Scene in Passing: Can Main Street trump Wall Street?
February 5, 2014
Don't be yellin' about Yellen taking over at the Fed just because it looks like the stock market teeters on the brink of a rout.
Janet Yellen took over this week and month as the first female chair at the nation's Federal Reserve. January had ended with stocks in a swoon. It opened February with more of the same. Markets abhor uncertainty.
The above teeters reference, by the way, is by way of injecting a little wordplay history lesson into the discussion: Nancy Teeters was the first female on the Fed's Board of Governors.
Appointed by President Jimmy Carter in 1978, Teeters broke a 65-year tradition of all-male boards. Teeters, like Yellen, looks to unemployment and real world ravages in making Fed decisions when the economy is dicey. In Teeters' day, the early 1980s to be more precise, men on the Fed board kept interest rates high and helped prolong a recession Teeters both voted and railed against.
"It was very difficult for me philosophically to run up the unemployment rate," Teeters once said. "It was perfectly obvious to me we didn't need to put interest rates up that high. We couldn't do it without a recession."
Yellen, now the Fed's top gun, makes it perfectly clear she is cut from similar cloth. Now the nation is at the other end of the spectrum, with interest rates low. But unemployment still is higher than anyone wants, although it's coming down. So Yellen won't zoom interest rates in any hurry. She likely will keep monetary policy at ease, so to speak, for quite a while rather than tightening prematurely.
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Wall Street momentarily may be spooked, but Main Street — or Carson Street in these precincts — should take this stocks swoon in stride. This isn't even a garden-variety correction. In other words, local business and governing decisions aborted out of fear over stock market shenanigans could prove premature and unwarranted.
Even as you read these words, Mayor Robert Crowell undoubtedly is about to, actually is or already has been sounding optimistic themes in his State of the City speech this morning. That's his job, barring obvious economic turmoil. As recently as a week ago, Crowell sounded upbeat themes at a Northern Nevada Development Authority breakfast meeting.
A year ago, the mayor spoke favorably of the city's bond ratings, a theme he has sounded more than once since. If he sounds it again, it won't surprise anyone if he also says a favorable word on behalf of local capital improvement projects he has backed and the Board of Supervisors will tackle on Feb. 20. This mayor isn't likely to turn yellow because Yellen took the helm at the Fed and stocks turned sour of late.
Perhaps he knows the old saying in finance that goes this way: make money on Wall Street, bury it on Main Street.