Yellin' for Yellen

Three cheers for Janet Yellen, the president of the San Francisco Federal Reserve! The former head of President Clinton's Council of Economic Advisers says the Fed may have to keep official interest rates near zero for years. She added at a speech in San Francisco yesterday that were short-term rates not already at zero, the Fed would be cutting rates further.

Good for her! The seriousness of this recession, coupled with still-evident pressures of deflation such as rising unemployment and falling home and auto prices, remains quite a concern for policymakers. Thank God she is saying it out loud, quashing talk among inflation hawks that the Fed needs to articulate an "exit strategy" before either the battle or the war against the forces of deflation is officially won.

Just this morning, ADP, the payroll services company, forecast that some 473,000 jobs were lost in June, far above the median consensus forecast of 350,000. It's true that ADP numbers have consistently missed the Labor Department's reported number (due tomorrow at 8:30 a.m. EDT) by wide margins, but job losses in the hundreds of thousands every month are not the stuff of inflation.

In addition, mortgage applications fell 19% in the last week as refinancings plunged to a seven-month low, thanks to the recent rise in interest rates. This data point shows just how vulnerable the economy is to rising rates as the real estate market gropes for a bottom.

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Ron Insana has returned to CNBC as a senior contributor to the nation's premier business news network. Prior to his return, Insana was a managing director at SAC Capital Advisers, a $12 billion hedge fund run by Steven A. Cohen. Insana was the president and CEO of Insana Capital Partners, a $120 million fund of funds manager, from March 2006 through August 2008. For over two decades, Insana has been a familiar face on business television, spending 17 years as a veteran anchor at CNBC. Before working at CNBC, he worked as managing editor and senior anchor for the Financial News Network, where he began his career in 1984 as a production assistant. He graduated with honors from California State University at Northridge.