Bailouts Saved America From 1930s-like Depression

Alan Blinder, former vice-chairman of the Federal Reserve, and Mark Zandi, chief economist at Moody’s Analytics and former advisor to Republican presidential candidate John McCain, have reported that econometric models confirm that the bailouts and stimulus packages saved America from suffering through another 1930s-like Great Depression. That is, the bailouts and stimulus packages worked!

Without the bailouts of the five “too big to fail” financial institutions, followed by the stimulus packages, they predict the real gross domestic product would have fallen a stunning 12 percent instead of the actual decline of only 4 percent. Twice as many jobs (some 17 million) would have disappeared, instead of the job loss actually suffered. Unemployment would have reached 16.5 percent instead of the 9.5 percent it did.

Furthermore, while the current deficit in fiscal year 2010 will hit $1.4 trillion, this amount is considerably LESS that what it would have been without the bailouts/stimulus packages. With no bailouts/stimuli, there would have been a severe lowering of tax revenue coupled with increased social spending requirements. Without the government spending that was done, they project that the 2010 deficit would have been over $2 trillion, the 2011 deficit would have reached $2.6 trillion, and the 2012 deficit would have been $2.25 trillion. Obama’s and the Democrats’ spending actually has resulted in lowering the deficit compared to what it would have been without this spending!

I have long maintained that history will show that the Republican administration of Bush/Cheney was a financial disaster of epic proportions for the American economy. They came into office with a yearly budget surplus under Clinton and ran it into a $1.1 trillion yearly deficit when they left office, if the costs of their two wars are included as rightly they should be (instead of keeping them as “special appropriations” outside the formal budget). They more than doubled the total federal deficit from $5 trillion to more than $10 trillion. Their policies let corporate greed run wild, causing the housing crisis, followed by the Wall Street derivatives crisis. They brought the American economy to the brink of national bankruptcy (a fact few Americans seem to fully comprehend!), endangering the world economy as a result. Please recall before he left office Bush began the bailouts with a $400 billion bailout to try to save the country’s economy.

Anyone who came after Bush/Cheney would have been faced with this choice:
Do nothing and watch America slide into a Great Depression with millions bankrupted, with 17 million jobs being lost, with every American who had a mortgage or credit card balance held by one of the endangered banks having to pay off their balance in cash on the spot or declare bankruptcy as those banks fought desperately to avoid going under, see the deficit soar by trillions more than it has, watch the American dollar fall in the world market and be replaced as the world monetary standard by the Euro, driving up the cost of all imports (say oil), etc OR Try to save the economy by bailing out the five “too big to fail” financial institutions and passing stimulus bills to shore up the economy. Obama did what anyone who was president in 2008 would have had to do. Yes, even McCain and Palin! History will blame the previous Republican administration for causing this disaster and will credit the Obama Democratic administration with saving the country. Ask any economist.

How can Republicans keep getting away with fooling their tea-baggers that Obama is at fault for running up the deficit and causing the economic crisis? Are they really so ill-informed that they don’t see what happened to the economy under Bush/Cheney and how Obama has done what was necessary to save America? Is Fox Entertainment (not really News) that effective in brainwashing them? I just don’t understand Republicans. And those ‘gentlemen’ will most likely succeed in regaining power to have another go at ruining America while transferring more wealth from the middle class to the elite rich class. Will the blind never ‘see’ how the Republican Party is duping them and playing them for fools? If you don’t make at least $300,000 a year and you vote Republican, you just flunked your IQ test!


Source: Newspaper column entitled "Washington saved America's economic hide" in The Shreveport Times, editorial page on Monday, 23 August 2010, by Froma Harrop, of the Creators Syndicate, Los Angeles, CA.

The fragility of the U.S. economy scares me!

I am truly worried about the next couple of years' U.S. economy. I watched The Bill Maher Show on HBO Friday night, and two U.S. Representatives said on national TV that most Americans do not realize just how close to national bankrupty our national economy is, that it is very "fragile" at present. I also read that several of our country's largest financial institutions/banks were insolvent, according to the NY Times. They will either have to declare bankrupty or be nationalized by the federal government. Then just today I read where Citibank is trying to negotiate for the federal government to become 40 % owners. Wall Street investors are bailing out of the market, according to the headlines, causing it to fall to its lowest point since 1997. The government acts like they are surprised that investors have not responded better to the recent bailout. Well, from what I read and have heard on 60 Minutes, the bankers do not even know for certain just how big a deficit/loss is involved with the big banks because no regulation means they never have had to report their exact deficit figures to any government agency and even the banks have no clear idea of the total figure. Some estimates are upwards of forty to fifty trillion $$. Insiders have no confidence that the bailouts can save many institutions because $1+ trillion from the government to these banks is a mere drop in their deficit bucket, and the government cannot possibly afford to give them 40 trillion $$$. Plus there will still be hundreds of thousands of jobs lost in the coming year, maybe more if several national banks and the Big-3 car manufacturers go bankrupt. Then there is still the housing crisis, with millions of foreclosures impending. Plus the health care costs for those now unemployed and uninsured. On and on, the economic picture for 2009 is dismal at best. And what if China and other foreign countries that have been allowed to buy up America suddenly demand payment on all the loans given to U.S. companies, etc. The U.S. dollar would become virtually worthless in international trading. Heaven help the U.S.A.! I don't think the average American has yet realized how dire the current economic crisis truly is.

I will quite interested to see what President Obama has to say in his national TV address tonight. I hope he tells it like it is.

The Republican rebuttal will be given by Piyush Jindal, who calls himself "Bobby", the current governor of Louisiana. Jindal is so busy running for President in 2012 that he seems to be out of state more than in-state. He is the Republican heir-apparent, so designated by the true Republican Party leader Rush Limbaugh, that ex-druggy hypocrit. Jindal is pure ambition; he will do or say anything the party leaders want him to since he is trying so hard to win the presidential nomination. Watch his mouth move with the Republican leaderships' hands up his back.

I truly do not understand the Republican Party. First Bush ruins the economy and has the first huge multi-billion $$$ bailout for the bankers, who then turn around and give billions of $$ in bonuses to bank company executives, remodel offices, take lavish trips, etc. since no accounting or regulations were included on how the money must be spent. Bush's bailout was certainly the first step toward nationalizing the banks and toward going down the road to socialism. But now, the Republicans are acting like they did not cause this economic disaster but somehow it belongs solely to Obama and the Democrats. What short and selective memories these Republicans have! Rather than try to help save millions of jobs, prevent home foreclosures, and rebuild America's failing infrastructure with the Obama bailout, all the Republicans in Congress save three Representatives from the Northeastern states voted NO, trying to block it. I guess it is okay with Republicans to bail out bank executives but to hell with working people across America. A good Republican should be rich enough not to need government help, I guess...unless he is a multi-millionaire banker. The Rupublican Party cares not one whit about this great country of ours. All they care about is hoping Obama's efforts fail so they will have a stronger campaign issue come the 2010 Congressional elections and then the 2012 Presidentail election. They are willing for America to suffer, maybe collapse economically, just so they can get returned to power. All I have to say is "Shame on the Republican Party!" I hope most Americans see them and what they are doing for what it is. They spit on Obama's gallant efforts at bi-partisanship. They are willing to spit on the American working class. Wake up, America! Don't let those..uh, gentlemen, get away with turning their backs on bailing out jobs, homes, roads & bridges, etc. Remember their votes and actions well this next year while America's economy suffers and falters. They will be smiling in glee watching it. Remember them in the coming 2010 & 2012 elections. It will be your turn to vote NO on them.

I hope everyone watches President Obama's speech tonight!