David Stockman thinks the economy is doomed, but not everyone is convinced

Stockman was once Ronald Reagan's head of the Office of Management and Budget and became a firece critic of the administration - along with most others - after he left office.

He recently wrote an opinion piece in the NYT where he lays out his multiple issues with the US's economic history since the early 1930s. He thinks the current - limited - recovery will end in a crash, and this time there will be little we can do to dig ourselves out of it.

There's been quite the backlash against it however, which allows us a preliminary look at debate over the state of the economy - and our economic policies in general - prior to digging into it later this semester.

Some of the commentary:

- 'David Stockman Goes Way, Way Over the Top'

- The nihilism of David Stockman.
- David Stockman's Delusions:
- It Wasn't David Stockman Who Wrecked the Economy

Peter Orszag and the Debt Ceiling

Aside from providing some analysis about the consequences of default, and the likely prospects for increases in employment in the near future, the following story illustrates the close relationship - some say too close - between executive officials and private enterprise.

Until recently, Peter Orszag was the head of Obama's Office of Management and Budget - the White House's top adviser on budgetary matters - a position comparable to the Congressional Budget Office. Now he holds a high position at Citigroup, and is able to provide inside information about likely government activities. Nothing he is doing is that different from previous officials from various administrations.

From the Atlantic:

Former OMB director Peter Orszag left the Obama administration last year for Citigroup. But his opinions about what's going on in Washington are highly sought after by Citigroup clients. Part of his job is to advise institutional clients like hedge funds and mutual funds, which are growing nervous about the looming possibility of a debt default, like everybody else. Orszag recently gave such a briefing that left at least some in his audience convinced that the situation is less dire than Treasury is indicating.
FYI: Ezra Klein explains why default is bad for the economy. It will increase the amount of money that the federal government pays in interest on the money it borrows, which will in turn increase everyone else's interests as well. This will suppress spending.

The Revolving Door -- Peter Orszag and Citibank

From Deal Book:

Wall Street has long stacked its ranks with Washington types.

It is the elephant in the room of White House grand bargains: after building a reputation and Rolodex in politics, the wise man moves on — or in many cases, back — to the financial industry to make a killing.

A decade ago, a former Treasury secretary, Robert E. Rubin, left the Clinton administration to become a senior adviser and board member at Citigroup — collecting a $10 million a year paycheck with no management responsibility.

On Thursday, Peter R. Orszag, President Obama’s first budget director and a protégé of Mr. Rubin, followed in his mentor’s footsteps and joined Citi’s investment banking group as a vice chairman. Mr. Orszag, 41, is the second cabinet official to join Citi this month, and his appointment comes days after the Treasury Department’s $10.5 billion stock offering helped further extricate the bailed out bank from Washington.

- Commentary from James Fallows.
- A response.

OMB Director May Resign

From the Washington Post.

Regarding Peter Orszap

An NYT profile of the OMB director. 2302 students should check out his conflicts with Larry Summers, the Director of the National Economic Council. Early insights into the inner workings of the Obama Administration