by Scott Stuart
Students gathered to fill the Marriot Library’s Gould Auditorium late last month to learn more about the state of the U.S. economy from Floyd Norris, chief financial correspondent for The New York Times.
Norris spoke highly of Andrew Mellon, former U.S. Treasurer of 12 years, and his philosophies. Mellon had crossed Norris’s mind due to the current economic climate being similar to that of Mellon’s reign.
Mellon held a lassiez-faire like philosophy in that the government should lay off and allow things to return to normal on their own – a philosophy that retains believers to this day.
“Don’t blame Wall Street, don’t blame the big banks, if you don’t have a job and you’re not rich, blame yourself,” said Norris quoting GOP presidential candidate Herman Cain, a fellow believer of Mellon’s philosophy. Mellon, Cain and company believe that it’s the poor’s fault that they are poor.
“Never mind that there are fewer jobs than people looking,” said Norris in one of his many satirical retorts of that afternoon.
Norris continued his humorous ways when speaking about his outlook on the current state of the economy.
“[I’m] not pessimistic now, but partially because I am optimistic,” said Norris.
The summer of 2009 was supposed to mark the end of the economic recession, Norris reported. The job market had picked up and the stimulus seemed to be working; however, it wasn’t the case. The argument now is over why the stimulus failed.
Some are arguing that it is pointless to reattempt a stimulus now due to its previous failure. To this, Norris gave an analogy of a student who studied for a test and did poorly and thus decided to not study for future exams for it would be pointless.
Norris mentioned President Barack Obama’s involvement in regulating mortgage financing as a means of stimulus. Under current law, people are ineligible to apply for refinancing if their home is valued at less than their mortgage.
Obama’s hope is to stimulate the economy by relieving the debt of some struggling Americans. Norris suggested that Wall Street investors would be the big losers if the act goes through. Banks would be allowed to subsequently reduce one’s debt to the value of the collateral owed.
Today, little sympathy is held toward borrowers while much hostility is held toward banks, according to Norris.
“[There is] plenty of willingness now to penalize banks,” said Norris. “[However], bank settlements are not going to the people who really need it.”
The U.S. government’s handling of the economy, amongst other factors, has found itself at an all time low for citizen trust – 10 percent.
“When credit is easy, it is a lot of fun,” said Norris enthusiastically reminiscing a pre-recession economy when trust levels were higher.
Norris believes that it is those “easy” times that regulators are needed most.
“[My job] is to take the punch bowl away just when the party is getting good,” said Norris in quoting former Chairman of the Federal Reserve William McChesney Martin.
“Don’t keep it out, add more to it, or make it bigger,” said Norris. “Bad regulation and lack of regulation got us into this mess.”
Norris suggested that a paradigm shift of some sort would need to occur before the economy stabilizes.
“[We are] at least seven years away from it being solved,” said Norris. “[That is] from when it blew out – not today.”
Many students found the lecture to be entertaining as well as very educational and informative.
“He made things easier to follow by adding humor,” said Julie Burggraf, a student at the University of Utah. “I don’t follow all of the details, but I feel a bit better [about the state of the economy] now.”
“He gave some great examples and brought my attention to what is going on [in the economy],” said Montana Peterson, another student at the U of U. “I was unaware of the things that were happening.”