Washington won. That's the bet two of the New York Times' best-regarded financial writers--David Leonhardt and Paul Krugman--made over the weekend, crediting Obama's economic squad with staving off depression.
Though opinion about the administration's handling of the crisis has slowly warmed, this is still a bold claim. Recall how bad economic conditions were, and recall how scalding the criticism of Paulson, Summers, Bernanke and Geithner has been before reading Leonhardt's words:
History books may conclude that the financial crisis of 2008 turned out to be far less bad than it could have been and that Washington deserved much of the credit.
Krugman, with typical brio, puts it more boldly:
So it seems that we aren't going to have a second Great Depression after all. What saved us? The answer, basically, is Big Government.
But is it too soon? If anything, Bernanke and Paulson have faced more pummeling in recent weeks. The much-maligned Geithner has gotten more of a break, but that's only in the sense that no one is now calling for him to resign. Nevertheless, bloggers responding to Leonhardt and Krugman have to admit that conditions have improved. But they're warning that it's too soon to uncork the champagne.
- Main Street's Not Fixed, says Robert Kuttner in the Huffington Post. "Don't count those chickens yet. What if Wall Street got too much of the aid and Main Street too little? What if we are in for ... a jobs recovery that leaves working Americans even more insecure than they were before this financial collapse?"
- Debts to Pay, Deeds Unpunished, says Rod Dreher at BeliefNet. "What's missing from the analysis is informed speculation about what all the massive borrowing the government undertook to avert disaster is going to cost us eventually. What's also missing -- and what Leonhardt's final paragraph alludes to -- is the relative lack of accountability in Washington and on Wall Street for the people who actively or passively drove the economy off a cliff."
- Give the Credit to Capitalism, says Nobel laureate Gary Becker. "As I mentioned, some Fed and Treasury policies helped a lot, but the capitalist American economy continues to have strong momentum as well. Recessions always end and usually change into booms."
Right or not, such bets have been made--and been disproved--before.