Obama, Congress and Bernanke did not save the world from a Great Depression

[Karmadillo]

http://www.ianwelsh.net/obama-congress-and-bernanke-did-not-save-the-world-from-a-great-depression/

by Ian Welsh

Sorry, they simply did not. The baseline IMF forecast before the bailouts and before the stimulus bill tracks almost exactly what happened.

The bailouts were an actual net drag on the economy. Instead of cleaning up banks balance sheets, they allowed zombie banks to continue to exist, banks which are crippled when it comes to lending. In order to make sure these banks can pay down their bad debts, the Fed not only had to take on huge amounts of their paper at par when it was worth 20 cents at most, it has had to lend to them at concessionary rates, pay extra interest to them, and let them leverage that to make obscene profits from what lending they are doing (why did your credit card rate go up, that’s why?) and from trading on a captive market.

<edit>

Furthermore, there were far, far more intelligent things which could have been done. The crisis was, as the tired phrase goes, also an opportunity to break the power of monied interests, so that ordinary Americans could prosper again and could reclaim their government. The stimulus was an opportunity to restructure the US economy to allow real, widespread growth in the future.

Both those opportunities were wasted, and they were wasted by Obama. TARP would not have passed without him, and once he was in power he could have demanded that Bernanke do as he commanded (break the banks) or step down, if Bernanke wouldn’t, he could have easily impeached him. The stimulus was his stimulus.

Obama, Congress, Bernanke, Geithner, Paulson—none of them saved anybody except the banks and the rich from apocalypse. I understand that partisan Democrats want to pretend Dems saved the world, but they did no such thing.

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[Rex]

1. They saved the worlds financial system from collapse

maybe. What is worth noting here is the financial institutions did this themselves! The rich bankers got rewarded (in this scenario the bad guys) and made the innocent (working class) pay the bill. With our governments approval. If the system would have collapsed it might have been worse imo.

[AllentownJake]

69. They delayed

The system is very much still collapsing.

The financial system is about confidence, and that is eroding still.

[babylonsister]

2. A Scottish politician? Couldn't you find someone more local to

agree with your pov? :shrug:

[ProSense]

5. "Ian Welsh has been blogging since 2003. ...

Ian Welsh has been blogging since 2003. He was the Managing Editor of FireDogLake and the Agonist. His work has also appeared at Huffington Post, Alternet, and Truthout, as well as the now defunct Blogging of the President (BOPNews). In Canada his work has appeared in Pogge.ca and BlogsCanada. He is an editor, writer and social media consultant who currently lives in Toronto.

:rofl:

[babylonsister]

8. Precious! Such creds!

:rofl:

[DevonRex]

30. OMG. Ex managing editor of FDL. Where's his economics degree?

:rofl:

[KittyWampus]

22. I'm sure the OP'er HAS found other opinion writers to try and make Obama look bad.

Some people just swing that way.

[DevonRex]

31. I guess random bloggers are now economics experts.

:rofl:

[laughingliberal]

3. K & R nt

[Swede]

4. Why,yes he did.

This guy is full of it.

[Jim Sagle]

6. This is the truth, and everybody goddamn well knows it. Those who profess otherwise are lying.

And everybody goddamn well knows that too.

[ProSense]

7. We are

doomed!

[Jim Sagle]

66. Real unemployment is rising, the government's fake stats to the contrary notwithstanding.

[AllentownJake]

75. No blue links

What was that trillion dollar bailout two weeks ago.

[babylonsister]

9. Credible link? Your opinion doesn't count. nt

[QC]

18. "Who cares what you think?" -- George W. Bush n/t

[Jim Sagle]

80. Don't need links for what we all know.

[Lasher]

79. Beg the question much?

Then a fallacious argumentum ad populum, followed by a ruthless appeal to shame, wrapped up by another argumentum ad populum. I don't buy your ration of shit so I guess that makes me a lying nobody.

[msongs]

10. let's hire the people who caused the problem to fix it so their buddies make billions ok? nt

[scarletwoman]

11. "none of them saved anybody except the banks and the rich from apocalypse." Exactly the truth.

