In Study, 2 Economists Say Intervention Helped Avert a 2nd Depression

[Elmore Furth]

Source: NY Times

WASHINGTON — Like a mantra, officials from both the Bush and Obama administrations have trumpeted how the government’s sweeping interventions to prop up the economy since 2008 helped avert a second Depression.

Now, two leading economists wielding complex quantitative models say that assertion can be empirically proved.

In a new paper, the economists argue that without the Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration’s fiscal stimulus program, the nation’s gross domestic product would be about 6.5 percent lower this year.

In addition, there would be about 8.5 million fewer jobs, on top of the more than 8 million already lost; and the economy would be experiencing deflation, instead of low inflation.


Read more: http://www.nytimes.com/2010/07/28/business/economy/28bailout.html?src=busln

[rfranklin]

1. It was the Bush tax cut that saved us...

It just took a while to take effect. The Great Recession was the delayed effect of Clinton policies. :sarcasm:

[BootinUp]

4. And the free market.

lol.

[crim son]

5. Ain't that the truth!

Or so we will be certainly be told.

[wordpix]

6. AND all those anti-regulation policies

:rofl:

[ozymandius]

7. Remember those faith-based initiatives too!

Only faith in the daily dump of logic would have averted serious crises. :sarcasm:

[Downwinder]

9. And WAR stimulating the economy.

[onehandle]

19. Bush saved us from the era of 'Big Peace and Prosperity.'

Leave Britney Bush Alone!

[superconnected]

27. No, it was Regans trickle down finally paying off. Not that giving tax cuts to the wealthy didn't

also help - avoid this depression that many Americans would say we're actually neck deep in.

[bemildred]

2. Somebody inform them that it is not over yet, not by a long shot. nt

[nyy1998]

10. No one is doing victory laps.

I don't think I've seen Obama in front of a "Mission Accomplished" sign.

[bemildred]

11. And a damn good thing that is too. nt

[BootinUp]

3. Glad they decided to investigate it.

And the Stanford quack that shot it down before looking at it should maybe, I don't know take a look at it before he spouts off.

[snooper2]

8. Oh shit., positive news about Obama's administration

Hurry....quick!!! post something negative and why this is wrong...

[Roland99]

14. sheesh

it's a no-brainer that this helped. I don't think anyone was really arguing that the markets and banks and 401(k)s et all would be all hunky-dory if nothing had been done.

But it didn't fix the cause of the problem and it didn't stop the recession from continuing.


It was a band-aid.

[jpak]

28. He done it!

:evilgrin:

[DCBob]

12. The last paragraph is the best line of the whole article..

“When all is said and done, the financial and fiscal policies will have cost taxpayers a substantial sum, but not nearly as much as most had feared and not nearly as much as if policy makers had not acted at all."

That is what the voters need to hear repeatedly until Novemember... maybe add to end of it "as the Republicans wanted to do."

[YvonneCa]

20. Your words..."...as the Republicans wanted to do"...

...is exactly right. I'd add: "And as the Republicans STILL want to do." ;)

[Oregone]

13. Was this the *only* intervention possible?

Probably not. So essentially they are creating a false dichotomy by picking among the worst two outcomes, and bolstering the chosen one as correct by contrasting it to the very worse. If this is enough to fool you into supporting that no-strings-attached, trickle down bailout, all the power to you

[DCBob]

16. No.. but it was the only one congress and the WH could collectively agree on.

Many thought it would fail miserably or make the situation even worse. They look like total fools now.

[Oregone]

17. Im not so sure about that

This thing was shoved down America's throat under the pretense of imminent crisis if it was not passed; there was barely time for debate and alternate ideas to reach the table. Who says they wouldn't have agreed on another idea, perhaps one with a few more strings attached to the bailout money or direct to business lending to alleviate the credit crunch? We don't know that. I think thats a big "pragmatic" assumption to make (what is is what was only possible)

"or make the situation even worse."

Did it make "the situation" better? Are banks more solvent now? Where did the toxic assets go? Yes, the short-term battle was won (as this report infers), but we don't know what the future will hold

[DCBob]

18. Perhaps, but all of these measures barely passed congress...

Maybe alternative "acceptable" plans could have been devised but who knows how long that could have taken.. and we did not have have the luxury of time.

edited typo... duh.

[Oregone]

21. "we did not have have the luxury of time"

So we were told. Its was Demagoguery spearheading it, and it hasn't relented today.

You know directly where that plan came from. Maybe if Congress took a decent calm crack at it, even more people would of supported it.

Though Congress doesn't have the best track record...

[DCBob]

23. And you have some special knowledge that we did have time??

Even if we might have had more time, it would not have been wise to test the possibility.

[Oregone]

24. The first TARP vote failed

The sky didn't fall. The bill that had to be passed right NOW or the end of the world will happen wasn't passed. The end of the world did not come. It was passed a few days later.

Point being, they had a few days of discussion anyway (which we know, and is no secret), but they were stuck to this proposal written for them rather than thinking outside the narrow, confined box.

[DCBob]

25. Yeah they had a few days.. but thats not much time to conjure up a massive spending bill..

that would be acceptable to the entire congress and the WH.

[Roland99]

26. Wish I could find the thread/post showing that Wall St. execs pretty much just threatened to cause..

a total failure if there wasn't a bailout.

[girl gone mad]

30. Actually, we did have the luxury of time.

If you will recall, TARP wasn't even used until many weeks after the crisis had peaked, and even then, it was not used in the manner we were told it was needed.

Some would argue that we've taken a bank solvency crisis and turned it into a sovereign debt crisis. No one can tell you with certainty how this will play out, but it certainly has the potential to be far worse in the long run than writing down that debt would have been. At the very least, we are in for a decade or more of malaise, Japanese style.

[femrap]

15. I haven't heard

the fat lady sing yet.

But I do hear the humming of '16 Tons.'

[Downwinder]

22. Main Street here has become a liquidation mall.

[ozone_man]

29. It's a bit early to say that.

I think we'll know better in 2-5 years. The most this TARP has done in my opinion is to delay the inevitable, making any depression worse when it finally comes. Besides, Krugman already said that we're in a depression, now. http://www.nytimes.com/2010/06/28/opinion/28krugman.html

Of course, Krugman advocates spending our way out of recession/depression. But there is no amount of money enough to do that, and we'd bankrupt ourselves trying.

Personally, I liked his idea to nationalize and break up these banks back then. Now, we're still stuck with these too big to fail banks.
http://www.post-gazette.com/pg/09055/951102-109.stm