How badly do Republican economic policies mess up the economy?

This badly, in the words of economist James Galbraith in December Surprise Mother Jones Jul/Aug 2008:

Since August, America's big banks have been wards of the Fed[eral Reserve Bank], and those in Europe equally so of the Bank of England and the European Central Bank. The system survives because central banks keep the lending windows open, and the result is that - except for one instance in Britain - the public has not pulled out of the banks. Let's be clear. The private financial markets did actually fail. It's only the fact that the public trusts government that keeps the system from dissolving in panic. But even if the Fed and its counterparts can hold the line, the problem of mistrust among the big bankers won't go away soon. And that means we're at the end of the age of credit expansions, for now. (my emphasis)

The "December Surprise" in the title refers to the fact that, for some reason, the Federal Reserve tends to lower interest rates more and thus contribute a short-term boost to the economy during a Presidential election when there's a Republican incumbent than when there's a Democratic one. Sheer coincidence, I'm sure.

Tags: james galbraith

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