On the wires: Blinder and Zandi talk benefits of bailout
Two leading economists Mr. Blinder and Mr. Zandi, say that the benefits of the bank bailout in 2009 can be proved. The economists argue that without the Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration’s fiscal stimulus program, the nation’s gross domestic product would be about 6.5 percent lower this year.
In addition, there would be about 8.5 million fewer jobs, on top of the more than 8 million already lost; and the economy would be experiencing deflation, instead of low inflation. The paper, by Alan S. Blinder, a Princeton professor and former vice chairman of the Fed, and Mark Zandi, chief economist at Moody’s Analytics, represents a first stab at estimating the effects of the economic policy responses of the last few years.
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It’s a pretty big assumption if you ask me. I don’t think that we are anywhere close to being out of danger in this economy. The people I meet in daily life are a powerful evidence to that.