Paying the Price: Ending the Great Recession and Ensuring a New American Century

Product Author Bios

Mark Zandi, (Malvern, PA) chief economist and co-founder of Moody's Economy.com, directs the company's economic research and consulting activities serving businesses, governments, and other institutions. He served as an economic advisor to the McCain campaign for president, has advised the Obama administration, and regularly testifies before Congress, most recently on the economic impact of fiscal stimulus and the merits of aiding the vehicle industry. Zandi is author of Financial Shock, an exposé of the subprime financial crisis. He holds a Ph.D. from the University of Pennsylvania, where he did his research with Gerard Adams and Lawrence Klein.

Only a few years ago, the U.S. financial system and economy were near collapse. Global financial institutions teetered and fell, while at once-mighty U.S. companies, panicked CEOs slashed jobs. The financial chaos inflicted catastrophic damage: double-digit unemployment; crashing house and stock prices; federal budget deficits in the trillions, and a wider gap between the country’s haves and have-nots. Today many Americans still feel shell-shocked. But while there remains much to be nervous and frustrated about, it is impressive how much progress has been made in righting the wrongs that got us into this mess. The economy is growing and steadily creating jobs; house prices are stable and stock prices are up; debt burdens have eased for most households and the financial system has shored up its foundations to an impressive degree. American companies are as competitive globally as they have been in a half century. This dramatic turn in the economy’s fortunes occurred because of what government did to stem the financial panic and combat the effects of Great Recession. Policymakers’ unprecedented actions – from Congress’ auto and bank bailouts and fiscal stimulus, to the Federal Reserve’s zero interest rates and quantitative easing – remain intensely controversial, but ultimately they will be judged a success. Serious problems remain, including the government’s mounting debt load and a burgeoning number of disenfranchised workers, but we are on our way to addressing them. Our economic future has arguably never been brighter.

Table of Contents

Introduction     xiii

Chapter 1: Financial Shock to Financial Panic     1

Chapter 2: Bank Bailout     23

Chapter 3: Outside the Monetary Box     47

Chapter 4: As GM Goes, So Goes the Economy     71

Chapter 5: Stimulus Is Not a Dirty Word     91

Chapter 6: The Foreclosure Fiasco     119

Chapter 7: Fixing the Financial Plumbing     145

Chapter 8: The Fallout     171

Chapter 9: Getting Our Groove Back     197

Chapter 10: Don’t Bet Against the United States     219

Index     243