Christina Romer Leaving Obama Administration

As often happens in government, the person who got it right on the stimulus, Christina Romer, is leaving:

"She has been frustrated," a source with insight into the WH economics team said. "She doesn't feel that she has a direct line to the president. She would be giving different advice than Larry Summers [director of the National Economic Council], who does have a direct line to the president. She is ostensibly the chief economic adviser, but she doesn't seem to be playing that role," the source said.

Meanwhile, back at the failing economy:

[T]he nation lost 131,000 jobs last month, but those losses came as 143,000 Census Bureau workers left their temporary posts, the Labor Department said. June’s number was revised dramatically downward to a total loss of 221,000 jobs. The agency originally reported that the nation lost 125,000 jobs in June.

If Obama fails politically, the cause will be his policy failure regarding the size of the stimulus -- when he listened to Geithner and Summers instead of Christina Romer.

Speaking for me only

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    I hope she does what (5.00 / 2) (#1)
    by magster on Fri Aug 06, 2010 at 10:39:36 AM EST
    some of Bush's cabinet level retirees did in exposing Bush's incompetence before 9-11... go public.

    Exactly right on every point (5.00 / 1) (#2)
    by Militarytracy on Fri Aug 06, 2010 at 10:44:18 AM EST
    No other words needed.  But I am sad.  And economically it is likely we will emerge as some sort of elite class.  But I have never liked watching everyone else suffer.  It has never made me feel special, only depressed.

    I do take her leaving as possibly a sign (5.00 / 1) (#3)
    by Militarytracy on Fri Aug 06, 2010 at 10:55:16 AM EST
    though too.  That after the midterm elections are over, something is coming down the pike that she could not stomach and will not be affiliated with.

    Obama pushing through the recommendations of his (5.00 / 5) (#11)
    by jawbone on Fri Aug 06, 2010 at 11:29:33 AM EST
    Obama/Peterson Cat Food Commission?

    And forcing a vote in the lame duck session? And getting it from the Senate, which Pelosi has set up to require a vote in the House?

    Way to go in the political dumpster, Obama et al and DC Dems.


    I know (5.00 / 1) (#20)
    by Militarytracy on Fri Aug 06, 2010 at 12:00:03 PM EST
    If they do any of that stuff, they are so screwed.

    No, she wasn't right (5.00 / 1) (#5)
    by david mizner on Fri Aug 06, 2010 at 11:04:02 AM EST
    As Dean Baker and others have argued, a stimulus around 2 trillion was needed to reverse the slide. But she was less wrong, and, in any case, Summers didn't even pass along her recommendation of 1.2 trill.

    Between his management of the stimulus, with the damage it will do to the cause of activist government, and his oversight of deregulation under Clinton, Summers is approaching Bush-Cheney in terms of national wreckage.

    The multiplier effect (5.00 / 2) (#6)
    by Big Tent Democrat on Fri Aug 06, 2010 at 11:11:24 AM EST
    on 1.3 trillion  in stimulus spending would, the model indicated, equal a net gain of 2 trillion in aggregate demand.

    That said, overshooting the amount would have been the wise play. you can always cut back.


    But what if the multiplier effect doesn't work (none / 0) (#12)
    by Slado on Fri Aug 06, 2010 at 11:30:34 AM EST
    Are you so sure it does and that it even exists?

    Lets just assume it's there for the sake of argument.

    Why does the volume of stimulus matter if it works?  

    Simple mathematics teaches us that 1.1 times anything is more.  

    X doesn't have to be greater then Y for 1.1 to be greater then 1.   1.1 times anything is more.

    So in theory if the multiplier existed it shouldn't matter how much money the government pumped in.  It would work.

    Now one could argue factually that 1.1 time one is only 1.1.   So in theroy if you needed say 5 million in groth you'd need to multiply 1.1 times 4.55 million in stimulus money....you get the point.

