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Welcome to Fairfax Underground, a project site designed to improve communication among residents of Fairfax County, VA. Feel free to post anything Northern Virginia residents would find interesting.
How the Great Recession Was Brought to an End
Posted by:
Voter___
()
Date: July 30, 2010 07:12AM
This week, Princeton's Alan Blinder, a former vice chairman of the Federal Reserve, and Mark Zandi, chief economist at Moody's Analytics and a onetime adviser to John McCain's presidential campaign, released a paper laying out in simple and compelling terms how the government saved the country from another Great Depression. Think about all of this before you decide that returning Republicans to power would be a good idea:
In this paper, we use the Moody’s Analytics model of the U.S. economy—adjusted to accommodate some recent financial-market policies—to simulate the macroeconomic effects of the government’s total policy response. We find that its effects on real GDP, jobs, and inflation are huge, and probably averted what could have been called Great Depression 2.0. For example, we estimate that, without the government’s response, GDP in 2010 would be about 11.5% lower, payroll employment would be less by some 8½ million jobs, and the nation would now be experiencing deflation.
When we divide these effects into two components—one attributable to the fiscal stimulus and the other attributable
to financial-market policies such as the TARP, the bank stress tests and the Fed’s quantitative easing—
we estimate that the latter was substantially more powerful than the former. Nonetheless, the effects of the fiscal stimulus alone appear very substantial, raising 2010 real GDP by about 3.4%, holding the unemployment
rate about 1½ percentage points lower, and adding almost 2.7 million jobs to U.S. payrolls.
These estimates of the fiscal impact are broadly consistent with those made by the CBO and the Obama administration.
To our knowledge, however, our comprehensive estimates of the effects of the financial-market policies are the first of their kind. We welcome other efforts to estimate these effects.
In the scenario that excludes all the extraordinary policies, the downturn continues into 2011. Real GDP falls a stunning 7.4% in 2009 and another 3.7% in 2010 (see Table 3). The peak-to-trough decline in GDP is therefore close to 12%, compared to an actual decline of about 4%. By the time employment hits bottom, some 16.6 million jobs are lost in this scenario—about twice as many as actually were lost. The unemployment rate peaks at 16.5%, and although not determined in this analysis, it would not be surprising if the underemployment rate approached one-fourth of the labor force. The federal budget deficit surges to over $2 trillion in fiscal year 2010, $2.6 trillion in fiscal
year 2011, and $2.25 trillion in FY 2012. Remember, this is with no policy response. With outright deflation in prices and wages in 2009-2011, this dark scenario constitutes a 1930s-like depression.
http://www.economy.com/mark-zandi/documents/End-of-Great-Recession.pdf
In this paper, we use the Moody’s Analytics model of the U.S. economy—adjusted to accommodate some recent financial-market policies—to simulate the macroeconomic effects of the government’s total policy response. We find that its effects on real GDP, jobs, and inflation are huge, and probably averted what could have been called Great Depression 2.0. For example, we estimate that, without the government’s response, GDP in 2010 would be about 11.5% lower, payroll employment would be less by some 8½ million jobs, and the nation would now be experiencing deflation.
When we divide these effects into two components—one attributable to the fiscal stimulus and the other attributable
to financial-market policies such as the TARP, the bank stress tests and the Fed’s quantitative easing—
we estimate that the latter was substantially more powerful than the former. Nonetheless, the effects of the fiscal stimulus alone appear very substantial, raising 2010 real GDP by about 3.4%, holding the unemployment
rate about 1½ percentage points lower, and adding almost 2.7 million jobs to U.S. payrolls.
These estimates of the fiscal impact are broadly consistent with those made by the CBO and the Obama administration.
To our knowledge, however, our comprehensive estimates of the effects of the financial-market policies are the first of their kind. We welcome other efforts to estimate these effects.
