HarryG's BLOG

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 continue to wax political in this entry into my blog at: http://harrygillelandwrites.blogspot.com/  should you care to read the remainder of my comments.)

Cheers!

Harry