Good morning, friends. Here's a look at some of the stories I'm reading today.
Tracking what Janet Yellen tracks
Janet Yellen is likely to be confirmed as the next Fed chairman, so it's time to tune into her economic psyche. "More than half the gauges Janet Yellen uses to track the U.S. labor market are below pre-recession levels," writes Bloomberg's Michelle Jamrisko. Two of the six have improved -- payrolls are up and firings have slowed -- while four are still worse than they were in December 2007: unemployment, the labor force participation rate, and the hiring and quit rates. Bottom line? There's an increased likelihood that Yellen, who often stresses the pain of long-term unemployment, "will support an easier-for-longer Fed policy."
John Taylor takes on Larry Summers
Larry Summers has been making headlines with his talk on secular stagnation at the Nov. 8 IMF research conference. Summers said there has been a secular decline in the equilibrium real interest rate, which leaves the economy weak with nominal rates at zero and in need of asset bubbles for growth. Stanford economist John Taylor disagrees. "Deviations from good economic policy have been responsible for the very poor performance over the past decade," he writes on his blog, referring to the Fed's ultra-low interest rates in 2003-2005 and the lax enforcement of financial regulations. "Such policy deviations created a boom-bust cycle, and were a significant factor in the crisis and slow recovery." Perhaps the Fed, which relied on its ability to clean-up after asset bubbles burst, will come around to the view that prevention is the best cure.
Obamacare on life support
"Unless the HealthCare.gov website miraculously gets fixed by next month, there's a growing likelihood that over time, enough Democrats may join Republicans to decide to start over and scrap the whole complex health care enterprise," writes Josh Kraushaar of the National Journal. Last week, Michigan congressman Fred Upton managed to corral 62.4 percent of the House vote on his bill to allow insurers to continue offering substandard plans for the next year, just shy of the two-thirds majority needed to override a presidential veto. Given their self-preservation instinct, lawmakers need to escape the daily drip of bad news on Obamacare if they are to retain their congressional seats. Democrats may just decide this is one of those times where it's better to switch than fight. The next big test comes on Nov. 30, the deadline for fixing Healthcare.gov.
What many are thinking (but few are writing)
The National Review's Jonah Goldberg admits to a degree of schadenfreude at the unraveling of President Barack Obama's signature achievement: the health care law that bears his name. After the "obligatory caveats" about those who lost their health care and/or doctors and have been unable to sign up for a new plan, Goldberg expresses his "relief and mirth" at the fumbling of the Obamacare rollout. Why? Because of Obama's hubris, his detachment from anything that turns out to be a problem, and his false promises to the American people. Goldberg surely isn't the only one enjoying watching the president get his comeuppance.
Looking back and forward
The OECD revised down its global growth forecasts for this year -- more hind-cast than forecast -- and next, citing three main events for the change: 1) The reaction to talk of Fed tapering; 2) concerns in emerging market economies about capital outflows; and 3) the U.S. debt-ceiling crisis. "Downside risks dominate and policy must address them," the OECD said in today's semi-annual outlook. The May forecasts for global growth -- 3.1 percent in 2013 and 4 percent in 2014 -- were revised to 2.7 percent and 3.6 percent, respectively. The OECD released 2015 forecasts for the first time for anyone who's interested in the art of dart-throwing.
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