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      Former Fed chair Janet Yellen set to become first female treasury secretary

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      Janet Yellen, the first woman to chair the US Federal Reserve, is set to achieve another first, becoming the country’s first female treasury secretary.
      The 74-year-old economist is expected to be named as President-elect Joe Biden’s choice on Tuesday.
      Yellen will take the job during one of the most trying economic times in modern history.
      US unemployment hit a postwar record in April, in the first wave of the coronavirus pandemic, and while the jobs situation has improved, the recovery has slowed in recent months as rates of infection have increased.
      Millions remain out of work, and women and people of color have been hit disproportionately hard by the downturn.
      Congress has struggled to reach agreement on a new round of economic spending, the US national debt is at record levels, and relations with the US’s major trading partners are frayed after the Trump administration’s trade wars.
      Donald Trump declined to reappoint Yellen to the Fed chair after his election in 2016, making her the first central bank chief not to serve two terms since the Carter administration. During his campaign Trump said Yellen should be “ashamed” of her policy actions and accused her of keeping interest rates low in order to bolster President Barack Obama’s legacy.
      Cautious and carefully spoken Yellen has made few comments about Trump although when asked last year if she thought Trump “had a grasp” of macroeconomic policy she said: “No I do not.”
      Yellen has recently advocated for more federal spending from Congress to tackle the economic devastation caused by the virus.
      “There is a huge amount of suffering out there. The economy needs the spending,” Yellen said in a September interview.
      Yellen, professor emeritus at the University of California at Berkeley, a former assistant professor at Harvard and a lecturer at the London School of Economics, is an expert in labor markets who has highlighted the economic impact of uneven growth in the jobs market.
      She is married to the Nobel-winning economist and frequent co-author George Akerlof.
      Progressives had been hoping Senator Elizabeth Warren, a staunch critic of Wall Street, might get the job. But with control of the Senate still in the balance, Yellen is a safer pick. After the news broke Warren called Yellen “an outstanding choice.”

      Elizabeth Warren
      (@SenWarren)
      Janet Yellen would be an outstanding choice for Treasury Secretary. She is smart, tough, and principled. As one of the most successful Fed Chairs ever, she has stood up to Wall Street banks, including holding Wells Fargo accountable for cheating working families.

      November 23, 2020

      Biden said last week that his Treasury nominee would be accepted by both the progressive and moderate wings of the Democrat party. Yellen has also in the past attracted bipartisan support, receiving 11 Republican votes for her 2014 confirmation as Fed chair, including the backing of three sitting Republican senators.
      She is also one of the best-connected economists in the world, leading the Fed from 2014 to 2018 after a long career in economic policymaking.
      If appointed, Yellen will not only be the first female Fed chair and treasury secretary, but the first person to have headed both organizations and the White House council of economic advisers. More

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      Can Joe Biden and Kamala Harris unite America after Trump – video explainer

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      When Joe Biden formally takes over the presidency in January he will face some of the greatest crises to hit the US in recent history: a pandemic that has killed more than 200,000 Americans, a devastated economy, a rapidly overheating climate and a deeply fractured nation.
      The Guardian’s Lauren Gambino looks at how Biden and the vice-president-elect, Kamala Harris, plan to ‘heal’ the country after four years of Trumpism – and the challenges they will face with the prospect of having to navigate these times without a majority in the Senate
      How Joe Biden beat Donald Trump in the fight for America’s soul – video More

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      in Elections

      How can Joe Biden deal with Donald Trump's obstruction in transition?

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      The president-elect can learn from Franklin D Roosevelt’s response to Herbert HooverPresidential transitions are never easy, especially when they involve an incumbent president defeated at the polls. But this time the transition occurs in the midst of an unprecedented crisis. The incumbent refuses to acknowledge the vote as a rejection of his policies and has a visceral dislike for the president-elect, who he accuses of dishonesty and dismisses as too frail to assume the duties of office. He tars his successor as a socialist, an advocate of policies that will put the country on the road to ruin.The year was 1932, and the transition from Herbert Hoover to Franklin D Roosevelt occurred in the midst of an unparalleled economic depression and banking crisis. The outgoing president, Hoover, had an intense aversion to his successor, whose incapacity of concern was not any lack of mental acuity, but rather Roosevelt’s partial paralysis. He called FDR a “chameleon on plaid” and accused him of dealing “from the bottom of the deck”. In his campaign and subsequently, Hoover insinuated that FDR’s socialistic tendencies would put the country on a “march to Moscow”. Continue reading… More

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      Big tech and corporate tax cuts: the targets of Joe Biden's urgent economic plans

