Joe Biden's Unsolvable Identity Politics Problem

Great piece from Michael Barone, at the Washington Examiner, "Biden: Identity politics and no apologies":

Even as the Supreme Court rejected the last pro-Trump lawsuit and the Electoral College confirmed his 306-232 majority, Biden seemed to be playing identity politics with his major appointments. “Identity-based groups,” the New York Times is reporting, “continue to lobby Mr. Biden to ensure racial and gender diversity at all levels in his administration.”

He’s facing demands for two cabinet posts for Hispanic women, for a black attorney general, and for a Native American interior secretary. He’s facing criticism for placing “people of color” in posts for which they have no apparent expertise — Xavier Becerra at Health and Human Services, for example, and Susan Rice at the Domestic Policy Council [and she's a fucking foreign policy "expert"!]. 

Every incoming president faces vexing choices and scornful criticism, but it’s an especially vexing problem for Democrats. Their party, since its creation in 1832, has been an often unwieldy coalition of out-groups with grievances and self-appointed advocates. Their urban political bosses developed the art of balancing party tickets (with Southern Democrats, decades and decades ago).

The plaints and pleas of identity group advocates can sometimes seem disconnected from reality. How many Hispanic-surnamed women out there are determined to renounce the Democratic party unless Biden appoints to his cabinet not just one but two Latinas? (At least the Times isn’t using the university-spawned and unpronounceable adjective "Latinx.") Will black voters really feel betrayed if this Democratic president doesn’t appoint a black attorney general as the last Democratic president did?

At this point in our history, it seems apparent that the public will not only accept but approve of appointees of any ethnic or racial description, depending on their performance and policies. And one suspects that among the public, if not in the press, most people care more about policy than ethnicity, more about competence than ticket-balancing...

RTWT.

Get Ready for the Mother of All Corrections

From Jeremy Warner, at the Telegraph U.K., "Get ready for the mother of all stock market corrections once central banks cease their money printing."

A great piece.

Read it all at the link.

Element Capital Buys Billions of Dollars of Treasury Securities

Hmm... This is pretty interesting.

At WSJ, "An Obscure Hedge Fund Is Buying Tens of Billions of Dollars of U.S. Treasurys":

A little-known New York hedge fund run by a former Yale University math whiz has been buying tens of billions of dollars of U.S. Treasury debt at recent auctions, drawing attention from the Treasury Department and Wall Street.

Element Capital Management LLC, led by trader Jeffrey Talpins, has been the largest purchaser in dozens of government-bond auctions over the past 10 months, people familiar with the matter said. The buying is part of an apparent effort by the fund to use borrowed money to exploit small inefficiencies in the world’s most liquid securities market, a strategy that is delivering sizable profits, said people close to the matter.

Mr. Talpins is an intense and reserved trader formerly at Citigroup Inc. and Goldman Sachs Group Inc. He is known for a tenacious style that can grate on rivals and once tested the patience of former Federal Reserve Chairman Ben Bernanke.

Element has been the largest bidder in many of the 62 Treasury note and bond auctions between last November and July, these people said. At many recent auctions, some of which involved sales of more than $30 billion of debt, Element purchased about 10% of the issue, these people said. That is an unusually large figure, analysts said.

Element’s activity has raised questions because the cumulative purchases far exceed the hedge fund’s $6 billion in assets under management. Treasury officials, who frequently meet with large auction participants, have asked Element about its activity, said someone close to the matter.

“Their buying is eyebrow-raising,” said a trader who once worked for a firm that deals in government securities and witnessed Element’s bidding. These primary dealers often know the identity of other auction bidders. Element “never shared its strategy, but we often asked,” the trader said.

Treasury likes to know who is buying its bonds and why, partly because it prefers long-term holders such as pension funds, insurance companies and central banks. Treasury officials fear purchases by trading-oriented funds could result in sales that increase market swings and potentially drive up borrowing costs.

“If you’re issuing debt, your preference is those ‘sticky investors,’” said Scott Skyrm, a managing director at Wedbush Securities.

“Consistent with our policy, Treasury does not comment on individual investors in Treasury auctions or conversations with market participants,” a Treasury representative said.

Element is a “macro” fund, or one that wagers on global macroeconomic trends in bond, stock and currency markets. The firm uses a “unique probabilistic approach,” according to a presentation the firm made last year at the University of Pennsylvania’s Wharton School.

