Tag Archives: Economics reporting
by Liz Hester
This week’s edition of Bloomberg Businessweek rolled out with six different covers each featuring a low-paid worker in a story about raising the minimum wage.
Peter Coy wrote the story:
Raising the minimum wage is certain to be a wedge issue for Democrats in the midterm elections because it’s the rare redistributive measure that enjoys broad popular support. A Washington Post-ABC News poll in December found that two-thirds of Americans support a minimum wage increase. But to opponents, it smacks of Big Government heavy-handedness. That explains why politicians on both sides are loudly reminding their constituents of their ideologies. The back and forth, however, fails to address the real issues: What’s the right minimum wage? And what’s the fairest way for the world’s largest economy—historically a beacon of social mobility—to arrive at it?
The first question is a bit easier to answer. The original minimum wage, 25¢ an hour, was born in 1938 under similar conditions of economic hardship and class resentment. Labor Secretary Frances Perkins and President Franklin Roosevelt had fought for it for five years. The night before signing the Fair Labor Standards Act, in a radio fireside chat, Roosevelt said, “Do not let any calamity-howling executive with an income of $1,000 a day … tell you … that a wage of $11 a week is going to have a disastrous effect on all American industry.”
Coy goes on to talk about the argument against government setting pricing standards and why some free-market advocates dislike the interference. He then examines research debunking the notion that raising wages contributes to higher unemployment.
The Card-Krueger study touched off an econometric arms race as labor economists on opposite sides of the argument topped one another with increasingly sophisticated analyses. The net result has been to soften the economics profession’s traditional skepticism about minimum wages. If there are negative effects on total employment, the most recent studies show, they appear to be small. Higher wages reduce turnover by increasing job satisfaction, so at any given moment there are fewer unfilled openings. Within reasonable ranges of a minimum wage, the churn-reducing effect seems to offset whatever staff reductions occur because of higher labor costs. Also, some businesses manage to pass along the costs to customers without harming sales.
Writing for the Huffington Post, Jillian Berman’s headline said the story makes “a terrific argument for raising the minimum wage”:
The magazine made six covers featuring low-wage workers. Each person is seen holding up an answer to one of the following questions: “What is your biggest financial fear?” “What do you think you should earn?” and “What do you do?”
“I’m a cashier. I make people smile,” one sign reads. “I worry that the more time I spend working, the less time I have raising my children,” another one states.
The story accompanying the cover delves into how different stake-holders make the economic case for raising the minimum wage or keeping it the same (the federal minimum wage is a measly $7.25). Democratic lawmakers have proposed raising the minimum wage to $10.10 an hour (with President Obama’s backing), but the provision is stalled in Congress.
The affects of a minimum wage increase on the economy is one of the most hotly debated issues in economic research. Conservatives argue that a boost in the minimum wage would actually be worse for workers because it would make businesses more hesitant to hire. Six hundred economists, including seven nobel laureates, signed a letter last month backing a $10.10 minimum wage. The letter states that the “weight of evidence” shows that “increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market.”
The timing of the story coincides with President Obama signing an executive order to raise the rate, Elena Schneider reported in the New York Times:
President Obama signed an executive order on Wednesday to raise the minimum wage to $10.10 an hour from $7.25 an hour for federal contract workers starting in 2015, a promise he made in his State of the Union address last month.
“We are a nation that believes in rewarding honest work with honest wages,” Mr. Obama said Wednesday in a letter announcing the move. “And America deserves a raise.”
As Coy points out, the debate is one of economics, and also politics and elections. There are many sides and special interests that get factored into the discussion and decisions, but people need to make more money to survive. And that’s what the president is saying by issuing his executive order. The Bloomberg Businessweek piece is a comprehensive look at the politics and debate over the minimum wage and worth the read.
by Liz Hester
In one of the sanest moves in recent Congressional history, the U.S. House passed a bill to raise the nation’s borrowing limit without any stipulations attached. It’s big news considering the recent history of Congress holding the limit and investors hostage as it debates whether to pay bills its already incurred.
The Washington Post had this story by Paul Kane, Robert Costa and Ed O’Keefe:
The House passed a yearlong suspension of the Treasury’s debt limit Tuesday in a vote that left Republicans once again ceding control to Democrats, following a collapse in support for an earlier proposal advanced by GOP leaders.
