Tales from the Trail

Washington Extra – Ducking the issue

U.S. Treasury Secretary Timothy Geithner testifies before a Senate Banking, Housing and Urban Affairs Committee hearing on The Treasury Department's Report on International Economic and Exchange Rate Policies on Capitol Hill in Washington September 16, 2010.

We were all primed for the release of the Treasury’s global currency report this afternoon, which would have included a ruling on whether China was a currency manipulator. But a decision was taken to delay the report until after the Group of 20 summit in Seoul in mid-November.

Pressure from lawmakers and business had been mounting on President Barack Obama to act, but the delay shouldn’t come as a big surprise. After all, Treasury Secretary Tim Geithner told Congress last month he wanted to rally the G20 around the issue and take a multilateral approach. Perhaps more importantly, the administration is conveniently ducking the issue until after the Nov. 2 congressional elections.

Some Democrats, who have made China’s currency practices an issue in their campaigns, are disappointed today. Our Breakingviews columnist James Pethokoukis says Obama should be given credit for resisting populist pressures for the second time this week, after also declining to heed appeals to impose a national moratorium on home foreclosures.

That may be true but Obama also knows no amount of populism is going to help his party in the midterms, and he is already looking ahead.

It is safe to assume the president wants to avoid starting the second half of his term embroiled in a damaging trade war with China, which also happens to be the largest holder of U.S. government debt. The administration clearly thinks a direct confrontation would be counterproductive, make the Chinese dig in their heels and, if they stop buying U.S. debt, potentially push up long-term interest rates. There are also big issues to address around market access and intellectual property rights, which confrontation would have obscured.

Washington Extra – Storm clouds over Haiti

There was a tremendous outpouring of goodwill and money for Haiti after the quake, which prevented a further humanitarian catastrophe. But so far, nine months after the capital was devastated, progress in “building back better” seems painfully slow. haitiRubble still chokes the narrow streets of Port-au-Prince, and 1.3 million people occupy every available scrap of land in tents awaiting resettlement, or even just a government plan on what to do with them.

Given the mind-boggling scale of the disaster, the weakness of the government and economy even before the earthquake, the lack of land as well as clearly defined land ownership records, it is unfair to expect too much.

But today everyone seems to be asking: What has all this goodwill achieved in terms of lasting benefits to Haiti? One thing that is clear from our interviews this week is the government, local elites and the international community seem to be playing something of a blame game.

Washington Extra – Just Keep Smiling

bernanke1In the past few days we have seen the president and the chairman of the Federal Reserve both standing up and insisting they had more cards at their disposal to rescue the faltering American economy. In truth, though, both men look like they are holding weak hands, and are reduced, for the time being, to putting a brave face on things.

With short-term interest rates already at zero, Ben Bernanke has few cards he can play, and none of them feel like sure-fire winners. One is to restart an aggressive program of purchasing government securities to drive long-term interest rates down still further, another is to cut the interest rate on reserves, and a third, desperate measure would be to raise the inflation target. None of those cards are likely to be played unless things get significantly worse.

In theory President Barack Obama has more options at his disposal, but it is far from clear what he can actually get through Congress in election season. Today Obama promised that his economic team was “hard at work in identifying additional measures” to support the economy and boost hiring. But he had few new ideas to offer, besides extending tax cuts for the middle class that are set to expire this year, increasing government support for clean energy development, and rebuilding more U.S. infrastructure.

Washington Extra — Beck, Bernanke and baseball

An “American miracle” or an “exercise in self-aggrandizement on a Napoleonic scale”?

Reuters/Chris Keane (Beck at an NRA meeting in Charlotte May 15)

 No, I am not talking about Reuters Washington Extra, but Glenn Beck’s Restoring Honor rally which is due to take place on the steps of the Lincoln Memorial on Saturday. Beck, never one to hide his light under a bushel, has described tomorrow’s event as “a defibrillator to the heart of America”, “the Woodstock of the next generation”, and “the turning point” in American history. Eugene Robinson in today’s Washington Post was less optimistic about the rally and its “egomaniacal” host, who will be speaking a few steps down from where Martin Luther King gave his “I Have a Dream” speech on the same day in 1963. Washington Extra is not taking sides.