Element had been shorting, or betting against, bonds in anticipation of higher interest rates but has been exiting from that wager, according to someone close to the matter. That is one reason the fund has been a big buyer of Treasurys lately.

But people who have worked with the firm or are close to Mr. Talpins said there is another reason: Element is among the last to embrace “bond-auction strategies,” trading maneuvers that have become less popular since the financial crisis.

These trades aim to take advantage of the effects of supply and demand in the $12.8 trillion Treasury market. Demand for these bonds often fluctuates based on factors including investor perceptions of economic growth and market risk, while supply can be affected by regular auctions of different-maturity Treasury securities. A burst of new supply tends to slightly depress prices for short periods, sometimes for less than an hour...

More at the link.

This is so slick it reminds of "Bonfire of the Vanities."

Ben Bernanke Struggled to Boost U.S. Economic Growth

Bernanke's stepping down at the end of the month, and the Fed's supposed to ease off its economic stimulus policies, but we'll see. A report at the New York Times, "Fed Scales Back Stimulus Campaign."

And see the Wall Street Journal, "Meltdown Averted, Bernanke Struggled to Stoke Growth: Fed Chairman Fails to Engineer Robust Recovery, Even With Extraordinary Measures" (via Google):

After a financial crisis he didn't see coming, Ben Bernanke steered the U.S. away from a potentially devastating panic. Yet five years later, the recovery he helped engineer with extraordinary policies remains frustratingly weak.

As Mr. Bernanke prepares for his final days as Federal Reserve chairman, that legacy—a mix of failings, boldness, persistence and frustration—is coming into sharper focus, and with it a clearer picture of the power and limitations of modern central banking.

Fed officials meeting in Washington on Wednesday face another consequential decision: a close call on whether to start winding down their $85 billion-a-month bond-buying program.

At the root of the issue is a long-running debate between Mr. Bernanke and other Fed officials about how much more a central bank can or should do to try to spur an economy that hasn't been wholly responsive to its efforts.

It could be the last big Fed decision before Mr. Bernanke ends his chairmanship next month, eight years after taking the helm in what he expected to be a far-more-placid era.

"I will make continuity with the policies and policy strategies of the Greenspan Fed a top priority," Mr. Bernanke said at his first confirmation hearing in November 2005, citing predecessor Alan Greenspan. He talked broadly of the need to ensure financial stability, but made no mention in his statement of the threat from a housing boom that by then had begun showing signs of cracking.

How would you rate Bernanke's performance? How will history remember him? Weigh in here.
Fans of Mr. Bernanke say history will mark him most as the courageous economic steward who, once crisis struck in 2008 and 2009, flooded the financial system with loans and averted another Great Depression.

"This is like saving you from nuclear war," said Ray Dalio, founder of the giant hedge fund Bridgewater Associates.

Mark Gertler, a New York University economics professor and friend of Mr. Bernanke, said that "like Roosevelt, he was the calming influence, the grown-up in the room, during the darkest days of the economic turmoil."

Before then, however, came calculations that haunt the Fed.

Mr. Bernanke's first steps in office were to continue a succession of small interest-rate increases that some economists say were too late, and too timid, to curb a badly swollen housing bubble.

Mr. Bernanke has disputed that analysis, but acknowledged that the Fed failed to adequately supervise banks before the crisis or to see danger to the broader financial system—mistakes that have since led Congress to revamp Washington's approach to financial supervision.

Early on, Mr. Bernanke embraced only reluctantly the interventionist stance that has come to define his stewardship.

In December 2007, for example, he said he was "quite conflicted" about whether to cut interest rates sharply, according to transcripts of Fed's meetings. That turned out the be the month the recession began. At other times, he talked about wanting to avoid bailing out financial markets, institutions or people.

Timothy Geithner, the former Treasury Secretary and New York Fed president, saw the reserved former professor's worldview change in early January 2008 as financial turmoil deepened and started to bite the economy.

"That's when he decided that the risks were so great and he was going to have to be much more aggressive," Mr. Geithner said. "He kept at it."

It is widely accepted that the landmark policies Mr. Bernanke championed during and after the crisis—rock-bottom interest rates, loans to banks and controversial bond buying—averted an economic calamity. Their failure to spur a vigorous recovery, however, has created perhaps the biggest unanswered question about Mr. Bernanke's legacy.

"I wish I was leaving with the unemployment rate at 5% instead of 7%," he said wistfully during a November discussion with high-school teachers.

