I must not have kept up with the news for a couple of days, so I was pretty surprised when I woke up Sunday morning and discovered that the U.S. economy was in free fall and the American way of life was teetering on the brink of disaster.
I thought the American economy was strong. How could I be so wrong?
· “The economic stimulus package that I signed earlier this year is having its intended effect. Many Americans who received tax rebates are spending them. Businesses are taking advantage of tax incentives to purchase new equipment this year. And there are signs that the stimulus package will continue to have a beneficial impact on the economy in the second half of the year.”--George W. Bush August 30, 2008
Okay--that was Bush, and we all know he’s a co*k-eyed optimist (and pathological liar), so we can’t really believe what he says about the economy... or the war ...or the environment ... or torture ...or the time of day ...etc.. But straight-talking maverick war hero John McCain has also said that our economy was “strong” at least eighteen times this year, and said so as recently as last week (9/15/08).
Was that just political happy-talk in an election year? What did America’s top economic experts have to say?
Federal Reserve Chairman Ben Bernanke said:
· [T]he agencies have made clear that no bank is too big too fail, so that bank management, shareholders, and uninsured debt holders understand that they will not escape the consequences of excessive risk-taking..--The Wall Street Journal, 11/15/05
· The risk of moral hazard must be considered in designing government-backed programs; such programs should not bail out failed investors, as doing so would only encourage excessive risk-taking.--Committee on Financial Services, U.S. House of Representatives, 9/20,07
· It is not the responsibility of the Federal Reserve - nor would it be appropriate - to protect lenders and investors from the consequences of their financial decisions.--Speech at the Economic Club of New York, 11/15/07
· I don't anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system.--The Guardian, 2/29/08
· [Freddie Mac] …no danger of failing. [Fannie Mae] ...adequately capitalized.-- CBS, 7/16/08
US Treasury Secretary Henry Paulson said:
· This is far and away the strongest global economy I've seen in my business lifetime.--CNN, 6/12/07
· I don't see [subprime mortgage market troubles] imposing a serious problem. I think it's going to be largely contained."--Reuters, 4/20/07
· We've got strong financial institutions . . . Our markets are the envy of the world. They're resilient, they're...innovative, they're flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong.--RealClearPolitics.com, 3/16/08
· In my judgment, we are closer to the end of the market turmoil than the beginning.-- USA Today, 5/16/08