    Refer to awesome quote by Friedman.  Why stop at shovels.  Why not use spoons, or pinky fingers.

    If it doesn't work on one end, IE your theory that  not enough stimulus won't work then how can it be true that too much stimulus isn't a problem?

    You can't have it both ways.


    An economy is not (none / 0) (#21)
    by Militarytracy on Fri Aug 06, 2010 at 12:11:28 PM EST
    a matter of simple Math in such terms.  Accounting used to be that, but now even that has been violated by the make believers Geithner and Summers and now accountants count things that don't exist.  An economy is a bit like a living organism and fosters and requires many different inputs and produces many different outputs.  When it is deficient in specific areas and it is provided, it can create more specific outputs.  But you do seem to have fourth grade math down.

    Beware the economist (5.00 / 1) (#24)
    by Slado on Fri Aug 06, 2010 at 01:29:44 PM EST
    that tells you economics is complicated.

    It's not.  It's math and is no more compliated then 1st grade math.

    The study of macroencomics is quite complicated and it has to be.  It has to be so that you are unaware when the pronosticators (both ways) are always wrong.

    Did Kurgman see the housing bubble coming?  Of course he didn't.  But he'd love to tell you how it complicatedly happened and how his complicated solution will make sure it doesn't again etc... etc...

    The economy is very complex in how many moving parts their are but they all work with the same simple rules.

    Supply vs. Demand etc...

    Making it complicated is the art of the modern economist who lately hasn't know what he/she's talking about.

    If you have to spend 3 paragraphs explaining how 1 is greater then 2 then maybe is isn't.


    Well I saw the housing bubble (none / 0) (#27)
    by Militarytracy on Fri Aug 06, 2010 at 05:19:35 PM EST
    And I agree with Krugman on most things he says too.  Paul Ryan = total flakejob.

    That's your opinion (none / 0) (#28)
    by Slado on Sat Aug 07, 2010 at 08:41:39 AM EST
    I think Krugman is wrong.  He's probably a nice guy but he's wrong.

    I haven't read enough of Ryan to know if he's right or wrong but he's right about one thing.

    The government can't keep spending as much money as it's does.

    A combination of spending cuts and higher taxes is probably the most realistic way to get us out of this hole.

    Will it help in the short term? No.  But nothing we're doing now is helping either.


    I find it confusing that the answer (5.00 / 1) (#9)
    by Slado on Fri Aug 06, 2010 at 11:24:40 AM EST
    to the spectacular failure of the stimulus is more stimulus.

    Our economic situation is the result of too much public, private and government debt.

    The great fallacy of this whole economic strategy was that creating more debt would bring us out of it.   Some are living in a new world where simple economic transactions are enough to grow an economy.  If we can just print money and move it in a greater volume through government planning somehow a more productive and growing economy will emerge.

    It was precisely the over involvement of government and this type of economic policy that created our situation.

    Left alone our economy would surge and fall at a less spectacular rate then what we saw in the last few years.  Too much regulation, taxation, monetary policy etc... leads to these spectacular crashes and bubbles and if we'd go back to leaving the economy alone or in other words stop trying to over manage it through government involvement we'd all be better off.  

    We'll most of us any way.  The elite in Washington would have to step aside and so would their selected few partners in crime on Wall Street who scratch and claw to be the one or two people taking advantage of these terrible policies.

    Not surprised that (5.00 / 9) (#10)
    by Big Tent Democrat on Fri Aug 06, 2010 at 11:26:44 AM EST
    you are confused.

    You would likely order a fire department to turn of the water if it did not put out a fire due to the fact that not enough water was being used.


    No (5.00 / 1) (#14)
    by Slado on Fri Aug 06, 2010 at 11:34:25 AM EST
    That is not what I'm saying.

    I'm saying in some cases a certain amount of water is needed to put out the fire.

    However some fires burn too hot to be put out by water so more water isn't the answer.