The Fed has promised to hold short-term interest rates near zero at least until the unemployment rate, currently 7%, falls to 6.5%. And in an effort to drive long-term rates down, the central bank has accumulated more than $3 trillion in Treasury bonds and mortgage securities.

In the process, it has flooded the U.S. banking system with money, funds available for banks to lend. These cheap-credit policies, in theory, should spur job-creating growth.

There's a fabulous graphic here, "Imperfect Tools, Imperfect Economy." Pay attention to the radical growth and scale of quantitative easing after 2009. The Fed flooded the economy with money, deflating the currency while staving off a collapse in growth. Seriously. Just take a look at the scale of the monetary stimulus. That's gotta be unprecedented.

See that New York Times piece at top for more.

Janet Yellen and the Left's Federal Reserve Gender Debate

Seems to me the relevant question should be "Is this woman the most qualified economist for the job?"

But it's never about that nowadays, in our quota drenched, PC gender-obsessed leftist culture.

Idiot leftist Greg Sargent has a piece up now at Memeorandum, "Senate Dems push White House to appoint Janet Yellen (and not Larry Summers) to the Fed."

And that reminded me of this morning's New York Times, "In Tug of War Over New Fed Leader, Some Gender Undertones":

WASHINGTON — President Obama’s choice of a replacement for the Federal Reserve chairman, Ben S. Bernanke, is coming down to a battle between the California girls and the Rubin boys.

Janet L. Yellen, the Fed’s vice chairwoman, is one of three female friends, all former or current professors at the University of California, Berkeley, who have broken into the male-dominated business of advising presidents on economic policy. Her career has been intertwined with those of Christina D. Romer, who led Mr. Obama’s Council of Economic Advisers at the beginning of his first term, and Laura D’Andrea Tyson, who held the same job under President Clinton and later served as the director of the White House economic policy committee. But no woman has climbed to the very top of the hierarchy to serve as Fed chairwoman or Treasury secretary.

Ms. Yellen’s chief rival for Mr. Bernanke’s job, Lawrence H. Summers, is a member of a close-knit group of men, protégés of the former Treasury Secretary Robert E. Rubin, who have dominated economic policy-making in both the Clinton and the Obama administrations. Those men, including the former Treasury Secretary Timothy F. Geithner and Gene B. Sperling, the president’s chief economic policy adviser, are said to be quietly pressing Mr. Obama to nominate Mr. Summers.

The choice of a Fed chair is perhaps the single most important economic policy decision that Mr. Obama will make in his second term. Mr. Bernanke’s successor must lead the Fed’s fractious policy-making committee in deciding how much longer and how much harder it should push to stimulate growth and seek to drive down the unemployment rate.

Ms. Yellen’s selection would be a vote for continuity: she is an architect of the Fed’s stimulus campaign and shares with Mr. Bernanke a low-key, collaborative style. Mr. Summers, by contrast, has said that he doubts the effectiveness of some of the Fed’s efforts, and his self-assured leadership style has more in common with past chairmen like Alan Greenspan and Paul A. Volcker.

But the choice also is roiling Washington because it is reviving longstanding and sensitive questions about the insularity of the Obama White House and the dearth of women in its top economic policy positions. Even as three different women have served as secretary of state under various presidents and growing numbers have taken other high-ranking government jobs, there has been little diversity among Mr. Obama’s top economic advisers.

“Are we moving forward? It’s hard to see it,” said Ms. Romer, herself a late addition to Mr. Obama’s original economic team, chosen partly because the president wanted a woman.

Continue reading.

President Obama runs an extremely sexist "good old boys" White House. He's leaning toward appointing Lawrence Summers, an interesting choice, considering he left Harvard's presidency after inflaming the radical left's gender grievance academic correct-think reeducation commissars.

But like I said, the job should go to the best candidate, and that's Yellen, according to none other than renowned monetary policy economist Amanda Marcotte, "The Best Candidate for Fed Chair Is a Woman, so Why Consider Larry Summers?":

On Tuesday [Ezra] Klein wrote a new column, this time saying that, to his utter disbelief, Larry Summers is the frontrunner for the Fed chair. And I've been told that the Summers camp is using the whisper campaign against Yellen to bolster their man's chances with Obama. Yes, the same Larry Summers who condescendingly told a roomful of people who had lived their adult lives as female scientists that women lack the innate abilities to do science. Yes, the same Larry Summers who, unlike Yellen, played an instrumental role in the economic collapse in the first place by consistently backing deregulation schemes that led to the housing bubble and its collapse. If this is the male candidate Obama needs to exhaust before he deigns to consider a female one, well, he should consider Summers exhausted.

