I could not disagree more strongly on this. First, objectively, we have no basis for saying whether or not the actions taken actually helped anything, because we have no control of any sort. All we have are theoretical models, which, I cannot stress enough, were absolutely useless in predicting the crisis in the first place, which, while not disproving their effectiveness, should at least give us pause. How many times can a model be wrong and "on-the-other-handed" before we admit that it is garbage?
Long-term it sounds like we're not in disagreement, but the short-term aspect I also find unconvincing. We still lost the jobs. People still fell down into debt spirals, specifically because the capital infusion allowed the banks to not reprice their mortgages, which is the only sensible way that they could have had any sort of business continuity; to take the write-down on the property values and allowing people to keep paying down the repriced debt rather than pushing things further down the cliff by forcing people to enter foreclosure and thus further depress the housing market.
Subjectively, we saved a couple of giant banks (and an insurance company) that collectively had taken on so much risk exposure that it dwarfed the total income that those institutions had made over their lifetime. Those were the institutions that most needed to go into receivership, to be broken into pieces and sold to smaller banks that had been more prudent with their investments. That process already existed in law and needed no special handling; Sheila Bair and the FDIC were ready and willing to do the right thing. Instead we end up with TARP and the ridiculous avoidance of actually relieving troubled assets, instead just giving a ton of money to the worst possible actors, and then fudging the balance sheet to look like we made a profit on the deal. The whole thing stinks and is morally repugnant and sets up all sorts of perverse incentives.
Okay, that's enough of the initial rant, and I apologize if it seems like I'm lashing out at your reply, which actually was well-balanced.
Productivity does have a precise economic definition, but it is not the colloquial one, and regardless, it is absolutely impossible to measure in any meaningful sense; all we can do is use statistical tricks with existing data to attempt to estimate it, but those estimators do not remain stable over time because the underlying metrics rarely have the longevity to serve back a few more years.
It's a rabbit hole I heartily recommend -- find an estimate of "productivity" and dig down to what it is actually measuring, and then see if those metrics can be compared to metrics from the past. If someone wants to take that on and reply to this, I'm happy to see the analysis; I haven't done it yet for this particular metric, but I've become familiar with the picture; colloquial term to "precise" economic definition, the methodology for estimating it as a point estimate based on other metrics whose provenance is dubious and which themselves have methodological issues that defy our ability to measure them over time (i.e. often devolving to self-reported data or tax data or labor that is subject to changes year over year; the changes in reporting requirements alone make the data useless). If we dug down and talked about the actual metric that we're talking about when we say "productivity" then it would be rapidly apparent that we're talking in circles.
I could not disagree more strongly on this. First, objectively, we have no basis for saying whether or not the actions taken actually helped anything, because we have no control of any sort. All we have are theoretical models, which, I cannot stress enough, were absolutely useless in predicting the crisis in the first place, which, while not disproving their effectiveness, should at least give us pause. How many times can a model be wrong and "on-the-other-handed" before we admit that it is garbage?
Long-term it sounds like we're not in disagreement, but the short-term aspect I also find unconvincing. We still lost the jobs. People still fell down into debt spirals, specifically because the capital infusion allowed the banks to not reprice their mortgages, which is the only sensible way that they could have had any sort of business continuity; to take the write-down on the property values and allowing people to keep paying down the repriced debt rather than pushing things further down the cliff by forcing people to enter foreclosure and thus further depress the housing market.
Subjectively, we saved a couple of giant banks (and an insurance company) that collectively had taken on so much risk exposure that it dwarfed the total income that those institutions had made over their lifetime. Those were the institutions that most needed to go into receivership, to be broken into pieces and sold to smaller banks that had been more prudent with their investments. That process already existed in law and needed no special handling; Sheila Bair and the FDIC were ready and willing to do the right thing. Instead we end up with TARP and the ridiculous avoidance of actually relieving troubled assets, instead just giving a ton of money to the worst possible actors, and then fudging the balance sheet to look like we made a profit on the deal. The whole thing stinks and is morally repugnant and sets up all sorts of perverse incentives.
Okay, that's enough of the initial rant, and I apologize if it seems like I'm lashing out at your reply, which actually was well-balanced.
Productivity does have a precise economic definition, but it is not the colloquial one, and regardless, it is absolutely impossible to measure in any meaningful sense; all we can do is use statistical tricks with existing data to attempt to estimate it, but those estimators do not remain stable over time because the underlying metrics rarely have the longevity to serve back a few more years.
It's a rabbit hole I heartily recommend -- find an estimate of "productivity" and dig down to what it is actually measuring, and then see if those metrics can be compared to metrics from the past. If someone wants to take that on and reply to this, I'm happy to see the analysis; I haven't done it yet for this particular metric, but I've become familiar with the picture; colloquial term to "precise" economic definition, the methodology for estimating it as a point estimate based on other metrics whose provenance is dubious and which themselves have methodological issues that defy our ability to measure them over time (i.e. often devolving to self-reported data or tax data or labor that is subject to changes year over year; the changes in reporting requirements alone make the data useless). If we dug down and talked about the actual metric that we're talking about when we say "productivity" then it would be rapidly apparent that we're talking in circles.