It would work... In theory? Why did they bail out the banks?
Throwing money at a problem in some vague hope that it will resolve is almost as American as apple pie and baseball. Did Depression-era bailouts fail as a result of too-little-too-late, or does trickle-down economics sound as phony as it seems? Did our modern depression not escalate because of the bailout? Consumer spending creates the most revenue, and impact the most people, why not put money there? Why was America's most economically prosperous decades (1950's to 2000's) the ones were middle-class Americans had more wealth? Why did Bush liberally intervene with the economy?
Imagine unemployment rates of 50%. A world-wide depression. The collapse of all equity driven markets. That would be today's economy without the Federal bail-out of the F.D.I.C.
Wow, there is a lot there, but to begin with answering the question on why the banks were bailed out is simple -- Crony Capitalism which is really - Corporate Socialism. This bailout ensured the elite multinational corporations were protected which ensured that big money political donations continued to flow to elite politicians.
As for the depression, FDR New Deal progressive policies, based on Keynesian economic theory of government spending was worsened by these policies in 1937, which extended the time and deepened the affects of the economy. Economists at my alma mater UCLA, wrote a fantastic paper regarding the Great Depression. http://newsroom.ucla.edu/portal/ucla/FD … -5409.aspx
You are correct in asserting that the Great Recession and ensuing market crash and current economic stagnation/recession have been exacerbated by the bailouts. One reason is the elimination of moral hazard -- whereupon the companies that are deemed "critical" to the American economy are assumed to be going to be bailout by government regardless of the rish they engage in.
As for consumer spending, the reason that it consumes 70 percent of the economy is because the US no longer manufactures anything. Hence, in order to keep the economy growing consumers have had to shoulder the burden. This is an "unsustainable" economic theory, because consumer spending over the past 10 to 12 years was based on home values and 401k or investment capital. But, borrowing from these are finite. And now with real estate values down consumers cannot borrow in order to juice spending. Therefore, an economy built on consumer spending is an economy built to fail -- unless the eoconomy is a strong manufacturing, business and financial friendly economy.
Read the "Road To Surdom" by Friedrich Hayek it is a wonderful book to explain the issues you have raised. And it essentially answers the question as why America was prosperous -- which is because the United States was a free business friendly environment that welcomed individuals to build businesses that resulted in creating jobs and generating more industry.
As for Bush -- he is a Big Government progressive and not a conservative constitutionalist republican. Stated differently, Bush is a socialist not a conservative, which is why he intervened.
by John Coviello 2 years ago
Why Do You Think Consumer Spending Is So Anemic?Despite an economic recovery that is going on 8 years and lower fuel costs, consumer spending numbers in the US are rather weak and is some months falling. Why do you think this is? Is the money being spent elsewhere or saved?
by cliffordh 8 years ago
I was one of many individuals yesterday that, was disappointed in the Senateâ��s refusal to fund emergency unemployment benefits for millions of Americans across the country who, were in desperate need of it, using the catchall excuse their reluctance to add more to an already growing deficit...
by Ralph Deeds 9 years ago
Paul Krugman's column in the NYTimes today 1-5-08 is entitled "Fighting Off Depression." In it he called the recent economic numbers "terrifying," not just in the U.S. but around the world. Manufacturing in particular is plunging everywhere; banks aren't lending; businesses and...
by Cagsil 8 years ago
Hey Hubberville,I am planning on writing my next about the state of affairs of the Financial business' and Government action.However, I would like to point out one specific problem, for which, needs to be addressed almost immediately. Hence, the reason for the posting.The "credit" crisis...
by fishskinfreak2008 8 years ago
"Consumer spending PLUNGED in September by the largest amount in nine months, reflecting the end of the government's Cash for Clunkers auto sales program. Incomes, the fuel for future spending, were flat.While the government reported that the overall economy grew in the July-September period,...
by MikeNV 8 years ago
"WASHINGTON (AFP) – The US economy is "gradually" improving after the financial crisis, US Treasury Secretary Timothy Geithner said in an interview on NBC News' "Meet the Press" program, to be broadcast Sunday."Gee that means a lot coming from the incompetent...
Copyright © 2018 HubPages Inc. and respective owners. Other product and company names shown may be trademarks of their respective owners. HubPages® is a registered Service Mark of HubPages, Inc. HubPages and Hubbers (authors) may earn revenue on this page based on affiliate relationships and advertisements with partners including Amazon, Google, and others.
|HubPages Device ID||This is used to identify particular browsers or devices when the access the service, and is used for security reasons.|
|Login||This is necessary to sign in to the HubPages Service.|
|HubPages Traffic Pixel||This is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.|
|Remarketing Pixels||We may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.|
|Conversion Tracking Pixels||We may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.|