The XX Factor: What women really think.

Christina Romer, An Economist Who Knows The Difference Between "Schools" And "Shoes"

Emily, Larry Kudlow and I don't agree on much, but we seem for now to be equally satisfied with the appointment of Christina Romer to chair the Council of Economic Advisers. Larry—and yes, the CNBC is still on; it's gotten to the point where I feel anxious when it's not on—is convinced on the basis of Romer's critiques of the New Deal that she is a "secret supply-sider" who believes cutting taxes, not using them to fund public programs that create jobs, is the way out of recession. I like her because of what she told the Times last month about the distinctly horrifying nature of this particular credit crisis: "If you told me we were spending like crazy to build schools and send everyone to college," she said, "that would have infinitely different implications than borrowing like crazy to finance current consumption.” Hmmm, interesting thought!

I'm pretty sure Kudlow's honeymoon with Romer will be short-lived unless he's intellectually honest enough—"audacious" thought but one can hope!—to recognize that while federal debt as a percentage of the GDP has shrunk steadily and considerably since the post-Depression era, consumer debt has rocketed from the mid-single digits in 1943 to 250 percent today in a phenomenon wonks call the Great Risk Shift that, along with the fact that "tax hikes on the rich" under FDR meant a 90 percent tax bracket, render most cautionary fiscal policy tales learned during the New Deal sort of completely nonapplicable.  

I take these statistics, incidentally, from a Carlyle Group Power Point presentation forwarded to me by an i-banker friend; Wall Street recognizes this stuff—that's why they're so scared. Yesterday I was flipping through old clips from the Korean economic crisis in the late '90s to see if there wasn't anything America —or its auto companies—might learn from that country's astounding bounce back from a devastating nearly 7 percent GDP contraction it sustained in 1996, a recovery that, among many other things, catapulted ailing Hyundai Motors to bona fide auto brand greatness. And … not much, it looks like! Korea had sort of the opposite problems as us. Like … a fundamentally robust manufacturing sector that just needed a little fiscal discipline applied to it. And a somewhat stodgy cluelessness about marketing, design and other things "cool."  And … too many households saving too much money.

Those problems, mercifully enough for the Koreans, turned out not to be insurmountable! I am happy to say I do not worry that Christina Romer would be so glib in describing ours. That is about the only thing I'm happy about.