US doomed to move from one bubble to another

Homeslice · 10-27-2010, 12:37 AM

Without a Plan, U.S. "Doomed to Move from Asset Bubble to Asset Bubble," Rajan Says

Posted Oct 26, 2010 01:52pm EDT by Aaron Task in Recession, Banking, Politics

In the aftermath of the 2008 crisis, trillions of dollars have been spent helping the financial system get back on its feet. Those efforts helped stabilize the global economy and "short-term we are in recovery mode," says Raghuram Rajan of the University of Chicago's Booth School of Business.

But the recovery is occurring with the official unemployment rate still at 9.6%. "We have people who don't have the skills necessary in the global economy," Rajan says. "We need to think about how to get them those skills; otherwise we're doomed to move from asset bubble to asset bubble, from excessive stimulus to excessive stimulus. We're in danger of doing that again in response to high unemployment."

Like many others at The Economist's Buttonwood Gathering, where the accompanying video was taped, Rajan believes we have "reached the limits" of monetary policy. The Fed "shouldn't throw a Hail Mary pass and hope someone catches it. It could land in the wrong place."

Rajan, a former chief economist at the IMF and author of Fault Lines, admits "there are no easy, off the shelf" solutions to the problem of under-skilled workers, but says the government should focus on skill building, retraining and improving our infrastructure.

"Where we can provide stimulus that alleviates deep pain, we should do that," he says. "Where we can build a bridge to the future -- create skills, infrastructure - we should do that too. But you have to do it right. There are lots of bad ways to spend money. Spending for the sake of spending is not good. You need to have a plan."

Similarly, Rajan says the U.S. needs to come up with a credible medium-term plan to tackle its huge deficit problem, including unfunded liabilities like Social Security and Medicaid. "We need to have a path which brings that under control," he says. "It's very important to tell the bond market and the public what that path is."

LeeNetworX · 10-27-2010, 08:55 AM

Similarly, Rajan says the U.S. needs to come up with a credible medium-term plan to tackle its huge deficit problem, including unfunded liabilities like Social Security and Medicaid. "We need to have a path which brings that under control," he says. "It's very important to tell the bond market and the public what that path is."

Well, no shit. Why don't you enlighten us, Mr. Rajan, and share with us your brilliant ideas to get out of this mess.

The article says nothing we don't already know.

KSGregman · 10-27-2010, 10:23 AM

Quote:

Originally Posted by LeeNetworX

Well, no shit. Why don't you enlighten us, Mr. Rajan, and share with us your brilliant ideas to get out of this mess.

The article says nothing we don't already know.

I don't disagree with you about the article telling us nothing that we don't already know.....but....I honestly don't believe most Americans are capable of even HEARING, much less living with, the solution to the mess that we are in.

At the end of the day it's going to take big changes to both how much the Government spends....and how much the Government earns....to dig out of this hole.

Want to enjoy the current level of "give aways" you are receiving from the public teet? OK...well, that is going to require that taxes go up to pay for it as we can no longer afford to support the "give aways" on credit.

What's that? NO to higher taxes? OK....well, which "give aways" are you willing to live without then? No support for cuts in spending either, eh?

Well....I guess we can all just sit here pointing fingers at each while China, India, Brazil and all the other up and comers (and our creditors, by the way) laugh at us....all the way to the bank.

z06boy · 10-27-2010, 10:47 AM

Quote:

Originally Posted by KSGregman

What's that? NO to higher taxes? OK....well, which "give aways" are you willing to live without then?

Cut out a lot of the foreign aide we give and cut back on welfare for starters...especially for people that can't afford day to day life without it and keep popping out babies. I'm also for cutting out some of these BS research projects that I see/hear about and no I don't have a list in front of me so don't ask which ones.

goof2 · 10-27-2010, 11:25 AM

I'd like to know what kind of skills Rajan believes those Americans out of work lack that are "necessary in the global economy". Out of those who are currently unemployed plenty of them are either skilled labor or educated. The problem as I see it right now isn't an unskilled workforce, it is a dearth of jobs that require those skills.

I disagree with him about the problems caused by asset bubbles. They do create financial difficulties for people and they do cause smaller recessions but they happen all the time and aren't like what we are currently going through. I would argue the current recession has been more severe because the asset bubble was financed by a credit bubble.

pauldun170 · 10-27-2010, 12:38 PM

Wow....that article said absolutely nothing.

Rajan says absolutely nothing in this article.

