Tom Keene Talks with Barry Ritholtz
The President’s decision to tap the Strategic Petroleum Reserve really came out of nowhere, didn’t it?
When you look at the bag of tricks that the Fed and Treasury have, they are running out of them. So this is a case of, “All right, they’ve seen me juggle and they’ve seen me ride the unicycle, what can I do now?” Well, tapping the reserve, with energy prices falling and a little bit of softness on the consumer side, is very much a tactical decision to goose the economy.
What else can they do?
Whatever they can to prime the pump. Yet I think 1.5 to 2.5 percent gross domestic product growth is what you should get following a credit crisis and an ongoing deleveraging, with big unemployment and a huge headwind from housing.
What policy would alleviate the fear in the economy?
The debate about what the government should be doing in terms of taxing and spending is far off from what the actual debate should be, which is, “What are the things that only the government can do that the private sector can’t?” We built an interstate highway system. The Internet comes out of the Defense Dept., and it is now an enormous slice of the economy. That is the sort of thing that the government can do where they are not interfering with the private sector, but instead creating something for the private sector.