Crisis cost up to $14 trillion, Dallas Fed says

[Kushinator]

The financial crisis cost the U.S. economy $6 trillion to $14 trillion—and possibly twice that—along with untold costs from "special treatment" that too-big-to-fail banks received, according to an explosive new analysis from the Dallas Federal Reserve.
Nearing the five-year anniversary of the Lehman Brothers' bankruptcy that shocked the global economy, the central bank analysis takes a stark look at the costs left behind by the crisis and the ensuing bailout.

The rest of the article can be found here.

This is a testament to just how severe the economic crisis actually is/was. Not since the 1930's have we faced such grave financial and economic conditions, and therefore it is irresponsible for a specific subset of the political stratosphere to demand the federal government reduce spending during a time of crisis. Fiscal policy needs to be dictated on the basis of economic conditions and not the political party of the President of the United States.

 

[Harshaw]

and therefore it is irresponsible for a specific subset of the political stratosphere to demand the federal government reduce spending during a time of crisis. Fiscal policy needs to be dictated on the basis of economic conditions and not the political party of the President of the United States.

I assume, then, that the "specific subset" to whom you are addressing this does not include those who want to reduce spending having nothing to do with the political party of the President of the United States?

 

[Fisher]

The rest of the article can be found here.

This is a testament to just how severe the economic crisis actually is/was. Not since the 1930's have we faced such grave financial and economic conditions, and therefore it is irresponsible for a specific subset of the political stratosphere to demand the federal government reduce spending during a time of crisis. Fiscal policy needs to be dictated on the basis of economic conditions and not the political party of the President of the United States.

So it basically has cost us the same amount as the war on poverty which is about the same amount as our stated debt? The scope of the crisis does not dictate whether we should or should not spend as a nation. The obsession with spending is why government spending often ends up with no multiplier effect--it is wasteful.

 

[Thoreau72]

The rest of the article can be found here.

This is a testament to just how severe the economic crisis actually is/was. Not since the 1930's have we faced such grave financial and economic conditions, and therefore it is irresponsible for a specific subset of the political stratosphere to demand the federal government reduce spending during a time of crisis. Fiscal policy needs to be dictated on the basis of economic conditions and not the political party of the President of the United States.

I think I'm going to go shopping!

 

[Kushinator]

So it basically has cost us the same amount as the war on poverty which is about the same amount as our stated debt?

There is a difference between an expenditure and the opportunity cost of a crisis. You should have at least read the link in the OP before commenting.

The obsession with spending is why government spending often ends up with no multiplier effect--it is wasteful.

Waste is not a government specific problem. It is generally accepted that the government is more wasteful than the private sector due to differences in motivation (profit vs governance). However, when the private sector is in severe disarray, only the public sector can fill the shortfall left by a decline in private investment and domestic consumption.

 

[Kushinator]

I think I'm going to go shopping!

Good for you!

 

[Kushinator]

I assume, then, that the "specific subset" to whom you are addressing this does not include those who want to reduce spending having nothing to do with the political party of the President of the United States?

Reducing spending during a general deleveraging of the private sector is re-tar-ded. Remember the 1930's?

 

[Harshaw]

Reducing spending during a general deleveraging of the private sector is re-tar-ded. Remember the 1930's?

That's not what I asked about.

 

[Kushinator]

That's not what I asked about.

Your question was predicated on poor macroeconomic logic. Those who want to reduce spending for the sake of reducing spending, given our current economic condition, are.....

 

[Harshaw]

Your question was predicated on poor macroeconomic logic. Those who want to reduce spending for the sake of reducing spending, given our current economic condition, are.....

No, it wasn't. It was predicated on your implication that the only reason someone would want to reduce spending is because of the political party of the President. But you knew that.

 

[Fisher]

There is a difference between an expenditure and the opportunity cost of a crisis. You should have at least read the link in the OP before commenting.



Waste is not a government specific problem. It is generally accepted that the government is more wasteful than the private sector due to differences in motivation (profit vs governance). However, when the private sector is in severe disarray, only the public sector can fill the shortfall left by a decline in private investment and domestic consumption.

Well since your link cites over $12T in direct assistance given, perhaps you should have read the link. The fact that the government can do something does not mean that the government should do something. As a so-called libertarian, I would think that you would know the difference.

 

[Kushinator]

No, it wasn't. It was predicated on your implication that the only reason someone would want to reduce spending is because of the political party of the President. But you knew that.

Well, we know it couldn't be based on valid macroeconomic logic. Therefore we are left with political party.

 

[Canell]

The financial crisis cost the U.S. economy $6 trillion to $14 trillion—and possibly twice that...

Makes you wanna do like in your avatar.

 

[Harshaw]

Well, we know it couldn't be based on valid macroeconomic logic. Therefore we are left with political party.

I suspected this was a troll/bait thread from the start. Your responses confirm it.

 

[Kushinator]

Well since your link cites over $12T in direct assistance given, perhaps you should have read the link. The fact that the government can do something does not mean that the government should do something. As a so-called libertarian, I would think that you would know the difference.

