I’m a member of the New York chapter of the National Association of Business Economists. A few days ago we had our monthly meeting for November at the Harvard Club in New York City. Our guest speaker was Dr. Peter Orszag, who is currently the Vice Chairman of Global Banking at Citigroup. Prior to accepting his position at Citigroup, he worked in the Clinton Administration and also served as a cabinet member for the Obama Administration. His was the Director of the Office of Management and Budget from January 2009 until July 2010.
In between taking a couple of shots at economist, John Taylor (Mr. Taylor was on the short list to replace Alan Greenspan), Dr. Orszag admitted that the current administration has not focused enough on the U.S. housing sector. His estimate is that there is some one million more homes in inventory than normal. Obviously, that is a huge excess of inventory and will continue to have a negative impact on the U.S. economy unitl properly addressed.
Dr. Orszag also pointed out that private sector borrowing imploded in 2008, down some 45% from normal levels and has yet to return to normal. He also said that even though the administration wanted $1.2 trillion instead of the $800 billion stimulus/spending package that was passed, the additional $400 billion would not have improved our economy at all. Think about that…we were almost scared into another $400 billion of spending and the former Director of the Office of Management and Budget admitted that we wouldn’t be in any better shape!
Lastly, when asked about banks not lending, Dr. Orszag said that big companies are awash in money and have no problem getting loans, however, that is not the case for small businesses. He said small businesses continue to have problems securing loans because of the risk involved based on the economic and financial uncertainty that exists, and the difficulty of small businesses’ ability to function in the current environment.
It’s amazing what you can learn from a high-level politician once they are no longer a politician and all of the pork, payback, spending, etc they supported and helped pass is behind them.