“After months of speculation, it’s official: Janet Yellen will be the next chair of the Federal Reserve, succeeding Ben Bernanke, the White House said late Tuesday,” CNBC reports:
President Obama will make the announcement on Wednesday at 3pm ET, the White House said. Both Janet Yellen and current Fed chair Ben Bernanke are expected to attend. That announcement will be right after the Fed releases the minutes from its last meeting, due out at 2pm ET.
Dow and S&P futures shot higher following the announcement, pointing to a higher open on Wall Street Wednesday.
Wait, does the administration view that last sentence as a positive or a negative?
Regarding Yellen herself, the Zero-Hedge econoblog definitely views her nomination as a negative:
Just in case there is still any confusion about Yellen’s ability to peer into the future, we once again present her own words confirming otherwise. From the NYT which captured a moment of a 2010 FCIC hearing:
Ms. Yellen told the Financial Crisis Inquiry Commission in 2010 that she and other San Francisco Fed officials pressed Washington for new guidance, sharing the problems they were seeing. But Ms. Yellen did not raise those concerns publicly, and she said that she had not explored the San Francisco Fed’s ability to act unilaterally, taking the view that it had to do what Washington said.
“For my own part,” Ms. Yellen said, “I did not see and did not appreciate what the risks were with securitization, the credit ratings agencies, the shadow banking system, the S.I.V.’s — I didn’t see any of that coming until it happened.” Her startled interviewers noted that almost none of the officials who testified had offered a similar acknowledgment of an almost universal failure.
And just like getting the president it richly deserves, the US is about to have a Fed chairman who will continue doing much more of the same: pillaging the middle class, and injecting trillions in “wealth effects” straight into the offshore bank accounts of the uberwealthy, while pushing the S&P to fresh all time record highs.
Don’t worry, the man is hiding his stash, somewhere. Until it’s all been confiscated, as Richard Fernandez posited recently:
The shutdown process is as simple as it is cynical. While much of the government, like Homeland Security, keeps going for the duration, any resulting inconvenience will be pointedly inflicted on the public. It’s like waterboarding the taxpayers, until they cry “uncle” and give up one more bit of control over their wallets for the privilege of getting their money unfrozen and their debts increased. What could go wrong?
Megan McArdle despite her long career as a pundit never quite “got it” until she looked at the Detroit pension plan. McArdle wondered why the pension trustees were handing out “bonuses” to the recipients when all investment logic demanded that the funds in their care be reinvested. Being a logical and decent person McArdle cast around for an explanation without success.
I literally slapped my forehead while reading some of the explanations that the trustees offered for their behavior. The spokesman for the trustees has the nerve to complain about the actuary’s report that outlines these wild deviations from sanity. Here is how she justified draining the pension fund assets:
She said that the trustees were administering benefits that had been negotiated by the city and its various unions and that they had established an internal account to set aside “excess earnings” that would cover the cost. She said it was appropriate for retirees to benefit from market upturns because they had paid into the pension fund, so their own contributions had generated part of the investment gains.
“People were having a hard time, living hand-to-mouth, and we thought we would give them some extra,” Ms. Bassett said.
It does not seem to have occurred to Ms. Bassett, or the other trustees, that people would have a very hard time when the pension that they were depending on went up in smoke.
Then she got it, like a light coming on in her head. The pension trustees were draining the pension because they were so sure, so absolutely certain that the taxpayers would have to refill the pot they felt safe helping themselves to whatever they wanted. She wrote:
they were thinking the pensions would have to be paid, one way or another. After all, it’s in the Michigan State Constitution. So they could pay out bonuses, please various constituencies, and then force the city or the state to make them whole when it all came tumbling down.
What could go wrong? To everyone’s amazement something completely unprecedented happened: City Hall went broke. “They didn’t reckon with the possibility that the city would simply run out of money, and the state would decline to step in, leaving them with no deep pockets to make up for their mismanagement.” And so the Detroit pension is bust unless they find something they can siphon off to replenish it.
This is exactly the game the administration is playing. However, the one danger the Obama administration, smug behind its wall of tame media and government bureaucracy, has not provided against is an emergent event like that which crushed detroit. What if the money really runs out? What if this time they go too far?
The insiders are probably laughing at the very idea of limits, saying to themselves that no you can’t go too far. The Fed can always print more money. That yes, have to raise the debt limit, because we always did. That sure it’s going to happen because it always has. And so forth. Until one maybe one day it just doesn’t happen.
Is this the day? Nobody can say for sure. But there’s one thing to bear in mind. President Obama was all set to strike Syria on his own authority until suddenly he found that he couldn’t. He never saw it coming. One day his foreign policy car wouldn’t start. Oh well, he has tried to console himself by arguing that however diminished he has become abroad, he is still a giant at home. Maybe he is. But then again maybe not.
Only one thing’s for sure. When the music does stop, nobody — least of all the administration — will see it coming.
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