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Thread: Ben Bernanke On The Financial And Economic Crisis Of 2008/2009

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    Radical Centrist BigLeRoy's Avatar
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    Ben Bernanke On The Financial And Economic Crisis Of 2008/2009

    I am going to quote from Ben Bernanke's memoir of the financial crisis, The Courage to Act. This starts on page 387, early in the chapter titled 'From Financial Crisis to Economic Crisis':

    "Fittingly, President Obama aimed his first major policy initiative at arresting the devastating economic contraction---now more than a year old. As new (and old) Keynesians would predict, collapsing private demand----consumer spending, home purchases, capital investment---had sent production and employment reeling. As Keynes had first suggested in the 1930s, in an economic slump public spending could replace private spending for a time. With the economy still in free fall and with short-term interest rates already near zero, the economy certainly needed fiscal help---increased government spending, tax cuts to promote private spending, or both. I had said so (albeit in my usual cautious central bank speak) during the fall, to the point that The Wall Street Journal editorialized that I had effectively endorsed Obama for President. I wasn't endorsing a candidate, I was endorsing a program, just as I had supported President Bush's fiscal stimulus (in the form of tax cuts) that had passed in early 2008."

    "On February 17, less than a month after his inauguration, Obama signed a major fiscal package, the American Recovery and Reinvestment Act of 2009. The $787 billion bill included $288 billion in tax reductions to help spur consumption and investment----most notably, a temporary reduction in Social Security payroll taxes----as well as $144 billion in aid to state and local governments, mostly to support spending on education and Medicaid...The remaining $355 billion was spread among diverse federal spending programs, including $40 billion for extended unemployment benefits and $105 billion for infrastructure investment."

    "I am SURE that the Recovery Act helped create jobs and slow the economic contraction----a conclusion shared by our own staff and the nonpartisan Congressional Budget Office. Nevertheless, the recovery would be slow and protracted. In retrospect, some economists (including Obama's CEA chair, Christy Romer) have said that the stimulus package was too small. Within the Fed, some of our fiscal specialists expressed that concern at the time. Over the next few years, I came to agree that, from a purely economic perspective, the program probably WAS too small."

    "I know it's hard to think of a $787 billion package as small, but its size must be compared with the objective of helping to ARREST the deepest recession in seventy years in a $15 trillion U.S. economy. Also, several considerations reduced the impact of the program. First, the headline figure overstated the program's effective size to some degree. For example, some of the Medicaid spending and certain tax fixes included in the bill would have occurred anyway. Second, and more importantly, much of the effect was OFFSET by spending cuts and tax increases undertaken by state and local governments. With economic activity contracting, the income, sales, and property tax revenues of state and local governments fell sharply. Many of these governments operate under laws requiring balanced budgets, so they responded to the lost revenue by laying off workers (including thousands of teachers, police, and firefighters), raising tax rates, and canceling capital projects. The federal stimulus package aided state and local governments but not nearly enough to make up for the budget crunch they faced."
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    You violated copyright laws by posting all that sickening self ego stroking from Bernake. He and Obama were responsible for crafting fiscal policy full of graft and corrupt political payback that tamped down economic recovery and prevented economic recovery.

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    Southern Strategy Liberal OldGaffer's Avatar
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    Quote Originally Posted by Libertine View Post
    You violated copyright laws by posting all that sickening self ego stroking from Bernake. He and Obama were responsible for crafting fiscal policy full of graft and corrupt political payback that tamped down economic recovery and prevented economic recovery.
    Bullshit.
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    Cat-tastic Babba's Avatar
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    ...Second, and more importantly, much of the effect was OFFSET by spending cuts and tax increases undertaken by state and local governments. With economic activity contracting, the income, sales, and property tax revenues of state and local governments fell sharply. Many of these governments operate under laws requiring balanced budgets, so they responded to the lost revenue by laying off workers (including thousands of teachers, police, and firefighters), raising tax rates, and canceling capital projects. The federal stimulus package aided state and local governments but not nearly enough to make up for the budget crunch they faced."
    This is exactly why the federal government can NEVER be restrained by a Balanced Budget law. EVER. Those laws reduced the effectiveness of the federal government's attempts to climb out of the recession. (Do you have a link to what you quoted?)
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    Radical Centrist BigLeRoy's Avatar
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    Quote Originally Posted by Babba View Post
    This is exactly why the federal government can NEVER be restrained by a Balanced Budget law. EVER. Those laws reduced the effectiveness of the federal government's attempts to climb out of the recession. (Do you have a link to what you quoted?)
    I don't think you can link to a book.....can you?
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    Radical Centrist BigLeRoy's Avatar
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    Quote Originally Posted by Libertine View Post
    You violated copyright laws by posting all that sickening self ego stroking from Bernake. He and Obama were responsible for crafting fiscal policy full of graft and corrupt political payback that tamped down economic recovery and prevented economic recovery.
    Bernanke doesn't even have ANYTHING to do with fiscal policy, you hopeless economics illiterate. As Chairman of the Fed, he was in charge of monetary policy.

