The world is a scary place. Planes are disappearing, regions are seceding, countries are overthrowing governments and income inequality is growing larger everyday. There’s a lot to worry about during the wee hours of the night.
Yahoo Finance’s editor-in-chief Aaron Task asked some of the biggest and brightest economic minds today what keeps them up at night. Watch the video above and read on below for their anxiety-inducing answers.
Jared Bernstein, former chief economist for Vice President Joe Biden
“What really worries me”, says Bernstein, “is hysteresis.” That may sound like a strange medical ailment but it’s actually what happens when a cyclical economic problem morphs into a structural problem.
“We’ve had a lot of long-term unemployment and if that were just a cyclical problem when the economy came back those unemployed people would come back into the job market and your labor force would grow again,” he says. “But if the down cycle lasts long enough then those folks are permanently out of the job market and that kind of a permanent restructuring of growth and livelihoods, that keeps me up at night.”
Sheila Bair, former chair, FDIC; now director, Banco Santander
Monetary policy is what keeps Bair up at night. “During the crisis we had this toxic brew of very easy monetary policy and very relaxed regulatory policy and while regulation has lightened up, monetary policy has become more aggressive,” she says.
This could lead to excesses and imbalances. “The Fed is getting out but … can they get out? Can the markets get off of that drug and stabilize and find their own equilibrium without us having a very ugly transition?”
Richard Vague, chair, Governor’s Woods Foundation
The Chinese economy worries Vague, who chairs this non-profit philanthropic organization based in Philadelphia. He's specifically concerned about China’s ability to deal with its overcapacity problem. “I think the effects [could] be manageable, but if they stumble it could have a ripple effect,” he says.
Alice Rivlin, former vice-chair of the Federal Reserve and senior fellow, Brookings Institute
Rivlin is bothered by the U.S. government’s inability to compromise. “We have a constitution which requires compromise across several different lines,” she says. “Nothing gets done in this country unless we compromise across political lines.”
Compromise, says Rivlin, has gotten a bad name recently. “I think that is the most serious thing we face.”
Simon Johnson, former chief economist, IMF; now professor of entrepreneurship, MIT
“I think the Russia and Ukraine situation is very unstable,” says Johnson.
According to Johnson the U.S. and European response has not been helpful. “This is a real flashpoint and a danger to the European economy.”
Grover Norquist, president, Americans for Tax Reform
Grover Norquist’s fears are more abstract. He is worried about electro-magnetic pulses and solar flares or “some rogue country tossing a nuke up and frying all of our cars and handhelds.”
Follow The Daily Ticker on Facebook and Twitter!
More from The Daily Ticker
Unions will be a bigger issue than Obamacare in midterm elections: Grover Norquist
- Politics & Government
- Budget, Tax & Economy
- Jared Bernstein
- Sheila Bair