EconomicCrisis.US

Ten years ago the cover of Time magazine featured Robert Rubin, then Treasury secretary, Alan Greenspan, then chairman of the Federal Reserve, and Lawrence Summers, then deputy Treasury secretary. Time dubbed the three “the committee to save the world,” crediting them with leading the global financial system through a crisis that seemed terrifying at the time, although it was a small blip compared with what we’re going through now.

All the men on that cover were Americans, but nobody considered that odd. After all, in 1999 the United States was the unquestioned leader of the global crisis response. That leadership role was only partly based on American wealth; it also, to an important degree, reflected America’s stature as a role model. The United States, everyone thought, was the country that knew how to do finance right.
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Felix G. Rohatyn, the financier and former ambassador to France who helped save New York City from bankruptcy in the 1970s, offers this view on the importance of infrastructure investment and how the financial system can be repaired. The text is adapted from a speech he gave this week at the Economic Club of Chicago.

This is a time of grave concern about the global economy and our position in it. As Roosevelt did almost eighty years ago, we are searching for a strategy for reviving America and allowing us to lead. I believe that a central component of that strategy must be significant new investment in our public infrastructure.
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Harvey Pitt chaired the Securities and Exchange Commission from 2001 to 2003 and is now CEO of Kalorama Partners, a global business consulting firm.

USA TODAY reporter Del Jones interviewed Pitt by e-mail Thursday about the Obama administration’s plans to reform the U.S. financial system and regulate hedge funds and others.

Following are edited excerpts.

Q: Treasury Secretary Tim Geithner outlined the plan in pretty broad strokes. Do you foresee a “devil in the details?”

A: He attached proposed legislation to deal with companies that pose systemic risks, so there is some detail. Notwithstanding, I am concerned that this may not give government the right tools to deal with future crises that likely would not resemble our current crisis.
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The economy shrank at a 6.3 percent pace at the end of 2008, the worst showing in a quarter-century, and probably isn’t doing much better now.

The Commerce Department on Thursday reported that the economy was sinking a bit faster than the 6.2 percent annualized drop for the October-December quarter estimated a month ago.

And the pain has persisted in the current quarter. New claims for unemployment benefits last week rose to a seasonally adjusted 652,000 from the previous week’s revised figure of 644,000, the Labor Department said Thursday. The total number of people claiming benefits jumped to 5.56 million, higher than economists’ projections of 5.48 million, and a ninth straight record-high.
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