Robert Rubin, Treasury secretary to Bill Clinton, came out
on Fareed Zakaria GPS against further economic stimulus
economy is "going to have slow and bumpy growth," he said, and another stimulus might harm the economy by damaging confidence and increasing uncertainty. As a major economic figure from a Democratic
administration, Rubin's stance has made a bit of a splash in the blogosphere. Some writers are evaluating the political impact, some are trying to understand what, exactly, he meant, and a few economics and finance
bloggers are arguing that he's just plain wrong.
- Rubin & Co. Want to Believe This Is the Asian Crisis, argues Paul Krugman,
and that the crisis, is, therefore "amenable to similar solutions." The
1997-98 crisis didn't involve much government action at all. Krugman
calls himself "saddened but not really surprised" at the statement.
- 'This Is Actually a Bit Surprising,' says Business Insider's Joe Weisenthal,
though he appears to be referring in large part to the general mystery
of Rubin's reasoning. Rubin, explains Weisenthal, "told CNN ... that
while the economy may have some bumps and may slow, further stimulus
might cause uncertainty and hit confidence. It's not clear what kind of
uncertainty he meant--perhaps uncertainty on the deficit reduction
scenario." Then again, muses Weisenthal, "he then went on to oppose the
expiry of the Bush tax cuts, which is also a kind of stimulus, and relies on similar logic (and is also deficit negative, most likely)."
- Bit of a Slap to Liberals Rubin has been pretty quiet during this administration, writes The Huffington Post's Sam Stein,
and, while "[h]is pushback against a second major stimulus effort
doesn't necessarily have practical political impacts," not least
because "Congress wouldn't write the check" anyway, "being a
high-profile Democratic-affiliated figure ... Rubin's comments hurt
those arguing the case that more stimulus spending is needed." That
said, Rubin also expressed support for the estate tax, which should
cheer liberals somewhat.
- This Makes No Sense "Can someone get
me some of the Very Serious Person crack rock," writes liberal blogger
and former economics lecturer Atrios,
"so I can understand the very sophisticated economic model such that
all that matters is 'confidence' and that confidence could be
undermined by fiscal stimulus?"
- If Rubin Says So, Do the Opposite, is finance blogger and former Goldman employee Yves Smith's surprisingly vehement take.
role as a major, if not the major, architect of the crisis is Exhibit
One as to why to listen to nothing he says, and unless proven
otherwise, to run fast the other way: his primary allegiance is the
interest of the banking classes, which is no longer that of most
Americans. As we have discussed, cutting deficits now (when the private
sector is deleveraging and we are running a sizeable trade deficit) is
a guarantee of a further contraction, which will result in worse
debt/GDP ratios, the problem this little operation was intended to fix.
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