    SMH: You don't even comprehend the difference between fiscal policy and monetary policy!

    A distinction that is covered in just about EVERY Econ 101 class.

    Finally, you didn't even spell his name correctly.
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    Radical Centrist BigLeRoy's Avatar
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    Quote Originally Posted by Libertine View Post
    You violated copyright laws by posting all that sickening self ego stroking from Bernake. He and Obama were responsible for crafting fiscal policy full of graft and corrupt political payback that tamped down economic recovery and prevented economic recovery.
    Oh, and BTW, we once again see the MASSIVE case of cognitive dissonance you are carrying around with you. Previously, you had been claiming that the recovery began in, like February of 2009-----which it did NOT-----and NOW you're claiming that economic recovery was 'prevented'. Well? Which is it? MAKE UP YOUR FUCKING MIND!

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    Quote Originally Posted by BigLeRoy View Post
    I am going to quote from Ben Bernanke's memoir of the financial crisis, The Courage to Act. This starts on page 387, early in the chapter titled 'From Financial Crisis to Economic Crisis':

    "Fittingly, President Obama aimed his first major policy initiative at arresting the devastating economic contraction---now more than a year old. As new (and old) Keynesians would predict, collapsing private demand----consumer spending, home purchases, capital investment---had sent production and employment reeling. As Keynes had first suggested in the 1930s, in an economic slump public spending could replace private spending for a time. With the economy still in free fall and with short-term interest rates already near zero, the economy certainly needed fiscal help---increased government spending, tax cuts to promote private spending, or both. I had said so (albeit in my usual cautious central bank speak) during the fall, to the point that The Wall Street Journal editorialized that I had effectively endorsed Obama for President. I wasn't endorsing a candidate, I was endorsing a program, just as I had supported President Bush's fiscal stimulus (in the form of tax cuts) that had passed in early 2008."

    "On February 17, less than a month after his inauguration, Obama signed a major fiscal package, the American Recovery and Reinvestment Act of 2009. The $787 billion bill included $288 billion in tax reductions to help spur consumption and investment----most notably, a temporary reduction in Social Security payroll taxes----as well as $144 billion in aid to state and local governments, mostly to support spending on education and Medicaid...The remaining $355 billion was spread among diverse federal spending programs, including $40 billion for extended unemployment benefits and $105 billion for infrastructure investment."

    "I am SURE that the Recovery Act helped create jobs and slow the economic contraction----a conclusion shared by our own staff and the nonpartisan Congressional Budget Office. Nevertheless, the recovery would be slow and protracted. In retrospect, some economists (including Obama's CEA chair, Christy Romer) have said that the stimulus package was too small. Within the Fed, some of our fiscal specialists expressed that concern at the time. Over the next few years, I came to agree that, from a purely economic perspective, the program probably WAS too small."

    "I know it's hard to think of a $787 billion package as small, but its size must be compared with the objective of helping to ARREST the deepest recession in seventy years in a $15 trillion U.S. economy. Also, several considerations reduced the impact of the program. First, the headline figure overstated the program's effective size to some degree. For example, some of the Medicaid spending and certain tax fixes included in the bill would have occurred anyway. Second, and more importantly, much of the effect was OFFSET by spending cuts and tax increases undertaken by state and local governments. With economic activity contracting, the income, sales, and property tax revenues of state and local governments fell sharply. Many of these governments operate under laws requiring balanced budgets, so they responded to the lost revenue by laying off workers (including thousands of teachers, police, and firefighters), raising tax rates, and canceling capital projects. The federal stimulus package aided state and local governments but not nearly enough to make up for the budget crunch they faced."
    Bernanke's decisions to raise interest rates multiple times as soon as he became Fed Chairman in 2006 is what burst the housing bubble which resulted in the financial crisis, and you are praising his horrible judgment and lack of understanding?

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    Two questions. What was the unemployment rate the month the stimulus passed? And then what was it one year later?

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    Quote Originally Posted by Libertine View Post
    Bernanke's decisions to raise interest rates multiple times as soon as he became Fed Chairman in 2006 is what burst the housing bubble which resulted in the financial crisis, and you are praising his horrible judgment and lack of understanding?
    Thank GOD we did not have YOU in charge! You would have just let the bubble get bigger and BIGGER and BIGGER?!?!? THAT'S your answer?!?!? Holy fuck!

    The bubble should have been popped SOONER----then it wouldn't have caused as much DAMAGE as it did when it finally burst.

    Do you NOT understand that bubbles INEVITABLY burst at some point???

    It is a SIMPLE consequence of Stein's Law.

    Stein's Law: If something cannot continue forever, it will stop.

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