courseofhistory
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- Aug 7, 2012
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Is the economy getting cleaded up? Yes.
Krugman said Bill Clinton basically got it right. Obama did help the country get through a bad patch with the economy and put us on the road to recovery.
On Inauguration Day 2009, the U.S. economy faced three main problems. First, and most pressing, there was a crisis in the financial system, with many of the crucial channels of credit frozen; we were, in effect, suffering the 21st-century version of the bank runs that brought on the Great Depression. Second, the economy was taking a major hit from the collapse of a gigantic housing bubble. Third, consumer spending was being held down by high levels of household debt, much of which had been run up during the Bush-era bubble.
The first of these problems was resolved quite quickly, thanks both to lots of emergency lending by the Federal Reserve and, yes, the much maligned bank bailouts. By late 2009, measures of financial stress were more or less back to normal.
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Now, you may have noticed that in telling this story about a disappointing recovery I didnt mention any of the things that Republicans talked about last week in Tampa, Fla. the effects of high taxes and regulation, the lack of confidence supposedly created by Mr. Obamas failure to lavish enough praise on job creators (what I call the Ma, hes looking at me funny! theory of our economic problems). Why the omission? Because theres not a shred of evidence for the G.O.P. theory of what ails our economy, while theres a lot of hard evidence for the view that a lack of demand, largely because of excessive household debt, is the real problem.
Krugman said Bill Clinton basically got it right. Obama did help the country get through a bad patch with the economy and put us on the road to recovery.
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