Bush says coordinated action saved world economy

Business Week ^

[Chet 99]

Coordinated international action helped save the world from the financial crisis that erupted last year, former President George W. Bush said Wednesday.

"We intervened early, we intervened aggressively and we intervened together," Bush told the World Knowledge Forum, an annual conference sponsored by a South Korean business newspaper. Bush added that it remains unknown what would have happened had action not been taken.

"I believe because of close coordination and the willingness to act in the face of financial danger that the interjection of capital into the financial system helped save our economies," Bush said.

[Uri’el-2012]

Advice to George:

Better to keep your mouth shut and be thought a fool
than to open it and remove all doubt.

[sickoflibs]

Just look what GWB and republican congress did to take credit for a bi-partision energy bill with ethanol, then when gasoline prices went up (food prices too even when there were dips in oil prices) both republicans and capitalism got the blame. He gave democrats the talking points “We tried it your way. We tried drilling and free markets, now lets try taxes.”

http://en.wikipedia.org/wiki/Energy_Policy_Act_of_2005

http://en.wikipedia.org/wiki/Clean_Energy_Act_of_2007

[TChris]

I have a little humility before making blanket pronouncements. For example, our side is fond of saying that tax cuts advance prosperity. That is a government intervention that we think works. You agree? Do you want to amend the blanket assertion that interventions never work?

I suppose you could refer to a tax cut as an intervention. I see it as a decrease in government intervention. That is to say, a tax cut is government getting out of the way, lightening the load, loosening its grip, etc., whereas the usual meaning of "intervention" is the opposite: Government tightening its grip, centralizing decisions, etc..

[03A3]

OK. I was confusing TARP with the breaking of the buck that occurred, my fault, but I dont agree with you on the parties. There are no differences between Republicans and Democrats.

[nathanbedford]

I have always been bothered by the apparent contradiction about what actually brought the United States out of the Great Depression. Even if one accepts, and I do, that much of what Hoover and Roosevelt did deepened and prolonged the recession, we still must come up with an ideologically satisfactory answer about what brought us out of the Great Depression. Was it not massive government spending arming the nation to fight World War II? Is that not the equivalent of a massive works program? Does that not show that massive federal spending will move the economy?

Similarly, is it not widely accepted that Hitler got Germany out of its mess in 1933-34 with massive government works projects and with expenditures on rearmament?

The argument today against work projects appeals to me because it diverts money away from the private sector which would undoubtedly spend it better in terms of creating wealth and creating jobs. I suppose the counter argument is that the money otherwise would never get spent at all.

I don't know if we can measure the distortions to the economy which occur because of these government interventions. If we create jobs by building highways those jobs to some degree are measurable but the jobs which are lost because the money was diverted are not. Politicians cannot go to the people who are in extremis and say, "we think but we cannot prove that it is better not to spend because we believe we will create more jobs that way." Especially can he not say that when another politician will certainly exploit the opening and promise jobs rebuilding those roads.

But all of this public Works business is what Obama is doing and that is something different from the 11th hour decision to save the economic system which allegedly confronted Bush. Clearly Obama is not out to revive the economy but to reshape it and that it is an undeniably fraudulent and destructive objective.

[TChris]

Was it not massive government spending arming the nation to fight World War II? Is that not the equivalent of a massive works program? Does that not show that massive federal spending will move the economy?

The short answer is: no.

Dr. Sowell discusses the subject in Great Myths About the Great Depression, a review of FDR's Folly, by Jim Powell. He also mentions in The Brainy Bunch that it was only because the war ended many of the New Deal policies that the economy could finally get up off the ground.

Another Great Depression? is another one to put those mistaken ideas to rest.

Federal spending is tax money. That money must come OUT of the economy in order for the government to possess it. The government creates no wealth itself, so it can only have what it has confiscated.

Where money could have been multiplying and growing in a free economy, it was being squandered on vote-buying, pork projects, corruption, government inefficiency, etc., some on legitimate expenditures, making it back into the economy. But only some of what was taken out.

For BILLIONS of dollars to go from the government INTO the economy, TRILLIONS of dollars must come OUT of the economy as taxes, either before hand or afterward in the form of budget deficits.

The TRILLIONS of dollars of "stimulus" have all been charged to our childrens' accounts to be paid off later, or to irrevocably crush our economy under a staggering tax burden.

[Impy]

Legacy wh*ring huh. Ex-Presidents Bush, Bush, and Clinton (great name for a law firm) are obsessed with their legacies.

Bush 2’s main legacy is the rat scumbag who took his place.