    Our debt problem is a run away fire, say an oil or a kitchen fire.  Our water, more debt, won't help.  We need a chemical solution, say savings and investment, that will put it out.

    How's that for an analogy?  :-)


    Our debt problem (5.00 / 3) (#16)
    by Big Tent Democrat on Fri Aug 06, 2010 at 11:38:00 AM EST
    is not the issue Donnie.

    Interest rates are basically zero.

    The issue is aggregate demand.


    Correct (5.00 / 1) (#19)
    by Slado on Fri Aug 06, 2010 at 11:52:48 AM EST
    There is no demand because there are no savings, IE too much debt.

    How can we ask the American consumer to spend more to support our consumption economy.

    If we simply give them money then we inflate the ecnomy and we are all millinaires but big mac's cost $550K.

    Wealth is created by saving, then investing in something everyone else with savings wants.

    Wealth or growth is not created by printing/borrowing money so that everyone has more to spend.

    We simply inflate the amount of money in the system but no real wealth has been created.


    By the way simply cutting taxes doesn't help either.   In a weird way if done improperly it's a delayed stimulus.   The only way to encourage savings, investment and eventually growth is for government to free up more money by spending less.


    The private sector's way (5.00 / 5) (#23)
    by Dadler on Fri Aug 06, 2010 at 12:30:23 PM EST
    This is wrongheaded (none / 0) (#22)
    by cenobite on Fri Aug 06, 2010 at 12:24:50 PM EST
    The only way to encourage savings, investment and eventually growth is for government to free up more money by spending less.

    Exactly the opposite is in fact true.

    Every % of GDP that the government sector deficit goes down by is a % of GDP taken away from the private sector (this is an accounting identity: if it's not true, then double-entry bookkeeping has been wrong for over 600 years.) Decreasing the federal deficit will do nothing but make things worse by impoverishing the private sector.

    Deficits matter when there is danger of inflation. There is no danger of inflation in an economy with high unemployment and a shrinking money supply.


    That is only true (5.00 / 1) (#25)
    by Slado on Fri Aug 06, 2010 at 01:34:48 PM EST
    if savings went in a mattress.

    They don't.

    They go into a bank's vault and that bank uses the money to lend to other people.

    If money is better spent in the hands of government why do we even need the private sector?

    Give them spoons.


    And you know this...how??? (none / 0) (#13)
    by jawbone on Fri Aug 06, 2010 at 11:31:11 AM EST
    Perhaps you have the same reverence for St. Ronnie that Obama does...?

    Not Ronnie (none / 0) (#15)
    by Slado on Fri Aug 06, 2010 at 11:37:26 AM EST
    He talked a good game but he spent too much money as well.

    This Guy

    And those of his ilk if you will.


    Please, (5.00 / 1) (#26)
    by NYShooter on Fri Aug 06, 2010 at 01:35:19 PM EST
    For the love of G*D, Please!

    How many ways can you repeat your Winger Mantra, "the answer to too much debt isn't more debt?"

    We got it.....Please!


    Krugman: 'Geithner and Summers are smart guys' (none / 0) (#4)
    by Dan the Man on Fri Aug 06, 2010 at 11:01:38 AM EST

    'but they are wrong' (5.00 / 1) (#7)
    by Big Tent Democrat on Fri Aug 06, 2010 at 11:12:28 AM EST
    In case folks did not click through the link.

    they have no business (5.00 / 1) (#17)
    by jondee on Fri Aug 06, 2010 at 11:43:30 AM EST
    being within ten miles of the Whitehouse.

    And Greenspan should be made to give back that Presidential Medal of Freedom. It's that simple.


    Wall St's (5.00 / 2) (#18)
    by jondee on Fri Aug 06, 2010 at 11:44:54 AM EST

    What an effing travesty.


    smart + isolated (none / 0) (#8)
    by Dadler on Fri Aug 06, 2010 at 11:18:03 AM EST
    = disconnected.