I give the Federal Reserve a lot of credit for preventing the financial crisis from spiraling out of control. They took a number of incredibly creative and aggressive actions to unfreeze financial markets and keep credit flowing in the fall of 2008. In early 2009, they did a round of quantitative easing that helped to reduce mortgage rates and stabilize the housing market.
(Emphasis supplied.) How anyone can praise any government actor for their dealings with regard to the housing crisis is beyond me. The Fed and especially the Obama Administration Treasury Secretary have been miserable failures with regard to the housing crisis.
The obsession with preserving the TBTF banks instead of dealing forthrightly and properly with the toxic assets of the banks and provide meaningful assistance to struggling homeowners is a failure of historic proportions. Romer fails to even mention in passing this collossal failure.
One interesting tidbit that Romer provides is President Obama's distaste for disagreement and his blind faith in the virtues of achieving consensus:
There was a definite split among the economics team about whether we should push for more fiscal stimulus, or switch our focus to the deficit. A number of us tried to make the case that more action was desperately needed and would be effective. Normally, meetings with the President were very friendly and free-wheeling. He likes to hear both sides of an issue argued passionately. But, about the fourth time we had the same argument over more stimulus in front of him, he had clearly had enough. As luck would have it, the next day, a reporter asked him if he ever lost his temper. He replied, “Yes, I let my economics team have it just yesterday.”
The implication is that the President wanted people who disagreed to pretend to agree. This type of attitude is reflected in much of Obama's approach as President, and it is clearly his biggest failing.
Romer continued:
As frustrating and stressful as this period was, it also provides a good window into policymaking in the Obama White House. It was a remarkably intellectual process. You won arguments not by being political or vying for face time with the President, but by having the best evidence.
This is ridiculous from Romer. Better if she had argued that "political constraints" had made the best policies not feasible than to pretend that Obama listened to all the evidence and then adopted the best policy. He did not and does not. Like all pols, he makes political calculations.
Ultimately, the biggest indictment of Romer is that in the "what we need to do" section of her speech, the housing crisis does not even merit a mention.
And this really tells a tale imo. From all accounts, Romer was the most clearheaded and accurate economic advisor the President had. And even she can not come to grips with the centrality of the housing crisis to our economic woes.
Yes, more fiscal stimulus was needed and is needed. Sure, quantitative easing may not hurt. But what continues to hurt the nation's economy is the blithely ignored problems in the housing market.
It truly boggles my mind.
Speaking for me only