That's how Volcker, current head of President Obama's Economic Recovery Advisory Board, sees the health of the U.S. economy. He predicts a "long slog," before the country can fully recover to where its economy was before the recession.
"I think we have some big adjustments ahead in the financial markets - and more importantly, in the real economy," he says.
Volcker was the 19th laureate in the William W. Siebens American Heritage Lecture Series at Buena Vista University on Friday. The event included the evening lecture to regional leaders and a panelist discussion with six BVU students - Brianne Sweeden, Marcus Rihner, Bikash Pandey, Jennifer Flint, Brett Malone and Zane Gernhart.
"This is an amazing opportunity for our students to interact face-to-face with a man who has been a key advisor to President Obama on one of the most severe economic crises in our nation's history," says BVU President Fred Moore. "It is experiences such as this this that add another dimension to our students' education and helps them to develop a deeper understanding of political and socio-economic forces that are having an impact on our nation and the world community."
Students asked a variety of questions - and sought advice about their own futures entering the job market in tough times. Volcker said it's important for everyone to look at saving money, but graduates should look beyond the salary being offered for a job, seek something that excite them, challenges them and opens them up to a new experience, he said. Or, take a year off and see the world, he added with a chuckle.
A COUNTRY IN NEED OF MENDING, SlOWLY
Volcker says America faces a big challenge to get back to pre-recession level and says the country has been consuming more than it's been able to produce. "We've been very consumption conscious, very consumption directed," he says. "I don't know whether that's true in Storm Lake, Iowa, maybe not." Volcker says there will always be a level of consumption orientation, the issue is to what degree. He says both state and federal government will step back and look carefully at their budgets. Brianne shared the example of Iowa's state government, she said it's tried to decrease its deficit by cutting spending in areas like education. Volcker said several other state and local governments are in the same boat - reaching deficits they can't finance. He said states were helped by the economic stimulus funding but says the funding was 'artificial help,' and says it will eventually run out. Volcker says right now it's hard for anyone to deal with the deficits because of the recession but says in the next three or four years the federal and state governments are going to have to do some 'hard thinking,' about the tax structure and work together to more effectively produce the revenues needed.
With the economic downfall, came several bailouts. He said he wants limits on activities of banks that are considered "too big to fail," and says they should be prohibited from engaging in certain types of trading and investing activities.
Volcker said he believed that the large stimulus package was necessary in the midst of the recession but says he feels the country would be better off if the focus had been more on infrastructures and less on subsidies and the government program 'Cash for Clunkers'.
When Volcker became the Chairman of the Federal Reserve, the U.S. was in the middle of a economic crisis remembered for by its rate of high rate of inflation. "It didn't last very long. The economy bounced back very rapidly as the inflation rate came down. Then there was a long period of stability," he says. He noted the recent economic situation has been a more challenging situation. As a chairman of the Federal Reserve Board he is credited with the leading role in ending a period of high inflation and restoring a base for sustained growth. He was initially appointed to the board by President Carter and was reappointed in 1983 by President Reagan. Volcker says he grew up in a family that in public service. His father was the City Manager in Teaneck, N.J. "He always said 'go into business, go into business," he said. "It was monkey see, monkey do."
Volcker joins a pre-eminent list of lecturers that includes former world leaders, heads of state, and others who have reached the highest levels of accomplishment and recognition in their fields including President George H.W. Bush and Jimmy Carter; Presidents F.W. de Klerk and Viecente Fox; Prime Ministers Margaret Thatcher, Shimon Perpes, Benazir Bhutto and John Major; Former Secretary of State Madeleine Albright, Gen. Colin Powell and Jehan Sadat. This distinguished lecture series was established in 1989 to provide Iowa and the Midwest with access to prominent world figures discussing current issues underlying American Freedoms.