In a narrow vote, 221-201, 28 Republicans voted with 193 Democrats to approve a “clean” extension of the federal government’s borrowing authority — one without strings attached — sending the legislation to the Senate for a possible final vote later this week. Two Democrats and 199 Republicans voted no.
The vote came two weeks before the Feb. 27 debt-limit deadline set by Treasury Secretary Jack Lew, and once again underscored the House leadership’s inability to corral Republicans behind a debt-ceiling plan. “The natural reluctance is obvious,” said Rep. Peter Roskam (R-Ill.), the chief deputy whip.
Conservative advocacy groups reacted negatively to Boehner’s plan to bring the clean bill to a vote, with spokesmen for Heritage Action for America and the Club for Growth urging members to vote “no” and including the vote on their scorecards, which serve as guides for their supporters. “When we heard that House leadership was scheduling a clean debt-ceiling increase, we thought it was a joke,” said Barney Keller, a Club for Growth adviser. “But it’s not. Something is very wrong with House leadership, or with the Republican Party.”
The New York Times story by Ashley Parker and Jonathan Weisman pointed out that the move signaled more dissent within the Republican ranks:
Mr. Boehner stunned House Republicans Tuesday morning when he ditched a package that would have tied the debt ceiling increase to a repeal of cuts to military retirement pensions that had been approved in December and announced he would put a “clean” debt ceiling increase up for a vote.
Enough Republicans had balked at that package when it was presented Monday night to convince the speaker he had no choice but to turn to the Democratic minority. It was another startling display of Republican disunity, fueled by the political ambitions of members seeking higher office and personal animus that burst into the open.
For Mr. Boehner it was a potentially momentous decision. Anger among the nation’s most ardent conservatives at the House leadership may be at an apogee. The Tea Party Patriots, FreedomWorks, and conservative activists on the website RedState.com are all circulating petitions to end Mr. Boehner’s speakership.
And it was Mr. Boehner who raised such high expectations around the debt limit. In 2011, he established what has become known as the “Boehner Rule”: any debt ceiling increase was supposed to be offset by an equivalent spending cut.
Kristina Peterson and Janet Hook wrote in the Wall Street Journal that Democrats celebrated the move:
Democrats welcomed the news that Republicans had withdrawn their policy demands on the debt ceiling as an example of how their party’s coordinated stance has lent them leverage over a divided GOP caucus.
“Democratic unity around responsible government and honoring our national debt has helped force the Republicans to be responsible on this issue,” said Rep. Jared Polis (D., Colo.).
Democrats propelled the bill through the chamber, with 193 Democrats and 28 Republicans voting for the debt-ceiling suspension. The measure was opposed by two Democrats and 199 Republicans.
Susan Davis had this background about the debt ceiling debate in USA Today:
However, after the partial government shutdown last October — which left the GOP politically bruised— Boehner and other GOP leaders pledged that Congress would not allow a debt default. Without any internal GOP consensus on how to proceed on the latest debt ceiling increase, Boehner had few options but to allow an up-or-down vote.
During Boehner’s tenure as speaker, congressional Republicans have waged battles over the debt limit under an informal rule advocated by the Ohio Republican that any increase in the debt limit should be met by equal or greater spending cuts or other savings. Tuesday’s vote abandoned that standard. “I am disappointed to say the least,” Boehner said.
Outside conservative and Tea Party groups — long at odds with the party establishment — ratcheted up their rhetoric opposing Boehner. The Senate Conservatives Fund circulated an online petition calling for Boehner to be replaced, while Tea Party Patriots co-founder Jenny Beth Martin said, “It is time for him to go.” Neither Boehner nor his office has responded to the opposition groups.
The speaker instead said the burden should be on Democrats to pass the debt limit hike because President Obama has refused to engage with the GOP over how to reduce the deficit. “(President Obama) is the one driving up the debt. Then the question (Republicans) are asking is, ‘Well, why should I deal with his debt limit?’ And so the fact is we’ll let the Democrats put the votes up,” he said.
While it might have surprised some political watchers that Boehner would back down from his previous stance, investors are likely to be happy about the news. At least the nation’s debt rating is secure for the next year, until after the 2014 elections.
by Chris Roush
David Lieberman, the executive editor for Deadline.com, writes about the need for local media to improve their business and economics coverage.
