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Romer Lies
Romer Lies
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Christina Romer is one on the leading liberal economist in the nation. She’s no dummy. Valedictorian from Princeton, PHD from MIT, former Chairperson of the Council of Obama’s council of Economic Advisors and now she is a professor of economics at U.C. Berkley. She’s also a liar.
Ms Romer penned a piece for the NYT over the weekend. This was her plea for, guess what, more fiscal and monetary stimulus.
Romer acknowledges that US public sector debt is already too high. But she argues that we are nowhere near the levels that were reached post WWII. Her words:
At the end of World War II, that ratio hit 109 percent — one and a half times as high as it is now.
One and a half times Ms Romer? (This equates to a debt to GDP of 72%) Where does that number come from? A few facts:
First, total debt is now $14.588 Trillion. From Treasury Direct:
GDP as measured by the BLS was running a tad over $15b as of the most recent read. From BLS:
Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 3.7 percent, or $136.0 billion, in the second quarter to a level of $15,003.8 billion.
Put the two together and the actual debt to GDP is currently at 97.25% (and rapidly rising). We will exceed the 100% barrier over the next six months.
What Ms Romer has done to spin her number is to exclude all of the debt ($4.7 Trillion) of the nation that is held by the Intergovernmental Accounts ("IG"). This is fast and loose economics. Ms. Romer knows that. But she elects to mislead the public with a totally false claim.
Does Romer think the debts owed to Social Security, Medicare, Military Pensions and Federal employees pension funds don’t count? If she takes that position, she is flat wrong. I maintain that the Intergovernmental debts are much more toxic to the economy than the debt held by the public.
The simple reason is that the Intergovernmental accounts have to be paid back in full. The process of running down the intergovernmental accounts has already started. It will accelerate very rapidly for the next decade. Every penny of the draw down of these accounts MUST result in an increase in debt held by the public.
The US has a huge outstanding of debt to the public. But neither the interest on that debt or the principal has to be paid back. This debt can be rolled over to a new maturity and a new investor. That happens virtually every single day. That is not the case with the Intergovernmental account. All of those Special Issue Treasury notes held by the various government agencies are going to come due over the next 20 years. When that happens it will result in a dollar for dollar increase in Debt to Public. Exactly the worst possible outcome.
Ignoring the IG debt and only focusing on the debt held by the public is a dangerous thing to do. It is the worst form of denial. To ignore the IG account is equivalent of ignoring the crisis in Medicare and Social Security. But that is precisely what Romer would have our policy makers do.
It’s true that the US economy is running at a pace that is too slow to create enough jobs. I think this is a structural issue. We have a rapidly aging population. We have, for years, been losing our manufacturing base. We have outsourced ourselves to high unemployment and a soft economy. That problem will take years of hard work (and sacrifice) to reverse. Insane levels of deficit spending and an (equally) insane monetary policy that just steals from savers and promotes inflation are not going to address our fundamental weakness.
Ms Romer is one of the Deep Water economists (either coast) who are pushing for more and more debt and more and more spending. She is entitled to her opinion, but she in not entitled to lie about it.
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How perfect that she put out that particular lie in the ny times.
Too bad she couldn't have done it as a part of a joint column with former Enron adviser Paul Krugman. Krugman, who urged the U.S. to bubble up the housing sector to avoid recession in the early 2000's has never heard a proposed stimulus spending numbers sufficient so that his response to it isn't "more!".
Bruce, yes it did need to be said and I for one learned something. Appreciate it
Great article Bruce. As a lawyer, I'm reminded of jury selection practice - you don't pick someone who looks like that if you want a jury that acts rationally. We could debate the psychology, but just think about it.
Would you marry someone who looks like that? Would you want her running your life or raising your children? Would you put her in charge of a business to meet your clients/customers?
It's not just about being ugly. This person isn't smart enough to even try to regulate her personal appearance. Despite degrees and accolades in group think, this person lacks practical wisdom. And she camps out in academia and government, where you can be like that. In summary, someone who can't even run her own life has no business running ours.
Well said. Those who hide in academia often lack common sense, wisdom, and maturity
Nobody has any business running our lives in the first place, whatever they look like, so your argument is as pointless as Romer's position.
Romer's job was nothing more than to shill for Obama, who shills for his banker bosses. No intelligence needed. Just regurgitate the talking points with a straight face. The MSM's job is to broadcast it with a flourish and make it seem credible -- job well done.
I respectfully disagree.
A job well done requires intelligence, and credentials.
Those targeted would respect and trust (believe) them.
Snow job, well done.
Yes, her stopover in Barry's administration went pretty quick, so she just wanted the credential stamp. That projection of an 8% unemployment rate as a result of the wasteful stimulus went straight from BO's big mouth to her eager ears. No PhD required.