Ben Bernanke’s speech at the Federal Reserve conference in Jackson Hole was considerably less dramatic than Beck’s is likely to be, but does merit a quick mention too. The Fed chairman said the economic recovery had weakened more than expected but downplayed concerns that it might slip back into recession. The Fed, he said, was ready to act if needed to spur growth and said the central bank still had ammunition left. He at least is not reaching for the defibrillator yet.

Washington Extra

What do central bankers and slalom skiers have in common? Bobbing and weaving, for one thing.

Federal Reserve Chairman Ben Bernanke sat in front of lawmakers for a second day on Thursday to deliver his semi-annual assessment of the economy, cleverly sidestepping the obstacles they placed to his right and left. With election season fast approaching, each side wanted ammunition for their campaigns, and for their partisan readings of the economy.
bernanke

Not surprisingly, the resolutely apolitical Bernanke trod carefully. For the Democrats, there was comforting agreement that this week’s bill to regulate Wall Street had placed the financial system on a sounder footing and reduced the risk of another devastating financial crisis. Last year’s $862 billion economic stimulus had saved or created somewhere between one and three million jobs, Bernanke said, and the government was right to run a fiscal deficit in 2010 to support the economy.

The First Draft: Drag out that vacation a bit

For some Americans — including the president – there’s just one last week of summer before work and school get back into full swing. 

OBAMA/President Barack Obama found out that as president, sometimes a vacation isn’t always a break from work. So he decided to extend his time off a bit by going to Camp David next week after returning from Martha’s Vineyard.

While on the Vineyard Obama interrupted his family holiday a couple of times. First, to announce his renomination of Ben Bernanke as chairman of the Federal Reserve and then to speak after his friend, Senator Edward Kennedy, died of cancer.

Fed chief victim of identity theft

Not even the head of the nation’s top bank is immune from identity theft.

Federal Reserve Board Chairman Ben Bernanke became a victim last summer after a thief stole his wife’s purse with the couple’s joint check book inside, Newsweek reported, citing recently filed court records.

Days after the purse was swiped at a Starbucks on Capitol Hill, someone started cashing checks on the Bernanke family bank account, Newsweek said.

The theft of  Bernanke’s check book became part of a wide-ranging identity-theft investigation the by the Secret Service and the U.S. Postal Inspection Service.

Obama’s summer holiday no walk on the beach

OBAMA/President Barack Obama began his summer vacation by sending a specific message to the White House press corps.

 ”He wants you to relax and have a good time,” Deputy Press Secretary Bill Burton said as Air Force One carried the first family to the Massachusetts island where they are spending a week-long holiday. “Take some walks on the beaches. Nobody is looking to make any news, so he’s hoping that you guys can enjoy Martha’s Vineyard while we’re there.”

“I asked him if he had a message for the press corps, and that’s what it is,” Burton said.

Watch out for the quiet ones: Bernanke 1, Summers 0

Watch out for the quiet ones in the War of the Wonks (OK so we’re being a bit dramatic).

Mild-mannered Ben Bernanke gets to keep his five-star financial job as Federal Reserve Chairman, winning out over speculation that President Barack Obama was thinking about replacing him with Larry Summers, known among other things for his outsized ego.

Delving into the past of the grey-beard, here are some clues about what propelled him to become the nation’s economic engineer — a job he managed to hold on to despite a national unemployment rate approaching 10 percent.

The First Draft: Bernanke, budget trump vacation – for a bit

OBAMA/Two days after arriving in Martha’s Vineyard, President Barack Obama is taking a break from his vacation to make some news: he will announce that he is nominating Ben Bernanke to a second term as chairman of the Federal Reserve.

Investors have given Bernanke, whose current term expires on Jan. 31, 2010, high marks and had widely expected his reappointment.

But the announcement is being made earlier than expected and comes not just during Obama’s family vacation but also on the day that the White House Office of Management and Budget and the non-partisan Congressional Budget Office both release their midyear budget updates.