I'm guessing that this is a filler article and that Rajan initial interview\comments were deemed boring by the editor so they whittled it down to the bare minimum.

Particle Man · 10-27-2010, 06:19 PM

also known as the "AssHAT" bubble....

Homeslice · 10-27-2010, 06:21 PM

I am sorry that this article did not pass muster here.

pauldun170 · 10-27-2010, 08:06 PM

Quote:

Originally Posted by Homeslice

I am sorry that this article did not pass muster here.

Its goofs fault.

goof2 · 10-27-2010, 09:39 PM

Quote:

Originally Posted by pauldun170

Its goofs fault.

Rajan says I don't have the skills necessary in the global internet.

10-27-2010, 12:37 AM	#1
Homeslice Elitist Join Date: Nov 2008 Location: SF Bay Area Moto: Gix 750 Posts: 11,351	US doomed to move from one bubble to another Without a Plan, U.S. "Doomed to Move from Asset Bubble to Asset Bubble," Rajan Says Posted Oct 26, 2010 01:52pm EDT by Aaron Task in Recession, Banking, Politics In the aftermath of the 2008 crisis, trillions of dollars have been spent helping the financial system get back on its feet. Those efforts helped stabilize the global economy and "short-term we are in recovery mode," says Raghuram Rajan of the University of Chicago's Booth School of Business. But the recovery is occurring with the official unemployment rate still at 9.6%. "We have people who don't have the skills necessary in the global economy," Rajan says. "We need to think about how to get them those skills; otherwise we're doomed to move from asset bubble to asset bubble, from excessive stimulus to excessive stimulus. We're in danger of doing that again in response to high unemployment." Like many others at The Economist's Buttonwood Gathering, where the accompanying video was taped, Rajan believes we have "reached the limits" of monetary policy. The Fed "shouldn't throw a Hail Mary pass and hope someone catches it. It could land in the wrong place." Rajan, a former chief economist at the IMF and author of Fault Lines, admits "there are no easy, off the shelf" solutions to the problem of under-skilled workers, but says the government should focus on skill building, retraining and improving our infrastructure. "Where we can provide stimulus that alleviates deep pain, we should do that," he says. "Where we can build a bridge to the future -- create skills, infrastructure - we should do that too. But you have to do it right. There are lots of bad ways to spend money. Spending for the sake of spending is not good. You need to have a plan." Similarly, Rajan says the U.S. needs to come up with a credible medium-term plan to tackle its huge deficit problem, including unfunded liabilities like Social Security and Medicaid. "We need to have a path which brings that under control," he says. "It's very important to tell the bond market and the public what that path is."

10-27-2010, 06:19 PM	#7
Particle Man Custom User Title Join Date: Nov 2008 Location: Central NY Moto: 2003 SV650S Posts: 14,959	also known as the "AssHAT" bubble.... __________________ I'm not "fat." I'm "Enlarged to show texture." Handle every stressful situation like a DOG: If you can't eat it or hump it, pi$$ on it & walk away.

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10-27-2010, 08:55 AM	#2
LeeNetworX SFL Expatriate #1 Join Date: Nov 2008 Location: ATL Burbs Moto: '09 Triumph Speed Triple Posts: 4,712	Similarly, Rajan says the U.S. needs to come up with a credible medium-term plan to tackle its huge deficit problem, including unfunded liabilities like Social Security and Medicaid. "We need to have a path which brings that under control," he says. "It's very important to tell the bond market and the public what that path is." Well, no shit. Why don't you enlighten us, Mr. Rajan, and share with us your brilliant ideas to get out of this mess. The article says nothing we don't already know.

10-27-2010, 11:25 AM	#5
goof2 AMA Supersport Join Date: Feb 2009 Posts: 4,756	I'd like to know what kind of skills Rajan believes those Americans out of work lack that are "necessary in the global economy". Out of those who are currently unemployed plenty of them are either skilled labor or educated. The problem as I see it right now isn't an unskilled workforce, it is a dearth of jobs that require those skills. I disagree with him about the problems caused by asset bubbles. They do create financial difficulties for people and they do cause smaller recessions but they happen all the time and aren't like what we are currently going through. I would argue the current recession has been more severe because the asset bubble was financed by a credit bubble.

10-27-2010, 06:21 PM	#8
Homeslice Elitist Join Date: Nov 2008 Location: SF Bay Area Moto: Gix 750 Posts: 11,351	I am sorry that this article did not pass muster here.