In the scenario that excludes all the extraordinary policies, the downturn continues into 2011. Real GDP falls a stunning 7.4% in 2009 and another 3.7% in 2010 (see Table 3). The peak-to-trough decline in GDP is therefore close to 12%, compared to an actual decline of about 4%. By the time employment hits bottom, some 16.6 million jobs are lost in this scenario—about twice as many as actually were lost. The unemployment rate peaks at 16.5%, and although not determined in this analysis, it would not be surprising if the underemployment rate approached one-fourth of the labor force. The federal budget deficit surges to over $2 trillion in fiscal year 2010, $2.6 trillion in fiscal
year 2011, and $2.25 trillion in FY 2012. Remember, this is with no policy response. With outright deflation in prices and wages in 2009-2011, this dark scenario constitutes a 1930s-like depression.
http://www.economy.com/mark-zandi/documents/End-of-Great-Recession.pdf
Re: How the Great Recession Was Brought to an End
Posted by:
Gravis
()
Date: July 30, 2010 07:48AM
td;dr
"the wisdom of the wise will perish, the intelligence of the intelligent will vanish."
"the wisdom of the wise will perish, the intelligence of the intelligent will vanish."
Re: How the Great Recession Was Brought to an End
Posted by:
Voter___
()
Date: July 30, 2010 08:00AM
Yes, this is why we have inane discussions about mosques, sharia law, death panels, the New Black Panthers and who got a manicure before the debate. It's also why voters don't understand that the current deficit isn't the result of the actions taken by the Obama administration--that they actually kept it lower than it otherwise would have been.
Gravis Wrote:
-------------------------------------------------------
> td;dr
Gravis Wrote:
-------------------------------------------------------
> td;dr
Re: How the Great Recession Was Brought to an End
Posted by:
Britdrnva~
()
Date: July 30, 2010 08:06AM
I honestly think both the Dems and Reps suck. The Dems had control of all house/senate and presidential chambers and had some good ideas but at the 1st sign of a fight (and the Republicans made it very clear from the onset that they would not work with the Dems) they would bend over backwards to appease the Reps. What we've gotten after two years while better than what Reps would have given us had they controlled the 3 chambers is anemic. I wish there were a third choice. As I can't stand the Democrats nearly as much as I can't stand the Reps.
Re: How the Great Recession Was Brought to an End
Posted by:
WashingTone-Locian
()
Date: July 30, 2010 08:57AM
Thanks for posting. Unfortunately people can't comprehend something that didn't happen. But I can tell you that we would have been seriously fucked if the credit markets had remained frozen and if AIG, Goldman, GM, etc, had all been allowed to fail.
Skeptics may say the government has just delayed the inevitable. But I would rather the government take a chance to stave off catastrophe than to sit idly by while it happened and say, "It's the free market."
---------------------------------------------------------------------------------
http://bible.cc/1_corinthians/13-11.htm
Skeptics may say the government has just delayed the inevitable. But I would rather the government take a chance to stave off catastrophe than to sit idly by while it happened and say, "It's the free market."
---------------------------------------------------------------------------------
http://bible.cc/1_corinthians/13-11.htm
Re: How the Great Recession Was Brought to an End
Posted by:
Vince(1)
()
Date: July 30, 2010 09:02AM
Never expect intelligent debate from Gravis. And dont worry about it either...he has proudly announced that he never votes and iof he did he'd vote for whomever his mother told him to.
The articles point is well made...but Im afraid it will sway few voters...we are a nation of sheep and whichever message strikes a chord is how we vote. The Democrats meesage isnt sexy...."It couldve been a lot worse".
Registered Voter...a Big talking coward..big man on FFXU...little man in life.
The articles point is well made...but Im afraid it will sway few voters...we are a nation of sheep and whichever message strikes a chord is how we vote. The Democrats meesage isnt sexy...."It couldve been a lot worse".
Registered Voter...a Big talking coward..big man on FFXU...little man in life.
Re: How the Great Recession Was Brought to an End
Posted by:
conVince
()
Date: July 30, 2010 10:09AM
Voter___ Wrote:
-------------------------------------------------------
> This week, Princeton's Alan Blinder, a former vice
> chairman of the Federal Reserve, and Mark Zandi,
> chief economist at Moody's Analytics and a onetime
> adviser to John McCain's presidential campaign,
> released a paper laying out in simple and
> compelling terms how the government saved the
> country from another Great Depression. Think
> about all of this before you decide that returning
> Republicans to power would be a good idea:
The response was initiated by Bush's Treasury secretary and Bush's nominated Fed Reserve Chairman. If you credit the "response" you are crediting Bush policies.
