Fed Chair Yellen had a health scare during a speech, but she’s feeling fine now
Fed Chairwoman Janet Yellen gave a scare Thursday while giving a speech on monetary policy and inflation at the University of Massachusetts at Amherst.
Near the end of her prepared remarks, Yellen appeared to be experiencing some physical discomfort. She paused several times to cough before saying she would stop.
“[I]f the economy surprises us, our judgments about appropriate monetary policy will change,” she said. “Let me stop there. Thank you.”
She gathered her notes, gave several smiles, and stuck around to be presented with a gift before she made her way offstage.
Several news outlets reported that she proceeded to receive medical attention, but now she seems to be in the clear.
Global debt levels are dangerously high and central banks cannot keep the game going indefinitely, warns the high priest of orthodoxy
By Ambrose Evans-Pritchard
8:30AM BST 14 Sep 2015
Debt ratios have reached extreme levels across all major regions of the global economy, leaving the financial system acutely vulnerable to monetary tightening by the US Federal Reserve, the world’s top financial watchdog has warned.
The Bank for International Settlements said the wild market ructions of recent weeks and capital outflows from China are warning signs that the massive build-up in credit is coming back to haunt, compounded by worries that policymakers may be struggling to control events.
“We are not seeing isolated tremors, but the release of pressure that has gradually accumulated over the years along major fault lines,” said Claudio Borio, the bank’s chief economist.
The Swiss-based BIS said total debt ratios are now significantly higher than they were at the peak of the last credit cycle in 2007, just before the onset of global financial crisis.
What happens when the Federal Reserve loses its stranglehold over debt markets? Investors are finding out.
The selloff in corporate bonds is deepening and investors are seeking safety in the longest-dated government debt, which does best when the economy does worst. Defaults are rising as oil tumbles and investors are looking for the best ways to hedge against credit losses.
All this comes as the Fed does, well, nothing much. Instead, it’s China that’s taken the lead with new rounds of financial stimulus in the face of slowing growth. But some days it’s a free for all, with even Kazakhstan wielding its influence.
WASHINGTON, D.C. – Rep. Scott Garrett (NJ-05), Chairman of the House Financial Services Capital Markets and Government Sponsored Enterprises Subcommittee, issued the following statement in response to Federal Reserve Chair Janet Yellen’s testimony before the House Financial Services Committee today.
“The Federal Reserve has proven itself to be one of the most unaccountable and least transparent agencies in the federal government, and today’s hearing did little to change that reality. From being unresponsive to subpoena requests from our Committee to dismissing concerns over serious problems in the fixed income markets, the Fed is the poster child of a shadow regulatory system that threatens taxpayers and our broader economy. It is an agency in dire need of change, and I look forward to continuing our Committee’s efforts to bring real reforms to the Federal Reserve.”
Rep. Garrett has been a longtime critic of the Federal Reserve’s lack of transparency and its failed monetary policy. He is the author of two pieces of legislation that would shed light on the Federal Reserve’s notoriously opaque operations:
H.R. 113, The Federal Reserve Accountability and Transparency Act of 2015
H.R. 2625, The Bailout Prevention Act of 2015
The Federal Reserve Bank of Atlanta has reported that its forecast for U.S. gross domestic product (GDP) growth dropped to zero on April 1 and ticked back up to 0.1% on April 2. The bank uses a unique model called GDPNow to prepare its forecasts, and the model typically estimates growth well below the rate projected by the Bureau of Economic Analysis (BEA).
The GDPNow model aggregates the same 13 subcomponents used by BEA to construct its estimate, but when a data point is not available, the model uses “bridge equations” to fill the gap. Other forecasters use similar “nowcast” techniques, but the Atlanta Fed notes that other forecasts are not updated more than once a month or once a quarter. Also, they are not publicly available and do not include forecasts of the subcomponents that add color to the top-line number. The GDPNow model fills those voids.
On February 2, the GDPNow model forecast GDP growth of 1.9%. At that time the change in net exports was forecast to be down $15 billion. By March 12, that total had dropped to a $40 billion negative change. Nonresidential construction spending was initially forecast to drop by 1.5% and is now forecast to be down 22.5%.
What it means if Fed no longer says it’s ‘patient’ on rates
By MARTIN CRUTSINGER
AP Economics Writer
WASHINGTON (AP) — For the Federal Reserve, patience may no longer be a virtue.
Surrounding the Fed’s policy meeting this week is the widespread expectation that it will no longer use the word “patient” to describe its stance on raising interest rates from record lows.
The big question is: What will that mean?
