Stanley Fischer is likely to be tapped as the vice chair of the Fed once Janet Yellen takes the helm on February 1, according to Jon Hilsenrath. From 2005 until last June, Fischer served as the head of the Bank of Israel. “His broader résumé—MIT, IMF, Citigroup, Bank of Israel—places him very much at the center of the economic policy-making establishment of the past two decades, including the years leading up and after to the 2008 financial crisis”, says Hilsenrath. Fischer was born in Northern Rhodesia (now Zambia), educated in South Africa, then London, and spent most of his academic career at MIT (after a brief stint at Chicago). While at MIT, Fischer taught Ben Bernanke, Mario Draghi, and Larry Summers. He also literally wrote the book on macroeconomics.
Morgan Stanley put out a report yesterday that called Yellen and Fischer the “Fed Dream Team”. Sam Ro quotes it: “Fischer has been around the inner circle of international economic policymaking for three decades. If he was not at a major meeting in person, one of his students from his long tenure at MIT probably was". Cardiff Garcia says “it’s impossible to think of anyone more qualified for the gig”.
In a separate WSJ story flagged by Tyler Cowen, Hilsenrath describes Fischer’s record as head of the Bank of Israel, particularly his work with the Palestinians:
In Israel, his interventions won their share of support. [Palestinian Monetary Authority Chief Jihad] Al Wazir said Mr. Fischer helped ease strain in the Palestinian banking system during recurring liquidity crises … He helped to get shipments of cash into the Gaza Strip's blockaded economy. Mr. Fischer was one of the first central bankers to cut interest rates during the 2008 crisis.
Binyamin Appelbaum looks further back into Fischer’s career, focusing on the 1977 paper in which he “helped to transform the practice of monetary policy, creating the world in which Ben S. Bernanke has operated”. Fischer’s revolutionary theory, he writes, was that activist monetary policy can, in fact, boost the economy in the short-term. With this paper, says Appelbaum, Fischer helped usher in a new wave of Keynesian thinking about the role the government can play in the economy. Central banks were no longer powerless in the face of crisis.
Fischer’s time as the number two at the IMF, from 1994 to 2001, was rockier than other moments in his career. “During Fischer’s tenure, he had to confront both the 1994 Mexico and 1998 Asian financial crises. The IMF contained both problems, preventing global meltdowns, although success came at a high cost”, writes Dylan Matthews. Still, it’s hard to find significant criticism of Fischer. “I don't know what Fischer stands for on regulation”, from former IMF chief economist Simon Johnson, is the closest Hilsenrath gets to controversy around Fischer’s candidacy.
In arguing that Fischer should be picked as Fed chair (before Yellen got the nod), Neil Irwin said, “The reason Fischer is not viewed as a front-runner for the Fed chairmanship is that he is viewed as a foreigner”. Irwin noted that Fischer is a US citizen (he kept his citizenship during his time in Israel) and lived here for decades. -- Shane Ferro
On to today’s links:
Charts
Your shrinking unemployment benefits, in two charts - Brad Plumer
1.3 million of the long-term jobless are preparing to lose unemployment insurance payments- Annie Lowrey
UGH
Big tobacco's justification for fighting anti-smoking laws in poor countries? Free trade - NYT
"Enjoyed today's New York Times story on trade deals and tobacco more when I wrote it in September" - Tim Fernholz
Cost Cutters
"Jon Lovitz is in a duck costume" - Byron Allen's low-cost, factory-style TV revolution - Bloomberg Businessweek
The Fed
The Fed doesn't really trust banks either - Matt Levine
Fail
Public transit, private fare card: card: Chicago’s Ventra debacle - The Nation
Fiscally Speaking
The war against austerity is over - Kevin Drum
Classic Bess
Chinese entrepreneur isn’t just going to sit back and let his wife have all the fun - Bess Levin
Long Reads
What does it mean to have a good death? - Lapham’s Quarterly
Alpha
Thoughtful post on Jack Bogle as a finance industry heretic - Justin Fox
SAC Capital may change its name - WSJ
Niche Markets
Lance Armstrong, currency arbitrageur - Cyclingnews
You are more likely to get extra toppings on your pizza when you don't have to order from a human - Duke University
Strangely Existential
"Audio nirvana was always just out of reach" - Anxious Machine
Ouch
"The real reason so many of us inflate grades is to avoid students complaining" - Allison Schrager
Equals
Why do female academics in science get fewer citations? - Nature
Says Science
James Bond "downed 1,150 units of alcohol in 88 days" - BBC
FYI
Fewer guns means fewer suicides - Alex Tabarrok
Popular Myths
Government spending is now lower than during Reagan's first term - Menzie Chinn
It’s Academic
NYU grad assistants unionize - Steven Greenhouse
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