Crazy Economists Are Still Defending The Wall Street Bailout As The Recession Gets Worse

[Omaha Steve]

http://www.alternet.org/economy/147743/crazy_economists_are_still_defending_the_wall_street_bailout_as_the_recession_gets_worse/?utm_source=feedblitz&utm_medium=FeedBlitzRss&utm_campaign=alternet_workplace

By Dean Baker August 6, 2010

It is amazing that angry mobs have not risen up and chased all the economists out of the country. While the greed of the Wall Street gang provided the fuel for the bubble, the economists played an essential role as enablers. This was most directly true for economists in policymaking positions, like Alan Greenspan at the Fed.

It was Greenspan's job to stop the housing bubble. A competent and honest Fed chair would have recognized the bubble by 2002 and taken whatever steps were necessary to rein it in. And we should be 100 percent clear, in spite of all the song and dance about how the financial reform bill will prevent another bailout, the Fed absolutely had all the tools needed to stop this disaster. They just lacked either the competence or the integrity, or both.

But the economists in policymaking positions are just the beginning. There are thousands of macroeconomists across the country, in government, academia and private industry who track the economy as a full-time job. It is actually a well-paid job, with many drawing six-figure salaries and big name types getting close to $1 million a year.

Given the high pay for this profession, it was reasonable to expect that they would be able to see something like the $8 trillion housing bubble that eventually wrecked the economy when it collapsed. But you can count on your fingers the number of economists who raised warnings about the housing bubble. The rest either did not see it, or didn't think it worth mentioning.

Remarkably, no economists seem to have lost their jobs for this failing. Unlike dishwashers and custodians, economists are not held accountable for the quality of their work.

FULL story at link.

[theoldman]

1. Only the economist in the Federal government have control over the economy.

All of the other economist can shout all they want but nothing will happen. Greenspan kept the interest rates low to fuel the housing market and create jobs. Give Joe Six Pack a job and he will not object to a tax cut for the rich. Get the picture?

[Warpy]

2. The banks needed the bailout.

Not doing so would have resulted in a disaster worse than the Great Depression and, like it did then, all the money in the country would have disappeared overnight, the FDIC bankrupted when the first megabank went under.

The problem was that it was a GOP bailout that didn't have sufficient strings attached to prevent the abuse of executive bonuses and the continuing refusal to lend.

The bailout wasn't the problem, in other words. It was the lack of regulation, a consistent problem with the GOP, that allowed that bailout money to be diverted into pockets instead of lent out to stabilize the economy.

[grasswire]

3. who is unrec-ing this?

thanks, omaha steve. The comments section is enlightening.