Paul Krugman asks how policy makers – Timothy Geithner for one – can consider economic policy since the financial crisis a success.
“In both Europe and America, economic policy has to a large extent been governed by the implicit slogan ‘Save the bankers, save the world’ — that is, restore confidence in the financial system and prosperity will follow. And government actions have indeed restored financial confidence. Unfortunately, we’re still waiting for the promised prosperity.”
“Many analysts believe that the burden of high household debt, a legacy of the housing bubble, has been a big drag on the economy … According to many accounts, the biggest roadblock was Mr. Geithner’s consistent opposition to mortgage debt relief — he was, if you like, all for bailing out banks but against bailing out families.”
“In the end, the story of economic policy since 2008 has been that of a remarkable double standard. Bad loans always involve mistakes on both sides — if borrowers were irresponsible, so were the people who lent them money. But when crisis came, bankers were held harmless for their errors while families paid full price.”