The intervention of us government actually helped prevent recession 2 times

The intervention of the U.S. government actually helped prevent recession 2 times

11:48:09 | 28/07/2010

The Bush administration and Obama both believe that government intervention to support the economy from 2008 to now help prevent recession 2. This is the second leading economists proven by complex quantitative models .
Two leading economists Alan S. Blinder , a professor at Princeton and former vice president of the Fed , said Mark Zandi , who is chief economist at the company analysts Moody's , in their study estimated the effects of feedback in economic policies International few years .

The two men said that if there is no plan to guarantee a range of financial institutions on Wall Street , bank inspections , plans for emergency loans and the sale of assets of the U.S. Federal Reserve ( Fed ) and the fiscal stimulus program of the Obama administration , America's GDP in 2010 will be lower than the actual rate to 6.5 % .

In addition, the shortage economy will add about 8.5 million jobs next to the current figure is more than 8 million jobs have been lost . The economy thus faces deflation , rather than low inflation today.

In the study, 2 he said: "The impact of each individual factor , then they could be debated , but the overall efficiency of the policy response is almost certain . "

Mr. Blinder and Mr. Zandi emphasized the scale of losses from financial crisis cause . The total direct cost of the drainage failure was about 1.6 trillion dollars , the total expenditure budget , including revenue loss of approximately 750th billion by the weakening economy , accounts for 2.35 trillion , Equivalent to 16 % of GDP.

above figures are compared with the cost savings from the crisis and lending was 350 billion, of which 275 billion are direct costs and $ 75 billion is from the 1990-1991 crisis , about 6 % of GDP at that time .

Two economists also pointed out that measures to stabilize the financial rescue program assets worst ( TARP ) or the guarantee package , along with an inspection of banks and the impact from the Fed , has created work greater than the fiscal stimulus program of the government Obama.

If only the fiscal stimulus program is executed and no other financial measures , reduction in 2009 GDP will be 5 % to 12 million jobs lost. But if the only enforcement measures and not make fiscal stimulus program , the GDP will decrease by nearly 4 % to 10 million jobs lost.

They also said , can not compare the effects of combining the above two types of policies with particular impact that each policy offers , because "the policies tend to support each other . "

However, leading economists and others expressed doubts with the above results . Stanford University professor concurrently high commissioner at the Hoover Institute , John B. Taylor said : "I am very surprised with the huge impact of the policies identified in the study . And I see the results on variance with what I saw from his experience . "
According to Taylor , the Fed has successfully stabilized the market negotiable instruments and money markets , but the purchase of 1.25 trillion of securities based on mortgages were not effective . He also said the stimulus program of Government Obama " very low efficiency and do not have much to say about this program except to inherit a larger debt . "

Disagreement for two research economist Zandi Blinder and mainly revolves around the dependency of the econometric estimates in the design and modeling solution . Two economists said they expected that their analysis can stand before the detector reviews from other scholars . In the analysis , 2 he said : "When everything has been implemented , the fiscal policy and fiscal will spend the taxpayers a huge amount of money , but not to the extent as the majority are still worried and certainly not many in numbers will cost if policy makers do not have any action . "

Source: New York Times / STX