US had all the signs of the next Great depression. Plummeting prices! Falling economic growth! And unemployment rising at horrid levels. Why not compare the U.S. Financial Crisis to the last five financial crisis’?
Financial Crisis Unemployment Comparison
Here is what Josh Lehner says:
The question that naturally follows and is
not answered here is why does the current U.S. cycle measure up in terms
of the aftermath of financial crises except in the percentage of
employment loss? Relative to Spain, Norway, Finland and Sweden, it
appears that the U.S. did something right. Is it as simple as ARRA? Is
it TARP and the backstopping of the financial industry? Is it the fact
that, more or less, the world had a coordinated response in late
2008/early 2009 for expansionary fiscal and monetary policies?
Economic Growth: Yes or No of Financial Crisis
Paul Krugman points out Eurozone GDP growth has been far out paced by US GDP growth. The US debt crisis cut deep and began the global financial meltdown. Of course, Eurozone experienced growth in the Eurozone countries until lending froze along with economic contraction of auterity.
US GDP Growth VS Eurozone GDP Growth During ‘Lesser Depression’
There have been many critics of monetary policy and quick action by the Fed’s Bernanke as well as poo pooing of the stimulus in 2009. Stimulus has saved and/or created auto worker’s jobs while shoring up one of the leading contributors to GDP as of late… auto industry. Effects of quantitative easing is debatable on to what degree it helped. It’s not debatable that it has played a role in the housing recovery or the commercial real estate rebound.
Will Growth Set US Free
Growth is very important and plays a big role in balancing budgets. In fact, analyses of Greek’s post financial crisis skyrocketing debt seems to be largely from GDP contraction. Lack of competition came later. This doesn’t contradict needed reforms in Greece’s tax collecting process and corruption. They are needed as well.
Lars makes a good point about the cause of Greek debt to GDP increase during the financial crisis.
Greek nominal GDP has dropped by around 10% since 2007 and that pretty much explains the 50%-point increase in public debt since 2007. Greece is smack on the regression line in the graph – and so is Germany. The better debt performance in Germany does not reflect that the German government is more fiscally conservative than the Greek government. Rather it reflects a much better NGDP growth performance.