It is a matter of values. Doing nothing equates to a grave travesty. Ensuring the system (global!) does not go belly up is in fact something the government must do!

$12 trillion in direct assistance is not an expenditure unless it has yet to be recovered. There are still losses with GM and AIG that have impacted expenditures. A more astute student of economics would understand that opportunity costs are of the most severe.

From the article:

"The 2007–09 meltdown produced a huge downshift in the path of economic output, consumption and financial wealth," the paper said. "The nation has borne additional costs arising from psychological consequences, skill atrophy from extended unemployment, a reduced set of economic opportunities and increased government intervention in the economy."

From the paper:

One way to measure the cost of lost output is in terms of how much worse off society is relative to a baseline trend that might have existed absent the crisis. Such an exercise is crucial to grasping the magnitude of what occurred and the
effects of the still-emerging recovery. Output per person as of mid-2013 stood 12 percent below the average of U.S. economic recoveries over the past half century, corroborating a large body of literature suggesting that recoveries from financial crises are slower than rebounds from typical recessions (Chart 1). Our bottom-line estimate of the cost of the crisis, assuming output eventually returns to its pre-crisis trend path, is an output loss of $6 trillion to $14 trillion.

AKA the area between the two lines (after they intersect of course!).

I know this is a lot to comprehend given your inclination to use political lean as a means of supporting your position. Take your time.

 

[Kushinator]

I suspected this was a troll/bait thread from the start. Your responses confirm it.

If you can't keep up with the discussion, I do expect you to run away and claim bait/troll.

Be gone.

 

[Harshaw]

If you can't keep up with the discussion, I do expect you to run away and claim bait/troll.

Be gone.

No, I kept up with the discussion.

The point is, you're saying the only reason someone may want to cut spending is because of partisanship.

That's absurd on its face.

And no, even if their reasoning isn't sound, it doesn't leave ONLY partisanship as their motivation.

You know this. Thus, you're simply baiting. If you weren't, you would have responded to my first post differently.

And considering it was just about the only point you tried to make in the OP, that makes the whole thread a bait thread.

 

[Kushinator]

And no, even if their reasoning isn't sound, it doesn't leave ONLY partisanship as their motivation.

No. Either partisanship or poor macroeconomic logic; the two tend to go hand-in-hand.

You know this. Thus, you're simply baiting. If you weren't, you would have responded to my first post differently.

And considering it was just about the only point you tried to make in the OP, that makes the whole thread a bait thread.

The point made in the OP was that our economic reality justifies federal expenditure. I know it's difficult to comprehend, but it is what it is.

 

[Harshaw]

No. Either partisanship or poor macroeconomic logic; the two tend to go hand-in-hand.


The point made in the OP was that our economic reality justifies federal expenditure. I know it's difficult to comprehend, but it is what it is.

No, your point was quite clear, and your continued gymnastics in dodging what I'm saying drive it home even further.

It's no problem; I simply won't make the mistake of crediting you with good faith in the future. Carry on.

 

[Kushinator]

No, your point was quite clear, and your continued gymnastics in dodging what I'm saying drive it home even further.

Here is your initial response:

I assume, then, that the "specific subset" to whom you are addressing this does not include those who want to reduce spending having nothing to do with the political party of the President of the United States?

To which I label those who identify with the bold as re-tar-ded. If your participation in this thread is meant to substitute economic logic with semantics, it has been successful.

 

[Harshaw]

Here is your initial response:



To which I label those who identify with the bold as re-tar-ded. If your participation in this thread is meant to substitute economic logic with semantics, it has been successful.

Sure. Show your good faith by ignoring the first part of my sentence.

Look, as I said, you're not stupid. You know what I'm saying. You're dodging it. Thus, baiting.

 

[Kushinator]

Sure. Show your good faith by ignoring the first part of my sentence.

Look, as I said, you're not stupid. You know what I'm saying. You're dodging it. Thus, baiting.

You are not saying anything of importance. Those who oppose deficit spending during severe economic contraction for reasons other than party politics are too stupid to understand that they are advocating against their self interests. Whether it is based on partisanship or general innocence does not matter. As stated, the two tend to go hand-in-hand.

 

[keith]

I actually can support built in automatic stabilizers that tend to keep spending and revenue relatively in balance over the economic cycle.The use of deficit spending to pay off supporters using a poor economy as an excuse is what sickens me

 

[Kushinator]

I actually can support built in automatic stabilizers that tend to keep spending and revenue relatively in balance over the economic cycle.The use of deficit spending to pay off supporters using a poor economy as an excuse is what sickens me

As it does me! However, this is not typically the case. For example; Rhapsody1447 had a brilliant post a few weeks ago describing the relationship between corporate profits and federal deficits. Supporters of deficit spending tend to be the coporations whose top-line growth is heavily derived from changes (negative) in government saving.

 

[Thoreau72]

Good for you!

Just following the advice of Dubya, for what to do during times of crisis.