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Christina Romer: Government Inaction "Shameful"

Discussion in 'Off-Topic' started by Integral, Mar 27, 2011.

  1. Integral

    Integral Can't you hear it?

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    link

    Further,
    link

    A couple of points:
    1) I'm not crazy. I've been pushing for more Fed stimulus and a strict price level target for some time, and now Christina Romer agrees with me. So nyah. :p

    2) IMO, she's correct in her framing of the budget deficit problem. (a) The deficit is important, but (b) it's not important right now and (c) the long-term problem is health care, not the stimulus.

    So, is 8.9% unemployment enough to justify more government action? If so, what form should it take? Could the Fed communicate unconventional policy effectively, or would it just go over the heads of everyone involved?
     
  2. Hygro

    Hygro soundcloud.com/hygro/

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    Christina Romer is absolutely correct but made the mistake of trying to think like a politician when she was in the white house, thinking two bites of 600 billion stimulus would be easier for the American people than one big 1.2 trillion stimulus. Little did she realize there was never going to be a second 600 billion, something Krugman warned in every column for like 3 months.

    She is definitely arguing the correct policy, and democrats need to get on board. I should take one of her classes in the coming semesters.

    Republicans are going to pin austerity on Obama if he caves and talk about how they would have created jobs come the 2012 presidential elections if our economy picks up at the snail's pace they hope for. More likely, though, will say their inevitable compromise wasn't enough and the deficits are killing our economy.

    The only way for democrats to win is to USE SMART ECONOMIC POLICY. The only way to do that is for use EXPANSIONARY monetary economic and stimulus policy.

    If they do that, not only do the Democrats win but so do the American people :rolleyes:
     
  3. amadeus

    amadeus As seen on OT

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    Can Obama help me get out of my apartment lease? I want the government to pay the three months rent that's coming that I can't afford because of the lousy economy.
     
  4. Quackers

    Quackers The Frog

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    Jesus, you've already had QE2 - doesn't that just prove it doesn't work??? (in unemployement at least :D)

    3rd time lucky? lol?
     
  5. Hygro

    Hygro soundcloud.com/hygro/

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    Hence my point that she was foolish to suggest that Americans could take stimulus in two parts after the first didn't do enough.

    If you were to require a soldier to fit in war, and you trained him halfway, and then he performed poorly, would you then say the problem was trying to train soldiers at all? No, you'd realize you need to finish his damn training!
     
  6. amadeus

    amadeus As seen on OT

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    If you were to build a sand castle and the tide washes it away, what makes you think building more sand castles is going to stop the tide?
     
  7. Hygro

    Hygro soundcloud.com/hygro/

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    That analogy is not felicitous, there's no "tide" and "sand castle". The American economy is about 20% the world's economy. There's no magic tide outside the economy.

    What we are dealing with are demand shortages caused largely by income inequality that created a debt bubble that burst. We shore up the demand shortage first, and then we fix what created it in the first place.
     
  8. amadeus

    amadeus As seen on OT

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    There's no soldier, either.
     
  9. Hygro

    Hygro soundcloud.com/hygro/

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    My analogy was about the misguiding thinking of stopping something halfway through and therefore declaring the entire intent of the project a waste simply because it didn't reach fruition.

    It doesn't matter though, one side of the argument is grounded in a bizarre combination of misguided common sense and a finicky discomfort to what one doesn't understand, the other grounded in valid economics that work.
     
  10. amadeus

    amadeus As seen on OT

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    I know what it was about, I just don't think it's apt.
     
  11. BuckeyeJim

    BuckeyeJim King

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    I can't help that ideas like this are what lead to the ignorant general populace we're all so quick to criticize. Inequality doesn't create debt, the desire to turn us all into consumers does.

    It'd be a heck of a lot easier for me to buy my house if people like Romer weren't out there trying to prop up a mindless consumer who put themselves into a bad mortgage and lived beyond their means due to their inherent ignorance.
     
  12. Hygro

    Hygro soundcloud.com/hygro/

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    That narrative contains so much BS you could grow enough crops to feed Africa with it.

    The housing bubble didn't collapse because people took out mortgages they couldn't afford to live beyond their means. The housing bubble collapses and then took down with it people who previously could afford their mortgages. Given the upward trend of the housing market over the past 40 years it seemed stupid and irresponsible to not do whatever possible to get a home lest you get priced out of this wealth building asset forever. These were responsible people who made responsible decisions for good reasons, but because they lost their jobs and a bubble tanked the value of their homes, they couldn't afford stay solvent, causing a cascading effect.

    And now we're stuck with a massive demand shortage and one side has the answers for how to fix it, and the other side is making up fake stories of why it happened so as to justify economic policy not based on economics but a bizarre and twisted sense of blame the victim. Nice one.
     
  13. Cutlass

    Cutlass The Man Who Wasn't There.

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    The growing income inequality is the foundation of what caused the housing crisis and the consumer debt crisis. You cannot separate causes from effects.



    The thing is, if skills mismatch is the problem, then how do you deal with that? One way is a labor shortage. Make the employers take who is available and retrain them. That's much more efficient than having the worker pursue retraining on their own.


    Right there with you. But I'm probably more fiscal and less monetary than you are. :mischief:

    The answer is: Politics. The best chance the Republicans have to get back in power is for Obama to fail. The best chance for Obama to fail is to obstruct sound policy to the greatest extent possible.
     
  14. UnendingRequiem

    UnendingRequiem Chieftain

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    Not sure if serious.
     
  15. amadeus

    amadeus As seen on OT

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    I'm not wholly unserious. Why should people that live in houses get government bailouts and I shouldn't? It's socialism for the rich... house-owners.
     
  16. Hygro

    Hygro soundcloud.com/hygro/

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    On a philosophical level, ignoring the economic one, perhaps because home ownership leads to a healthier, happier civil society and therefore we should help bridge the gap in this unusual trying time for home owners, but knowing that we can't have government do everything for everyone lest we destroy our whole system.

    It's not really my argument, but I think it's a sensible one.
     
  17. JohnRM

    JohnRM Don't make me destroy you

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    I would prefer to do nothing and simply shrink the standard of living in the United States over the long-term.
     
  18. Spitefire

    Spitefire Prince

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    Yes, inflation is so great just look at the wonders it is preforming for Zimbabwe.
     
  19. Integral

    Integral Can't you hear it?

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    Fortunately, the probability that we see sustained inflation, even if (or especially with) a price level target, is approximately 0.

    QE2 isn't causing inflation. Neither is the budget deficit. Five- and ten-year inflation forecasts, both by professional forecasters and the market, are showing lower than usual projections of inflation.

    :)
     
  20. Cutlass

    Cutlass The Man Who Wasn't There.

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    A more practical position is that having so many underwater mortgages outstanding while the job market is weak adds a great deal of uncertainty to the financial markets. And that keeps lending weak, which keeps jobs weak, which keeps the economy weak.

    Buying up the bad mortgages would probably pay for itself the way the Fed's extraordinary lending paid for itself. Because it would have the greatest effect of resetting the economy.
     

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