What if obama had not allowed the bailouts or fed actions? not give $$ to banks?

We would ahve cleaned otu year 1 and be prosperous again by now.

wow

I wish he had doen will of people adn not given $$ to banks.

 

Unemployment would have soared initially. But better businesses would have taken their place, which is the whole point of capitalism. It would have taken way longer than a year to recover though.

 

We would still be alive and would be in a lot less debt.

 

1 - we would be in even greater debt than we are today, since loss of government revenue from decreased tax returns would be much higher 2 - we'd be in a depression

 

No, financials are not like a physical plant. If GM goes bankrupt (not the bailout crap that obama did for them, but really bankrupt), it takes time to appraise equipment, find buyers, maybe move equipment, change personnel, suppliers, etc. Some companies stay in bankruptcy for years.

Financials are electronic pieces of paper, it might take time to sort through them but as each item is sorted it can be valued and sold. The mess would have been cleaned up in months. I doubt there would even be more than a little tick in unemployment.

The current problem is obama and the pols are fighting the collapse of the bubble which is just prolonging the problem. If they had let the house of cards just fall, get it over with, and we would be in a real recovery instead of this illusion created by DC.

 

Thats crazy. The loss of revenue would be greatly offset by the decreased spending - no bailouts, no stimulus, no crony obama games. We would be in a recovery already.

 

In the long run, the loss of revenue would be much greater than the stimulus itself. A stimulus is a one time outlay. The loss of revenue is a long-term phenomenon. Every year that we delay a recovery, we are losing revenue. SO without a stimulus, we'd still be mired in depression, and we'd be losing more and more revenue every year. The conservatives are short-term thinkers. Sure you save money in the short term. But you actually end up losing money in the long run.

 

No, you dont understand the conservative, the Keynes, or the progressive position. They all think long term, they just take difference approaches and have different goals.

The conservative postion is that the country is still in this recession because of the many stimulus programs, bailouts, and govt intervention. The govt actions are trying to circumvent the economic correction instead of letting the correction take place. All past recessions since WW2 except 2 have recovered in about 1 year, and the recovery was rapid. Those 2 recessions that did not were the Carter recession (until Reagen came in and chnged the govt policies), and the current recession. There is also a school of thought that argues teh Great Depression was great because of the govt. In all 3 cases, the govt tried to "manage" the nation out of the recession/depression.

And before you say this recession is worse than the Carter recession that Reagen inherited, its not. The Carter one was worse, higher unemployment, much much higher inflation, interest rates in double digits, gas shortages. This recession is not nearly as bad.

 

Yep, conservatives don't do economics! The idea of some natural correction is fed by an ideological tosh that ignores the nature of capitalism. It makes them sheep for the dogmatic preachers.

 

We can't know what would have been, but if letting Lehman fail allows us to draw any conclusions I'd say the fall out wouldn't have been nearly as bad as the Fed and the administration tried to suggest. I believe, and the lack of prudence certainly support this, that the creditors knew full well there was no chance of being allowed to fail, the precedence was set with the S&L bailout in the '80's and the moral hazard created echoed in the current housing collapse.

 

Did you mean to include TARP in your question?

 

Bailouts and stimulus and social handouts are all political gadgetry!

I continue to suggest that the private economy is a separate entity from society and government. Sure they are intertwined but they are separate entities. Therefore, the private economy is going to ebb and flow under it's own merits, with a long-term trend of growth, rewarding the fittest and eliminating the weaknesses. Society and government don't care much when the private economy is growing. But society and government show signs of trouble and weakness when the private economy contracts. In this case, the true problems as perceived by society and government actually lie with society and government...not the private economy. Therefore, society and government need to change their behaviors in order to deal with their own problems. If society and government want more people to be employed, then society and government need to consume more from the private economy and/or hire more government employees and/or society and government just create social handouts. There is only so much society and government can extract from the private sector to fund their causes without causing negative consequences to the economy so this requires a balancing act or what usually ends up being government debt. Government and society can do lots of things to allow the private economy to be more competitive in global markets which creates GDP growth which creates jobs which creates more taxation and everyone is happier. But if society and government do the opposite, making US companies less competitive, this slows GDP growth, loses jobs, loses tax revenues, and everyone is cranky!