She's whoring herself out for a high-paying consultancy job on the otherside of the revolving door. Maybe Warren Buffet will hire her to give blow jobs and tell lies about GE, GS and AIG.
Who would allow that to be attached to their dick? Is buffet that senile?
Where did "Sushi's" post go? It was right on the mark.
I have the same question. Tyler?
Turns out the default display settings result in older posts dropping out of the thread.
Cat had a great post and I responded to that and both posts have now dropped off the thread. Change the display settings to 250 posts per page, oldest posts first and the posts come back.
Not sure if this is a feature or a bug. Explains why some threads seem to be hotbeds of non-sequiturs and incomprehensible replies.
Bruce, she's even dumber than you say. Your critique ignores the fact that at the end of WWII, private sector debt was almost nothing because the Depression wiped everything out. That high debt figure for government was most of the nation's debt. Today, private sector debt is already multiples of GDP. Pumping up government debt will be the redwood log that breaks the camel's back.
In addition, oil was cheap and we produced it ourselves. These discussions can no longer exclude energy prices...
Your telling me. I just paid $528 for $152 gallons of fuel oit. WTF!!!
Not dumb, just immature, misguided, vain, completely wrong, and utterly dishonest.
If stimulus worked, we would have seen some improvement in the underlying causes of our distress. We have seen no improvement. The economy is weaker. If the medicine didn't work when the patient was stronger, why will it work when the patient is weaker?
The truth is the medicine is working as intended, because the real patient is the banking system, not the economy.
Most economists fall into two categories, and the worst fall into both. They are either silly goonies flapping their plumage (drivil) to try and attract the attention of other economists. The other kind are just whores who will say and do anything their twisted johns, the bankers, require of them. Actually, whores can only give you the clap one person at a time so economists are worse than whores.
I attended the PhD ceremony for my brother in law. I think all real kowledge has been learned already, because the theses (feces?) of the poor fuckers getting their diploma were utter bullshit, including the thesis of my brother in law. WTF? We have already discovered electricity and jet fuel and glow-in-the-dark nugs of cannibis, but the universities have to make money, so they churn this useless garbage out, year after year. My guess is that Ms Strap-on Romer isn't that smart, she simply had the funds to pay, and the ability to regurgitate pure bullshit on command. Evolution never stops, but in times of relative plenty, the evolutionary process can divert itself by creating bizarre and complicated sets of antlers and sub-species dedicated to eating a single variety of plant. When the shit hits the fan, the fancy evolution goes extinct, leaving the rats and cockroaches to start over.
Romer = fancy evolution.
For crying out loud, she's an economist, not a particle physicist. There is a difference, you know. Next will be hearing about a really smart psychologist, and after that, a PhD astrologer or masseur.
The medicine was intended to cure the banking industry but they didn't count on us all giving them the middle finger and pulling all our money out. Obviously the banking system is not getting better, but mark to myth covers that up nicely. I just hope this latest gold drop continues so I can load up even more. I just wish people on here were a little more civil. Just because someone isn't as well educated about something or has a different point of view on a topic doesn't mean they are morons or targets for ridicule. Most people on this site aren't here because they work for JPM or GS and want to sway opinion. They want to learn and stay current. ZH is a global phenomenon and as such here are many different cultures in play here. Tolerance is a virtue far greater than understanding.
Why is there a picture of Beau Bridges with this article?
The only Romer picture had her taking a 18" corn dog up the pooper. NSFW.
Beau needed the work, so voilà!
how does a person like her, even get anywhere near a university of higher learning. the woman is a complete dolt
HPD, our universities are full of these folks...
The problem is she is not a dolt. Not by a long shot.
She represents the best and the brightest the US has to offer. That is why you should be scared, not by her stupidity but by her smarts.
+1.
If the argument between half baked theoretical education and plain common sense is manifested in Christina Romers I'm glad I'm just an ordinary guy trying to run a business.
With any set of numbers, or words, just like Humpty Dumpty,(PUN NOT INTENDED, BUT APPROPRIATE IN HER CASE) you can make them mean whatever you want them to mean if you've got an agenda.
The "professional"politicos know what's best for themselves however much it disadvantages we proles.
It's just bullshit, which is also used for growing mushrooms, and like us they have to be kept in the dark.
THE S AND P DOWNGRADE WAS POLICY
Consider a few of the antecedent events as QE2 ran down and out. Rather suddenly the stream of Government reports morphed from the standard panglossian fiction to an unaccustomed raw honesty. They turned absolutely dreadful, which is to say, they were reported somewhat honestly.
