Krugman : Let congress pass another 800 billion $ stimulus

Originally posted by alienreality

Originally posted by xxshadowfaxx
Stimulus did not fail It helped keep the economy afloat for the past two years. Now that money has run out, and everything is falling back into the pit it was in. I don't think there is any other solution other than to do another bailout. Yes, the bottom will fall out eventually, but its so far gone now that we can't fix it. So all we can do, is last as long as possible. The next bailout might last us another 2 years. Either way, the economy is doomed, its just a matter of when.

Following your logic I should not pay any bills and just max out all my credit cards and enjoy!

This is what the government is now doing like they expect the world to end soon.

- emphasis mine

Maybe they are ... that would explain their behavior.

Sometimes I like to wonder what might have happened if TARP and the bailouts of GM/Chrysler and others would have never happened. As much as I am against both, I do understand that many people believe that there was no other choice. Obama as a Sentator voted for TARP while he was running for President, and promoted Turbo Tax Timmy to sec Tres after winning so I feel that he is as responsible as GW Bush.

Had the banks and other scum not been bailed out we would be two years beyond the systemic collapse of the world financial system instead of still awaiting the inevitable. The amount of money spent to insure that the Goldmans and JPMorgans of the world still receive rediculus bonuses each year could have easily been used to capitalize a new financial system at prudent leverage ratios. Let's assume that all the bailouts since Fannie/Freddie were only to the tune of 5trillion (I personally believe that at least double that has been borrowed, QE'd, etc) at a reasonable 10xs leverage that would have created a financial system capable of 50trillion worth of lending. Lehman and Bear Sterns were operating at leverage over 20xs when they blew up and most of the large banks if they had to mark assets at actual value would be well over that 10xs leverage today.

We could be two years into the new normal rather than still watching the death throes of the world economy. I ignore all who like to blame only one political party for this. The circumstances that led to the financial meltdown was truly a bipartisan effort and in a sane world with intelligent voters neither democrats or republicans would be able to win power for at least a generation.