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September 19, 2010 at 04:05 PM
On Sunday, the second anniversary of the collapse of Lehman Brothers, analyst Fareed Zakaria on CNN’s GPS said in no uncertain terms that if not for the Troubled Assets Relief Program (TARP), the economy would be in far worse shape–not just here but around the world.
First he reminded viewers just how bad everything was. In the immediate wake of the collapse, the economy was in a dreadful state: in the fourth quarter of 2008, the real GDP was down 6%; 1.7 million U.S. jobs were lost (the largest drop in 65 years); and net household worth plummeted by $5 trillion–”the largest and fastest such drop ever recorded.” Banks, he pointed out, “simply stopped lending,” and businesses were unable to pay employees or suppliers because of the lack of short-term lending; private sector borrowing had dropped more than at any time since the 1930s. Trouble spread across the globe, with a contraction in global trade “larger than in the first year of the Great Depression.”
But there was a bright spot: one thing that happened was that “Washington, incredibly, actually worked.” Democrats and Republicans, he pointed out, came together; “George Bush was working with Barney Frank,” said Zakaria, and together, with all that concerted effort, they passed the “huge rescue package” that was TARP.