Just like Obama and the demokrats have gone back to using terms like "what we inherited" and only paint positive movements as "the last eighteen months" you can't on one hand deny a "lightswitch" ability to fix things and on the other hand claim benefits from Bush administration intervention as demokrat victories. Stupid. Never mind that the financial meltdown was caused by packaging of loans that existed only due to legislation written by Chris Dodd and Chuck Schumer, two banking industry bribe recipients and probably the worst amerikans to ever enter the Senate chamber.
> Think
> about all of this before you decide that returning
> Republicans to power would be a good idea:
Will do!
------------------------------------
twitter @EyeAmU
-------------------------------------------------------
> This week, Princeton's Alan Blinder, a former vice
> chairman of the Federal Reserve, and Mark Zandi,
> chief economist at Moody's Analytics and a onetime
> adviser to John McCain's presidential campaign,
> released a paper laying out in simple and
> compelling terms how the government saved the
> country from another Great Depression. Think
> about all of this before you decide that returning
> Republicans to power would be a good idea:
The response was initiated by Bush's Treasury secretary and Bush's nominated Fed Reserve Chairman. If you credit the "response" you are crediting Bush policies.
Just like Obama and the demokrats have gone back to using terms like "what we inherited" and only paint positive movements as "the last eighteen months" you can't on one hand deny a "lightswitch" ability to fix things and on the other hand claim benefits from Bush administration intervention as demokrat victories. Stupid. Never mind that the financial meltdown was caused by packaging of loans that existed only due to legislation written by Chris Dodd and Chuck Schumer, two banking industry bribe recipients and probably the worst amerikans to ever enter the Senate chamber.
> Think
> about all of this before you decide that returning
> Republicans to power would be a good idea:
Will do!
------------------------------------
twitter @EyeAmU
Re: How the Great Recession Was Brought to an End
Posted by:
Voter___
()
Date: July 30, 2010 10:38AM
You are correct about that. There are a handful of things I will give Bush credit for. They are:
1) Admitting that his free market principles were going to be inadequate in the face of the economic collapse and taking the advice of his Treasury secretary and other advisors.
2) Going against his party to try to enact comprehensive immigration reform. There are those who argue that Bush was motivated purely by the politics of a changing demographic, but I actually believe that he actually cared about the issue.
3) Increased funding to fight AIDS in Africa.
4) In the wake of 9/11 he made a concerted effort to calm anti-Islamic sentiment that I also believe was rooted in tolerance for people of other faiths.
Pretty much everything else he fucked up.
conVince Wrote:
>
> The response was initiated by Bush's Treasury
> secretary and Bush's nominated Fed Reserve
> Chairman. If you credit the "response" you are
> crediting Bush policies.
>
> Just like Obama and the demokrats have gone back
> to using terms like "what we inherited" and only
> paint positive movements as "the last eighteen
> months" you can't on one hand deny a "lightswitch"
> ability to fix things and on the other hand claim
> benefits from Bush administration intervention as
> demokrat victories.
1) Admitting that his free market principles were going to be inadequate in the face of the economic collapse and taking the advice of his Treasury secretary and other advisors.
2) Going against his party to try to enact comprehensive immigration reform. There are those who argue that Bush was motivated purely by the politics of a changing demographic, but I actually believe that he actually cared about the issue.
3) Increased funding to fight AIDS in Africa.
4) In the wake of 9/11 he made a concerted effort to calm anti-Islamic sentiment that I also believe was rooted in tolerance for people of other faiths.
Pretty much everything else he fucked up.
conVince Wrote:
>
> The response was initiated by Bush's Treasury
> secretary and Bush's nominated Fed Reserve
> Chairman. If you credit the "response" you are
> crediting Bush policies.
>
> Just like Obama and the demokrats have gone back
> to using terms like "what we inherited" and only
> paint positive movements as "the last eighteen
> months" you can't on one hand deny a "lightswitch"
> ability to fix things and on the other hand claim
> benefits from Bush administration intervention as
> demokrat victories.
Re: How the Great Recession Was Brought to an End
Posted by:
WashingTone-Locian
()
Date: July 30, 2010 10:49AM
If it hadn't been for the Democrats in Congress, Bush wouldn't have gotten any kind of rescue bill passed. Most of the Republicans in the House bailed on Bush.
