Sunday, August 22, 2010

Sad Truths

Today is Sunday, 22 August 2010.

“How the Great Recession Was Brought to an End” is a study released on 27 July 2010, and authored by Alan S. Blinder (Professor of Economics at Princeton and former Vice Chairman of the Federal Reserve) and Mark Zandi (Chief Economist, Moody’s Analytics). (Citation below.) So far as I can ascertain, it is the first of its kind.

The study models four scenarios: “1. a baseline that includes all the policies actually pursued, 2. a counterfactual scenario with the fiscal stimulus but without the financial policies, 3. a counterfactual with the financial policies but without fiscal stimulus, 4. a scenario that excludes all the policy responses”.

The central conclusion: “We find that its [“the government’s total policy response”] effects on real GDP, jobs, and inflation are huge, and probably averted what could have been called Great Depression 2.0. For example, we estimate that, without the government’s intervention, GDP in 2010 would be about 11.5% lower, payroll employment would be less by some 8½ million jobs, and the nation would now be experiencing deflation”.

The Republican Great Recession was the product of capitalism operating as it is meant to operate. Irrational goals, values, and structures mean that economic swings of bi-polar intensity are inevitable and devastating, and cloaked for public consumption in the bland euphemism of “the business cycle”. Had the W.Bush/Cheney and Obama regimes heeded the blinkered ideologues, and left the mystical “genius of the market”, the “invisible hand”, the “imaginary friend”, to its own devices, the world would surely have enjoyed the Second Great Depression. Then, the ideologues would undoubtedly have responded with the likes of “good medicine always tastes bad”, “spare the rod and spoil the child”, etc.

The sad truth: the vast majority of people in this country have an ignorance of how capitalism works exceeded only by their ignorance of how quantum mechanics works.

The sad truth: the stimulus should have been larger.

And, I feel like a tune:


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