Fallout: The Financial Crisis

Obama unveils team, but few details

John Dimsdale Nov 24, 2008
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Fallout: The Financial Crisis

Obama unveils team, but few details

John Dimsdale Nov 24, 2008
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TEXT OF STORY

Kai Ryssdal:
Those leaks Friday afternoon about the economic team that’ll inherit the financial crisis in a couple of months proved themselves true today.
The president-elect named New York Fed Chief Timothy Geithner to be Treasury Secretary and former Treasury Secretary Larry Summers to run the National Economic Council. He also picked the Berkeley economist Christina Romer to head the Council of Economic Advisors.
Other than that though, Mr. Obama was kind of short on economic specifics, as our Washington bureau chief John Dimsdale explains.


John Dimsdale:
The president-elect says there’s a consensus that a stimulus package is necessary. But he wouldn’t say how big other than it will be “costly.”

Tape of Barack Obama: We have to make sure that the stimulus is significant enough that it really gives a jolt to the economy. That it is putting people back to work. That it is making investments. That it is restoring some confidence in the business community, that in fact their products and services are going to have customers.

Some Democrats say the economy is in such dire condition, the stimulus needs to be in the range of $500 to $700 billion. Obama has talked about tax credits for job creation, help for families facing foreclosure, as well as infrastructure spending on roads, bridges and green energy projects. Like the last stimulus, the government will have to borrow the money by selling Treasury bonds. Cato Institute economist Jerry O’Driscoll wonders whether if there will be enough investors willing to buy those bonds.

Jerry O’Driscoll: At some point you will get to a situation where you’re going to cause problems, especially at the long end of the Treasury bond market, and risk a dollar crash. And I don’t know what that point is. The market will tell us and unfortunately it may not give us much advance notice.

But for now, stock markets welcomed the economic moves announced today. O’Driscoll says that might be because they see an end to a leadership vacuum.

O’Driscoll: I think the markets now understand the Obama economic team is in place and that anything else that is done in this administration will have his blessing and will in effect be Obama policy.

Obama said he’ll have more announcements tomorrow, including thoughts on how to reform the budget process and change the way Washington does business.

In Washington, I’m John Dimsdale for Marketplace.

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