---------------------------------------------------------------------------------
http://bible.cc/1_corinthians/13-11.htm
---------------------------------------------------------------------------------
http://bible.cc/1_corinthians/13-11.htm
Re: How the Great Recession Was Brought to an End
Posted by:
Voter___
()
Date: July 30, 2010 10:52AM
There is that too. Bush also deferred to Obama and McCain during that time allowing them to influence decisions about the rescue effort.
WashingTone-Locian Wrote:
-------------------------------------------------------
> If it hadn't been for the Democrats in Congress,
> Bush wouldn't have gotten any kind of rescue bill
> passed. Most of the Republicans in the House
> bailed on Bush.
WashingTone-Locian Wrote:
-------------------------------------------------------
> If it hadn't been for the Democrats in Congress,
> Bush wouldn't have gotten any kind of rescue bill
> passed. Most of the Republicans in the House
> bailed on Bush.
Re: How the Great Recession Was Brought to an End
Posted by:
Capt. Obvious
()
Date: July 30, 2010 10:55AM
WashingTone-Locian Wrote:
-------------------------------------------------------
> If it hadn't been for the Democrats in Congress,
> Bush wouldn't have gotten any kind of rescue bill
> passed. Most of the Republicans in the House
> bailed on Bush.
Just so I am clear. The Democrats in Congress are responsible for the rescue bill because it happened under their watch? However, the recession is all Bush's fault even though the Democrats took over Congress in 2007?
-------------------------------------------------------
> If it hadn't been for the Democrats in Congress,
> Bush wouldn't have gotten any kind of rescue bill
> passed. Most of the Republicans in the House
> bailed on Bush.
Just so I am clear. The Democrats in Congress are responsible for the rescue bill because it happened under their watch? However, the recession is all Bush's fault even though the Democrats took over Congress in 2007?
Re: How the Great Recession Was Brought to an End
Posted by:
WashingTone-Locian
()
Date: July 30, 2010 11:01AM
Capt. Obvious Wrote:
-------------------------------------------------------
> WashingTone-Locian Wrote:
> --------------------------------------------------
> -----
> > If it hadn't been for the Democrats in
> Congress,
> > Bush wouldn't have gotten any kind of rescue
> bill
> > passed. Most of the Republicans in the House
> > bailed on Bush.
>
>
> Just so I am clear. The Democrats in Congress are
> responsible for the rescue bill because it
> happened under their watch? However, the
> recession is all Bush's fault even though the
> Democrats took over Congress in 2007?
The financial crisis isn't all Bush's fault. Plenty of Dems allowed it to happen (including Clinton). But a lot of the de-regulation that the Republicans instituted going back to 1995 is at the core of today's problems.
I have no problem with some de-regulation. But I do take issue with these assholes on Wall Street not being watched at all while they plundered the country. A lot of that was the result of Republican policies over the past 15 years.
---------------------------------------------------------------------------------
http://bible.cc/1_corinthians/13-11.htm
Edited 2 time(s). Last edit at 07/30/2010 11:02AM by WashingTone-Locian.
-------------------------------------------------------
> WashingTone-Locian Wrote:
> --------------------------------------------------
> -----
> > If it hadn't been for the Democrats in
> Congress,
> > Bush wouldn't have gotten any kind of rescue
> bill
> > passed. Most of the Republicans in the House
> > bailed on Bush.
>
>
> Just so I am clear. The Democrats in Congress are
> responsible for the rescue bill because it
> happened under their watch? However, the
> recession is all Bush's fault even though the
> Democrats took over Congress in 2007?
The financial crisis isn't all Bush's fault. Plenty of Dems allowed it to happen (including Clinton). But a lot of the de-regulation that the Republicans instituted going back to 1995 is at the core of today's problems.
I have no problem with some de-regulation. But I do take issue with these assholes on Wall Street not being watched at all while they plundered the country. A lot of that was the result of Republican policies over the past 15 years.
---------------------------------------------------------------------------------
http://bible.cc/1_corinthians/13-11.htm
Edited 2 time(s). Last edit at 07/30/2010 11:02AM by WashingTone-Locian.