[djsherin]

***Was it not massive government spending arming the nation to fight World War II? Is that not the equivalent of a massive works program? Does that not show that massive federal spending will move the economy?***

We could get GDP really high and unemployment really low by having everyone dig holes and fill them up again. Would we be any better off? War spending boosts production, but not for things consumers want or need. The standard of living is worse when resources are diverted to destructive ends (war). It may be necessary to fight a war, but that should not be confused with saying war is good for the economy.

[Impy]

Some freeper who’s name I forget said without the crap response from RINO Hoover the depression would have been called the Panic of 1929.

Hoover is falsey painted as sticking to his free market guns and thus exacerbating the depression.

That is one of the great lies in American political history. He did exacerbate the depression but by abandoning free market principles.

He started the new (raw) deal.

And Rooooooselvt and the rat party platform in 1932 pledged to cut spending and curb bureaucracy, that message being relevant to their victory. Had he actually done that it would have ended the economic crisis. Instead he massively hiked spending and taxes and prolonged it.

[dfwgator]

We could get GDP really high and unemployment really low by having everyone dig holes and fill them up again.

Well it worked for Cool Hand Luke.

[djsherin]

After reading some of your posts, I’d like to add my thoughts hopefully for some clarification. Economics is a science where you can only say what one thing will do to a situation when everything else is held constant. In other words, it’s very relative. When someone says the minimum wage causes unemployment, they mean that it will push unemployment higher than it otherwise would have been. This comes from logical reasoning. If the minimum wage gets pushed to $6/hr from $5/hr, workers who were worth more than $5/hr but less than $6/hr will be unemployed because they represent a greater cost to the business than what they bring in.

However, at the same time it’s possible that other factors occur that put downward pressure on the unemployment rate. If these downward pressures are greater than the upward pressure caused by the minimum wage increase, the unemployment rate may go down. If you were only to look at the minimum wage increase and see unemployment go down, you would fallaciously come to the conclusion that minimum wages either don’t affect unemployment, lessen it. A good economist can separate causes and effects and will not look at empirical data without qualification.

Government intervention makes things worse not because we can empirically observe this in every case, but because of the logical reasoning behind it. Any dollar spent by the government must be taken from the private sector either through taxing or borrowing (inflation steals purchasing power by the same amount). The government has no profit motive to keep costs low and expenditures efficient. What is spent by the public sector is largely arbitrary and lacks a true price system because spending is not based on consumer demand.

I do not believe that economics however is a predictive science. We can say that one policy will be harmful in relative terms, but not by how much. For instance, if we increase the supply of apples, the price of apples will be lower than it otherwise would have been, but we can not say if this will amount to an absolute reduction in the price or when the price change will take place or by how much the price changes.

[djsherin]

***But I’ve concluded that the one thing that most conservatives miss when considering economics is that our monetary system is not anywhere close to a free market system.***

Bingo. Good points in the rest of your post too.

[sickoflibs]

RE “Bush 2’s main legacy is the rat scumbag who took his place.”

Obama? Yes, and Pelosi, losing two elections badly, and two ongoing wars(one winding down) , and a economic disaster, and a hatred of markets and conservatism, and republicans a joke, and deficits, ....well, you cant have everything!

[blackbart.223]

"There is one thing the Feds can do. The interstate commerce clause was written to ensure free trade among the states (the word “regulate” mean to “keep regular”). Restrictions or bans imposed by one state on another states health care provider should be prevented. But instead, they’ll use the interstate commerce clause to control weapons and they’ll continue to let states enact barriers to free trade."

The problem here is The Constitution is little more than toilet paper to the Mongols in DC. And that goes from from the top down. A pox on them all.

[wastoute]

I haven't forgotten about you. I have been looking thru all the headlines on Denninger and can't find it. It seems to me it was a few days before the Latvian government tried to declare bankruptcy but I don't see it there. I do remember reading the headline before I went to work that day and commenting to a peer about it.

Μολὼν λάβε

[Wpin]

I remember getting the idea it was over numerous financial institutions and had the impression that it was private money...but, not definite on that aspect. I don’t think the Chinese would (at this point) cause such turmoil, it could hurt them also badly.

[2 Kool 2 Be 4-Gotten]

Ex-presidents should be - well - ex-presidents. There are very few exceptions to this rule. This, in essence, means - STFU.

[2 Kool 2 Be 4-Gotten]

I have always been bothered by the apparent contradiction about what actually brought the United States out of the Great Depression. Even if one accepts, and I do, that much of what Hoover and Roosevelt did deepened and prolonged the recession, we still must come up with an ideologically satisfactory answer about what brought us out of the Great Depression. Was it not massive government spending arming the nation to fight World War II? Is that not the equivalent of a massive works program? Does that not show that massive federal spending will move the economy?

