William C Dudley: How goes the recovery? Challenges for the nation, the region and the Fed Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at Cornell University, Ithaca, New York, 25 October 2010. *  *  *  Good morning. I am pleased to have this opportunity to speak to you as I travel through Upstate New York to meet with various communities in the region. This afternoon I will focus on national and regional economic conditions and what the Fed is doing about them – with particular attention to the housing sector and to conditions in Upstate New York. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee (FOMC) or the Federal Reserve System. Introduction to the New York Fed As many of you know, this is my first chance to speak at Cornell University since I became president of the New York Fed. So, by way of introduction, let me start with a synopsis of what the New York Fed is, what we do and what makes my job so interesting. The New York Fed is part of the Federal Reserve System, America’s central bank, and was created by Congress in 1913. With this act, Congress delegated to the Fed System its constitutional authority to manage the money supply – and designed it be decentralized, representative of all of America and independent of the political process.
I maintain that. WSJ: What do you think the risk is that this wrenching process will cause the breakup of the euro or its membership? TRICHET: Of course the euro is there and will be there in the future. I do not comment on what I consider absurd hypotheses. I am used to such questions from the very beginning of the euro. The paradox is that, years ago, the question was about Germany supposed to be at that time the “sick man of Europe”. I was responding that Germany was doing hard work that its economy was catching up on competitiveness. Now the same hard work has to be done by those that were growing rapidly over the past years but at the same time had lost their competitiveness. One has to accept that within a vast economy that has the size of the euro area, with 331 million people, there are economic differences. For instance when I look on both sides of the Atlantic I see that the differences between the fastest and slowest-growing U.S. states, it is more or less of the same order of magnitude as between countries in the euro area, for instance between Oklahoma and Nevada, 13 % differences in growth in 2009; between Slovakia and Ireland more than 9 % in growth in 2008. WSJ: The U.S. copes with these differences through labor mobility and a federal budget. Does the euro zone ultimately need a big federal budget?