24 May 2014

Richard Eskow: Did Washington Rescue the Wrong Economy?

Economists Atif Mian and Amir Sufi recently wrote an editorial for The Washington Post headlined “Why Tim Geithner is wrong on homeowner debt relief.” Using data and arguments from their upcoming book “House of Debt,” Mian and Sufi essentially argue that former Treasury Secretary Timothy Geithner’s recent public statements got the bailout exactly backwards. Geithner has argued that rescuing homeowners who were left underwater after the 2008 financial crisis wasn’t worth the effort, and that rescuing the banking system was our most urgent priority.

Binyamin Appelbaum of the New York Times interviewed Sufi and Mian, as well as a number of other economists, for a profile entitled “The Case Against the Bernanke-Obama Financial Rescue.” Their position is the same in both cases, of course, and in essence it’s a simple one: After exhaustive research, Sufi and Mian have concluded that long-term economic damage was not an inevitable outcome of the 2008 financial crisis. Instead, it’s the result of a bailout plan that focused on the wrong segments of the economy.


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