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It seems that Summers is congratulating himself for having saved the world from the Great Depression: The Obama administration has helped pull the U.S. economy back from the “abyss” with aggressive efforts to spur growth and stabilize financial markets, a top White House adviser said on Monday… …”Thanks largely to the Recovery Act, alongside an aggressive financial stabilization plan and a program to keep responsible homeowners in their homes, we have walked a substantial distance back from the economic abyss and are on the path toward economic recovery,” Summers wrote to House Republican leader John Boehner.
All they did was throw cash at the problem, without dealing with the underlying issues, which is why they didn’t manage (as Jerome points out) to kickstart ANY net private spending. They didn’t break up major banks. They didn’t allow bankruptcy judges to rewrite mortgages. Their mortgage program kept hardly anyone in the house. And their money for financial firms did not increase lending by one cent.
So, as a Stirling Newberry likes to say “the economy breathes fine, as long as we don’t unplug the life support machines”. That’s all they did - throw the economy on life support by hooking it up to a money spigot, then wander off and have a cup of coffee and tell each other how brilliant they were, not noticing that they hadn’t actually cured the patient. This is going to be the wost “recovery” of your lifetime, unless you’re in the financial sector at a relatively high level. Bank profits have recovered but ordinary people are not, in a generation, going to see a full recovery from this clusterfuck - employment will not recover to pre-recession levels before the next recession, and I don’t expect it to recover after that recession either. At this point, in fact, I am expecting this to turn into a double dip recession—this “recovery” will not have any significant legs. Anyone who believes Summer when he pats himself on his back should remember that Summers record of being wrong about everything of significance is awe inspiring in its completeness. This is the man who helped create the necessary preconditions for the financial crisis through radical deregulation of financial markets, then didn’t see the crisis coming till it was already well underway. Oh, and one reason any peaceniks reading this kiss any chance of the Afghan war ending is that Obama needs the war stimulus to keep the economy on life support and military Keynesianism is the type of stimulus Republicans and Blue Dogs won’t vote against. Welcome to endless war, money for rich people, and trickle down for you. The future looks an awful lot like the past, doesn’t it?
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