thomas malloy wrote: > Stephen A. Lawrence wrote: > >> Jed Rothwell wrote: >> >> >>> Stephen A. Lawrence wrote: >>> >>>> Obama's mega plan, and Bush's not-quite-so mega plan before it, >>>> involved nothing more than transferring a couple trillion dollars from >>>> taxpayers and bondholders to banks and related businesses. >>>> >>> "Transferring" is the wrong word. It involved lending the money, at >>> interest. In the case of AIG the government has taken ownership of 80% >>> of the company. (In my opinion it should have taken large chunks of the >>> other banks.) >>> >> >> I'm not so sure about taking large chunks of the banks. >> >> I cannot pretend to understand this bailout. However, one thing seems >> clear: When it looked like Citibank and BOA were going to be >> nationalized, the stock market went into a full power dive. >> >> > The AIG money is going to pay their policy holders for the money that > they lost on bad loans. You may not like what Bush did with his bail > out, but the economy has only contracted 10%.
a) I don't have anything in particular against Bush's bailout package. As far as I can tell, Obama has continued on exactly the same path, dosing the economy with exactly the same medicine, and as far as I know the medicine they've prescribed is what currently accepted economic theory says they should use. The first dose didn't do the job, so Obama applied a bigger dose. That hasn't done the job either, so now they're using the nuclear option, and printing up 300 billion in new money. And with that move, they've emptied the bag of tricks; if it still doesn't do the job, well, hang onto your seat, it'll be a rough ride. Any time the government throws hundreds of billions of dollars at something in a big lump, there is going to be some waste, and there are going to be some pigs slurping at the trough who don't belong there. That cannot be entirely avoided, and doesn't mean we should condemn the whole operation out of hand. b) Contraction of the GDP in excess of 10% is one common definition of a "depression", rather than a "recession", which is less severe. So we have hit the threshold of a "depression", and I think you should leave off the adjective "only" when you say the economy has contracted by "only" 10%. 10% contraction means, roughly speaking, 10% of workers are idled, above and beyond those already out of work. That's painful!