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      When Joe Biden enters the White House on 20 January, he will face arguably the biggest set of challenges a president has had to tackle since the end of the second world war. The coronavirus is raging through the US, millions of Americans are still losing their jobs each month, and the climate crisis – ignored by the Trump administration – is deepening.
      Biden has set out his economic and policy plans, but without control of the Senate he may struggle to realise them. Official GDP figures for the third quarter showed the size of the economy was still almost 4% below its previous peak, despite a 7.4% recovery from the spring lockdown.
      At present it looks certain that the Democrats will control the House of Representatives, but we will have to wait for the results of special elections in Georgia before we know who controls the Senate. A Republican majority would block many of his proposals.
      Like Donald Trump, Biden can use executive orders – basically presidential decrees – to circumnavigate political roadblocks. While those orders would have major consequences, Biden is likely to struggle to pass significant legislation without Democratic control of both branches of Congress.
      But here are the some of the key elements of Bidenomics.
      Stimulus package More

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      America is a failing state. And establishment politics can’t solve the crisis | Bhaskar Sunkara

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      Our country is breaking down, we have no effective leadership, and we’re lagging behind other rich countries. The left needs to provide an answerIn 2020, America has shown itself to be exceptional in the worst possible ways. No other rich country has such a poor public health infrastructure or such a tattered social safety net. America’s levels of both police violence and violent crime find their closest peers in countries like Venezuela and South Africa, not Canada and Germany. And even Cuba and Bosnia and Herzegovina beat the world’s only superpower in infant mortality and other key social indicators. Continue reading… More

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      Joe Biden supporters won't believe in victory until it is theirs | Greg Jericho

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      A defining characteristic of progressive voters around the world is that they believe they can lose an election when ahead in the polls, and that they cannot win an election when they are behind in them.
      To be fair there is some justification for such belief. Progressives have become quite good at losing elections they should win.
      [embedded content]
      Graph not appearing? View here
      As we all look to the US presidential election this coming week, those working, hoping, and praying for a Biden win remain ever distrustful of the polls that have Biden up by eight points.
      Maybe we should not trust them, but we all know that were Biden down eight points, no one would think there was any hope left.
      The different attitude was nicely summarised by former Republican party consultant Stuart Stevens, who told Battleground podcast last week:

      I seem to remember losing to the Democrats in the popular vote every time since 1988, except 2004, so it’s like ‘you guys are winning, we’re losing’ and I just think there is a timidity to the idea that this can’t be a huge victory for Joe Biden … If I ran the Democratic party I would say ‘Look, this is ours, there is more of us than them, we just have to go and take it … rout them, rout them from the field and know that you are just.

      It’s true that since 1988 the Democratic candidate has won the national vote in six of the seven presidential elections (and is almost certain to do so again this time). And yet they have won just four of those times.
      The US electoral system, with its allocation of winner-takes-all electoral college votes, is so disjointed from the national vote that 538’s Nate Silver estimates that if Biden was ahead 1% in the popular vote he would only have a 6% chance of winning the election.
      Add in legitimate concerns about voter suppression (both before and after the election) and Biden supporters won’t believe the victory is won until he has his hand on the Bible delivering the oath of office.
      And even then …
      After all, we are talking about a country in which Walmart has announced that it is temporarily taking ammunition and guns off its shelves out of fear of violence in the wake of the election result. It is such a stunning announcement you kind of gloss over that this means guns and ammunition are normally on the shelves of Walmart stores.
      We’re also talking about a country where 40% of Florida voters in a recent poll said they thought Donald Trump was “compassionate” and 43% thought he was “truthful”. Words no longer have meaning at such times.
      In the past month everyone has been waiting for an “October surprise”.
      But the Trump party’s (that rancid combination of the Republican party and conservative media) attempt to smear Biden by way of his son were as arousing to voters as watching Rudy Giuliani “tuck in his shirt” while lying on a bed.
      Only the deluded and the desperate cared.
      But what about good economic news that will turn voters back to Trump? Late this past week there were reports of “record” GDP growth figures, with headlines that in the September quarter America’s economy grew 33%.
      It didn’t.
      America for some bizarre reason likes to annualise quarterly growth. The economy actually grew 7.4% in the September quarter after falling 9% in June – both figures were records.
      The US economy remains 3.5% smaller than it was before the pandemic took hold. There are also 11 million fewer Americans employed than there were in February. That is not a boom.
      But nothing – neither the polls, the economy, nor the horrendous spread of the virus – will give Biden supporters any sense that the election is his to win.
      And fair enough – the stakes are too high.
      A Trump victory would signal the failure of the US democratic experiment and the triumph of authoritarianism. Given his administration’s utter inability to deal with the virus it would also mean not only many more deaths but also a brake on the global economy for many years to come.
      It would also end hopes for limiting climate change at a global level.
      On the other side of the ledger is the hope a Biden administration with a Senate majority might be able to undo some of the damage and do some good over the next four years.
      There is no balance, and so we hold on, hoping there remains some good news for 2020 to deliver. More