Re: How the Great Recession Was Brought to an End
Posted by:
Voter___
()
Date: July 30, 2010 11:14AM
It is entirely Bush and the Republicans fault that we were so poorly suited to weather the crisis when it did hit. They insisted on tax cuts upon tax cuts with shifting rationales when nobody really needed them. They spent tons of money on wars and new programs without paying for any of it. When the crisis hit we already had massive amounts of debt and large deficits. And with tax rates already at near historic lows cutting them further wouldn't have had nearly the stimulative effect that it would have otherwise.
WashingTone-Locian Wrote:
> The financial crisis isn't all Bush's fault.
> Plenty of Dems allowed it to happen (including
> Clinton). But a lot of the de-regulation that the
> Republicans instituted going back to 1995 is at
> the core of today's problems.
>
> I have no problem with some de-regulation. But I
> do take issue with these assholes on Wall Street
> not being watched at all while they plundered the
> country. A lot of that was the result of
> Republican policies over the past 15 years.
WashingTone-Locian Wrote:
> The financial crisis isn't all Bush's fault.
> Plenty of Dems allowed it to happen (including
> Clinton). But a lot of the de-regulation that the
> Republicans instituted going back to 1995 is at
> the core of today's problems.
>
> I have no problem with some de-regulation. But I
> do take issue with these assholes on Wall Street
> not being watched at all while they plundered the
> country. A lot of that was the result of
> Republican policies over the past 15 years.
Re: How the Great Recession Was Brought to an End
Posted by:
Vince(1)
()
Date: July 30, 2010 03:59PM
Voter___ Wrote:
-------------------------------------------------------
> You are correct about that. There are a handful
> of things I will give Bush credit for. They are:
>
> 1) Admitting that his free market principles were
> going to be inadequate in the face of the economic
> collapse and taking the advice of his Treasury
> secretary and other advisors.
>
> 2) Going against his party to try to enact
> comprehensive immigration reform. There are those
> who argue that Bush was motivated purely by the
> politics of a changing demographic, but I actually
> believe that he actually cared about the issue.
>
> 3) Increased funding to fight AIDS in Africa.
>
> 4) In the wake of 9/11 he made a concerted effort
> to calm anti-Islamic sentiment that I also believe
> was rooted in tolerance for people of other
> faiths.
>
> Pretty much everything else he fucked up.
>
>
> conVince Wrote:
> >
> > The response was initiated by Bush's Treasury
> > secretary and Bush's nominated Fed Reserve
> > Chairman. If you credit the "response" you are
> > crediting Bush policies.
> >
> > Just like Obama and the demokrats have gone
> back
> > to using terms like "what we inherited" and
> only
> > paint positive movements as "the last eighteen
> > months" you can't on one hand deny a
> "lightswitch"
> > ability to fix things and on the other hand
> claim
> > benefits from Bush administration intervention
> as
> > demokrat victories.
No child left behind was an excellent start at nationwide standards of education.
Registered Voter...a Big talking coward..big man on FFXU...little man in life.
-------------------------------------------------------
> You are correct about that. There are a handful
> of things I will give Bush credit for. They are:
>
> 1) Admitting that his free market principles were
> going to be inadequate in the face of the economic
> collapse and taking the advice of his Treasury
> secretary and other advisors.
>
> 2) Going against his party to try to enact
> comprehensive immigration reform. There are those
> who argue that Bush was motivated purely by the
> politics of a changing demographic, but I actually
> believe that he actually cared about the issue.
>
> 3) Increased funding to fight AIDS in Africa.
>
> 4) In the wake of 9/11 he made a concerted effort
> to calm anti-Islamic sentiment that I also believe
> was rooted in tolerance for people of other
> faiths.
>
> Pretty much everything else he fucked up.
>
>
> conVince Wrote:
> >
> > The response was initiated by Bush's Treasury
> > secretary and Bush's nominated Fed Reserve
> > Chairman. If you credit the "response" you are
> > crediting Bush policies.
> >
> > Just like Obama and the demokrats have gone
> back
> > to using terms like "what we inherited" and
> only
> > paint positive movements as "the last eighteen
> > months" you can't on one hand deny a
> "lightswitch"
> > ability to fix things and on the other hand
> claim
> > benefits from Bush administration intervention
> as
> > demokrat victories.
No child left behind was an excellent start at nationwide standards of education.
Registered Voter...a Big talking coward..big man on FFXU...little man in life.