The United States downgraded itself, deliberately, using S and P as a mask.
Consider the position of S and P. This organization got bought by Wall Street, bribed, and put their AAA imprimature on trillions of steaming piles of sub prime manure, they and their Principals should and probably were be facing criminal charges for their conduct.The very last thing they would remotely contemplate would be to unilaterally down grade the United States.They would end up with their heads in pots in Arlington.
Perhaps they were facing charges, and Uncle offered a deal. Perhaps. .
Accordingly, on a Friday night , at a time calculated to engender maximum psychological market damage , this crippled criminal enterprise has the temerity to downgrade the United States?, given their political and criminal position. this falls into the category of the rather profoundly doubtful. They were following orders at Treasury, and at gunpoint.
Did Treasury know the bond market would ignore the downgrade? certainly. It was Policy. This was just the left jab. To set up the right hook of the Bernanke two year ZIRP guarantee. They very well knew that the right hook would crush any nascent lift in yields from the downgrade as it manifestly did. In fact the bond market didn't even try. If the stock market gyrated a bit, all well and good. Further cover.
Nope , this was Policy straight out of Treasury, with S and P as the patsy.
The United States sole hope, vain in my opinion, is shake confidence in the US Dollar , indeed the Country proper, generate a nice currency damaging inflation, eviscerate its savers by confiscating their returns, and devalue the currency to manage the debts. and it was happening too slowly.
S and P, staring at Sub Prime indictments was a willing co conspirator, at gunpoint. Its actually kind of reminiscent of B of A being compelled to buy Merrill Lynch in 09 after finding all the numbers were crooked . This is gunpoint domestic politics.
Its sad, America is quite clearly finished , but make no mistake, the S and P downgrade of the United States on that fateful Friday night was Government Policy. period.
Bingo vamoose wins the prize. This downgrade is so the politicians can blame the S&P. Now they have a scapegoat while they rape the people of this country.
+1
Hostage capitalism and hostage politics. Instead of favors for favors, it's now "don't f%$k with me or I will f&#k you even harder". My secrets are your secrets and visa versa.
Hostage implies an outside-r. I say capitive would probably more appropriate.
Captive capitalism and capitive politics. All in this sanitorium, except ZH.
"My secrets" are not secrets here.
Thanks for sharing.
ho hum... Just more show business for ugly people.... zzzz zzzz zzzz
More unicorns shitting skittles. If IG debt does not matter, then why even account for it. Totally fucking stupid, nothing matters, until it does. These academic shit heads need to be taken to the woodshed.
We insist on an economic model that requires infitnite growth on a finite planet. Good luck with that you fucking retards.
The auction of "long" (30-year) paper undertaken by the Treasury this week was a disaster. Yields on this paper jumped 25 basis points right after the sale. Worse by far, "indirect bidders" (a category which includes foreign central banks) bought a mere 12.2 percent of the paper on offer. This was the lowest ever - and a pale shadow of the average 40.1 percent bought at recent auctions. And where are we going to get the money the US gov't needs? Would you lend money to a spendthrift deadbeat?
Confiscation of 401K and IRA next?
No confiscation necessary. Both IRAs and 401ks are government created programs, you can participate, buy you have to keep your account in government debt. It's only fair.
Problem solved
There was Patrick Ewing and now there is Christina Romer, that fat whore is the missing link between the half ape, half woman!
OT:
http://www.infowars.com/rick-perry-hurt-little-girls/
I'm sorry Bruce, I don't agree with Romer at all, but you're just wrong here. Intragovernmental debt is in fact irrelevant, except for technical purposes such as counting the debt ceiling. Nobody who understands debt counts intragovernmental debt. The government owes it to itself. It pays interest on it to itself. That's not real debt. I know you're retired and it pains you to accept that the SSTF is an accounting fiction. You want to believe that those trillions of SSTF "savings" in the form of IG debt protect you. They don't. The only thing that matters is the law that determines benefit amounts. The ONLY thing. Look at S&P and you'll see they did the same thing Romer did (but added state & local). No serious analyst of US debt gives a damn what the IG debt is. It could be $2 or $200 trillion, the economic impact is the same, none. The IG could easily be avoided with a simple new accounting trick. For example part of personal income tax could be relegated to SS & Medicare, giving them surpluses, which the general budget would borrow from them. IG debt would start growing again. The seeming need to pay it back would be postponed. None of this would make one iota of difference to the government's consolidated budget or to its real ability to pay its real debts. The reason for the downgrade is the steep trend in payouts, especially Medicare, the enormous federal spending/revenues ratio and the political gridlock. Nobody cares about IG debt.
another idiot who is saying is not the debt..
LISTEN , IDIOT, IT IS NOT 'government owes it to itself'
its owned to american people..