The System that funnels the Wealth of the Nation -- and the Wealth of the World -- upward to the wealthiest remains in place.

[Greyhound]

54. And that's exactly what they saved. Kick

[caledesi]

12. Blogs are not facts! Reputable link pls. nt

[kentuck]

13. Sort of impossible to prove a negative...

We really don't know. They only did what the "experts" said was necessary. Of course, the "experts" were big bankers and financiers.

[unkachuck]

14. K&R....n/t

[OHdem10]

15. They saved the world from financial collapse by stabalizing our

Financial System. Any serious economist, and I have listened to
many, says they did what they had to do.

Believe you me, there is no way on earth GWB would ever have
started the TARP, if he was not staring into the Abyss. This
action went against everything he believes as a Conservative.

Did you have any experience with the Great Depression???
Let me tell you--you would not want to go there.

[aquart]

16. We also want to pretend that the crisis is over.

And so frequently, the PR is way more important than the truth.

[KonaKane]

17. Convenient Monday morning quarterbacking

significant of not much else.

[Karmadillo]

19. You're wrong. Welsh has been right on this from the beginning.

http://www.ianwelsh.net/memory-lane-on-the-paulsongoldman-stickup-what-i-wrote-sept-20-2008-and-why-it-matters-today/

<edit>

Time for Congress to call his bluff, and to see that the financial crisis is dealt with on their terms, with strict oversight by people they can trust, not by a scam artist and liar like Paulson.

Of course, Congress didn’t call his bluff and Congress did fall for it. But let’s remember our history. The House voted against. Nancy Pelosi indicated that she would not pass TARP unless Republicans voted for it in the same proportion as Democrats. They weren’t going to do that, so TARP was dead.

Then Barack Obama stepped in and started twisting arms. TARP is Obama’s baby. If you like it, or don’t like it, remember, without Barack Obama it would have died.

This is the fundamental problem right now with Democrats. They passed a lousy stimulus, they made TARP Democratic policy by passing it with majority Democratic votes and they are on their way to passing a lousy healthcare bill which won’t even kick in till 2013.

Bad policy leads to bad outcomes. Bad outcomes get blamed on the incumbents (as they should). TARP, the Stimulus, healthcare and the economy become less and less the Republican’s problem every month that passed. Even if they screwed it up, Democrats control the House, Congress and the Presidency. It’s up to them to fix George Bush’s mess, and if they don’t they will be judged as failures, and that judgment will be accurate and deserved.

And the outcomes are going to be bad. The stimulus bill was both badly put together (too many tax cuts, not properly targeted) and too small. The healthcare bill should be single payor, because single payor is proven to work and the witch’s brew that Congress has put together isn’t proven to work and they can’t afford to fail. And TARP was, and is, a piece of crap, but the differences between Bush/Paulson financial policy and Obama/Geithner are so thin as to be largely cosmetic.

[B Calm]

25. Welsh cannot even call Barack Obama, President. I wouldn't

give this partisan hack any credence!

[Raineyb]

53. You don't have to be able to call the president to note that the underlying problems

that caused the collapse in 2008 have not been fixed. Re-inflating the bubble and postponing even more financial disaster is NOT exactly what I would call saving the world. When things have been FIXED then you can call the world saved. Until then, it's just puffery.

[MajorChode]

27. Of course Welsh was right. If you don't believe it, just ask Welsh

Got it.

[Karmadillo]

28. Or you could read what he wrote at the time. Don't hurt your lips, though.

nt

[MajorChode]

32. I did. Thanks for the chuckle.

Cheers!

[Karmadillo]

34. Sure you did. Welsh called the bipartisan raid on the treasury as it happened, while

Major Chode cheered and wondered just what kind of pony he'd be getting. Next election, there's a saddle with your name on it! Keep the faith!

http://firedoglake.com/2008/09/20/hank-paulsons-raid-on-the-treasury/

Hank Paulson’s Raid on the Treasury
By: Ian Welsh Saturday September 20, 2008 6:45 pm Tweet Share

Paulson after Congressional Testimony

The more I look at the Paulson "plan" the more I come to the conclusion it’s just an old fashioned stickup. A scam. The Republicans know they have only a few more months, and this is their last raid on the treasury. Republicans created this crisis, and in the way of scam artists everywhere now that there’s a crisis they’re demanding money and power to fix their own mistakes.

