## Monday, November 24, 2008 ... //

### Obama's chetviorka: Geithner, Summers, Orszag, Romer

Barack Obama is likely to reveal his economic team today.

Bloomberg
• Timothy Geithner is set to be the Treasury secretary.
• Lawrence Summers who needs no introduction among the TRF readers will be the White House economic director, with a chance of superseding Ben Bernanke in 2010
• Peter Orszag will chair the Congressional Budget Office.
• Christina Romer who was denied a job at Harvard by the new administration will head the Council of Economic Advisers.
Sounds pretty good, at least if you compare the group above with the most typical Obama supporters. ;-) Because this blog was the Google hit #5 for Christina Romer before many articles about the choice exploded today, we are getting a few thousand extra hits a day.

Doubling the U.S. debt, at least for a while

Gordon has pointed out a Bloomberg story that the segments of the U.S. federal government are lending or going to lend about USD 7.4 trillion in total. Just to be sure, I mean 7.4 x 10^{12} dollars, about 25,000 per American capita, including newborns. It equals the U.S. federal budget for three years. These numbers are completely scary and suggest that the negotiations in the U.S. Congress were just a joke about a tiny tip of an iceberg.

As a U.S. citizen, I would disagree with such policies. They're no longer about some marginal attempts to keep some macroeconomic quantities constant and about a piece of sugar meant to cure the investors' irrationally sour mood. They're about a radical change of the character of the U.S. economy and about a seed to a future massive inflation. I am ready to believe that Bernanke or his successor would get the money back at some moment but the amount could already be severely cut by inflation.

I don't believe that every industry of the U.S. economy is viable in the current form and should be expected to return all loans with interests. If someone believes that it should, doesn't he also think that the whole national debt should be equally safe and profitable? It's just wrong for too many industries to live from loans because it cripples their innovation and the creativity needed to survive.

For example, are you certain that the Detroit carmakers are doing the right job these days? These previously great companies are confined by the excessive power of the labor unions and overpaid workers. Are they really competitive? Can they ever become competitive again? Is that just a matter of loans? I kind of doubt it. It is likely that there exist other industries in which the U.S. still beats the world and they should be given the freedom to expand and absorb workers from the less successful industries.

Today, the euro has "slightly" strengthened against the U.S. dollar, namely by 3 cents. Ten more days like that from new records. On the other hand, Dow Jones jumped by 5 percent today. It's usually attributed to the two good news (for the investors) above - the bailout, especially the rescue of Citigroup, and Obama's picks. But I am not sure whether the second news is good and balanced for the whole U.S. nation (or mankind).