Summers: ‘Excess of Fear’ Must be Broken

Now they tell us:

President Barack Obama‘s top economic adviser said Friday the nation’s economic crisis has led to an “excess of fear” among Americans that must be broken to reverse the downturn.  National Economic Council Director Lawrence Summers said consumer spending seems to have stabilized in an encouraging sign, but he also suggested it was still too early to predict the timing of an economic turnaround. In the meantime, he told a forum, a problem has been that “fear begets fear.”

[…]

Summers was asked by a member of the audience what the nation’s business community could do to help speed the recovery.

“What we need today is more optimism and more confidence,” Summers said.  “Those who have sound long-term strategy, who have investments that they want to make, who see productive opportunities, are going to find this a very good moment to make those investments,” he said. “There are a very large number of things that are on sale today. Think about the cost of doing construction today, versus the cost of doing construction two years ago.

He’s right, of course.  Trouble is, his boss helped create said excess.

No, I’m not blaming the global financial meltdown on Obama.  It began before he took office and he doesn’t even have his team in place yet.  But he’s certainly contributed to the climate of fear over the last several months.

Summers’ full remarks are available at WSJ in text form and at Brookings in audio.

Photo: Brookings

FILED UNDER: Economics and Business, , ,
James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. markm says:

    No, I’m not blaming the global financial meltdown on Obama.

    he doesn’t even have his team in place yet

    But he almost did…a few times.




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  2. Bithead says:

    He’s right, of course. Trouble is, his boss helped create said excess.

    No, I’m not blaming the global financial meltdown on Obama. It began before he took office and he doesn’t even have his team in place yet. But he’s certainly contributed to the climate of fear over the last several months.

    Correction, James; Years. He’s spent the last two years, about, downtalking the economy. Insofar as that and his voting record in the Senate, yes, he deserves blame. Decidedly so.




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  3. Alexander Klingman says:

    But he’s certainly contributed to the climate of fear over the last several months.

    Citation Needed. How did you quantify this?




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  4. Zelsdorf Ragshaft III says:

    Never waste a good crisis. We must re-engineer this society while they are scared. Whar Alinski’s rules for a situation like this?




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  5. HiItsNino says:

    Who are “they” that you are referring to? Obama’s been in office, what, 50 days now. Wasn’t it the Bush admin that declared an economic emergency and McCain who put his campaign on hold so he could deal with this dire emergency?

    Personally, I thought “they” were embellishing a bad situation to help get their guy in office. However, for the “they” I am referring to – it did not work.




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  6. spencer says:

    Exactly what has Obama dome to create this excess fear?

    It can not be to create fears that we can not get foreign capital to finance the deficit since the dollar is soaring.

    I would love to see a specific example.




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  7. Dave Schuler says:

    Repeated talk during the campaign and since the election of the most serious economic crisis since the Great Depression when that wasn’t the case. It’s the most serious financial crisis not the most serious economic crisis.




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  8. anjin-san says:

    He’s spent the last two years, about, downtalking the economy.

    True, he was out there telling us the truth while Bush and McCain were insisting everything was sunshine and roses…




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  9. Steve Verdon says:

    Citation Needed. How did you quantify this?

    Link, Link, Link, Link, Link

    Basically the message, for some time, was, “If you don’t pass this bill the economy will go from crisis to catastrophe.” Or to put it another way, the economy is in very bad shape and massive stimulus is needed.




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  10. odograph says:

    James, sometimes when you are flat wrong, you should just stop rolling in it.

    He’s right, of course. Trouble is, his boss helped create said excess.

    Yeah, like that there. I mean WTF, at this point you acknowledge a serious problem. Yes, it has sentiment as a component.

    But … because you didn’t want “the problem” to be mentioned in The Olde Days, you’ve built a strange and contorted position. Obama should have dealt with this serious problem, while never actually mentioning that it was serious!




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  11. odograph says:

    Repeated talk during the campaign and since the election of the most serious economic crisis since the Great Depression when that wasn’t the case. It’s the most serious financial crisis not the most serious economic crisis.

    No. It was the worst-since, but you got your panties in a knot because you interpreted that to mean “as bad as.”




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  12. odograph says:

    Shorter answer:

    When you said this wasn’t the worst-since the Great Depression, you were wrong.

