Did Bush and Obama prevent another depression? Influential economists say yes.

[Dinner]

"A new study by Alan Blinder, the distinguished economist and former Fed vice chairman, and Mark Zandi, chief economist of Moody's Analytics, finds that the federal response to the Great Recession almost certainly averted a second Great Depression. They write:"

"The U.S. economy has made enormous progress since the dark days of early 2009. Eighteen months ago, the global financial system was on the brink of collapse and the U.S. was suffering its worst economic down- turn since the 1930s. Real GDP was falling at about a 6% annual rate, and monthly job losses averaged close to 750,000. Today, the financial system is operating much more normally, real GDP is advancing at a nearly 3% pace, and job growth has resumed, albeit at an insufficient pace."

Your thoughts...?

To read the entire article, and for more links click on the link below.
Seattletimes.com: http://seattletimes.nwsource.com/htm...event_ano.html

You can read the actual report here: http://www.economy.com/mark-zandi/do...-Recession.pdf

Some of my favorite quotes so far (I'm only on page 10 so far):

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.

That's a real economist saying that government spending (mainly the stimulus and unemployment benefits) added almost 2.7 million jobs to U.S. payrolls. I'm sure the usual suspects won't let those facts get in the way of their "The Stimulus is a failure and nothing but pork!11111!1" rants though.

Another great quote:

The stimulus has done what it was supposed to do: end the Great Recession and spur recovery. We do not believe it a coincidence that the turnaround from recession to recovery occurred last summer, just as the ARRA was providing its maximum economic benefit.

ARRA = American Recovery and Reinvestment Act which is popularly known as the Stimulus Bill.

[Ben Kenobi]

Overall debt is 400 percent of GDP, higher than it was in 1933, the last time it spiked.

Obama's been outdoing the Great Depression so far.

[Dinner]

Ben, do you just constantly lie? Debt to GDP is around 90% not 400%, you moron.

http://www.usgovernmentspending.com/downchart_gs.php?year=1792_2010&view=1&expand=&units=p&fy=fy11&chart=H0-fed&bar=0&stack=1&size=l&title=US%20Federal%20Debt%20As%20Percent%20Of%20GDP&state=US&color=c&local=s

I guess I should give you an award for having a perfect post because you managed to get every single thing wrong in that post.

[Ben Kenobi]

Ben, do you just constantly lie? Debt to GDP is around 90% not 400%, you moron.

Overall debt includes household and consumer debt. It's far higher now than it was in the last great depression.

Debt to GDP ratio is up to 90 from 60 in just one and a half years. That's incredible.

Another 1 and a half years like this, America will be in the same bind as Europe.

[Dinner]

This section deals directly with the lame "the stimulus is a failure rhetoric which a certain poster on this board has aped.

Criticism of the ARRA has also been strident, focusing on the high price tag, the slow speed of delivery, and the fact that the unemployment rate rose much higher than the Administration predicted in January 2009.

While we would not defend every aspect of the stimulus, we believe this criticism is largely misplaced, for these reasons:
The unusually large size of the fiscal stimulus (equal to about 7% of GDP) is consistent with the extraordinarily severe downturn and the limited ability to use monetary policy once interest rates neared zero.
Regarding speed, almost $500 billion has been spent to date (see Table 2). What matters for economic growth is the pace of stimulus spending, which surged from nothing at the start of 2009 to over $100 billion (over $400 billion at an annual rate) in the second quarter. That is a big change in a short period, and it is one major reason why the Great Recession ended and recovery began last summer.7
Critics who argue that the ARRA failed because it did not keep unemployment below 8% ignore the facts that (a) unemployment was already above 8% when the ARRA was passed and (b) most private forecasters (including Moody’s Analytics) misjudged how serious the downturn would be. If anything, this forecasting error suggests the stimulus package should have been even larger than it was.

This study attempts to quantify the contributions of the TARP, the stimulus, and other government initiatives to ending the financial panic and the Great Recession. In sum, we find they were highly effective. Without such a determined and aggressive response by policymakers, the economy would likely have fallen into a much deeper slump.

[giblets]

Overall debt includes household and consumer debt. It's far higher now than it was in the last great depression.

Debt to GDP ratio is up to 90 from 60 in just one and a half years. That's incredible.

Another 1 and a half years like this, America will be in the same bind as Europe.

