployment down to where we need it to be,” Sperling said.

A confrontation is also looming between Obama and Republicans on the government’s operating budget for the next fiscal year.

If no deals are reached within weeks, the government could be shut down by the beginning of October, and it could begin defaulting on its debts by the middle of the month.

Obama has made repeated efforts to refocus his crisis-hounded administration on the economy and to claim credit for often unpopular measures like an $800 billion stimulus plan and a huge bank bailout.

Though he defied conventional wisdom in winning re-election despite a soft economy last year, the president still bears the scars of the crisis.

In an NBC Wall Street Journal Report last week, only 27 percent of Americans said they thought the economy would get better over the next year, while 52 percent disapproved of how Obama was handling the economy.

Though the crisis has passed, home prices remain well below their pre-recession peak and unemployment, which rose as high as 10 percent, remains at 7.3 percent.

Obama’s Republican foes will argue this week that the president’s spending programs and tax policies are to blame for slowing the pace of recovery.

They are also sure to mock his new attempt to “pivot” to the economy.


© AFP 2013


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