Posted on 07/28/2010 7:04:43 AM PDT by SeekAndFind
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.
The paper, by Alan S. Blinder, a Princeton professor and former vice chairman of the Fed, and Mark Zandi, chief economist at Moody’s Analytics, represents a first stab at comprehensively estimating the effects of the economic policy responses of the last few years.
“While the effectiveness of any individual element certainly can be debated, there is little doubt that in total, the policy response was highly effective,” they write.
Mr. Blinder and Mr. Zandi emphasize the sheer size of the fallout from the financial crisis. They estimate the total direct cost of the recession at $1.6 trillion, and the total budgetary cost, after adding in nearly $750 billion in lost revenue from the weaker economy, at $2.35 trillion, or about 16 percent of G.D.P.
By comparison, the savings and loan crisis cost about $350 billion in today’s dollars: $275 billion in direct cost and an additional $75 billion from the recession of 1990-91 — or about 6 percent of G.D.P. at the time.
(Excerpt) Read more at nytimes.com ...
For one thing, Mr. Blinder and Mr. Zandi find that the financial stabilization measures — the Troubled Asset Relief Program, as the bailout is known, along with the bank stress tests and the Fed’s actions — have had a relatively greater impact than the stimulus program.
If the fiscal stimulus alone had been enacted, and not the financial measures, they concluded, real G.D.P. would have fallen 5 percent last year, with 12 million jobs lost. But if only the financial measures had been enacted, and not the stimulus, real G.D.P. would have fallen nearly 4 percent, with 10 million jobs lost.
The combined effects of both sets of policies cannot be directly compared with the sum of each in isolation, they found, “because the policies tend to reinforce each other
In a third NYT study, solid evidence that more studies bodes well for bird cage liners and fish sale enclosures.
lol we didnt avert it.
Wow,,TWO?
Two as in dos? Two as in duo? That’s a mighty big number there Tex. Two. Economics btw, is not considered a science by everyone..just sayin
Under different circumstances this would be hilarious.
The article, obviously, is pure pure propaganda.
I estimate that unemployment would currently be at, or under, 6% if the Government had cut taxes on business $787 billion instead of passing the "Stimulus" spending package and there is MORE empirical data to support my estimate then there is to support THEIR assumptions
I hear that they also stopped crazed elephants from roaming the streets as well.
DO YOU SEE ANY ELEPHANTS OUTSIDE YOUR DOOR?!?
So I am supposed to trust eggheads and not real experience? (see Thomas Sowell’s latest column “How Smart Are We?”)
1. Obama claimed unemployment would PEAK at 8%. He failed.
2. The stimulus destroyed the liberty of millions of American taxpayers, as those taxpayers will be required to foot the bill.
3. The NY Times and the media have a vested interest in propping up any data—even inaccurate data(see: Global Warming Data and email scandal)—which sheds a positive light upon their mindset of a centrally-controlled economy.
In essence, this is BULLCRAP.
A hack being mocked by a somewhat less ultrapartisan hack?
Next, I suppose we will learn that Warren Buffet still backs Obama and so does Colin Powell. < / sarcasm >
The study would have more credibility if it told who started the collapse of money market funds in Sept 08. Still waiting . . . .
So instead of hurting bad for 10 months...the government “saving” us will make us hurt for 10 years instead?
Thanks for nothing.
LLS
The 2nd Depression was averted, and our grandchildren and great grandchildren will get severely depressed trying to pay for it. They might argue that it would have been better for this generation to experience a little depression than bury future generations in debt that can’t be paid. They might also argue from their future perspective that measures to revive private enterprise, entrepreneurship, and growth of the US economy should have been instigated along with the stimulus. But, who knows? In twenty, thirty years, we might think 20 percent unemployment is normal. We might think the middle class was just a fairy tale our parents dreamed up. Who knows what the 3rd world will cause our future generations to think, if they are still allowed to think at all?
Two “economists” - Paul Krugman and who?
This is yellow journalism at its worst.
At some point, even with the Pravda/MSM media giving full support, reality overpowers illusion.
As much as he may want to believe otherwise, Obama is most assuredly not God.
He seems to still believe he has the omnipotence to speak things into being.
Even he will one day have to deal with the fact that he is just one more in history's long line of egotistic megalomaniacs.
And a badly misguided one at that.
93.65% of all statistics cited on the Internet are completely made up.
Could of been worse. They could have had Krugman as one of the experts. LOL
That explains why unemployment is so low. /sarcasm
...averted that over 8% unemployment too huh, NYT? =.=
Economic theory is flimsy because too many assumptions have to be made. It would have been better, per alternate economic theory, to let the system disintegrate and rebuild itself like a retail store going out of business because its approach is antiquated. Thanks to competition we have a free enterprise system that is self maintaining. Walmarts are here, five & dime stores are gone.
Our only problem is government regulation such as forcing lending institutions to loan money to unqualified buyers on a grand scale. Financial regulation seems to enrich the party in power at the expense of the taxpayers.
Figures don’t lie; liars figure. (someone had to say it)
Yes indeed.
Blinder is a hard core Keynesian and Zandi is well know to be an advisor to the Obama, Pelosi, and Reid triumvariate. I heard Zandi give a talk a year ago at my workplace and he predicted we would be in a strong recovery, including the housing, market by now. He claimed things would start humming along by end of November 2009. Looks like he is going to be at least a year late in the prediction.
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