Obama Advisor: Damaging If All Countries Move To Austerity At Once

Discussion in 'Wall St. News' started by ASusilovic, May 28, 2010.

  1. PARIS (Dow Jones)--Some countries need to shift immediately to austere policies, but it would be damaging if all nations began such fiscal tightening at the same time, a top aide to U.S. President Barack Obama said Thursday.

    "It would be very damaging for every country in the world to quickly move to fiscal exit because that [would be] a major aggregate demand contraction at a time when we need more aggregate demand," Christina Romer, chair of the Council of Economic Advisers, said at an event at the Organization for Economic Coordination and Development in Paris.

    "There are obviously going to be some countries that need to exit very quickly, and move immediately to austerity measures, but there are other counties, like the United States, and certainly a number of other countries in Europe, where...we can take our time," she said.

    She noted that the state of the world economy is very mixed, with rapid growth in Asia but Europe seeing much lower rates of expansion.

    "That is going to be a challenge going forward, we need all of the world to be recovering from this terrible crisis," she said.

    The U.S. economy, Romer said, is recovering but not booming, while unemployment remains "painfully high."

    She said headwinds remain, including still-tight credit availability and budget shortfalls for states and local governments.

    Romer also said that U.S. consumers aren't expected to return to their free-spending ways, and noted there hasn't been a strong recovery in foreign demand.

    http://online.wsj.com/article/BT-CO-20100527-703676.html?mod=WSJ_latestheadlines

    ...at a time when we need more demand...

    Italy 30 bllion EURO
    Spain 15 billion EURO
    Germany 10 billion EURO
    Greece 4.8 billion EURO
    Portugal 5 billion EURO
    UK 6 billion GBP
    USA = nothing ????
    :cool:
     
  2. Deflation.....it's a bitch and greatly misunderstood. :(
     
  3. By the numbers I've seen, California (and perhaps a few other states) are in worse shape than Greece and other PIIGS. As a whole, the U.S. isn't quite as bad as far as debt-to-GDP, etc.

    In a better universe, everyone going austere at once would be very painful for just a bit, then things would get better shortly.

    That's the way it worked in 1800s era depressions, the 1921 depression and other times before the crazed fiat currency/credit/debt world went into full bloom. I'm not sure what would happen now, though I still prefer austerity to never-ending stimulus.
     
  4. There ya go throwing out these one liners, always putting the challenge out there, with that said I'm off to study the bright side or the dark side of defaltion.
     
  5. In other words, the USA should keep borrowing and spending like drunken sailors... :cool:
     
  6. pspr

    pspr

    I wouldn't listen to anything Christina Romer has to say until she pulls her head out of her ass.
     
  7. Yea, especially when every G20 economy is hugely overweight FIRE.
     
  8. sumfuka

    sumfuka

    In other words, bagholders need to be present in order for countries to dump their debt. :)
     
  9. Coolio

    Coolio

    This is more Keynesian claptrap. You can have a 1921 severe recession or a 1929 Depression. Pick one. I'll take 1921 thank you very much.

    You know what is sick? Spain just post their AAA bond rating but their debt to GDP is better than the USA!!!!

    USA is Greece bordering and headed to Zimbabwe status! How fitting that our president is a Kenyan national.
     
  10. TGregg

    TGregg

    The advisor wanted to add

     
    #10     May 29, 2010