There's a really diverting article here about the role of Ben Bernanke, Chairman of the US Federal Reserve, in stemming the impact of the current Global Financial Crisis - otherwise known as the GFC, or Globally fried Chicken.
In the world of financial pain and recrimination after the panic of 2008, it is easy to miss a central point: the US Federal Reserve has, so far, saved the American economy from a precipitous collapse.
Even easier to miss is the Federal Reserve's role internationally; no country likes to issue a press release with the title, "The US central bank saved our butts".
The Fed put up massive amounts of dollars, more than $US620 billion ($821 billion), including some $US20 billion for the Reserve Bank of Australia, to meet the dollar demands of banks throughout the world. It played a vital role as international lender of last resort and averting a global financial catastrophe (see breakout). "The Fed story is a revolutionary story because, in my book, they avoided a tremendous calamity", says a Columbia University associate professor of finance, Martin Cherkes.
Prominent New York mergers-and-acquisition lawyer Rodgin Cohen, the chairman of Sullivan & Cromwell, says: "What you will never know and can only guess is how much worse it would have been if the Fed had not played this role. It would have been a lot worse. One will never know but we could well have been thrown into a Great Depression very quickly".
These views are not the popular perception amid the welter of post-crisis regulator bashing. It is hard to use a word like "saved" when the US economy is in such a parlous state: unemployment numbers are at their highest level since 1983, climbing to 8.5 per cent in March and the US gross domestic product is falling at an annual rate of 6.3 per cent.
But so far it is a recession and most economists believe it is unlikely to become a depression. Unemployment grew more quickly in the Great Depression and peaked at 25 per cent. GDP fell more quickly too in the 1930s, before bottoming more than 30 per cent below its peak.
Sure, there is pain. But this time around there is still a functioning banking system. There were 25 bank collapses last year. In the first 10 months of 1930 there were 744 bank failures, in the next three months there were 761 bank failures.
The Fed has pulled off this rescue of the financial system with actions of a size and scale that are hard to comprehend. It has continually upped the stakes until it has committed to lending or spending $US2 trillion to address the full force of the panic, using many programs it has invented out of thin air. It has moved from a strict money supply role, advocated by monetarist economists and championed by Milton Friedman, to outright spending to support failing markets, a role closely aligned to the views of John Maynard Keynes.
In other words, he was ready to abandon principles and do what's right. All those people talking about moral hazards were in essence arguing that we should go down the path of the Great Depression in order to preserve our principles. It's a hard pill to swallow if it is the size of a watermelon folks!
An Article About The US Republican Party
Back in the day when Time Magazine was WASP and North Eastern USA in its bias, I don't know if it would have published an article like this one here. It's a bit far-reaching in its claims; but it is an interesting read.
As the party has shrunk to its base, it has catered even more to its base's biases, insisting that the New Deal made the Depression worse, carbon emissions are fine for the environment and tax cuts actually boost revenues — even though the vast majority of historians, scientists and economists disagree. The RNC is about to vote on a kindergartenish resolution to change the name of its opponent to the Democrat Socialist Party. This plays well with hard-core culture warriors and tea-party activists convinced that a dictator-President is plotting to seize their guns, choose their doctors and put ACORN in charge of the Census, but it ultimately produces even more shrinkage, which gives the base even more influence — and the death spiral continues. "We're excluding the young, minorities, environmentalists, pro-choice — the list goes on," says Olympia Snowe of Maine, one of two moderate Republicans left in the Senate after Specter's switch. "Ideological purity is not the ticket to the promised land."
More juicy bits here:
Big Government is never popular in theory, but the disaster aid, school lunches and prescription drugs that make up Big Government have become wildly popular in practice, especially now that so many people are hurting. Samuel Wurzelbacher, better known as Joe the Plumber, tells TIME he's so outraged by GOP overspending, he's quitting the party — and he's the bull's-eye of its target audience. But he also said he wouldn't support any cuts in defense, Social Security, Medicare or Medicaid — which, along with debt payments, would put more than two-thirds of the budget off limits. It's no coincidence that many Republicans who voted against the stimulus have claimed credit for stimulus projects in their district — or that Louisiana Governor Bobby Jindal stopped ridiculing volcano-monitoring programs after a volcano erupted in Alaska. "We can't be the antigovernment party," Snowe says. "That's not what people want."
That bit had me in stitches. It's a little late to wake up to that notion now. Part of the horror of the Bush years - and you can count in his old man's term with it - is that the repeated coddling of the rich while continuously cutting back what government offered was really going to hurt a lot of people. It's a little harder to argue a case for the big end of town when the current President is going to be busy cleaning up the mess from the rampant deregulated orgy left behind by those years where the rich got their way, all the way. If you're the party that enabled it, then you're stuck with that bill.
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