His essay won the American Institute for Economic Research’s Women’s Economic Roundtable (WERT) Business Journalism Prize. The prize awards $2,000 to the best essay on an economic or financial topic written by a current or past recipient of the Columbia Journalism School’s Knight-Bagehot Fellowship in Economics and Business Journalism.
Lieberman writes, “Some news providers are trying to improve things. A University of Missouri School of Journalism professor recently launched Missouri Business Alert to fill the gap in local economic news. Digital First Media’s Connecticut Newsroom, which serves local newspapers and sites across the state, just assigned a reporter to cover poverty full time. A few years ago the Pocono Record assigned staffers to cover high-impact topics such as development and growth, traffic, and infrastructure—and let stringers cover town council and school board meetings. And the Institute for Policy Studies launched the Economic Hardship Reporting Project in 2011 to help bring stories about poverty and economic insecurity ‘to the center of the national conversation.’
“It’s too early to say whether these initiatives or others will unearth a business model to pay for serious local economic news. In the meantime, the press and its allies should encourage it in other ways. Colleges and universities can offer additional seminars to help journalists become financially literate. Many have to learn the basics: the difference between a deficit and a debt, how the bond market works, what’s meant by concepts such as the ‘multiplier effect’ —as well as how to find, and interpret, key reports and documents. The profession also needs programs outside of the major cities that can train reporters to deal with local needs. A community built on agriculture has different priorities than other areas that depend on manufacturing, technology, tourism, finance, oil production, or trade.
“Universities and professional associations also must reconsider their concept of prestige to give reporters who do superior work each day covering local business and economic issues a fighting chance to be recognized. Sponsors of journalism prizes should start by changing the way they’re judged to mimic Most Valuable Player awards in sports. Experts follow athletes’ day-to-day contributions and then pro-actively choose the winners. But in journalism, judges typically aren’t expected to know anything about the candidates. Applicants bear the burden of impressing them with samples of their work. The arrangement stacks the deck in favor of reporters who produce a few high-impact stories and against those who cover demanding beats well every day.”
Read more here.
by Liz Hester
Just when it seemed like the economy was on an up swing and recovery underway, the debt ceiling is rearing its ugly head– again. Treasury Secretary Jacob Lew warned Congress on Monday that the borrowing limit needed to be increased so the government could continue to function.
Damien Paletta had this story in the Wall Street Journal:
A fresh battle over the debt ceiling is looming, and lawmakers will have less time and flexibility to negotiate than in earlier fights because of the annual rush of people seeking tax refunds this month.
Treasury Secretary Jacob Lew on Monday urged Congress to intervene quickly to raise the debt limit, the latest in a drumbeat of warnings from the Obama administration that dawdling could potentially lead to delays or cuts in Social Security benefits and military pay.
In October, as part of the deal that ended the government shutdown, Congress suspended the borrowing limit until Feb. 7. After that, the Treasury Department is expected to use emergency measures, such as halting certain pension payments, to allow it to continue borrowing money to pay the government’s bills. Those powers will run out by the end of the month, Mr. Lew said, a much shorter fuse than during previous fights.
“Without borrowing authority, at some point very soon, it would not be possible to meet all of the obligations of the federal government,” Mr. Lew said in a speech to the Bipartisan Policy Center.
Enforcement of the debt limit is suspended, but it will come back into force Friday under the terms of a deal lawmakers struck in the fall. That leaves Lew bumping up against the limit in tax-filing season, he said Monday, when he will have far less flexibility to juggle the books and ward off disaster.
“Unlike other recent periods when we have had to use extraordinary measures to continue financing the government, this time these measures will give us only a brief span of time,” Lew said in a speech at the Bipartisan Policy Center. “Given these realities, it is imperative that Congress move right away to increase our borrowing authority.”
Congress, meanwhile, is moving at a relatively glacial pace. House Speaker John A. Boehner (R-Ohio) said last week that he will not permit the nation to default on its debt. But House Republicans emerged from their annual policy retreat without a plan for bartering with Democrats in exchange for raising the debt limit.
The most popular option under discussion by Republicans would combine a one-year extension of the debt limit with a ban on “bailouts” for health-insurance companies under the Affordable Care Act.