The best minds have spoken!

Renowned monetary policy economist Amanda Marcotte cites renowned Washington juice box policy analyst Ezra Klein, with the added bonus of smacking down those sexist anti-Yellen whisper campaigns.

I'm torn, I'm torn!

Yellen? Summers?

Yellen? Summers?

Oh forget it!

I'm refuse to weigh in until I hear what Sandra Fluke has to say!

Federal Reserve to Continue Easy-Money Policies

Neil Cavuto was going off yesterday on the Fed's corporate welfare handout to the financial sector, and today's Wall Street Journal indicates the easy money gravy train will continue.

See, "Fed Affirms Easy-Money Tilt: Bernanke Says Retreat From Bond Buying Separate From Decision on Raising Rates(via Google):

Federal Reserve Chairman Ben Bernanke sought to reassure jittery markets that while the central bank could start winding down its $85 billion-a-month bond-buying program later this year, Fed officials aren't abandoning their broader commitment to easy-money policies.

"You can only conclude that highly accommodative monetary policy for the foreseeable future is what's needed in the U.S. economy," he said Wednesday at a conference held by the National Bureau of Economic Research, citing the high unemployment rate, low inflation and "quite restrictive" fiscal policy. He said he expects the Fed won't raise short-term rates for some time after the unemployment rate hits 6.5%, which would be more than a full percentage point lower than its current level.

The remarks Wednesday came a few hours after minutes of the Fed's June policy meeting showed officials deeply divided over when to start unwinding the bond-buying program. About half the officials walked into the meeting thinking the central bank might end the program altogether by the end of the year, the minutes showed.

As discussions proceeded over two days of talks, a number of officials worried about locking themselves into a position and some wanted more information about the economy before laying out a plan to start reducing the bond purchases. A few were concerned that inflation was getting so low that pulling back the program might be unwarranted.

The minutes also showed that Fed officials appear largely in agreement that their decision on the bond program is separate and distinct from their decision-making on raising short-term rates, which have hovered near zero since late 2008. "Many members indicated that decisions about the pace and composition of asset purchases were distinct from decisions about the appropriate level of the federal funds rate," and that rates were likely to stay low for a considerable time after the bond program ends, the minutes said.

The disagreement revealed in the minutes was met Wednesday with muted reaction from investors, perhaps showing that Fed officials' postmeeting remarks aimed at clarifying the central bank's thinking has been successful. U.S. stocks initially rebounded from slight losses after the 2 p.m. release of the minutes. The Dow Jones Industrial Average ended the day down 8.68 points, or 0.1%, at 15291.66. Government bond prices fell, with the yield on the benchmark 10-year Treasury climbing to 2.688%.

Michael Hanson, an economist with Bank of America BAC -1.20% Merrill Lynch, said he suspects the minutes overstate the real level of support to reduce and then stop the bond buying. The minutes may count the number of officials who adhere to a particular view, but that obscures the fact that key Fed officials such as Mr. Bernanke, Vice Chairwoman Janet Yellen and New York Fed President William Dudley are still strongly committed to pressing forward with the program, and their views dominate the policy-making process.

The minutes show the slowdown in bond buying many analysts expect in September isn't yet a done deal, Mr. Hanson said. Other issues were also left unsettled, he noted, pointing to a lack of guidance about how a gradual reduction in purchases might take place.

In the news conference after the June meeting, Mr. Bernanke said he had been "deputized" by his colleagues to sketch out their expectations for the program. He said if the economy continues to improve as the Fed expects, the central bank could make the first reduction in its bond purchases later this year. If the economy continued to meet the Fed's expectations, reductions would continue and the program would wrap up by mid-2014, Mr. Bernanke said.

Mr. Bernanke on Wednesday repeated the message he and other Fed officials have tried to convey to markets since the volatility began: pulling back on bond-buying doesn't mean the Fed is going to move quickly or aggressively toward reining in its easy-money policies. He also held out the possibility that the Fed could keep the program going longer if inflation, now near 1%, doesn't return to the Fed's 2% target.

Sounds like he's having a hard time cutting the cord, actually. Read the whole thing at that top link.