ALAN BLINDER AFTER THE MUSIC STOPPED PDF

They played a crucial role in bringing the public with him as his government helped lead the economy out of the Great Depression. Seventy-five and more years later, after the collapse of Lehman Brothers triggered a financial meltdown and deep recession, successive American administrations learned important lessons from Roosevelt, which helped the United States and the world avoid another Great Depression. However, they failed to learn the importance of communicating clearly with the public about what was happening and what the government was doing about it. If the public had only understood this, confidence would have returned sooner, and with it stronger growth, and Obama would not have had such a hellish time getting re-elected.

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They played a crucial role in bringing the public with him as his government helped lead the economy out of the Great Depression. Seventy-five and more years later, after the collapse of Lehman Brothers triggered a financial meltdown and deep recession, successive American administrations learned important lessons from Roosevelt, which helped the United States and the world avoid another Great Depression.

However, they failed to learn the importance of communicating clearly with the public about what was happening and what the government was doing about it.

If the public had only understood this, confidence would have returned sooner, and with it stronger growth, and Obama would not have had such a hellish time getting re-elected.

Image Times Square, September Rather, it is the work of a somewhat frustrated technocrat who has spent his career at the highest tables of academia and policy making, never entirely comfortable because of a tendency to speak his mind. His two-year tenure as vice chairman of the Federal Reserve probably would have been longer but for his habit of challenging the unquestioning cult of Alan Greenspan that had taken hold among Fed staff members under the chairman.

After leaving the Fed in , Blinder gave many speeches warning about the growing bubble in the financial markets, especially in credit, though he is honest enough to acknowledge that he never foresaw the scale of the crisis that was to follow the bursting of that bubble.

Why did the crisis happen? Charles O. He points out that the now notorious Troubled Asset Relief Program, known as TARP, which lent billions to the banks to keep them alive, ultimately generated a profit to the American taxpayer as the banks returned to health and repaid what they owed. Here, Blinder says, the communications failure began to take its toll, because Obama did not make the case for a big enough stimulus or for a necessary additional stimulus later. Blinder is also fairly satisfied with the controversial Dodd-Frank Act of that overhauled American financial regulation — although perhaps his praise is largely a reflection of his low expectations.

He does not think Dodd-Frank will make financial crises a thing of the past, and is not even sure it will make them rarer. However, Blinder claims, it should reduce the severity and costs of future financial excesses. The foreclosure crisis that has caused millions of Americans to lose their homes was unnecessarily painful, he believes.

A series of government interventions to help struggling homeowners was consistently too little, too late. Spending cuts will be essential. Given a divided Congress and a confused public, making the case for the right fiscal reforms will require a master communicator.

Time for Obama to throw a few logs on the White House fire and start talking.

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Many fine books on the financial crisis were first drafts of history - books written to fill the need for immediate understanding. Alan S. Blinder, esteemed Princeton professor, Wall Street Journal columnist, and former vice chairman of the Federal Reserve Board, held off, taking the time to understand the crisis and to think his way through to a truly comprehensive and coherent narrative of how the worst economic crisis in postwar American history happened, what the government did to fight it, and what we can do from here - mired as we still are in its wreckage. With bracing clarity, Blinder shows us how the U. Some people think of the financial industry as a sideshow with little relevance to the real economy - where the jobs, factories, and shops are. But finance is more like the circulatory system of the economic body: if the blood stops flowing, the body goes into cardiac arrest. It took the crisis for the world to discover, to its horror, just how truly interconnected - and fragile - the global financial system is.

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After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead

It details the mechanics of the underlying problems as well as the sequence of events as panic began to set in. Finally, it also explains how the US government managed to halt the chaos and rescue the economy. Key idea 1 of 8 After the year , enormous price bubbles developed in the housing and mortgage-bond markets. Before the financial crisis first became evident in , buying a house or investing in bonds seemed like a very profitable investment. But underneath this positive outlook both markets were in fact in serious trouble.

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