But Democrats say that the provisions dubbed “bailouts” by the GOP are necessary to ease the transition into the health-care law’s public marketplaces — and were employed when Republicans set up a similar system for the Medicare Part D prescription-drug program.
The Financial Times story by James Polti detailed the most recent history of the debt ceiling debate, which has many twists and turns recently:
The White House emerged triumphant from the last budgetary stand-off in October, when a 16-day government shutdown and brush with sovereign default was mostly blamed on Republican intransigence. Republicans recovered politically shortly afterwards as a result of the botched rollout of the 2010 health law. But they appeared to have learnt their lesson and are reluctant to force a new high-profile budget battle, even if it means triggering a backlash from conservative Tea Party members.
In December, Paul Ryan, the Republican chairman of the House budget committee, brokered a deal with Patty Murray, the Democratic chair of the Senate budget committee, to set spending levels for two years and avoid new federal shutdowns. But they avoided tackling the need to increase the debt ceiling, which is now looming.
In the recent past, Republicans have demanded huge concessions from the White House in exchange for debt ceiling increases, including deep spending cuts and a full repeal of the 2010 health law or a delay in its main provisions.
But this year, they are considering attaching much more modest policy changes as a condition of a debt ceiling increase, with the latest idea being to scrap some of the protections against big losses for insurers under “Obamacare” – the Affordable Care Act. But Mr Lew signalled the White House would continue to oppose negotiations over the debt ceiling, even in the face of sharply curtailed Republican ambitions.
The Reuters story did say the decrease in budget deficits had improved the nation’s finances:
U.S. politicians now partake in a regular dance around the country’s so-called debt limit. First, Congress authorizes spending that outstrips tax receipts. Then lawmakers balk over whether to OK enough borrowing to pay the bills. A rancorous debate ensues over putting public finances on a stable path.
Washington has danced perilously close to the edge of default several times since 2011, and this year some Republicans pledge to extract policy concessions from Democrats before they allow the debt limit to rise.
The administration has vowed not to negotiate on the matter, and Lew said public finances are in good enough shape that long-term fiscal problems don’t have to be solved this year anyway.
Federal debt ballooned during the 2007-09 recession and most analysts think Washington’s obligations to pay for health care for the elderly will stress the budget more as U.S. society ages.
But Lew said the sharp reduction in budget deficits over the last few years has bought America time to improve its fiscal outlook.
It’s impossible to say what would happen if Congress didn’t raise the debt limit. And while it’s unlikely to test it out, the fact that it’s even an issue is absurd. The economy shouldn’t be used in political brinkmanship.
by Liz Hester
In his State of the Union address Tuesday, President Barack Obama took the time to call for increasing the minimum wage, reducing the income gap and stimulating economic recovery. While the speech covered many topics, including health care and the war in Afghanistan, it’s telling that more than five years after the financial crisis, the economy remains top of mind.
Peter Baker wrote for the New York Times that Obama “declared independence from Congress”:
But the main thrust of Mr. Obama’s message was the wide gap between the wealthiest and the rest of America, and he used the speech to position himself as a champion of those left behind in the modern economy. “Those at the top have never done better,” he said. “But average wages have barely budged. Inequality has deepened. Upward mobility has stalled.
“The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by, let alone to get ahead,” he added. “And too many still aren’t working at all. So our job is to reverse these trends.”
To do so, the president announced an executive order raising the minimum wage to $10.10 an hour for future federal contract workers and the creation of a new Treasury bond for workers without access to traditional retirement options. He proposed incentives for trucks running on alternative fuels and higher efficiency standards for those running on gasoline. And he announced a meeting on working families and a review of federal job training programs.
Mr. Obama was gambling that a series of ideas that seemed small-bore on their own would add up to a larger collective vision of an America with expanded opportunity. But the moderate ambitions were a stark contrast to past years when Mr. Obama proposed sweeping legislation to remake the nation’s health care system, regulate Wall Street, curb climate change and restrict access to high-powered firearms.
The top of the Wall Street Journal story by Carol E. Lee and Peter Nicholas also focused on Obama’s declaration to bypass Congress whenever possible:
President Barack Obama, seeking to restore confidence in his leadership, declared in his State of the Union address Tuesday that he would use executive power to try to narrow the gap between rich and poor and speed the nation’s economic recovery.