FROM WHOM MONEY WERE TAKEN AT FIRST PLACE? GOT IT ?
its SS money,, loaned by american people to US gov to invest to repay in the future...
so, forget about US gov, lets consider you..
you make living, put off some money for retirement, put into special retiremnt fund, then each year you took all money from fund, spent all, and put FUCKING PIECE OF PAPER SAYING 'GOOD AS MONEY'.. fine.
so, now you're 65 years old, time to retire .. you went to bank to get all money from retirment fund.. you get bunch sheets w/ 'good as money' printing..
WHAT ARE YOU FUCKING GOING TO DO? hang yourself, probably
hey idiot, se movie DUMB/DUMBER.. there's scene when they found briefcase full of money , they spent and put notes saying good for 'xxx $$$'
alx
The "trust fund" was spent and replaced with IOUs that are an obligation to pay back with future revenues, with interest. Sounds like debt to me.
As soon as SS needs to start cashing in those IOU's to pay benefits, then the government will have to issue debt more debt to fund the payments OR take from other areas of government spending OR reduce benefits. I'm not sure I understand Tom's logic. At some point it is a simple cash flow exercise. Perhaps he is aguring that since they don't have that problem RIGHT NOW, they won't count IG debt, which is hide the salami economics.
so would this accounting logic be like....
Bernie Madeoff borrowing clients money from his account, using it for other purposes, like sexy apartments, cars, art, paying other clients, etc....but leaving an IOU in its place....but really not counting it as debt cuz it really isn't debt at all cuz it was from his accounts?
Is that a course taught at some Ivy League college...Ponzinomics 101?
Finally, an analogy! I Don't understand it. But I appreciate it, because analogies help me. What can I say, I am an idiot. Here is my try at it:
Does IG debt count, or not? Let's say I have a credit card, a checking acct, a savings acct, and some PM's hidden under the mattress. I lose my job, but I have a lifestyle to support, so I keep spending. I max out my credit card, and overdraw my checking acct. In order to try and balance things, I transfer all my savings into my checking acct, and sell off the PM's to pay the credit card, but I don't stop spending. So now I say I "owe" myself the savings and PM's, and promise myself I'm going to pay them back to myself...with what?
I'm sorry, but I think the whole argument of whether or not IG debt counts is academic. I'M FUCKING BROKE!
If this dykey brillo wasn't lying, she wouldn't have a job. Her job is to baffle us with bullshit Why is anyone surprised that she is lying, or upset about it? The only ones upset are those who desperately want to believe her, but simply are too honest to do so.
WARNING! WARNING!! A MMTer has just revealed himself! That's how these idiots think. The problem with your idea or theory is that we cannot and will not go back "to previous consumption" levels. So the "revenue" is not there to back you the ole "let's print more money" theory.
As somebody already pointed out the "default risk" is not determined by the debting entity, it is determined "by those that hold the debt".
What you have is a "simple theory" but it cannot and does not withstand the test or logic of "reality".
What you are spouting is a very liberal and very academic "belief", it is not even close to being a model of real "MODERN" economics.
MMT is idiotic. Why don't you go back over to PragCRAP and post there. They should rename that site "PragCrap MMT Temple". They got some true believers that are totally disconnected from the harsh realities of life and true trade.
SHTF time, these idiots will be the first ones against the wall for opening their mouths with something so stupid.
I basically agree with that, but I would also go further. On ZH only the gross debt of the government is discussed, but there is no mention mention of the net debt, i.e., the assets owned by the government. It seems that Obama's actions were focused on buying bad debts. Sure its real value is less than par, but simply looking at gross debt is the same as assuming that purchased assets are valued at 0, which is certainly not the case.
note: after some googling, it seems that most assets are IG holdings anyway...
Please enlighten me further. What is the carrying value of these mystery financial assets and where are they held? It is exciting that the Federal Government has this secret trove! I am quite certain you won't find them on the U.S. Treasury balance sheet. Surely you aren't talking about the Global Bank Cartel owned Federal Reserve. Where is this treasure chest of value!
Not following that part.
The SSTF & Medicare are already running cash flow deficits. They're already "relegating" income taxes. It raises the cash demands of the government overall. You're right that how much it pays out is the major determinate in how much cash goes out the door, but that's a given. That can be said of anything the government is spending money on right now.
If we were to be honest about this, we could use an accural method to account for the SS and Medicare liability. But that number is very large and highly sensitive to the assumptions.
Tom, You're an idiot! Simple rule: Cash flow is cash flow. You must be a financial advisor to the White House.
actually Tom is correct
all that calling him an idiot does is reveal more about your own thought processes (if you have any)