Truth is the opposite
Liberals believe a. Republicans caused the financial disaster in
27/8 and b. Obama fixed it. The truth is the OPPOSITE!
a.
Democrats caused the financial
meltdown http://www.thegatewaypundit.com/2012/12/new-study-finds-democrats-fully-to-blame-for-subprime-mortgage-crisis-that-caused-financial-collapse/
Obama Did Not Save the Economy
It’s not his fault he
arrived too late to play a role. But getting the credit wrong also gets the
blame wrong.
By
HOLMAN W. JENKINS, JR.
As
he goes out the door, President Obama is praised lavishly for saving the
financial system and warding off a second Great Depression—which indeed would
have been an amazing accomplishment for a backbench U.S. senator.
To cite an example
almost at random, Harvard economist Kenneth
Rogoff claimed on NPR this week that Mr. Obama “pulled us
out of a very deep abyss,” though Mr. Rogoff also allowed that President Bush deserves
“a little credit here.”
Put
aside the desire to be nice to the outgoing president. Such spin is unpromising
simply in the face of the calendar.
The
Troubled Asset Relief Program may have been the least of the rescue measures,
but it was the highest risk, because the people’s bipartisan representatives
were required to put their imprimatur on unpopular bailouts. Nonetheless, TARP
was enacted Oct. 3, 2008, almost four months before President Obama took
office.
On
March 16, 2008, the Federal Reserve arranged a fire sale of Bear Stearns.
Between Sept. 19 and Oct. 26, numerous other institutions were bailed out; the
money-fund industry and commercial paper market were propped up; bank
depositors were favored with a big extension of deposit insurance.
On Dec. 19, as a final
act, the Bush administration directed $17.4 billion in TARP funds to keep General Motors and Chrysler afloat so the Obama
administration wouldn’t be confronted with their liquidation on its first day
in office.
There
were numerous discrete acts that constituted the bailout. All were undertaken
by the Bush administration. There was one heroic, pell-mell effort at
bipartisan legislative coalition-building of the sort that never took place
during eight years of the Obama administration. That was TARP.
Mr.
Obama wasn’t even a character in the HBO movie about all this, “Too Big to
Fail.”
When
he finally arrived, his contribution consisted of fudgy bank “stress tests,”
less to establish confidence in the banks than to establish confidence in the
new administration, under lefty pressure at the time to reinflame the crisis by
nationalizing the industry.
He
gave us a $787 billion pork-barrel “stimulus,” an exercise in hand-waving which
ever since has figured prominently in the efforts of Obama publicists to create
confusion about what ended the crisis.
His
own Council of Economic Advisers, in a yeoman effort, argues essentially that
since a second Great Depression didn’t happen, whatever Mr. Obama did gets the credit.
Never mind that recoveries normally follow recessions.
Many convince themselves
that Mr. Obama surmounted overwhelming political opposition to prop up GM and
Chrysler, when the clear lesson of the Bush action is that no president would have been prepared to pay the
political price of letting them fail.
We
are perfectly serious when we say that Mr. Obama will carry a burden of
cognitive dissonance on this point in the decades ahead. It isn’t his fault
that he arrived too late to play an important role in the rescue. But in
getting the credit wrong, we also get the blame wrong.
As all now agree, it was Lehman, not the washing through of modest subprime
losses, that turned a regional U.S. housing downturn into a global financial
panic. In his memoirs, Fed chief Ben Bernanke protests that the Fed knew
exactly what a catastrophe Lehman’s unmanaged collapse would be, but its hands
were legally tied at the time.
Actually,
what seemed obvious at the time was that the Fed and Treasury were reacting to
the populist revulsion against bailouts. They feared getting on the wrong side
of public opinion and the politicians.
New
evidence on this agitated question comes from University of Pennsylvania legal
scholar Peter Conti-Brown, in his history of the Fed, “The Power
and Independence of the Federal Reserve.” He finds Mr. Bernanke’s legal
arguments wanting and concludes that political imperatives were indeed
paramount.
He
also argues that the Fed’s decision, though terrible for the economy, worked
out just fine for the Fed. The post-Lehman meltdown justified the central
bank’s subsequent bailout efforts and positioned the Fed to survive Dodd-Frank
with its powers intact.
OK,
presidents get credit they don’t deserve. They also sometimes escape blame. Let
it be said that, in the kind of omission that damns a presidency in the eyes of
the cognoscenti, it was President Bush who should have and could have stepped
up and provided his appointees political cover to spare the world the Lehman
meltdown.
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