What I’m hearing is that the gun being held to Congress’s head is the fear of a money market meltdown. These funds are integral to the economy, yes, but 700 billion is far more than is needed to bail them out. They aren’t all going to fail tomorrow, which that number assumes – that they’ll zero out on Monday, and then a few banks will fail simultaneously. A few money market funds may break the buck, but you can deal with that with, oh, 25 billion, and with change to spare. Frankly the Fed’s Bernanke can deal with it with the authority he already has.

So the gun that Paulson is holding to Congress’s head, while not filled with blanks, is a BB gun. He’s trying to stampede Congress into giving him more money and more power than he actually needs to fix the ostensible problem by acting as if there’s no time to think through, or disaster will occur almost immediately.

Why?

Well, that 700 billion bails out Paulson’s friends and colleagues at the highest levels (most of the little people will still lose their jobs). It preserves the world that Paulson worked in all his life. It means that Wall Street and the Banking industry doesn’t have to change how they do business. The people in charge of it will stay in charge and they will stay rich.

Paulson is asking Congress for 700 billion dollars to bail out his friends and to keep his world intact. To ensure there is no meaningful reform of how the financial industry does business, or who runs it. He knows that if serious consideration is given to how to do a bailout it will include a lot of conditions, that the markets will be re-regulated and reformed, and that his friends will mostly be tossed out on their butts.

Be clear, the economy is in a crisis, but it’s not a crisis that requires the literal dictatorial powers that Paulson is asking for. He does not need to be free from all oversight. He does not need to be given 700 billion dollars now. The bailout does not even have to be done through the treasury but could easily be done through the FDIC. Conditions can be imposed on the parties being bailed out. Help could be given to ordinary people as well as banks, not just to banks. Most of all, Congress does not need to sign Paulson a blank check and legal immunity from consequences as to how he spends it.

This is a stickup. Paulson is trying to stampede the Congressional herd into giving him powers and money that he knows they would never give if they had time to think it through carefully. It worked with the Patriot Act. It worked with the AUMF. He’s betting it’ll work again. Create a crisis (or lie one into existence) then demand dictatorial powers and unlimited spending authority to deal with it.

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[MajorChode]

47. Soon there won't be a dry eye in the house

[Karmadillo]

55. Major Chode: writing substanceless posts & kicking my thread. Thanks!

nt

[MajorChode]

57. You actually think your posts contain substance!

You should take your show on the road. All you've offered is the poorly supported opinions of a blogger, and as support for the opinions of others you offer more opinions from the same author. If that counts as substance in your book, I'm more than happy to kick your post if only for the entertainment value.

Cheers!

[Karmadillo]

58. Major Chode: mistaking fact for opinion.

Was Welsh Monday morning quarterbacking as asserted above? Nope. The facts, not an opinion, show he was against the bailout when the bailout was being considered and he even offered an alternative. But keep the attacks coming. Hint: Call Welsh a "blogger" or something. That would take him down a peg or two. "That blogger, Welsh," you could write. And then end with that "Cheers" tag line you do, cause that's cool and kind of hints at the monster intellect you have but kindly keep hidden so as not to discourage the rest of us from posting.

:toast:

[MajorChode]

59. Oh sweet Jebus this just keeps getting better and better

Your assertion was that Welsh was "right". That has NOTHING to do with fact and everything to do with opinion, which you can't even begin to support with anything other than more opinions from Welsh himself. So do yourself a favor and stop trying to pretend otherwise. Or don't and keep feeding your absurdity for my amusement.

I wouldn't dare think of discouraging you from posting anymore than I would discourage a streetcorner preacher from keying his bullhorn. I absolutely love hearing from those who have nothing more than blind faith to support their arguments.

Cheers!

[Karmadillo]

60. Keep trying! You can get there!

Was Welsh monday morning quarterbacking? Let me help you:

http://www.thefreedictionary.com/Monday+morning+quarterbacking

Monday morning quarterback
n. Informal
One who criticizes or passes judgment from a position of hindsight.

