The Economy: Where Are We, How Did We Get Here, And What Do We Do Now?
October 16th, 2008 categories: About the Local Market, Assessing the Local Market
Here is what Nouriel Roubini, the Economist who has been prophesying our current financial crisis for some time, said in an interview October 14th of the actions taken this weekend by U.S. and European central banks:
“What they’ve announced … goes a step in the right direction … We’re going to avert a catastrophe.” However, he warned that the situation ahead will be “bumpy” and “painful” as “we haven’t reached the bottom yet.”
When asked about the reason for the economic crisis, he stated: “The ideology in Washington for the last eight years regarding financial markets has been self regulation. Self regulation is meaningless. It means no regulation. It is an ideology based on market discipline. There was no market discipline …. No body was listening to the risk managers and then there was a reliance on the rating agencies who were being paid by the people they were supposed to rate. So the conflict of interest was huge” …
“The mistakes were done a few years ago. The Fed cut rates and kept them too low for too long … There was no supervision or regulation of these toxic mortgages and other credit. The entire ideology was one of “laissez faire.” We really created the biggest bubble in U.S. asset market. And It was not just a sub-prime mortgage problem … We created really a huge mess because we did not properly regulate the financial system.”
Roubini also gave some interesting suggestions as to how the U.S. should move forward to shorten the recession (e.g., stimulate growth through a large fiscal stimulus program with spending on roads, infrastructure, state and local government, energy, etc.), prevent future such problems, and to level out the large supply of foreclosed properties. Very interesting!
To watch this interview, Click Here
I would consider myself to be slightly above average in my understandings of economics and way above average in my desire to “cut to the chase” and “deal with real issues at work here.” With less than three weeks until the elections, I am (like many other Americans out there) wondering what those running for office REALLY think on the subject of the economy.
So much of what I hear on television, from the media and from the politicians themselves, is just political cheerleeding. You ask me a question and I respond with why I am Mr. (or Mrs.) Wonderful. This is pretty serious stuff, you know! Come on!
As an example, I googled the words, “Obama Economics” and “McCain Economics” and didn’t get much information either. A few line item ideas … They’re talking the normal political rhetoric: should we decrease taxes or increase them? Neither idea makes much sense if we’re in the red already and facing a recession. The normal methods of stimulating the economy (e.g., government spending and/or business investment) seem awfully small, don’t you think? I think it’s time to think bigger! If you are proposing something, let it not just be a “dud” proposal. What will be the true impact?
I did find a whole lot of opinions out there! Truthfully, I’m SO not interested in that!
With a recession now in sight, I am wondering: First, why in the world would a president, senator, or congressman want to inherit such problems? (Is it just ego or is there a true call to serve the American People?) Secondly, Mr. (or Mrs.) potential President, Senator, or Congressman, do you really understand the mechanics of the economic system and how it works? (This is very complicated! And we don’t need solutions that don’t address the real problems!) Finally, what’s your plan and who are your advisors? (Obviously, we don’t expect academic scholars in office … but you better know some good ones! Tell me, who are they? And why do you believe that way? Is it the party platform or is there REAL substance to your beliefs?)
Comments welcome!
RESPOND WITH YOUR MOOS & VIEWS HERE
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