Obama: Wall Street Built U.S. Economy On Sand, Not Rock
UPDATED at 12:42 P.M.
Addressing students and faculty at Georgetown University right now, President Obama quoted from Jesus's Sermon On the Mount (Matthew 7:24-27), comparing the former U.S. economy to a house built on sand and the future U.S. economy -- he hopes -- to one built on a rock.
Obama inveighed against the financial engineers of Wall Street who created a shaky financial system built on over-leverage and high risk that, like sand, washed away and brought down the house of the U.S. economy, a lesson that should resonate at the Jesuit university.
Such Wall Street numbers crunching "is good, and we need some of that, but we could use more scientists and engineers," Obama said.
He linked healthcare reform to entitlement reform, saying dangers like ahead if spending on Medicare, Medicaid and Social Security are not curbed.
Defending his government spending programs, Obama likened his administration to a family in a recession that cuts out luxuries but continues to spend money on their childrens's college eduction.
"They refuse to let their kids drop out of college to work in some fast food place," drawing riotous applause from the Georgetown students in the audience, who no doubt hoped their parents were listening to the president.
Obama wrapped up by saying that "by no means are we out of the woods yet, but for the very first time we are starting to see glimmers of hope," echoing his comments from last week.
Obama: Financial Regulatory Reform On My Desk By End Of Year
12:15 P.M.: Obama said he expects Congress to pass a bill outlining new and tougher regulations for the financial industry by the end of the year.
"We need to lay down tough new rules of the road for Wall Street," Obama said.
On Wall Street, by the way, the markets have been trading downward since Obama began speaking.
Obama: Government Needed To Stimulate Demand To Save Economy
12:06 P.M.: Obama is delivering an Econ 101 lecture to explain his administration's reaction to the ongoing crisis.
Obama addressed deficit hawks, who believe government should be cutting, not adding to, spending in this crisis. He said the crisis has been prolonged by a lack of demand, which he is trying to boost.
"Economists on both the left and right agree that the last thing a government should do in the middle of a recession is to cut back on spending," Obama said. (Putting out a call for supply-side economists in The Ticker's audience; please leave your comments at the bottom.)
Obama said that families around America have been sitting at their kitchen tables, trying to figure out where to cut, a process he said is "completely reasonable."
"But if everybody, every family in America cuts back all at once, no one is spending any money," Obama said. "There are no customers, more layoffs and the economy gets even worse. And that's why government has had to step in and temporarily boost spending to stimulate demand."
Obama also sought to quell his critics, who believe the banks should be nationalized and that his failure to do so shows he's soft on Wall Street.
"The reason we have not taken that step was not because of an ideological or political judgment we have made, but because we believe pre-emptive government takeovers are likely to end up costing taxpayers more in the end," he said.
He added that "2009 will continue to be a difficult year for America's economy," predicting "more foreclosures and more pain before it ends."
Obama: All Economic Moves Part of 'Overarching Strategy'
11:56 A.M.: Obama said that all of the various economic actions he's taken so far "fit together in a single overarching strategy...that will lead to prosperity."
He said he will seek to "explain our strategy as clearly as I can," adding that "this is prose, not poetry," a self-referential nod to his usual eloquence, or grandiloquence, depending on your view of the president.
Obama said the current recession, "unlike any other," was not caused by a business downtown. Part of its cause came from high-risk securities made by people who were "always passing off the risk to others for profit."
Check back in here for updates as the president speaks.
April 14, 2009; 12:42 PM ET
Categories: The Ticker | Tags: Obama, economic contraction, recession
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