Janet Yellen nomination for Federal Reserve may be rough ride


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It was perhaps appropriate that President Barack Obama towered over his choice to lead the world's most important central bank.

Janet Yellen has been given a tall order - to keep the American economy on track and not send shudders of fear through the world's economy.

She told the small select audience at the White House that there were too many Americans who couldn't find a job, who worried about paying their bills, and it was the Federal Reserve's job to help.

Her word's on some lips would be a politician's familiar piety. But this was an economist speaking, and one who has declared that people are more than statistics to her.

Speaking with a strong Brooklyn, New York, accent, she declared that more needed to be done to strengthen the recovery, that progress had been made but there was more to do.

That seems like a signal that she is not going to suddenly abandon those measures adopted to cope with a crisis.

'Huge relief'

Janet Yellen: "I'm honoured and humbled by the faith that you've placed in me"

When the outgoing chief Ben Bernanke mused earlier this year that the Fed might cut down the amount of money they were pumping into the American economy, the reaction was nervous.

There was huge relief around the globe last month when it didn't happen.

Ms Yellen's words may be taken as some reassurance she's not thinking "mission accomplished". Perhaps I am over interpreting - but she will have to get used to her every word being held up to the light and examined.

Ms Yellen wasn't President Obama's first choice, but she's popular in his party. In these hyper-partisan, bad-tempered, scratchy days, that could mean trouble ahead.

She seems a fairly straightforward modern Keynesian. The Fed has two main duties. One is to keep an eye on inflation. But unlike many central banks, it also has to worry about unemployment.

During the economic crisis Ms Yellen has pushed for the focus to be on getting more people into work, and that means cheap money and keeping interest rates at rock bottom.

And that means not being quite so hawkish about inflation. She was one of those who argued strongly for the inflation target to be 2%.

Some point out that she hasn't always argued this way: in the 1990s she urged then-Federal Reserve Chair Alan Greenspan to adopt a tighter monetary policy.

'A rough ride'

But there is another point that jumps out at me from her CV.

This daughter of a teacher and a doctor has moved smoothly back and forth between public service and academia - without ever joining Wall Street and making big bucks.

That is another thing that endears her to Democrats (and I guess should, in theory, help with the Tea Party as well).

When she was nominated to be the number two at the Fed her Senate hearing went fairly smoothly, getting through 17-6.

One of those voting against, Republican Senate Bob Corker, said she had "dovish" views on inflation.

He says he's likely to do so again, telling CNBC: "I am more of an 'eat your vegetables' kind of guy. I'm not a chocolate pie kind of guy and that's where we've been with the Fed for a long, long time."

The markets like her appointment, but she is taking on the most important economic job in the world as the US teeters on the edge of a huge economic crisis, a product purely of its partisan divide.

It seems fairly certain she will get a rough ride up on Capitol Hill.

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  • rate this

    Comment number 19.

    If anyone notices for Obama its all about rushing things quickly before people have a time to think things through

    Health care, immigration, you name it+Obama will rush it

    So of course w/ Yellen this is what Obama wants also
    even though Congress deserves more time to investigate who she is

    Can Yellen perform miracles?
    Probably not especially w/ Obama at the helm rushing her, too

  • rate this

    Comment number 18.

    Not surprised Obama nominated Ms Yellen since she taught at Harvard
    like numerous other Obama appointees

    Never really heard of her and not sure who she is, if she has kids or family

    Hopefully Wall Streeters don't push her around but then again Obama met with Wall Streeters not too long ago to discuss debt ceiling

    Wall Street is Obama's best friend
    and Yellen won't go against Obama

  • rate this

    Comment number 17.

    'Filibuster on principal' (obstruct anything Obama) is the GOP Senate member rule with Cruz currently lead spokesperson/obstructionist! Expect that John McCain and Lindsay Graham will also use the Senate hearing forum to try to wrest CNN sound bites away from Cruz.

    The GOP - business as usual!

