San Fran's Yellen comments on the crisis

Last night San Francisco Fed Chief Janet Yellen remarked on the current economic mess and how the Fed has responded.

First of all, she commented that the crisis has been like "a hundred-year flood—a disaster of the highest order which has put us on a continuous emergency footing."

She's "concerned that mortgage rates, which have risen of late, could place a drag on a still very sick housing market, potentially driving home prices still lower and pushing more borrowers into foreclosure.

"The recent run-up in oil prices may also reflect greater confidence in the global outlook. But it too is troublesome because it impedes recovery by forcing consumers and businesses to pay more for gas and energy, thereby reducing their ability to buy other goods and services."

Yellen anticipates the recession will end some time this year but the recovery will be "frustratingly slow." Plus, she believes a "massive shift in consumer behavior is underway." This renewed interest in saving a greater percentage of income will reap benefits in the future, but for now, it means less sales at the malls and fewer assembly jobs.

Lastly, she is concerned about another shock to the still-fragile financial system. "Commercial real estate is a particular danger zone. Property prices are falling and vacancy rates are rising in many parts of the country."

I don't share her unusually dire view but I won't give the all clear signal either.