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Blog cafe : In 1932?

President-elect Obama in an interview with '60 Minutes' was asked directly if the current economic situation is similar to the situation in 1932. His first response showed judgment—as he put it, in 1932 the unemployment rate was 25% and the economy was in much worse shape than today. However, he also quickly added that our current situation is the worse situation we have faced since 1932. His position is not uncommon, but I remain confused by this "argument" whether it is uttered by the President-Elect or by a university colleague. The position relies on an assessment of the counter-factual—that in fact had we not agreed to the $700b plus bailout, the economy would have deteriorated to a 1932 type crisis. We are told simultaneously that Hank Paulson has made mistakes in implementation and is still trying to figure it out, and yet that t

Blog cafe : In 1932?

President-elect Obama in an interview with ‘60 Minutes’ was asked directly if the current economic situation is similar to the situation in 1932. His first response showed judgment—as he put it, in 1932 the unemployment rate was 25% and the economy was in much worse shape than today. However, he also quickly added that our current situation is the worse situation we have faced since 1932. His position is not uncommon, but I remain confused by this “argument” whether it is uttered by the President-Elect or by a university colleague. The position relies on an assessment of the counter-factual—that in fact had we not agreed to the $700b plus bailout, the economy would have deteriorated to a 1932 type crisis. We are told simultaneously that Hank Paulson has made mistakes in implementation and is still trying to figure it out, and yet that the

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