Reuters - Video

EDITION: U.S. | U.K. | IN

Decoder

Yellen's challenges "unprecedented": Economist Mark Thoma

Monday, Dec 09, 2013 - 02:40

Janet Yellen could be confirmed as Fed chair as early as Thursday, and she will face the task of navigating the central bank through uncharted waters, contending with the largest-ever balance sheet and untested regulatory powers, says University of Oregon economist Mark Thoma.

▲ Hide Transcript

View Transcript

I believe the challenges that. -- Elmo phase. When she is confirmed our unprecedented. I can't think of another fed chair that faced challenges that are as important and as big as she's facing right now. I think there for a challenge is that Janet Yellen will face when she is confirmed. The first in the biggest -- the exit strategy getting the timing right getting the magnitudes right all of those sorts of things he'll be judged in the future quite a bit by how well she manages. The exit from QE if they get this thing wrong. And start pulling back too early in interest rates by congress to try and recovered that's gonna slow the employment recovery is gonna slow the recovery overall -- more unemployment. So the first big one here is the exit strategy I would agree that this program can not continue forever the second thing I think that she will face when she's confirmed as regulations. Although Dodd-Frank passed quite awhile ago only about 40% of its been implemented they're still quite a ways to go lot of rule making to go we've still got the problem of equipment of bank runs in the shadow banking market. Exactly what the problem was during the the financial panic and that problem has been solved yet. So -- that's going to be a big challenge getting that done right the third challenge she may face is whether or not the Fed needs to actively pop bubbles. She made a statement in 2005. That you agree with Alan Greenspan that we shouldn't -- the -- shouldn't pop bubbles that -- only try to clean up afterwards that turned out to be a bad strategy for the housing bubble in 2009 she changed her mind -- -- I think the Fed should actively go in and pop bubbles when they see them. If it looks like there's a bubble inflating for some reason maybe they don't manage exit strategy right or something along those lines. Then she's gonna face a big challenge about how will provide the leadership to either pop that bubble or let it go in the decision she makes could be critical. Finally if the financial sector gets in trouble I think there's a big issue with too big to fail banks in the resolution authority. And whether the Fed and other people who have input on this we'll have the courage to actually put banks through the resolution. Authority let them fail. And then see how markets react. -- is more -- Overwhelming response here 659%. Saying they think Jack McKeon is more dovish fed up Fed Chairman remember back with 15% say much more dovish. Janet Yellen has been. Pegged as a dove and she's studies she doesn't care about inflation all the sorts of things I think she might surprise markets in how tough she'll be. If inflation doesn't fat rear its head. I don't think she's going to put employment over inflation at all she's made indications in the past that she cares about inflation she understands it's important. And if inflation rears his head I think markets might be quite surprised at how strongly she reacts.

Yellen's challenges "unprecedented": Economist Mark Thoma

Monday, Dec 09, 2013 - 02:40

Top News »

Most Popular »

Money »

S&P 500 to new record on improving economy S&P 500 to new record on improving economy

Fri, Aug 29, 2014 - (2:31)

Finding meaning in the S&P 500 2000 mark Finding meaning in the S&P 500 2000 mark

Mon, Aug 25, 2014 - (2:35)

S&P falls back from record high S&P falls back from record high

Fri, Aug 22, 2014 - (1:35)

S&P 500 closes at new high S&P 500 closes at new high

Thu, Aug 21, 2014 - (1:24)

S&P 500 just shy of record S&P 500 just shy of record

Wed, Aug 20, 2014 - (2:23)

Apple hits $100 a share Apple hits $100 a share

Tue, Aug 19, 2014 - (2:06)

Nasdaq closes at 14-year high Nasdaq closes at 14-year high

Mon, Aug 18, 2014 - (2:23)

Putin puts Wall Street in buying mood Putin puts Wall Street in buying mood

Thu, Aug 14, 2014 - (2:10)

We've become a promotional culture-RetailMeNot's Bodge We've become a promotional...

Thu, Aug 14, 2014 - (4:39)

The Exchange »

The Exchange: Hot commodity The Exchange: Hot commodity

Wed, Jul 16, 2014 - (9:25)

The Exchange: Constitutional crusade The Exchange: Constitutional crusade

Wed, Jun 25, 2014 - (11:35)

The Exchange: The value of money The Exchange: The value of money

Mon, Jun 02, 2014 - (9:53)

The Exchange: China’s Second Continent The Exchange: China’s Second Continent

Tue, May 27, 2014 - (9:35)

The Exchange: A master of business arts The Exchange: A master of business arts

Thu, May 08, 2014 - (8:24)

The Exchange: America's bankrupt cities The Exchange: America's bankrupt cities

Mon, May 05, 2014 - (8:52)

The Exchange: Let the rocking commence The Exchange: Let the rocking commence

Tue, Apr 08, 2014 - (8:13)

The Exchange: The Moneyball fallacies The Exchange: The Moneyball fallacies

Mon, Mar 24, 2014 - (9:54)

Is doing good a good business? Is doing good a good business?

Mon, Mar 17, 2014 - (7:38)

Reuters Investigates »

Re-homing victim: "I could have been dead" Re-homing victim: "I could have been dead"

Wed, Feb 19, 2014 - (8:24)

Cops and loggers in the Amazon rainforest Cops and loggers in the Amazon rainforest

Fri, Jan 10, 2014 - (4:01)

"Passed around like a dog" "Passed around like a dog"

Thu, Aug 29, 2013 - (6:32)

Adopted, then abandoned online Adopted, then abandoned online

Thu, Aug 29, 2013 - (13:21)

How the DEA keeps its secrets secret How the DEA keeps its secrets secret

Mon, Aug 05, 2013 - (1:36)

How education lost its role as the great equalizer - Reuters Investigates How education lost its role as the great...

Mon, Dec 17, 2012 - (7:52)

Jihad Jane: From abused child to American jihadist - Reuters Investigates Jihad Jane: From abused child to American...

Sat, Dec 08, 2012 - (10:01)

Jihad Jane: The order to kill - Reuters Investigates Jihad Jane: The order to kill - Reuters...

Sun, Dec 09, 2012 - (10:39)

Moving Pictures »

Images of August Images of August

Fri, Aug 29, 2014 - (1:00)

Mending dolls, teddies and hearts Mending dolls, teddies and hearts

Fri, Aug 22, 2014 - (3:12)

"Old timers" sail the Chesapeake Bay "Old timers" sail the Chesapeake Bay

Mon, Aug 11, 2014 - (2:27)

Burned memories Burned memories

Fri, Aug 08, 2014 - (3:02)

Images of July Images of July

Thu, Jul 31, 2014 - (1:20)

World Cup: passion on the pitch World Cup: passion on the pitch

Fri, Jul 11, 2014 - (1:00)

A refugee in America gives back A refugee in America gives back

Wed, Jul 02, 2014 - (3:25)

A long search for refuge A long search for refuge

Fri, Jun 20, 2014 - (3:04)

World Cup: Around the globe in 50 goals World Cup: Around the globe in 50 goals

Fri, Jun 06, 2014 - (1:08)

VIVID – Sydney’s spectacle of light VIVID – Sydney’s spectacle of light

Fri, May 30, 2014 - (1:37)