Tuesday, April 21, 2009

Obama Economic Theory

I think the idea is sound but I wonder how it will be executed. What I am learning from this economic crisis is just how unstable we have been these past few years. We keep jumping from fad to fad, being told this way to prosperity. Sounds like a return to tradtional - conservative? - values - of hard work, steady work.

Obama plans to regulate new 'bubbles'
But what Obama rarely says about ending the “cycle of bubble and bust” is this: He’s prepared to intervene to make sure that kind of red-hot growth doesn’t occur.

And he’s willing to do it with added government regulation if needed to prevent any one sector of the economy from getting out of balance – the way the dot-com boom did in the 1990s and the real-estate market did earlier this decade.

According to Austan Goolsbee, a key Obama economic adviser, the president plans to focus on stopping bubbles along with preventing busts. And in an interview with POLITICO, Goolsbee said the administration will be on the lookout for new bubbles, like the tech stocks or housing prices.

If new threats are spotted, he said Obama would use “regulatory oversight to prevent guys who want to make a quick buck from doing real harm to the economy. ... That is what it means to get out of the bubble-and-bust cycle.”

It’s a controversial and largely untested idea – one that involves government intervention in the economy to a degree that recent presidents have been unwilling or unable to impose. There would be great political risks for Obama, particularly after the depths of this painful recession, and it would open him up to criticism that he is trying to squelch the free market.

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