Romer Seems To Break With Geithner On Cause Of Crisis

[TacticalPeek]

Romer Seems To Break With Geithner On Cause Of Crisis

March 10, 2009 10:27 AM


Christina Romer, at a speech at the Brookings Institution Monday afternoon, appeared to give support to critics of Treasury Secretary Timothy Geithner who say that he is wrongly treating the economic collapse as a "liquidity crisis" when it is instead a crisis of solvency in the banking system brought on by a collapse in asset prices.

"Most obviously, like the Great Depression, today's downturn had its fundamental cause in the decline in asset prices and the failure or near-failure of financial institutions," she said in prepared remarks, where she compared and contrasted the current crisis with the Great Depression. The assets in question are, by and large, houses and other real estate.

Asked by the Huffington Post if she specifically disagrees with Geithner as to whether the nation faces a liquidity crisis, however, she said that she does not.

"Let me be very clear. No, I absolutely don't disagree with him," said Romer, head of the president's Council of Economic Advisers. Treasury spokeswoman Stephanie Cutter also said that there was "no contradiction" between the two economic officials' views.

http://www.huffingtonpost.com/2009/03/10/howd-we-get-here-romer-di_n_173426.html

Riiiight, absolutely. James Galbraith explains more nuance to those differences in the article.

[asphalt.jungle]

1. here is video of her speech on cspan

http://cspan.org/Watch/watch.aspx?MediaId=HP-A-16193

so you can listen to what she said without the filter.

the huffington post question starts around 33:30

[amandabeech]

2. Well, that's interesting.

I wonder if Summers and Geithner will shout her down like they did with Brooksley Bourne, head of the Commodity Futures Trading Commission, when she said that the derivatives market had to be regulated?