Not going to happen. Remember, the House did vote down TARP--at first. The market crash that occurred immediately afterwards persuaded them to turn around, along with a number of modifications to the plan made by the Senate. Ultimately, everyone realizes that there's a crisis and sooner or later they're going to come together to agree on something to do about it, so you're going to get something like TARP. Maybe not a direct purchase of "troubled assets," but there's got to be something done to recapitalize banks and prop up the economy.The POD is no TARP.
Not going to happen. Remember, the House did vote down TARP--at first. The market crash that occurred immediately afterwards persuaded them to turn around, along with a number of modifications to the plan made by the Senate. . .
But then in 2010, we had this premature putting on the brakes.What Did We Learn from the Financial Crisis, the Great Recession, and the Pathetic Recovery?
by
Alan Blinder, Nov. 2014
https://www.princeton.edu/ceps/workingpapers/243blinder.pdf
' . . . But it would have been much worse had Congress, the US Treasury, and the Federal Reserve not taken a series of extraordinary actions. After much prodding and a Munchian scream from the stock market in 2008, Congress held its collective nose and passed the much-reviled Troubled Assets Relief Program (TARP), which was quickly labeled a "$700 billion bank bailout" although it was neither. Months later, under the Obama administration, Congress passed a huge fiscal stimulus over almost unanimous Republican opposition. . . '
' . . . a severe political backlash against "deficit spending" (but perhaps not against tax cuts) developed and, more or less, took over the fiscal policy debate in the U.S.—which by 2010 was focused on reducing the deficit. . . '
Yeah, sure. But my point was that the specific PoD suggested wouldn't work, because Congress was going to do something like TARP sooner or later. Moreover, by 2010 the chance of a Second Great Depression happening, at least in the United States, was gone. So that's much too late a PoD.But then in 2010, we had this premature putting on the brakes.
And much of Europe did go the route of austerity. For example, both Spain and Greece had depression-level unemployment.
Okay, I’ll agree with that specific point. And thank goodness, for it is a very important point.. . . or other mistakes once the worst of the crisis is past, but it's just hard to get something as systematically bad as the Great Depression to happen once it's actually happened.
Yeah, sure. But my point was that the specific PoD suggested wouldn't work, because Congress was going to do something like TARP sooner or later. Moreover, by 2010 the chance of a Second Great Depression happening, at least in the United States, was gone. So that's much too late a PoD.
The ultimate problem is that everyone remembers (not literally, of course) the Great Depression, knows how bad things got, and aren't going to make the mistakes that led to the Great Depression becoming Great. They might make new and exciting mistakes, or other mistakes once the worst of the crisis is past, but it's just hard to get something as systematically bad as the Great Depression to happen once it's actually happened.
Not going to happen. Remember, the House did vote down TARP--at first. The market crash that occurred immediately afterwards persuaded them to turn around, along with a number of modifications to the plan made by the Senate. Ultimately, everyone realizes that there's a crisis and sooner or later they're going to come together to agree on something to do about it, so you're going to get something like TARP. Maybe not a direct purchase of "troubled assets," but there's got to be something done to recapitalize banks and prop up the economy.
At this point, everyone knows there's a crisis and the response will be escalated as necessary until it's sufficient to at least prevent an economic collapse, i.e. a Great Depression-like scenario, up to and including outright nationalizing the banks and turning them into technically federally-owned companies the way that other countries did in some cases. The recovery may (likely will) be slow and difficult, as IOTL, but until there is a recovery people are going to be pushing harder and harder.True, but what if Citigroup and Bank of America followed Lehman into bankruptcy before the second vote? In OTL, this very nearly happened and were only saved by TARP. It's quite possible that if they go under, we could have reached a point of no return where you need much more than $700 billion to prevent the collapse of the remaining major investment banks.
Of course it's a matter of when. Recessions happen from time to time, and no one really has such a great handle on why that they could possibly prevent them.I was talking to someone not to long ago and he said their will be another recession. Apparently its a matter of when not if.
Yeah, it's way stronger than at almost any other time in history.You can see it, the economy is nothing compared to what it once was.
They're "directed" by nobody. You think Lehman Brothers wanted to go bankrupt? Bankers might have more influence than politicians, but overall the system is more akin to a hurricane or an earthquake than anything else; no one has all that much actual control over where things go.The economies of the world are directed by unelected bankers, not politicians.
When there is another recession, it will be as separate from the Great Recession as the Great Depression was from the Panic of 1907.I think there will be another recession, and it will just be an extension of 2008 but who knows about a Great Depression. Anything could happen. (You might have spoke too soon)
Banks, and the financial “industry” in general, damn sure have more power than us regular citizens. Laws and policy supporting the banks are viewed as highly critical and absolutely necessary in a way that, say, helping unemployed young persons is not.. . . The economies of the world are directed by unelected bankers, not politicians. . .
I’m not at all so sure, for even during the 2008 crisis itself, different conservative viewpoints gained traction.. . . the Republican party would get massacred in the election and probably lose control of Congress for 20 . . .