    Your psychotic defense seems to be that at that point time, Obama should have been wrong with you.




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  13. Steve Verdon says:

    No. It was the worst-since, but you got your panties in a knot because you interpreted that to mean “as bad as.”

    Technically this remains to be seen. I think it is fair to say it could very well be the worst since WWII, but we don’t know that yet.

    Oh, and you might want to be careful on calling others psychotic after posting 3 spittle flying comments in a row.




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  14. odograph says:

    Righteous Indignation, Steve. Of course the strongest force in The Internets is one man’s Righteous Indignation feeding upon anothers’.

    But in terms of what remains to be seen …

    The head of President Obama’s Council of Economic Advisers, Christina Romer, says that in the past few weeks she’s heard herself uttering these words far too often: “the worst 12-month job loss since the Great Depression, the worst financial crisis since the Great Depression, the worst rise in home foreclosures since the Great Depression.”

    Those phrases echo through the halls of Congress and tumble from the president’s lips. Even Federal Reserve Chairman Ben Bernanke sounds off, saying this week that “the world is suffering through the worst financial crisis since the 1930s.”

    An Important Distinction

    Now before we all open a window and jump out, let’s focus on the words. When people say “the worst since,” they’re not saying “as bad as the Great Depression” — and that’s an important distinction, says economist Alan Meltzer, who was a young boy during the 1930s.

    “I don’t like the comparisons with the Great Depression, because you’re comparing 7.5-8 percent unemployment to 25 percent unemployment,” Meltzer says. “You’re comparing a system which has lots of safety nets in it to one that didn’t have any safety nets. And when you’re unemployed in the Great Depression, you went in the bread line, the soup line. You went back to the family farm. You had no support system. So I think those comparisons are simply overdrawn.”

    Yes, there is an important difference between “worst since” and “as bad as.”




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  15. Alexander Klingman says:

    Steve,

    Link, Link, Link, Link, Link

    Basically the message, for some time, was, “If you don’t pass this bill the economy will go from crisis to catastrophe.” Or to put it another way, the economy is in very bad shape and massive stimulus is needed.

    James made the claim that Obama “contributed to the climate of fear.” In order for this to be true, it must be demonstrated that, but for Obama, people would think the economy is in better shape than they current believe. That is what has not been quantified.




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  16. odograph says:

    James made the claim that Obama “contributed to the climate of fear.” In order for this to be true, it must be demonstrated that, but for Obama, people would think the economy is in better shape than they current believe. That is what has not been quantified.

    I think the high point in fear was still the Paulson quote:

    “We had a conference call early on,” Inhofe said on Nov. 18. “It was on a Friday I think — a week and half before the vote on Oct. 1. So it would have been the middle … what was it — the 19th of September, we had a conference call. In this conference call — and I guess there’s no reason for me not to repeat what he said, but he said — he painted this picture you just described. He said, ‘This is serious. This is the most serious thing that we faced.’”

    According to Inhofe, Paulson said this would be far worse than the Great Depression – a time when unemployment was at 24.9 percent and U.S. gross domestic product (GDP) suffered steep declines.

    “He said, ‘This is going to be far worse than the Great Depression in the ’30s,’” Inhofe said. “And all these things — he was very descriptive of exactly what would happen if, if we didn’t buy out these toxic assets which he abandoned the day after he got the money.”

    Funny how James and Dave chase Obama when they’ve got that gold-standard to compare against.




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  17. Drew says:

    odo –

    I’m not sure what your argument is. As we sit here today, the most likely outcome of the current situation is a 1975 – 1981 style recession. Perhaps a bit worse. I (and Steve, who you are sparring with) have repeatedly said: “This is not a crisis,” “this is not a catastrophe” but a good firm recession.

    Where is the dispute? I (and I believe Steve – but I do not want to place words in his mouth) have repeatedly said that the descriptions of “crisis” and “potential catastrophe” were ill advised. That’s all.

    It seems to me the problem is that anyone under the age of 50 (or non-economists)only remember the 2001 and 1991 recessions. They were mild. If that is your frame of reference, then, yes, the current situation seems a “catastrophe.” Especially when media fueled. But those people are ignorant of history, especially the media.

    For experienced (wiser?) people, or economists, one would look at 1958, 1975 or 1981 and say: “our current situation, based upon everything we know today, is basically similar.”

