As we have been pointing out -- carl.
The first woman nominated for this role.
How much do you think that played in this decision?
Certainly when you are the president, you have the opportunity to break ground in new directions.
There is a little bit of a tainted image, because there was some evidence of the larry summers nomination.
She had a lot of backing from economists in your community.
There was a letter that was sent to president obama.
We are going to have the author of that letter on momentarily, and they endorsed her for this position.
Why is she so well liked?
Why is she so well respected?
I think we have to take the fed out of the picture because she is an excellent economist with an x went forecasting record, with a lifelong fed employee from the late 1970's, she has been there in various capacities, so it just speaks to her ability in terms of forecasting, her leadership skills, as well.
I think she will be a very good fit, and what is interesting, what you heard emphasized in the president's comments, two things.
Number one, he again tried to burnish her hawkish credentials a bit, so her perception that she is dovish, only focused on the labor market, he pointed out, exactly, that she is not fully focused on the unemployment side.
Perhaps, steve forbes, she can surprise you.
Perhaps, like going to china 40 years ago, but i am not going to bank my 401k on it.
And with ben bernanke, even though i disagreed with his policies, and the resident shutting him out in the television interview, absolutely outrageous for a man that was serving for that long without giving a heads up that he was going to push him out, so he got this instead of another shelf.
He did not get a chance to speak, but this is janet yellen's day, a move forward, and i wonder, and, steve, maybe you have some thoughts on this, how much she would have shaved to this.
I think that is why, as carl pointed out, burnishing her hawkish credentials, because she has a reputation of being a dove, and the whole idea of this and price stability is that it is contrasts.
A stable dollar is a requisite of employment, so they are not contradictory, but she has a curved mentality that there is a trade-off between employment and inflation, and if you want to get employment really low, you have to be prepared for higher prices.
They talk about 2.5% inflation, and that is really dicey when you take that genie out of the bottle.
Let's explore this notion further, and arguably, you could see there is probably a third unofficial one, and that is the housing one, and so the question is, will janet yellen in braves what ben bernanke has, and, steve, this seems to be where it is going, right?
She made it clear that the fed can do more, so how do you do more to support housing?
I think she will wait for more statistics before you even mention the word tapir, and that means $85 billion in bond buying, and it should count as part of the national debt.
Buying bonds at a premium, there is not enough of them out there, so in terms of housing, if you let it alone and had a natural recovery, remember, we get one million plus new starts per year.
We are nowhere near that today.
The government does more.
If they leave it alone and higher rates, that means everybody is paying more for their mortgage, so how does that help out?
You get people that create jobs, and ultimately, housing depends on the prosperity of the economy, not what we have seen in recent times.
That is why there was a lot of cash by commissary member, in terms of the mortgage, a lot of people could not get a mortgage, even though the rate were low.
In other words, use the this theoretical 30 year fixed rate is bringing in the wrong kind of buyer, rather than people -- it is restricting the natural market.
Again, 1.5 million new starts in the natural economy, not the early boom we had that was caused by the weak dollar, but housing starts very nicely, and 17 countries around the world have higher rates of homeownership than we do, and they do not engage in this kind of stuff.
Reading the minutes from the last fomc meeting, out just about one hour ago, it was very clear that the consensus from the committee -- now, there are the hawks that went to end quantitative easing as soon as possible, but the consensus on the committee is really pushing to keep the pedal to the medal for the time being.
We heard a lot of talk of it in a close call with tapering at the meeting, and you read the actual meeting minutes, it does not look like it is as close a call as people were suggesting.
But we got a boost out of those minutes, and the st.
Louis that president basically told us it was a close call weeks ago.
Everybody likes to say it was a close call, but when you read the minutes, they all say they do not have confidence that the market has recovered, they want to keep the pace going, they are worried about tightening.
Well, you cannot do that and not have financial conditions tightened at the same time.
The fed wants to have it both ways.
You would argue the exact opposite, right?
You could taper right now.
One of the questions that has to be asked is how do you plan to taper this thing, because markets do not wait for events to happen.
It will be higher rates.
They are not going to step up, step up, step up.
They are going to mark them down at once, and it will affect markets.
How does she unwind this thing without convulsions?
It will not be easy.
She has a lot of work ahead of her.
Thank you, steve, and steve is
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