Judging Obama by gross debt is kind of retarded, because gross debt includes intra-governmental obligations, such as teh social security trust fund. In other words, when social security runs a surplus, the government saves that surplus, and that surplus is counted as part of the overall government debt. The amount of money the government owes to external entities, aka the public debt, is currently around 60% of the United States GDP and is projected to peak at around 70% in 2011.

Judging him by consumer debt is even more retarded because the consumers are not part of the government and consumer debt was already huge when he took office.

[Al B. Sure!]

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.

That's a real economist saying that government spending (mainly the stimulus and unemployment benefits) added almost 2.7 million jobs to U.S. payrolls. I'm sure the usual suspects won't let those facts get in the way of their "The Stimulus is a failure and nothing but pork!11111!1" rants though.

What's so amazing about that, Oerdin? Ever heard of Keynesian economics?

Consider the fiscal multiplier. An increase in government spending increases total spending in the economy by a multiple of that increase under certain conditions; that is, assuming that people and businesses who receive the money spend it on goods or business expansion respectively.

It has its critics and does not bear out under all conditions but this has been part of economics for 80 years now. Catch up, Oerdin.

[Boris Godunov]

The deficit will drop noticeably when Bush's tax cuts for the wealthy expire soon. If it weren't for those and the cost of his ill-begotten wars, we'd be in a lot better fiscal shape.

[Robert]

Someone said that this crisis has switched the positions of Europe and the US, with the US adopting more to Keynes and Europe is leaning more to the Barro-Ricardo equivalence theory. (while it always used to be the other way around)

As neo-european I'd say: Good! Keynes is obsolete. Eventhough Europe will now recover slower then the USA, when we have recovered, we won't have to deal with the insane ammount of debts as the USA. Especially north-west Europe. (unfortunately Europe had to deal with the mediteranean countries, that almost ruined it as well)

Anyway, the way people respond to economic fluctuations will also fluctuate. What works today will not work tomorrow.

[Drake Tungsten]

Did Bush and Obama prevent another depression?

Bush = Yes

Obama = No

TARP =

ARRA =

[notyoueither]

Someone said that this crisis has switched the positions of Europe and the US, with the US adopting more to Keynes and Europe is leaning more to the Barro-Ricardo equivalence theory. (while it always used to be the other way around)

As neo-european I'd say: Good! Keynes is obsolete. Eventhough Europe will now recover slower then the USA, when we have recovered, we won't have to deal with the insane ammount of debts as the USA. Especially north-west Europe. (unfortunately Europe had to deal with the mediteranean countries, that almost ruined it as well)

Anyway, the way people respond to economic fluctuations will also fluctuate. What works today will not work tomorrow.

Europe wanted to do what the US is doing, and started to do so (stimulus spending). The difference is that EU governments had already lined up much of Europe against the wall.

Governments being idiots at managing economies during 'good times' and having no choices during 'bad times' isn't a problem with Keynes, is it?

[Drake Tungsten]

Also, Oerdin clearly hasn't learned what the multiplier is and why it is important to any discussion of the efficacy of fiscal stimulus.

[Ben Kenobi]

Judging Obama by gross debt is kind of retarded, because gross debt includes intra-governmental obligations, such as teh social security trust fund.

So are you suggesting that Obama will eliminate social security?

In other words, when social security runs a surplus, the government saves that surplus, and that surplus is counted as part of the overall government debt. The amount of money the government owes to external entities, aka the public debt, is currently around 60% of the United States GDP and is projected to peak at around 70% in 2011.

Yeah, and I have a brooklyn bridge. Are these the same folks who said that Unemployment wouldn't top 8 percent even without the stimulus?

Thank god for the stimulus, it turned 4 percent unemployment into 10 percent unemployement, and the greatest overall job loss since the great depression.

Judging him by consumer debt is even more retarded because the consumers are not part of the government and consumer debt was already huge when he took office.

It's relevant, because it impacts the ability of stimulus to generate economic returns. People won't spend if they are burdened by debts.

[duke o' york]

How was Canadia affected by the downturn Ben?

[Dinner]

What's so amazing about that, Oerdin? Ever heard of Keynesian economics?

Jesus, Al. I'm pointing out that Keynesian economics worked while certain posters here (and else where) continually claimed it did not work. I'll give you a break since you weren't posting here during the whole stimulus discussion which I referred to.