Similarly, is it not widely accepted that Hitler got Germany out of its mess in 1933-34 with massive government works projects and with expenditures on rearmament?

---

Any analysis of US post-war economic success MUST take into account the rather obvious situation that all the other countries were ravaged by war - Britain, France, Germany, Japan, Russia (who was also crippled by communism). The US was truly the “last man standing” just at the time that it was maturing as a manufacturing and technological powerhouse.

Loosely translated this means that we had lots of goods and services for sale and lots of other countries who needed them.

[nathanbedford]

Confusing Apples with Oranges

I am reminded of the businessman who returned unexpectedly from a business trip in the middle of the day and on entered the marital bedroom he found his wife naked in bed. He opened the closet door to find a strange man in the closet with an erection. His wife said, "who are you going to believe, me or your own eyes?"

When it comes to judging what got America out of the Great Depression I'm afraid I have to accept the evidence of my own eyes. The arming of America ignited a recovery from the Great Depression that lasted through Lyndon Johnson, marred by only a few very small recessions. It ushered in the American Century of American hegemony in military might and economic supremacy.

If there is evidence that the spending to arm America later cost America dearly, I am unaware of it and I wish you would point it out. The lesson I draw from the prolonged period of prosperity which followed on the massive spending for World War II and which raised our deficit as a percentage GDP to dizzying heights, was that it was easily paid for in the postwar boom which drove up GDP. (That is not to say that even Eisenhower was able to deliver consistent balance budgets. Parenthetically, 2 Kool 2 Be 4-Gotten has observed that the postwar recovery was fueled by demand from or destroyed Europe. That may be partially true, but one would wonder what it was the Europeans used to purchase all these American goods? Was it partly the Marshall plan? And if so, was this not another government intervention that succeeded?).

Even if you could demonstrate that the economy would have done better without that war spending can you somehow demonstrate that after nine years of depression we would have spontaneously come out of it? I do not think there is any dispute about the economic utility of arming the country against fascism and communism. It was necessary and it succeeded. It also got us out of the depression. It led to a boom that has lasted with a couple of setbacks for the course of my entire life.

Now let's sort out the oranges from the apples.

The subject matter of this thread is the utility of Bush's rescue package. Somehow we have spun off into comparing it with the futile efforts of Hoover and FDR to spend their way out of the Great Depression . But we should be comparing Bush's rescue package with the emergency spending to arm America. The latter, as noted, succeeded wonderfully, it was a program that saved America and got us out of the Depression as a bonus. To criticize Bush's package by comparing it the New Deal or to Hoover's gaffes is to mix apples and oranges. Obama's nostrums to grow the economy should be compared to the New Deal, a comparison which Obama himself has made. Bush should be compared to the emergency spending for World War II. Bush's goal, whether you accept the need or not, and whether you accept the efficacy or not, was to save the financial structure. The New Deal failed in its aim (New York Times columnists like Nicholas Kristof to the contrary notwithstanding) and so will Obama.

It seems that Bush succeeded in his emergency spending. Although I do not really know because no one knows what the hell went on at the Fed.

I can only repeat that if I were confronted with the facts as George Bush was and if I were compelled to make a decision in hours as George Bush was, I think I would have done the same and I think most Americans agree. It should not be necessary for me to distinguish between what George Bush did in what Obama did.

One of the problems with economics is that you can get away from the politics. As djsherin has so perceptibly said, the changing relative values of economics, especially of supply and demand, make it almost impossible to be predictive, an observation I made with my reference to Newton. Which brings me back to what we don't know. My original post was a cry for humility. One need only consider what one does not know about what the Fed has done to ratchet up his humility several notches.

Further, I think we have to agree that massive federal spending can move the economy. We think it causes dislocations, we agree that our ideology tells that is so but economics is such an inexact science that it is difficult to measure with precision. Moreover, history is not clear in its lessons. There is room for doubt and there is certainly room for contrary opinion and when there is room for contrary opinion, there is room for two political parties. At this point economics becomes contaminated by politics and a demagogue who will pander to the short-term interests of the voters and who is slavishly supported by the media can do immense damage.

[TChris]

When it comes to judging what got America out of the Great Depression I'm afraid I have to accept the evidence of my own eyes.

Many things we see with our own eyes are a matter of coincidence, not causality. Otherwise, I would be certain that a crowing rooster causes the sun to rise.

Sowell illustrates other factors at work in the recovery of the Great Depression which are not readily apparent from an outside perspective, and I am convinced by his analysis.