    So relax.

    Now. If Team Obama uck-fay up-yays this…….

    This stimulus package was a joke. Multipliers, schmultipliers. This was pork ridden enough to take the spending multiplier below 1. And his tax designs are a joke. I didn’t even mention ridiculous green spending and regulation. He could turn it down……….he really, really could.

    But I know in 2012 Kieth Olberman will still be spewing spittle onto the microphone crying for Cheney’s war trials and blaming Bush for the economy. I understand him, he’s psychotic and media driven.

    You?




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  18. markm says:

    True, he was out there telling us the truth while Bush and McCain were insisting everything was sunshine and roses…

    On Friday, the president called on Americans to keep “focused on all the fundamentally sound aspects of our economy.”

    Ah, well, when McCain said a similar bit of sunshine when things were better than they are now the new guy ripped him a new one..but you remember that. Then the new guy says “we gotta stimulate or this mo-fo will implode” and then yesterday/today he trots out the “hey…this ain’t that bad, dunno what we were thinkin'”. So yeah, he’s got truth surrounded.




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  19. mannning says:

    500,000 lost jobs a week incites fear.
    40 to 50% loss of equity in the stock market incites fear.
    Massive spending far beyond what anyone has ever seen because “we must spend our way out” incites fear.
    Realization the much of the spending will not succeed in more than lining the pockets of the well-connected incites fear.
    Large firms and small going under incites fear.
    Loss of substantial equity in the homestead incites fear.
    Always waiting for the next shoe to fall, and being told it surely will real soon now incites fear.
    What is this idiot’s cure for fear?




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  20. odograph says:

    But I know in 2012 Kieth Olberman will still be spewing spittle onto the microphone crying for Cheney’s war trials and blaming Bush for the economy. I understand him, he’s psychotic and media driven.

    Good parallel Drew. In 2012 will James and Dave be saying the economy tanked because Obama talked it down?

    (My hot button here is that Obama told us something that proved true (“worst since”) and James etc. couldn’t bear it. They could have done a solid and unemotional article (as NPR did) on why “worst since” is not the same as “as bad as” but they didn’t. They did what seems, as you say, a psychotic and media driven blame game.)




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  21. Eneils Bailey says:

    President Barack Obama’s top economic adviser said Friday the nation’s economic crisis has led to an “excess of fear” among Americans that must be broken to reverse the downturn.

    But, wait a minute, I thought at this point we all would be luxuriating in the stupor of “hope and change.”

    Did I miss something? Should I check ticketmaster to sign up for this concert or teleprompter speech?

    Remember, boys and girls, ladies and gentlemen, and those of you who fall into neither category; “all we have to fear is fear itself.”(or dubious politicians)




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  22. Bithead says:

    True, he was out there telling us the truth while Bush and McCain were insisting everything was sunshine and roses

    Is that anything like the sunshine and roses that started this conversation out of Obama yesterday? His bail out plans have done nothing to solve the initial problems with the economy, and yet all of a sudden he’s also in the sunlight about the future of the economy. He’s clearly blowing sunshine.

    Funny how you don’t mention that.

    It’s interesting, how we were told yesterday that the banks were suddenly making some profit during the first quarter. How can this be? Wasn’t that profit occurring while Obama was telling us that we were all in the worst crisis of our lives? Now suddenly, everything’s been turned around?

    The question apparently comes down to whether he’s lying to us now are he was lying to us then. Pick one.




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  23. Eneils Bailey says:

    The question apparently comes down to whether he’s lying to us now are he was lying to us then. Pick one.

    I will pick both as far as his lying goes.

    He wanted us to think a month or so ago that things were desperate. Get on board with me and we will ride “The Hope and Change Express” to good times in the sky.
    After a month of “His Majesty’s rule,” he wants us to believe things are better because the Dems have spent us us into the biggest debt in history and he is in “control” at the Big House.

    Hey, play it down, then do anything, and then talk it up. Old political Trick…It is as stale as a sour kraut fart.




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  24. anjin-san says:

    Wonder when the right is going to condemn Cheney for talking up terror attacks…




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  25. anjin-san says:

    The question apparently comes down to whether he’s lying to us now are he was lying to us then. Pick one.

    I will go with what is behind door #3 – Bit is a blithering ninny 🙂




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