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Home Publications Blogs Beat the Press The Washington Post Praises Baby Sitter Who Burned Down the House: the Kids Survived

The Washington Post Praises Baby Sitter Who Burned Down the House: the Kids Survived

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Sunday, 26 September 2010 07:52

Most workers are held accountable for their performance. The same does not apply at the Washington Post for the people who run economic policy. Once again the Post offered praise to Presidents Bush and Obama for preventing a Great Depression.

Of course it is always good to prevent a Great Depression, but the only reason a severe recession is even on the agenda is the result of braindead economic policies that were almost entirely ignored by the Washington Post. In the real world avoiding a Great Depression is a rather weak boast. (For the record, the second "Great Depression" story is a myth to scare little children and Post readers. The first Great Depression was the result of a decade of failed policies, not a single mistake or set of mistakes at its onset.)

Competent economists saw and warned of the dangers of the $8 trillion housing bubble, the collapse of which eventually sank the economy. This was an entirely predictable and predicted event, as was the fallout from this collapse.

However, those warning of the bubble were almost completely excluded from the pages of the Post. Instead, the Post filled its economic coverage and opinion pages with discussions of the budget deficit, which was (and is) the topic of endless hyperventilation. 

Comments (9)Add Comment
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written by izzatzo, September 26, 2010 8:59
Under the Hero Model, there's always a heroic rescue of last resort to rescue ... heroes of Wall Street based on their essential role to the economy. Heroes like Bush and Obama who rescue heros are held up as giving the ultimate sacrifice, spending other peoples money heroically volunteered by taxpayers to rescue ordinary heroes from a Second Great Depression.

Once heroes are rescued by heroes so heroes can heroically hold up the economy, further attempts to rescue the economy for non-heroes are considered acts of sedition by traitors and terrorists and will be dealt with by requiring all non-heroes expecting heroic rescue to present an Austerity Certificate that Less is More.
Keynes was against preventing bubbles
written by AndyfromTucson, September 26, 2010 9:05
From The General Theory of Employment, Interest, and Money, Chapter 21 - Trade Cycle - Section III:

"Thus the remedy for the boom is not a higher rate of interest but a lower rate of interest! For that may enable the so-called boom to last. The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and thus keeping us permanently in a quasi-boom."

Read all of Chap 21, Section III, for the complete reasoning. I guess this means Bush-Greenspan were pure Keynesians and Dean Baker is not a Keynesian?
The Keynes alternative to preventing bubbles: income redistribution
written by AndyfromTucson, September 26, 2010 9:12
This is similar to what Robert Reich has been arguing lately.

From The General Theory of Employment, Interest, and Money: Chapter 21 - Trade Cycle - Section III:

"Furthermore, even if we were to suppose that contemporary booms are apt to be associated with a momentary condition of full investment or over-investment in the strict sense, it would still be absurd to regard a higher rate of interest as the appropriate remedy. For in this event the case of those who attribute the disease to under-consumption would be wholly established. The remedy would lie in various measures designed to increase the propensity to consume by the redistribution of incomes or otherwise; so that a given level of employment would require a smaller volume of current investment to support it."
Worse than the Great Depression?
written by Mike Sandifer, September 26, 2010 10:27
I've rad that around a third of US banks failed during the Great Depression, with a similar drop in the money supply. Had the 18 or so largest financial institutions, responsible for around 70% of all US lending been allowed to fail, how could we avoid an even worse depression? Perhaps it would not have been the Great Depression 2.0, but X 2.
...
written by Ron Alley, September 26, 2010 11:13
Obama continued Bush's program and presumably signed off on the program during the interregnum. The burning issue is not the effectiveness of the program in preventing bank failure. The program was clearly successful. The issue is that the program addressed only the consequences of the financial bubble that affected the banks. The homeowners were free to fend for themselves. The exception being the ill-conceived, poorly implemented and failed HAMP program.
...
written by Edwin, September 26, 2010 5:41
"The first Great Depression was the result of a decade of failed policies, not a single mistake or set of mistakes at its onset."

I haven't heard this view before. I thought the commonly accepted cause among macroeconomists was the sharp drop in the money supply. Is there something I could read that elaborates on what you mean?
The economic system has failed.
written by Scott ffolliott, September 26, 2010 5:49
"Thatcherite simplicities for simpletons” are no longer believable. There are other options and better options

The economic system has failed. It is time that we recognize this fact. Since we lack a democratic system to put in place a new system, we must first and foremost set about creating a democracy before we can put into place a new economic system.
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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