I hesitate to leave you on your own here as you'll no doubt be forced to fall back on "Blogger!" and "streetcorner preacher!" (although I like the latter), SO (HINT!!!) if you go back a few posts you'll be able to determine whether or not the facts support the assertion that Welsh is monday morning quarterbacking.

Toodle pip!

[MajorChode]

61. Here's where you fucked up this time

I never made any "Monday morning quarterback" claims.

Oooops!

But don't let reality deter you from a good rant, not that it ever has. I'll leave you to argue your finer points of "fact" with yourself. Although you've been a great source of comic relief, I do have limits on encouraging absurdity and you've far exceeded your quota. However, please don't stop posting nonsense in general because the world can always use more unintentional comedians.

Cheers!

[Karmadillo]

64. LOL

My bad.

Toodle pip!

[Hannah Bell]

67. chode/choad

[AllentownJake]

70. A lot of people said this wasn't going to work nt.

[B Calm]

20. I do know President Obama saved my industry and American manufacturing jobs

with the wildly successful cash for clunkers program.

[laughingliberal]

40. Has nothing to do with the bank bailouts.

Did help the auto industry and many workers. However, the carte blanche given to financial institutions and fake help for homeowners has left those in the building trades starving.

[KittyWampus]

21. No, but SAVED IT FROM ARMAGEDDON MOTHERFUCKERS!

Bow Down.

:D

[B Calm]

23. NO KIDDING! DUers not even calling him President. . . amazing

[ljm2002]

43. Like no one ever said "Clinton" rather than "President Clinton"...

...right?

It is not uncommon to refer to Presidents by their last name only. Bush. Clinton. Reagan. Carter. Nixon. How many hundreds of articles used their last names, not preceded with the word President?

Please, find something else to be overly sensitive about.

[B Calm]

62. Have you ever heard a republican refer to him as President Obama?

[ljm2002]

65. Ian Welsh is a Republican?

Look, I get it. It is true there are some who cannot seem to bring themselves to call him President Obama.

On the other hand, it is undeniable that many, many opinion writers over the years have referred to Presidents mainly by their last names.

Which is why I think it is useless to get worked up about that particular issue. That, and the fact that many of us here on DU could not bring ourselves to call Dubya President Bush, either

But you are of course free to see it as an issue, and as I said, I know there are some to whom it applies, including many and maybe most Republicans.

[AllentownJake]

77. It is called attacking the messenger

and it is a very old human trait.

Focusing on that one thing is a way the shills who have trouble intellectually understanding what Ian wrote can attack him, not what he said and still try to manage to appear intelligent.

[AllentownJake]

76. I call him the Orator

What does that make me?

BTW Orator team leader in the primary and general election.

The beauty about being an American, we shunned royalty and embraced freedom of speech in 1792.

[MadHound]

24. LOL! Yes, yes, gotta love that,

Paying off Wall St. disguised as saving the world from armageddon:rofl:

Frankly, over the long run we would have been better off without the bailout, instead we've simply set ourselves up to get fleeced time and time again.

[tranche]

26. Miserable. While some handle the world's business. Ian drums up clicks to his blog.

[Karmadillo]

29. And others mishandle the world's business while drumming up bucks from their corporate gangland pals

nt

[tranche]

33. There's only 2 sides: Obama and his gangland pals, and bloggers fighting for what's good and right.

Except in this world there is a vast middle who care about jobs and a better way of life no matter how unpure it may be. While the white upper class bloggeratti bemoan the dismantling of an America that never was, real people will always continue to keep moving forward. So while some try and tease out some conspiracy during this debacle the vast majority of people are just happy that for now the whole system didn't collapse.

[blindpig]

35. Yes, there are only two sides.

Workers and Capitalists.

This administration(necessarily any administration) is not on the side of the workers.