Many economists say the dropping of “patience” would signal that the Fed plans to start raising rates in June to reflect a steadily strengthening U.S. job market. Others foresee no rate hike before September. And a few predict no increase before year’s end at the earliest.
Complicating the decision is a surging U.S. dollar, which is keeping inflation far below the Fed’s target rate and posing a threat to U.S. corporate profits and possibly to the economy. A rate increase could send the dollar even higher.
In a statement it will issue when its meeting ends Wednesday and in a news conference Chair Janet Yellen will hold afterward, the Fed isn’t likely to telegraph its timetable. Yellen has said that any decision to raise rates will reflect the latest economic data and that the Fed must remain flexible.
Still, nervous investors have been selling stocks out of concern that a rate increase – which could slow borrowing and spending and weigh on the economy – is coming soon.
Representative Scott Garrett, a New Jersey Republican, went on to spell out seven pieces of evidence that he said proved the Fed’s involvement in politics, including a meeting with President Barack Obama at the White House before Election Day, and another later in November with labor and community organizers.
“You’ve already made monetary policy a partisan political exercise,” Garrett said.
Yellen Defends Fed Against Republican Charges of Party Bias
(Bloomberg) — Janet Yellen was forced to defend the Federal Reserve against accusations that it’s politically partial to the Obama administration and liberal groups during heated exchanges with Republican members of Congress.
“The Federal Reserve is independent,” the central bank chair told the House Financial Services Committee on Wednesday in response to a question about her regular meetings with Treasury Secretary Jacob J. Lew. “I do not discuss monetary policy or actions we are going to take with the secretary.”
The exchange reflects rising tensions between the Fed and Republican lawmakers, who are vexed by its aggressive monetary policy and expanded supervision of banks since the financial crisis, and have proposed legislation to curb its powers.
At least 113 staffers at U.S. Fed earn more than Yellen
By Michael Flaherty
WASHINGTON Fri Oct 17, 2014 10:08am EDT
(Reuters) – The top 113 earners among staff at the Federal Reserve’s Washington headquarters make an average of $246,506 per year, excluding bonuses and other benefits – more than Fed Chair Janet Yellen and nearly double the normal top government rate.
Yellen, whose salary is set by Congress, earns $201,700 a year.
The details on Fed pay were provided to Reuters in response to a Freedom of Information Act request for data on all employees of the U.S. central bank’s board whose salaries outstrip $130,810, which is the top of the government’s pay scale in most areas.
However, the central bank only provided salaries for staff who make at least $225,000 a year, with some exceptions. It is the first time the list has been made public.
Republicans in the U.S. House of Representatives have sponsored a bill that would require the Fed to divulge that information publicly.
Supporters of the Fed say the world’s leading central bank needs top talent, and note that its expenses are not covered by taxpayers, but by the income it earns on securities it holds. Critics, however, think the Fed has too much discretion.
“It certainly bolsters the case for more oversight,” said Maggie Seidel, a spokeswoman for New Jersey Republican Scott Garrett, a co-sponsor of the bill. ( https://1.usa.gov/ZD7VXz )
NJ Senate Candidate Jeff Bell to Keynote RealShare NEW JERSEY, State’s Premier Commercial Real Estate Conference, Sept. 11 in New Brunswick
NEW YORK, Aug. 18, 2014 (GLOBE NEWSWIRE) — U.S. Senate candidate Jeff Bell will keynote RealShare NEW JERSEY, the annual conference for New Jersey’s commercial real estate movers and shakers, at New Brunswick’s Hyatt Regency on Sept. 11 from 7:45 a.m. until 12:25 p.m. The industry’s premier educational and networking conference is hosted by ALM’s Real Estate Media Group, publishers of GlobeSt.com and Real Estate Forum.
Mr. Bell will present his perspective on the Federal Reserve’s current policies, what he believes needs to be done to have a course correction in monetary policy, and how this produces prosperity on Main Street and impacts the commercial real estate industry.
“What’s hot, what’s new, and where to look for your next big deal, across all the property sectors, will be the focus of our 13th annual RealShare NEW JERSEY conference,” said Michael Desiato, vice president and group publisher of ALM’s Real Estate Media Group. “Besides the formal sessions, this is a venue where old business relationships are renewed and valuable new ones are forged.”
Conference panels include:
Town Hall: Economic Growth Update. Economic growth in the Garden State and the future of the commercial real estate market will be examined. Participants include: Meryl Gonchar, Esq.; Co-Chair, Redevelopment & Land Use Department; Greenbaum, Rowe, Smith & Davis LLP. Tracye McDaniel; President and Chief Executive Officer; Choose: New Jersey Inc. Fred Schmidt; President & Chief Operating Officer; Coldwell Banker Commercial Affiliates.