Mr. Obama’s speech was essentially a manifesto designed to inject new vigor into his languishing agenda and guide his presidency through the partisan divide in the capital. The goal was to position the president as the champion of struggling Americans fed up with the bickering in Washington, marshaling an array of policy proposals aimed at helping them save more, earn more and find work in a tough economy.
“Corporate profits and stock prices have rarely been higher, and those at the top have never done better. But average wages have barely budged,” Mr. Obama said. “Inequality has deepened. Upward mobility has stalled…Our job is to reverse these trends.”
The president told the joint session of Congress that “I’m eager to work with all of you,” but his message was clear: “Wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do.”
A USA Today analysis by Susan Page said the president’s speech reflected a “political journey from the aspirational to the achievable”:
This time, the president announced a pledge by some top corporate CEOs not to discriminate against job seekers who have been out of work for a long time and unveiled an executive order raising the minimum wage for new federal contract workers. “Give America a raise,” he said, urging Congress to raise the base wage for everyone.
He called reducing economic inequality and restoring upward mobility “the defining project of our generation.” He repeated the word “opportunity” a dozen times. He spoke energetically and more quickly than he typically does in big speeches.
But on that same platform in 2013, his proposals were more sweeping and his threat of political leverage more muscular. “Now is the time to do it; now is the time to get it done,” he said then of overhauling immigration laws. On offering quality preschool to every child in America: “That’s something we should be able to do.” On raising the minimum wage: “We should be able to get that done.” On simplifying the tax code: “We can get this done.”
Politico’s Josh Gerstein and Darren Samuelsohn wrote a piece fact-checking some of the president’s statements, including who would benefit from a minimum wage increase:
Who benefits from minimum wage boost?
Obama: “I will issue an executive order requiring federal contractors to pay their federally funded employees a fair wage of at least $10.10 an hour — because if you cook our troops’ meals or wash their dishes, you should not have to live in poverty.”
Obama’s move-part of his challenge to Congress to boost the minimum wage for most workers to $10.10 — clearly fits with his drive to act where he can and press lawmakers to do more. But his ability to act unilaterally on this point is very limited as most employees of federal contractors make well over $10 an hour.
White House officials say a few hundred thousand employees could get a wage boost from the president’s action. But it would apply only to future contracts, so would likely take several years to have even that impact.
Across the U.S., according to the Labor Department, 3.6 million workers currently make minimum wage or below. And millions who make a little more would get a boost if the wage went up to $10.10 — though some might lose their jobs or hours if employers respond to the higher wage costs by trying to use less labor.
I’m looking for coverage in the next few days about this topic. Will business leaders respond by raising wages and hiring fewer people, which would seem to widen the gap between the haves and the have nots even further. The analysis of this and how it will fit into an overall agenda of economic recovery will be an interesting one.
by Chris Roush
New York Times business editor Dean Murphy sent out the following staff announcement on Tuesday afternoon:
We are sorry to announce that Catherine Rampell is leaving The Times to become an op-ed columnist at the Washington Post.
Catherine has been a member of our economics team since 2008, when she joined us from The Chronicle of Higher Education as our online economics editor and chief blogger for Economix. Later, she became a member of New York-based economics reporting team, along with Nelson Schwartz and Shaila Dewan, and has covered a wide range of topics. She played an on-camera role in an early experiment with daily business video, and has also written guest economics columns for The Magazine and Sunday Business (and more than the occasional theater review for Culture).
Catherine has been a generous colleague to many of us on BizDay, always willing to share her expertise and insights. We’ll miss her. We wish her well in her new job, and her new career direction.
Rampell is a Princeton University graduate.
by Chris Roush
Wall Street Journal managing editor Gerard Baker sent out the following staff promotion on Tuesday:
I’m delighted to announce that Neil King has been named our new Global Economics Editor and a deputy Washington bureau chief, an important first step in a significant expansion of our already peerless economics coverage.
Economics is front and center of The Wall Street Journal’s broad and growing ambit and Neil is perfectly equipped to lead our coverage. In 21 years at the Journal, he has covered with depth and distinction a wide array of stories, from the opening up of Eastern Europe, the aftermath of the Yugoslav war, EU expansion and the birth of the euro, to international trade, OPEC and oil, the 2009 U.S. auto bailout and most recently, U.S. politics. Time and again, he has shown the ability to explain complicated matters of policy, but also to connect them to events and people far outside the bubbles that surround the world’s capitals.
