Open Left

Three Points

(1) Do we have a small data set?  Sure we do.  Which is why I first pointed, months ago, to the study by Reinhart and Rogoff, which drew on a larger data set of major financial crises in single economies.  The main purpose here was different, however.

(2) Wolf's main point, and that of Eichengreen and O'Rourke, is to get the global comparison right--and that comparison is to the Great Depression.  The world-wide fall in economic activity is comparable so far, there is just no denying that.  Which also implies that signs of recovery may be misleading, as were signs back then.  

(3) Do we have a better policy response?  Absolutely, and the analysis shows this as well.  But (a) no one knows if that will get the job done, (b) everyone knows it could have been better, and (c) everyone knows there are more problems down the road (another wave of mortgage bankruptcies, who knows how many toxic assets, crippling effects of slashing state budgets, just to name three biggies).  Particularly here in the US, the policy response was too restrained on at least two counts--the failure to think big enough in terms of what we are facing, and the continued influence of neoliberal ideology.

"Senate passes expanded GI bill despite Bush, McCain opposition"

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by: Paul Rosenberg @ Mon Jun 29, 2009 at 08:01:59 AM CDT