Robert Rubin videos on U.S. fiscal policy and Eurozone

The former treasury secretary. Always have respected him as a superbright guy who knows what is going on in a macro way, but he is so much better now that he doesn't have to toe a political line as much, so he is free to speak a bit more candidly. He did a good interview with Reuters. The videos are a bit long, but worth watching. I think from conversations I have, and from some things I see on this board, that a lot of people aren't really attuned to the fiscal messes in the U.S. and Europe, and the consequences we are heading toward for not dealing with them head on.

http://www.business.me/videos/46546

A bit self-serving on my part, because he says most of what I have been posting to the thread on gold about our unsustainable fiscal course and the consequences -- one of which is how we are monetizing, and will continue to monetize, our debt to avoid dealing with it.

http://www.business.me/videos/46549

Here he talks about the Eurozone crisis and states the obvious about how they are doing everything possible wrong. They need structural reforms to the labor markets and a unified plan to contain fiscal spending if they hope to create any interim stability. He is pretty pessimistic. He puts it at slightly greater than 50-50 odds that they stave off catastrophe, but not because he sees anything to suggest it is going to happen. He just doesn't want to think about the consequences. If Greece defaults and there is a run on banks in other countries as a result, and the SWOP markets implode, toward the end he responds to a question about how it compares to Lehman, and he says it is "Lehman times X."

 

Haven't read it.

Did read this! And I don't need my picture of Robert Rubin balanced. I know him for who he is. I think he is bright and articulate and sees things clearly -- as you can tell when he isn't serving any master and speaks relatively candidly as he did in those videos. But he is a Wall Street guy -- who was put in a position of governmental power where his job was to cater to Wall Street. There is a clear conflict of interest when we have someone going from Goldman Sachs to heading the treasury, which is way too intertwined with Wall Street, and then out the back door to cash in with Citigroup (where he cashed in, in a huge way) -- where he was at least partially responsible for running Citi into the ground. This is the way it was throughout the Clinton administration, the Bush administration. And then despite the rhetoric to the contrary (Clinton and Bush didn't promise change), Obama did the same loading the Treasury Department with the same old cast of characters doing the same old things -- making short-term policy decisions with severe long-term consequences, and then trying to put off those consequences by making more bad decisions -- particularly running up debt and then trying to monetize the debt. It has put us on a collision course with a day of reckoning. He's right -- even if he has been part of the problem. The thing about Rubin that I have always liked is that he is the kind of guy who privately will tell you that has been the game. There is an honesty about him, even if he played the game he knows has been harmful.