Saved From A Second Depression?

A paper by Alan S. Blinder and Mark Zandi is pinging around the economics blogs. From the NYT:

In a new paper, the economists argue that without the Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration’s fiscal stimulus program, the nation’s gross domestic product would be about 6.5 percent lower this year. In addition, there would be about 8.5 million fewer jobs, on top of the more than 8 million already lost; and the economy would be experiencing deflation, instead of low inflation...

The full paper is here (pdf). Avent gives a tentative response. Stephen Spruiell thinks it is "still pretty early in the game to be evaluating what effects the bailouts, the Fed interventions, and the stimulus actually had'. Delong's reading:

The hard part of it, of course, is figuring out what would have happened to the flow-of-funds through financial markets in the absence of TARP, of quantitative easing, and of other extraordinary financial policy interventions. That they were, collectively, about twice as big as the ARRA smells right to me, but the only pieces of information I have to support that are even shakier than back-of-the-envelope calculations.