Posts
The White House's Chief Economist Christina Romer said that the United States can come out of the "Great Recession" and be "better than normal" as long as we institute the correct policies for economic growth. She is calling for “targeted stimulus” to aid a recovery of the private sector. Romer said the economy needs additional funds to support state and local governments, an extension of unemployment insurance benefits, a $30 billion program to boost small business lending and a program to subsidize energy-efficiency renovations for homes.
Romer also said the country needs to focus on reducing it's budget deficit because a high budget deficit would lead to high interest rates and decrease investment. Rebalancing the economy for a “better normal” would mean “a higher-saving, higher-investment economy than that of recent decades,” Romer said. “Consumer caution, sounder lending practices and pro-saving policies are likely to lead to higher personal saving.”
What do you think? Is Romer correct in believing the United States can come out of this "better than normal" and with these new policies would this time really be different?
You can read the full article here:
http://www.businessweek.com/news/2010-04-18/romer-says-u-s-can-emerge-from-recession-into-better-normal-.html
Subscribe to:
Post Comments (Atom)
I love your use of the phrase "would this time really be different? " I think the short answer is yes. Like the great depression, sometimes short term crises spawn long term changes (think of Social Security and the FDIC) in this case it could be sustainable energy and healthcare (or not). We all still deep in the woods but I do think with careful and patient planning we could see an overall improvement coming out of this recession.
ReplyDeleteOn an unrelated note, I take serious issue with calling this the "great recession."
I really hope that this crisis will at least show us what needs to be done and where we should be focused as a financial system and economy to be better off in the future. I agree with Romer that something needs to be done to the current lending practices, but some sort of stimulus needs to be implemented to promote small business. I think that we will recover and hopefully be stronger from the mistakes that led to the current financial crisis.
ReplyDeleteI just hope we can actually learn from our mistakes in this financial crises to make sure that we don't end up in this crazy of a situation again. I don't know if we need to really focus on our budget deficit right now though. I think the we need to get the economy rolling again and back to a stable "normal" economy. Once we are there we can start working off our budget deficit.
ReplyDeleteI think that we could come out of this recession with our economy being better than normal but I think that it will take a long time. I think this will happen through new innovative financial tools and expansion of new ideas in the financial sector. But then eventually as we have greater innovation we will stumble upon a new crisis as the book has pointed out. It seems like we always fix the old problems but then always create new ones. Its just another cycle.
ReplyDeleteI'm reminded of the GDP equation Prof. McKinney used to discuss how we can recover from the recession. I think that analysis shows that Romer is oversimplifying the depth of the crisis a bit here. I really don't think a targeted stimulus, $30 billion for small business, and deficit reduction are even close to enough to compensate for the lost consumer spending.
ReplyDelete