[Karmadillo]

36. +1 (and a great graphic)

nt

[tranche]

42. I was going to put up a fight, but I can't.

The Administration is on the side of those bringing with it organization and massive amounts of capital. They're on the side with the most influence. They serve those who serve them. At the moment, that is the wealthy, the capitalists. That's really the way it's always been, for what, fifty years now? I believe that we may have in fact averted some type of disaster (even though the US does construct it's own economic reality), and in disagreement with the OP it was due to the US and world governments. What it also averted was the type of catastrophic event that could have helped strengthen a workers party. This is where I separate myself here. Some welcome it without thinking of the real consequences to people, while others are happy to take the medicine and keep pushing the machine forward. So, basically, I'm saying I gave up. Maybe I don't even trust the moral fabric of this country any more. Let's say the revolt happens, would the new leaders in this new system be any better, or will we just start a new leg of the game? The workers vs the capitalists.

[ljm2002]

44. Nice wedging there...

..."the white upper class bloggeratti"...

Thanks for coining yet another divisive term to try and shut down debate.

This is becoming distressingly common on DU.

[tranche]

46. The debate is the echo chamber that I pointed out. I'm powerless to stop it.

Because I'm not part of it.

[AllentownJake]

73. Same thing said about Bush and the wars of terror. nt.

[MellowDem]

37. Evidence? Proof? Oh, you have none....

What were the "far more intelligent things" that could have been done? I'm guessing this guy has a plan or something. Of course the bailouts were a drag on the economy, but much less worse than if the banks would have failed and set off a chain reaction of other, solvent banks failing and the whole financial system going down. This guy seems to have no understanding of economics or what actually caused the Great Depression.

[DevonRex]

38. But, but, but he writes a BLOG!1111!1

:rofl:

[MajorChode]

48. What more proof do you need?

If you don't bow down and accept the one and only truth, he'll post more Ian Welsh!

[DevonRex]

50. OMG.

:scared:

[AllentownJake]

78. Here is the awesome thing

I have not seen one substantive rebut to Ian's commentary.

Which makes me smile, because I frankly agree with most of what he had to say, and it means the people throwing poop have nothing.

[Karmadillo]

39. Be afraid! Be very afraid! Duct tape your savings! And then go read post #34 and

read more of Welsh and others on the internet who write of that which must not be spoken by the corporate media. We don't need to let the oligarchy continue to frighten us into paying protection money until we have nothing left.

"Out of focus ideology
keeps the masses from majority"

[MajorChode]

51. "others on the internet"...

http://www.youtube.com/watch?v=Wkm5mKgjEhA

[Karmadillo]

56. "others on the internet"...

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=8338863&mesg_id=8341662

[AllentownJake]

72. Trillion dollar bailout 2 weeks ago nt.

[spanone]

41. yea, i guess those republicans in congress did it....crock

[Tierra_y_Libertad]

45. No, they didn't. But, it's a pleasant pretense for the capitalist wing of the party.

[SidDithers]

49. Dude. You need a better hobby...nt

Sid

[Greyhound]

52. "none of them saved anybody except the banks and the rich from apocalypse."

And that's the bottom line.

They did nothing for your 401(k), except to steal it years ago. No they saved their asses and their game so that you can be forced to keep it going for them. Now, they have had their "9/11" to get the suckers to go along while they steal your SS.

The saddest thing, IMO, is that no matter how blatant they are, most of the sheeple still refuse to see what they do.
:kick: & R

[branders seine]

63. neither party represents "the people"

it is ALL about corporate donations

[johnaries]

68. Ian Welsh is not an economist, and real economists disagree

with him. I'll trust the experts.

[AllentownJake]

71. How is that working out?

When was the last trillion dollar bailout of banks...oh yeah two weeks ago.

Before you say that was just Europe, do a search on American banks exposure to European Sovereign debt and European banking institutions and the administrations actions to ensure a European bailout.

[AllentownJake]

74. Such hate over a truth people don't like

1) The European financial system was bailed out 2 weeks ago to a tune of 1 trillion dollars.

2) American exposure to European debt on bank balance sheets was quite large.

3) Volatility in the markets has been increasing.

4) Foreclosures, unemployment, and loss of tax revenue has left a giant crater in our economy that will take 10 years to fill.

Saved the world my fucking ass.