Both skills will be crucial for Neil as we work to further the reach and impact of our coverage. In this new role, Neil will have oversight of all economic coverage areas, from economic policy to U.S. economics reporting, and the new central banks vertical run by Nell Henderson, allowing us to better coordinate the many strands of our reporting. In the coming weeks, we expect to appoint several new reporters and editors to round out the team and to share plans to elevate the already excellent Real Time Economics into a more vital, must-read site for all economic news, analysis and data. An enhanced digital presence for economics will be one of the pillars of my push to deepen our digital presence this year.
A fourth-generation Coloradan, Neil earned a philosophy degree from Columbia University and a master’s in journalism from Northwestern University. His resume includes stints as a coin and precious-metals dealer, a waiter, a Wyoming ranch hand, a runner on the now-defunct Pacific Stock Exchange, an Alaskan fish-boat cleaner, a grape harvester at Chateau D’Yquem, an Oakland private investigator and a New York City cab driver. His first desk in journalism—in a strip mall at the rough and tumble New Port Richey bureau of the Tampa Tribune—was approximately six feet from that of another cub reporter, Rebecca Blumenstein.
Neil will report to Jerry Seib, and work closely with U.S. editor Jennifer Forsyth. In this newly created role, he will also work alongside fellow deputy bureau chief in Washington, the inestimable Matthew Rose.
This change also will allow us to realign our editing structure to prepare for the important coming launch of an expanded Washington online product. Susan Benkelman, who recently joined us from her previous position as Editorial Director of CQ-Roll Call, will take over management of coverage of Congress and a group of associated policy beats. That will free political editor Aaron Zitner to focus on our expanding national political coverage and the White House as we move into the 2014 and 2016 election cycles.
Tim Aeppel, who has done a splendid job shepherding the New York economics group, will take on a new assignment that we will announce shortly.
Please join me in congratulating Neil in this important new role.
by Liz Hester
With the nearing departure of Federal Reserve Board Chairman Ben Bernanke, many journalists are taking a look at his tenure, which saw its fair share of market turmoil and unprecedented actions.
Writing for the Los Angeles Times, Don Lee called his legacy “bittersweet”:
On one hand, his unprecedented efforts to drive down interest rates and stimulate the economy are widely credited by his peers with saving the nation from a second Depression, strengthening the economic recovery and leaving the nation’s financial condition poised to take off this year.
Yet those same policies have added momentum to one of the greatest surges in economic inequality in U.S. history, helping the wealthiest Americans add to their enormous riches while the incomes of almost everyone else stagnated.
By driving interest rates down to historic lows, the Fed chairman helped fuel a huge surge in the stock market, where the wealthiest 1% of Americans have been far better positioned to take advantage of gains than their less affluent fellow citizens.
The Wall Street Journal’s E.S. Browning wrote a commentary saying even some of Bernanke’s detractors have been won over by his management:
But many professional investors are acknowledging, sometimes grudgingly, that Mr. Bernanke has gone a long way toward achieving the main goal he set in 2008: He has stabilized markets and restored a large measure of investor and public confidence. Many thought it impossible that he would accomplish what he did.
“Back then during the real trauma in the fourth quarter of 2008 and first quarter of 2009, people were trading on fear. Now it is a much more normalized trading pattern. There is certainly still some fear out there and there are questions about valuation, but it is much more normalized,” says Andy Brooks, another market veteran. He heads stock trading at Baltimore asset-management firm T. Rowe Price, which oversees about $650 billion.
In a 2008 speech to the Economic Club of New York, Mr. Bernanke described his goal this way: “As in all past crises, at the root of the problem is a loss of confidence by investors and the public in the strength of key financial institutions and markets. The crisis will end when comprehensive responses by political and financial leaders restore that trust, bringing investors back into the market…”
The strides since then are remarkable. The Dow Jones Industrial Average has more than doubled from its 2009 low. The Nasdaq Composite Index has tripled. With new worries spreading about China and other developing markets amid fears that U.S. stocks are overdue for a pullback, the Dow suffered its worst weekly decline last week since 2011.
