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Home Publications Blogs Beat the Press Larry Summers Thought the Stock Bubble Was Cool and Missed the Housing Bubble

Larry Summers Thought the Stock Bubble Was Cool and Missed the Housing Bubble

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Wednesday, 21 August 2013 05:03

A Washington Post article on the battle over replacing Bernanke as Fed chair forget to mention these qualifications of Larry Summers.

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Like, You Know, Larry Summers Will Take on Wall Street on Behalf of the Middle Class
written by Last Mover, August 21, 2013 6:19

Like, you know, Obama makes this speech about how the middle class can't get anywhere by living off one asset bubble to the next.

Like, you know, this has to stop so the middle class can get some real economic traction over the long run with real jobs that produce real productivity gains that are actually received by the middle class instead of having them stripped away by the 1%.

Like, you know, Obama leaks his choice for Fed Chair as Larry Summers to make sure this happens.

Like, you know.
...
written by jonny bakho, August 21, 2013 6:44
As if the Fed Chair is the most important economic story. Not.
Unemployment is still the big story and the lack of action to create jobs by Congress and the administration is THE big story that is under reported

The Fed can tweak the economy and overshoot to send an economy into recession. However, the Fed alone cannot stimulate an economy when fiscal policy is tugging in the opposite direction. Any of the candidates will pursue roughly the same monetary policy. Better fiscal policy is desperately needed.
Wrong Jonny Bakho
written by Paul Mathis, August 21, 2013 8:04
Fed alone cannot stimulate an economy when fiscal policy is tugging in the opposite direction


When the Fed lowered mortgage interest rates to 3% last spring, it stimulated the housing market strongly. If the Fed would print another trillion dollars and dump it on the FX market, the dollar's value would fall and our exports would rise.

The Fed can do a lot to stimulate demand in our economy especially since it is not controlled by politicians.
look at your replies...
written by pete, August 21, 2013 11:58
Summers is the choice!...bubbles like Bernankes recent mini bubble are welcome. They put people to work. Capital comes out ahead, as always, but that does not seem to matter. Most very serious people know people are irrational, a la Keynes, rather than Lucas, and can be snookered with inflation. So here we go again, get the Fed to encourage investment, hiring picks up, real wages fall yet more. The focus on employment as a be all/end all is sad. Why not encourage the kind of investment in human capital which will lead to higher real wages. The Atlanta Fed has a nice summary of wage growth. Jobs with more human capital have indeed seen wage increases. Jobs without, nope. Yet our high schools stress college at the expense of trades...sad.
Pete's plumber
written by Cranky post-mature dude, August 21, 2013 3:18
Jobs with more human capital have indeed seen wage increases. Jobs without, nope. Yet our high schools stress college at the expense of trades...sad.


Do you have a link to that summary? I just did a search and came up dry. i do agree that too many people are going to college, if they're going there to get jobs. On the other hand, if they're going to college to get enlightened and learn new ways of thinking critically, then by all means, do it; then get a job plumbing. A well-educated blue collar class is desirable; a college education shouldn't just be a privilege of the wealthy. But we should stop telling people that the main purpose of a college education is to 'get a good job'. For professional degrees (accounting, engineering, medical doctors, ...) that's mainly how people work towards certification, why not just have trade schools for those things too, if they're not interested in being a well-rounded citizen who can read, write, do 'rithmetic, and know when they're being manipulated by advertizing/propoganda?

Meanwhile, I keep trying to find someone to do some repair masonry, but nobody does small ticket items anymore.
...
written by NWsteve, August 21, 2013 5:08
if the future activities of the Fed are to at least appear to be apolitical; the record, as generally known, would most assuredly disqualify Summers...

that this discussion has preempted the vastly more important discussions about employment, inequality, and the relative value of the dollar to other currencies, seems to be a travesty...

yawn---the dog days of August in DC-land (and, sadly, elsewhere)...
sorry...the Atlanta Fed blog is nice...low on the biases of many blogs
written by pete, August 21, 2013 7:29
Education comment on Pete's plumber
written by lodger, August 22, 2013 2:04
Do we really want doctors, lawyers, scientists and attorneys who went just to trade school? Every professional field is affected by and affects the larger society, and I think it's a good thing to require some significant exposure to the wider scope of knowledge. We already have a tremendous amount of specialization and tunnel vision, so why make the situation worse?
plebe
written by oscar.the.owch, August 24, 2013 10:15
Late to comment, but, Hey, Mr.Baker!

Your prominence is rising and there is an ever stronger chance Mr. Summers might be in a position to abide by political pressure of a new stripe, perhaps having seen the error of his big money serving ways...i-know there's lemons, will we make decent lemonade?

Would you take a look at retail wages as the cause of the middle class?

What are the numbers? Retail workers are what percentage of WSJ #'s on 'job growth' over the past twenty years?
Is there a worse misnomer in economic reporting, than the purported value of 'job growth' when the data on what sort of jobs were created is absent?
thanx...

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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