EconomicCrisis.US

In one of the most uninformed — and counter-productive — op-eds we’ve read in the last five years, President Barack Obama’s first chairwoman of the Council of Economic Advisors, Christina D. Romer, just spent 1,200 words arguing that we should do nothing about the crisis in American manufacturing. She meticulously constructed three straw men — market failures, jobs and income distribution — and then proceeded to knock the stuffing out of each of them.

It was a heroic, if not faintly humorous, performance given Ms. Romer’s recent position in the administration and the fact that few others in the country misread more the depth and the duration of the still largely ongoing Great Recession of 2007. She was an architect of the administration’s stimulus package, its auto bailout, and its policies that led to the “green shoots” and “recovery summer” fiascos. But none of that stopped her from eviscerating arguments meant to do something about the crisis in manufacturing.
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Businesses in the U.S. unexpectedly expanded at a faster pace in June and consumer confidence reached a 10-week high, signs that economic growth may pick up in the second half of the year.

The Institute for Supply Management-Chicago Inc.’s business barometer climbed to 61.1, exceeding the highest forecast in a Bloomberg News survey, from 56.6 in May. Readings greater than 50 signal expansion. The Bloomberg Consumer Comfort Index rose to minus 43.9 from minus 44.9.

Stocks climbed for a fourth day as the Chicago group’s figures indicated manufacturing is rebounding after a lull brought on by parts shortages tied to the March earthquake in Japan. The data underscore the view of Federal Reserve policy makers that the first-half slowdown will prove “temporary,” as fuel prices become less of a burden for companies and consumers.
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The U.S. needs to renew its “innovation economy” to drive future growth as consumers become more frugal and the government focuses on deficit reduction, former Gov. Timothy M. Kaine said Wednesday in Richmond.

In a speech at a symposium sponsored by the University of Richmond’s law school, Kaine, a Democrat who announced his candidacy for the U.S. Senate this week, said the U.S. can no longer rely on debt-fueled consumption for economic growth.

He cited ballooning government deficits, along with increasing household debt and declining savings, as major factors leading to the economic collapse.
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Treasury Secretary Timothy Geithner warned that the U.S. government may have to bail out major financial institutions again if there’s a crisis as big as the last one, according to a report released Thursday by a group overseeing the Troubled Asset Relief Program.

“We may have to do exceptional things again if we face a shock that large,” Geithner told the Office of the Special Inspector General for TARP in December.

SIGTARP, as the oversight group is known, spoke with Geithner during its investigation of the government bailout of Citigroup Inc. (C) . The group’s findings were released Thursday.
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