Friday, August 2, 2013

Yellen the Future, Summers the Past

Helicopter Ben Bernanke is stepping down as Chairman of the Federal Reserve.  There are two candidates bandying about: Larry Summers and Janet Yellen.  Larry Summers, the protégé of Robert Rubin, doyenne of Citigroup when it was technically bankrupt back in 2008 if not for the government bailout.  Rubin and Summers pushed for bank deregulation back in 2000 to allow structured vehicles to be created and traded, like CDOs (collateral debt instruments) and MBSs (mortgage backed securities), a form of bad sausage making done in the dark.

In today’s column , Paul Krugman outlines the Washington whispering campaign against Ms. Yellen and points out that there would be no question she had the appropriate credentials:

[S]uppose we were talking about a man with Ms. Yellen’s credentials: distinguished academic work, leader of the Council of Economic Advisers, six years as president of the San Francisco Fed, a record of working effectively with colleagues at the Board of Governors.  Would anyone suggest that a man with those credentials was somehow unqualified for office?

The Federal Reserve has two mandates: 1) keep inflation down, and 2) stimulate job growth.  Ms. Yellen has been a voice in the wilderness talking up job creation.

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