Not Out of the Woods

I was quite pleased with Obama's launching the Economic Advisory Board, especially by his appointment of Paul Volcker as chair. However, it seems that the board really has very little say in righting the ship, as indicated in this interview with Der Spiegel.

Unlike Bernanke, Volcker does not believe that we are out of the economic woods yet. Nor does he feel enough of the right things are being done to prevent another catastrophe.

Some quotes:

"Too much consumption and too little investment, too many imports and too few exports. We have not been on a sustainable economic track and that has to be changed. But those changes don't come overnight, they don't come in a quarter,
they don't come in a year. You can begin them but that is a process that takes
time. If we don't make that adjustment and if we again pump up consumption, we
will just walk into another crisis."

"...we have to get back in an area where there is confidence in the stability and the authority of the United States. I think we can do that but we have a challenge, we have gotten a wake-up call. There is concern in our recovery advisory group about how to rebuild the competitiveness of the United States, which inevitably means rebuilding, in part, the manufacturing sector of the economy."

"You are dedicated to exporting, we are dedicated to financial engineering and it hasn't worked out too well. I wish we had fewer financial engineers and more mechanical engineers."

"It's amazing how quickly some people want to forget about the trouble and go back to business as usual. We face a real challenge in dealing with that feeling that the crisis is over. The need for reform is obviously not over. It's hard to deny that we need some forward looking financial reform."

"Banking will never be boring. Banking is a risky business. They are going to have plenty of activity. They can do underwriting. They can do securitization. They can do a lot of lending. They can do merger and acquisition advice. They can do investment management. These are all client activities. What I don't want them doing is piling on top of that risky capital market business. That also leads to conflicts of interest."

"As an American, I have to be an optimist. But we have got a big challenge and we have to face up to it. And as you know, there is a lot of concern about the dysfunction of the political system."