And yet many investors hesitate to sell, for fear of missing future gains. That is a huge change from just a few years ago, when they were afraid to buy. Despite last week’s angst, the Dow is just 4% below the record it set on Dec. 31.
The Augusta Chronicle business editor Tim Rausch reported that Bernanke does have some detractors:
One of Bernanke’s former colleagues is not so gushing. Allen Berger was a senior economist at the Federal Reserve until 2008, when he became a professor at the University of South Carolina.
Berger said Bernanke was a good chairman, but dismisses the hype surrounding his saving of the world’s financial system.
“During the financial crisis, he did not give a public appearance of confidence. He told the public the banks were failing. And he backed the TARP program and other bailouts,” Berger said. “He ended up bailing out shareholders when I would have preferred an orderly liquidation like the FDIC does now.”
Bailouts encourage shareholders to take excessive risks, Berger argued.
Bernanke is often seen as a knight in shining armor. “So far, he’s doing well with it, but we’ll see how history treats him down the road,” said Jean Helwege, another member of the finance faculty at USC who also worked in the Federal Reserve System. “He has a decent amount of integrity and tries very hard to do a good job, but I also think there’s an element of him patting himself on the back and his buddies patting him on the back.”
Helwege said that Bernanke was chairman before the crisis and didn’t do anything when it became apparent that the housing market was dragging down the economy and lenders were going bankrupt.
While historians will sort through Bernanke’s legacy in the coming years, he won’t be around to preside over one of the biggest unknowns – what will happen as the Federal Reserve pairs back its bond-buying program. The economic stimulus was definitely needed and Bernanke deservedly get much of the credit for pulling the U.S. economy out of a recession. But how investors will react to the easing and new leadership will likely have a lasting effect on how Bernanke’s story is written in the history books.
by Chris Roush
Ezra Klein, who wrote about economics for The Washington Post, is starting a new online publication with Vox Media.
Klein writes, “Today, we are better than ever at telling people what’s happening, but not nearly good enough at giving them the crucial contextual information necessary to understand what’s happened. We treat the emphasis on the newness of information as an important virtue rather than a painful compromise.
“The news business, however, is just a subset of the informing-our-audience business — and that’s the business we aim to be in. Our mission is to create a site that’s as good at explaining the world as it is at reporting on it.
“Reimagining the way we explain the news means reinventing newsroom technology. Vox is already home to modern media brands — SB Nation, The Verge, Eater, Curbed, Racked, and Polygon — that are loved by tens of millions of people, including us. The engine of those sites is a world-class technology platform, Chorus, that blows apart many of the old limitations. And behind Chorus is a world-class design and engineering team that is already helping us rethink the way we power newsrooms and present information.
“We’ll be joined by some familiar faces in this venture, including the great Dylan Matthews — and more who’ll be announced in the coming weeks and months. But we’re also hiring. If you share our passion for fixing the news, you should send us your resume here, and tell us how you want to help us do a better job informing our readers.”
Read more here.
by Chris Roush
Reuters is seeking a journalist who is a proven news breaker and deeply sourced professional to cover the U.S. Federal Reserve Board from Washington.
We need someone with a hefty record in delivering ahead-of-the-curve initiative reporting and agenda-setting stories, who is comfortable handling breaking news, and whose prose stands out for its clarity.
The Fed is one of Washington’s most cloistered institutions, so the winning candidate will need excellent source-building skills. Moreover, this reporter must be capable of generating smart and incisive copy that takes readers beyond the bank’s clutch of annual public events to paint the big picture about the future policy track for the world’s most important central bank.
The Fed is at a critical juncture. It about to welcome a new chair and vice chair just as the Fed is preparing to wind down the greatest monetary policy experiment of all time. A mountain of unanswered questions on the direction of U.S. monetary policy, the U.S. and global economies and world financial markets will emerge in the wake of this high-stakes act.
We need someone who is able to come to terms with the beat quickly and who can help drive the file on what is one of the most important stories for our diverse readership.
We also need a team player who can work hand in glove with the rest of our Fed coverage team. The reporter who wins this post needs to have a grounding in both economics and finance and a strong sense for how Fed policy interacts with financial markets.
Even more so, however, this person needs a hard nose for news and the skills required to tell a big story well.
To apply, go here.