New Development, Redevelopment and Repositioning: The Full Update. Topics include the redevelopment of suburban office campuses, repositioned retail, and new multifamily and industrial development. What factors are creating opportunities across the state? Participants include: Nicholas Racioppi, Jr.; Partner; Riker Danzig Scherer Hyland & Perretti LLP. Carl Goldberg; Co-President; Roseland. Ronald Ladell; Senior Vice President, New Jersey; AvalonBay Communities, Inc. Constantino (Gus) T. Milano; Managing Director; Hartz Mountain Industries, Inc. Ken Sisk; National Client Manager; Partner Engineering & Science, Inc.
Transactions: Getting the Deals Done. Gain insight from New Jersey’s biggest players on the art of the deal. Participants include: Alex Cohen; CEO; Liberty SBF. Jose Cruz; Senior Managing Director; HFF. Nat Gambuzza; Vice President of Investments; Marcus & Millichap. David Simon; Executive Managing Director; Massey Knakal Realty Services.
Industrial Leaders in the Garden State. How have e-commerce, distribution and port-related activity caused increased user demand and how does this effect rental rates? Why has the overall industrial vacancy rate continued to improve for three consecutive years? Participants include: David B. Wolfe, Esq.; Partner; Skoloff & Wolfe, P.C. Marc Petrella; Senior Director; Cushman & Wakefield of NJ, Inc.
For more information or to register, go to https://www.globest.com/conferences/1_38/.
ALM is a global leader in specialized business news and information. Trusted reporting delivered through innovative technology is the hallmark of ALM’s award-winning media properties, which include Law.com (www.law.com), The American Lawyer, Corporate Counsel, The National Law Journal and The New York Law Journal. Headquartered in New York City with 16 offices worldwide, ALM brands have been serving their markets since 1843. For more information, visit www.alm.com.
The Fed Can’t Fix What Ails the Economy
By Gerald P. O’Driscoll Jr.
This article appeared in Real Clear Markets on July 21, 2014.
In Congressional testimony this week, Federal Reserve Chair Janet Yellen pointed to several economic maladies warranting continued activism by the central bank. But what ails the U.S. economy cannot be fixed by monetary policy.
This has been an exceptionally weak recovery when gauged by the labor market. About half of the decline in the unemployment rate can be accounted for by “discouraged workers,” who have dropped out of the labor force and are no longer actively seeking jobs. For that reason, the unemployment rate is increasingly becoming a misleading gauge of the labor market.
In Monday’s Wall Street Journal, Mortimer Zuckerman wrote cogently of “The Full-Time Scandal of Part-Time America.” As he put it, “Way too many adults now depend on the low-wage, part-time jobs that teenagers would normally fill.”
Low economic growth is one reason that job growth has been weak. Growth in full-time jobs has also been slowed by Obamacare. The act mandates that employers provide health insurance for those working 30 hours a week or more. The predictable consequence is that employers are reluctant to hire full-time workers. Better two half-time workers than one full-time employee.
There are many other forces at work in labor markets, few of which are influenced by anything the Fed does. Until recently, there were extended unemployment benefits. These discouraged workers from actively seeking jobs. That effect combines with benefits, like food stamps, to act as a tax on taking a job. Casey Mulligan, an economics professor at the University of Chicago, has written extensively on the employment tax. If people don’t take jobs, employment cannot grow.
Some of what occurred in the recession is a continuation or acceleration of trends long in place. The male labor force participation rate has been declining since 1950. It was about 87% then, and is 69.2% today. The overall labor force participation increased for a long time because of rising participation by women. That has flattened now.
The fact that men increasingly do not work has profound social consequences. But, again, this is not a problem that monetary policy can address.
Janet Yellen has long been associated with the belief that the central bank can influence employment. She has also commented on the weakness in current labor markets, and the fact that the numbers overstate strength there.
Yet yesterday she observed that the labor market is improving more quickly than expected, and therefore the Fed might raise interest rates sooner than expected. Perhaps the Yellen Fed has decided to declare victory, and extricate itself from the trap of its own making. But that does not change the fact that labor markets remain weak.
It is hubris to claim the Federal Reserve can control variables, like the unemployment rate and labor market weakness, over which they have no systematic influence. But Fed policy is not just ineffective; it is malignant.
The main effect of Fed policy has been to create asset bubbles in financial markets, decoupling these from the underlying economy. As we learned painfully in the recent financial crisis, overheated asset markets are not a source of strength – they the source of future problems.
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