  • Comment number 16.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 15.

    ref #14

    Than you must be doing well on your diet.

  • rate this

    Comment number 14.

    13.MagicKirin - -

    My policy is to not 'feed the trolls' . . .

  • rate this

    Comment number 13.

    ref #12
    . Although everyone is entitled to an 'opinion', not every opinion is equal.
    In other words I and other posters disagree with you. You are ill informed as are several Obamaphiles. This is not the Guardian which lies and censors people.

  • rate this

    Comment number 12.

    #'s 2, 4 & 11, (+many, many others) - "MagicKirin" - -

    The beeb should impose a life-time ban on 'trolls' . . . Although everyone is entitled to an 'opinion', not every opinion is equal. Some opinions are well-informed and based upon a well-intended desire to share information and ideas; and to ferret out the truth - - then there are the 'Internet trolls' . . .

  • rate this

    Comment number 11.

    ref #9

    It would be nice for you to have an original thought.

    But so few Obama supporters can get past their Palovian talking points

  • rate this

    Comment number 10.

    She is the Steve Mc Laren of the Fed. The Number 2 no-one really wanted but got it when everyone else stepped down. .

  • rate this

    Comment number 9.

    It doesn't take much talent (most GOP voters don't have) to understand that all talk about spending cut, debt reduction, balanced budget is utter nonsense. They are never serious with ANY of the issues. Check the track record for ANY GOP president since Carter (D). All GOP Govt increased/created budget deficit.

    Obama is the FIRST president in history who cut defence spending by whooping $500bn.

  • rate this

    Comment number 8.

    Only the innumerate and the political classes could fail to grasp that the USA has a MASSIVE debt problem.

    It's akin to someone earning £45k having a credit card bill of £167k

    Differences are

    A) by rate suppression the interest rate is low for now
    B) the bill will be passed to the 'children'
    C) Off balance sheet accounting hides considerably more debt.

    but it would reckless to question it :)

  • rate this

    Comment number 7.

    All GOP admin/president did worse so far budget deficit & debt is concerned.

    % increase in debt/GDP
    1977–1981 Carter(D) -3.3% (Surplus)
    1981–1985 Reagan(R) +11.3%
    1985–1989 Reagan +9.3%
    1989–1993 Bush Sr.(R) +13.0%
    1993–1997 Clinton (D) -0.7% (Surplus)
    1997–2001 Clinton -9.0% (Surplus)
    2001–2005 Bush (R) +7.1%
    2005–2009 Bush +20.7%
    2009–2013 Obama (D) +18.5%

  • rate this

    Comment number 6.

    A cursory background check reveals the same lobbies, same people and same forces just different faces. Nothing will change in America. Rich people will get richer and the poor will continue to suffer.

    Control of American finances is in the hands of an utterly greedy lot!

  • rate this

    Comment number 5.

    Whoohoo more money printing !

    $85bn a month / 1 Trillion p.a will not be enough!

    Money will soon be worth less than the paper it is not printed on!

    When I did 'O' level economics many years ago it was asserted that an essential property of a viable 'money commodity' was that it act as 'store of value' over time. Boy has that principle fallen by the way!

    Print away the debt!

  • rate this

    Comment number 4.

    ref #3

    Also of Obama czars have not been scrutinized nor was his NLRB appointments. Thats what I refered too.

    If Stephanie rice had gone through hearing for Sec of State she would have been grilled. John Kerry had an easy time

  • rate this

    Comment number 3.

    "Those that go through the process."

    That's not a trivial qualification there, Magic.

  • rate this

    Comment number 2.

    You may want to learn the issue, she will get through with little problems.

    Unlike the Democrats, the Republicans are reasonable on nominations. Those that go through the process.

  • rate this

    Comment number 1.

    Between Summers and Yellen. There is no comparison.
    Summers is in the crowd that repealed glass steagal. It may be a tough session but at least there will be no claim to conflict of interest or serving wall st as paulson did in treasury.


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