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      in Elections

      US economy bounces back but deeper trends hint at enduring woe

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      [embedded content]
      The US economy bounced sharply back from the record-setting slump at the start of the coronavirus pandemic, according to government figures released on Thursday, handing Donald Trump a key talking point days before the election.
      According to the Bureau of Economic Analysis gross domestic product (GDP) rose at an annualized rate of 33.1% between July and September and was up 7.4% compared to the previous quarter. The previous record was a 3.9% quarterly increase in 1950.
      Trump was quick to claim credit, tweeting the figures were the “Biggest and Best in the History of our Country, and not even close.”

      Donald J. Trump
      (@realDonaldTrump)
      GDP number just announced. Biggest and Best in the History of our Country, and not even close. Next year will be FANTASTIC!!! However, Sleepy Joe Biden and his proposed record setting tax increase, would kill it all. So glad this great GDP number came out before November 3rd.

      October 29, 2020

      But the numbers show the US still has a long way to go to escape the devastation wrought by Covid-19 and were boosted by extra unemployment payments, business loans and direct payments, none of which have been replenished for the fourth quarter.
      The news comes just five days before the US election and is the last major economic release before polls close. Even before the figures were released the Trump campaign released ads boasting: “FASTEST GDP GROWTH IN HISTORY.”
      Big issues remain for the economy, however. The growth rate announcement came on the same day that the labor department announced that another 751,000 people filed for unemployment claims last week and the unemployment rate, at 7.9%, is twice as high as it was in February before the pandemic struck the US.
      A closer look at the numbers shows that the US’s economic woes are far from over. Thursday’s figures follow an equally historic slump in the second quarter. The US economy shrank by a revised annual rate of 31.4% between April and June, its sharpest contraction since the second world war, as much of the country went into lockdown to control the virus.
      The annual rate suggests the economy will continue on its current trend for the rest of the year. But such huge swings make the annualized figures misleading – no one expects such massive losses or gains to continue but most economists expect the US economy to be smaller at the end of the year than it was at the beginning.
      Gus Faucher, chief economist at PNC, said the figures represented “real growth” but added “there is still a long way to go before we get back to normal.”
      The decision to reopen much of the economy has provided a considerable boost, especially to consumer spending, which drove much of the recovery. But it comes as coronavirus infections are soaring in the US. Covid cases hit new highs over the weekend and the US now has the largest number of infections, more than 8.6m, and deaths, over 225,000, in the world.
      There are also signs that the recovery has slowed in recent months. Unemployment claims remain at historically high levels and the number of new jobs being created has dropped month on month. The economic situation for women, people of colour and teenagers remains difficult. The unemployment rate fell to 7.9% for the US population overall in September. For Black Americans it was 12.1% and for Black teens (16-19) it was over 20%.
      GDP is the broadest measure of the economy and includes personal consumption, business investment, government spending and net exports. The figure has often been criticized as a measure of economic health – GDP growth has, for example, done little to address growing income inequality.
      For some still feeling the impact of the pandemic and its attendant recession the latest GDP news was little comfort, especially as Congress remains deadlocked over further stimulus relief.
      Tim Swartz in Mesa, Arizona, stopped receiving unemployment benefits on 5 September after the unemployment office flagged an issue with his payments. When the pandemic hit he had to stop working as an Uber and delivery driver to care for his five children, including one with special needs. His wife works full-time as a medicine technician at a facility for Alzheimer’s patients.
      “I cannot get any answers from anyone on the phone or through emails. I’m behind on rent and utilities,” Swartz said. He has now received an eviction notice. “I’m not sure how we will pay the outstanding balances for rent and utilities,” he said.
      “Many of us are losing hope along with everything we have worked so hard for,” said Swartz. Three of his children had to recently return to online learning after exposure to classmates who tested positive for coronavirus, further delaying his return to work. “Without any relief package to help keep the economy going I don’t see much growth in the near future and unfortunately even darker times ahead for American families.” More