I've posted before that I have no problem with using debt money in order for society and government to feel happier about their problems and weaknesses. For example, if government was going to spend $3 trillion over the next ten years on infrastructure projects, but government has a problem with unemployed citizens, then let government consolidate that spending to 5 or 3 years...spend the $3 trillion over 3 years. In this case government can put people to work doing something that was already planned and when the money is spent have something to show for it! The CAVEAT however is that if the $3 trillion is spent in 3 years, then there can be no more spending for the next 7 years unless more income can be created...

 

That wouldn't be consistent with microeconomic reality, macroeconomic theory or economic history. However, as long as you think it!

 

I'll continue to think this until YOU can prove differently. I'll further suggest that many of our problems stem from people like you who believe the private economy is theirs to manipulate and control...

 

I'll set you a task. Refer to some microeconomic reality, macroeconomic theory or economic history that confirms your ludicrous position as credible.

 

The USA government HAD to bailout the banks. They created the situation. The mandate to loan to unqualified borrowers RESULTED in fraudulent practices within the banking industry to deal with a psychotic liberal regime that was intent on destroying the concept of "fair" commerce. The real question is where does the USA go from here? I see a collapse coming. I've advocated for years that those with some amount of money should buy rural land with access to fresh water. Invest in distillation equipment, seeds, toiletries, guns, ammunition and set yourself up to deal with trolling zombies for next several years. A good transition. "The Walking Dead" starts a new season tonight at 9 pm EST on AMC. I should get paid for that statement, but I'll state this for free since it is consistent with my statement.

 

We would have avoided the crash, had interest rates increased to temper the housing bubble. No housing bubble, no need for huge amounts of AAA paper, mortgage backed securities would have been based on market based home prices, not bubble fueled inflated prices.

Liar loans weren't risky during the run up, because a default could be resold at no loss (maybe even a profit). That isn't the case when home prices grow slowly.

We would have avoided the crash had financial institutions been monitored by their creditors. But, since 1980's creditors had been balied out by the government at 100 cents on the dollar. Despite all the bluster the Democrats made about eliminating too big to fail - nothing of substance has been done.

The first good thing the government did was let Lehman Brothers fail. Did the US economy even notice?

 

God, the sort of fortune telling some of you guys are capable of is truly extraordinary to me!! Do you guys figure this out using astrology, or is that too complex?


The first thing I should say, is the fed is an independent body that Obama cannot dictate policy to. The second thing I would say, is I have no idea what would have happened. If I were in charge I would have let the banks fail, but I would have had the fed guarantee the assets of those failed banks that couldn't be sold off to more stable banks. However, I cannot say with any certainty what the outcome of that decision would have been. I think it would have been preferable, but I DO NOT know.

 

Honestly what are you people talking about? You think the failure of the most powerful financial institutions in the world would have only caused a blip in unemployment increases? I think there may be some sense in saying it would be much worse, but would get better faster. However, there is no sense in pretending the impact of US banking sector falling apart would have been negligible. It is nonsensical.

 

The problem is limited liability. It's not my problem if you go bankrupt, you owe me money.

And that's exactly why there was a bipartisan effort to pass the bailouts. Whoever the recovery happened under would be accused of having a failed economic plan because it didn't fix things overnight.

 

I cannot avoid my suggestion that the collective we have three separate entities in which we occupy; the private economy (GNP), society (people), and government. My contention is these three entities require better definition in order to make clear delineation between the three entities. An extreme example is socialization and/or nationalization by government of the private economy which reduces the original entities from three to two...society and government. If you move 180 degrees from this position, minimizing government involvement in the private economy, then the private economy as one of the three entities can function on it's own merits with society and government plucking from this economy whatever they need (consumption and taxation) while minimizing intrusions. It remains my position that a great deal of respect must be given to the private economy, which is now a global economy, as a separate entity, with minimal government and society intrusion.

Go ahead and quote your macro and micro-economic theories and if they work so grand why do we have any unemployment at all?

 

As past history has proven, the less government interference, the quicker the recovery. The bottom would have been initially lower because it has to find it's bottom to rebound but the rebound is always much quicker. Normal recessions rebound with 6 to 8% growth. We are now at 1.7% growth three years later.

 

We now have two models of massive government spending to prove the point. Some economists believe that the Great Depression was extended 7 years due to the "investments" of FDR, we now have sluggish and flat growth after the next massive government intrusion.

 

Can you point me to a macroeconomic study, hopefully published in a credible source, that supports that proposition?

 

i.e. you can't achieve my task. End of