Thursday, November 03, 2011

Christina Romer on Bloomberg

Former Obama economic adviser Christina Romer made a brief appearance on Tom Keene's Bloomberg noontime program yesterday. I must say I'm rapidly growing weary of Keene's apparent lack of ability to challenge any of his guests. They all seem, to him, equally profound and worthy of his unstinting praise. It's getting old.

Romer managed, in just a few minutes, to make a complete fool of herself. Never mind that her entire body of work while with the administration for the past three years has been discredited as a complete disaster. Never mind that her work there countered that of her research for years prior.

Yesterday, she argued that if the Fed would just announce that, by golly, they WERE going to lick this economic sluggishness, why, then, people "might feel they'd still have their job next year" and spend.

Her remark really showcased Romer's complete detachment from reality. Does anyone reading this know of anyone stupid enough to rely on the Fed's easing as a reason to suddenly feel their job is much safer than it had been?

The only hope the US economy, and that of the global economic system, has is for central banks to quite maintaining near-zero interest rates and begin to let the down-phase of the economic cycle clean out the excess dreck of the last phase, let prices drop to market-clearing levels for a variety of assets, and thus form a base for subsequent expansion.

Romer's remarks, made with a sort of giddy, goofy looking grin, portrayed her as an ivory-towered idiot.

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