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      in US Politics

      Investors should prepare for worst over US presidential election

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      Opinion polls in the US have long pointed to the strong possibility of a Democratic party sweep in the election on 3 November, with Joe Biden winning the presidency and Democrats gaining control of the US Senate and holding on to the House of Representatives, putting an end to divided government.
      But if the election turns out to be mostly a referendum on Donald Trump, Democrats might win just the White House while failing to retake the Senate. And one cannot rule out the possibility of Donald Trump navigating a narrow path to an electoral college victory, and of Republicans holding on to the Senate, thus reproducing the status quo.
      More ominous is the prospect of a long-contested result, with both sides refusing to concede as they wage ugly legal and political battles in the courts, through the media, and on the streets. In the contested 2000 election, it took until 12 December for the matter to be decided: the supreme court ruled in favour of George W Bush, and his Democratic opponent, Al Gore, gracefully conceded. Rattled by the political uncertainty, the stock market during this period fell by more than 7%. This time, the uncertainty could last for much longer – perhaps even months – implying serious risks for the markets.
      This nightmare scenario must be taken seriously, even if it currently seems unlikely. While Biden has consistently led in the polls, so, too, had Hillary Clinton on the eve of the 2016 election. It remains to be seen if there will be a slight surge in “shy” swing-state Trump voters who are unwilling to reveal their true preferences to pollsters.
      Moreover, as in 2016, massive disinformation campaigns (foreign and domestic) are under way. US authorities have warned that Russia, China, Iran and other hostile foreign powers are actively trying to influence the election and cast doubt on the legitimacy of the balloting process. Trolls and bots are flooding social media with conspiracy theories, fake news, deep fakes and misinformation. Trump and some of his fellow Republicans have embraced lunatic conspiracy theories such as QAnon and signalled their tacit support of white supremacist groups. In many Republican-controlled states, governors and other public officials are openly deploying dirty tricks to suppress the votes of Democratic-leaning cohorts.
      On top of all this, Trump has repeatedly claimed – falsely – that mail-in ballots cannot be trusted, because he anticipates that Democrats will comprise a disproportionate share of those not voting in person (as a pandemic-era precaution). He also has refused to say that he will relinquish power if he loses and has instead given a wink and a nod to right-wing militias (“stand back and stand by”) that have already been sowing chaos in the streets and plotting acts of domestic terrorism. If Trump loses and resorts to claiming that the election was rigged, violence and civil strife could be highly likely.
      Indeed, if the initial reported results on election night do not immediately indicate a sweep for the Democrats, Trump would almost certainly declare victory in battleground states before all mail-in ballots have been counted. Republican operatives already have plans to suspend the counting in key states by challenging such ballots’ validity. They will be waging these legal battles in Republican-controlled state capitals, local and federal courts stacked with Trump-appointed judges, a supreme court with a 6-3 conservative majority and a House of Representatives where, in the event of an electoral college draw, Republicans hold the majority of state delegations.
      At the same time, all of the white armed militias currently “standing by” could take to the streets to foment violence and chaos. The goal would be to provoke leftist counterviolence, giving Trump a pretext to invoke the Insurrection Act and deploy federal law enforcement or the US military to restore “law and order” (as he has previously threatened to do). With this endgame apparently in mind, the Trump administration has already designated several major Democratic-led cities as “anarchist hubs” that may need to be put down. In other words, Trump and his cronies have made clear that they will use any means necessary to steal the election; and, given the wide range of tools at the executive branch’s disposal, they could succeed if early election results are close, rather than showing a clear Biden sweep.
      [embedded content]
      To be sure, if early results on election night show Biden with a strong lead even in traditionally Republican states such as North Carolina, Florida or Texas, Trump would find it much harder to contest the result for more than a few days, and he would concede sooner. The problem is that anything short of a clear Biden landslide will leave an opening for Trump (and the foreign governments supporting him) to muddy the waters with chaos and disinformation as they manoeuvre to shift the final decision to more sympathetic venues such as the courts.
      This degree of political instability could trigger a major risk-off episode in financial markets at a time when the economy is already slowing and the near-term prospects for additional policy stimulus remain grim. If an election dispute drags on – perhaps into early next year – stock prices could fall by as much as 10%, government bond yields would decline (though they are already quite low), and the global flight to safety would push gold prices higher. Usually in this type of scenario the US dollar would strengthen; but, because this particular episode would have been triggered by US-based political chaos, capital might actually flee from the dollar, leaving it weaker.
      One thing is certain: a highly contested election would cause further damage to the US’s global image as an exemplar of democracy and the rule of law, eroding its soft power. Particularly over the past four years, the country has increasingly come to be regarded as a political mess. While hoping that the chaotic outcomes outlined above do not come to pass – polls still show a strong lead for Biden – investors should be preparing for the worst, not only on election day but in the weeks and months thereafter.
      • Nouriel Roubini is professor of economics at New York University’s Stern School of Business. He has worked for the International Monetary Fund, the US Federal Reserve and the World Bank.
      © Project Syndicate More