This week’s article is The Crisis and How to Deal with It with Bill Bradley, Niall Ferguson, Paul Krugman, Nouriel Roubini, George Soros and Robin Wells. Following are excerpts from a symposium on the economic crisis presented by The New York Review of Books and PEN World Voices at the Metropolitan Museum of Art on April 30. The participants were former senator Bill Bradley, Niall Ferguson, Paul Krugman, Nouriel Roubini, George Soros, and Robin Wells, with Jeff Madrick as moderator.:

Jeff Madrick: It was six months ago now that the Lehman debacle occurred, that AIG was rescued, that Bank of America bought Merrill Lynch; it was about six months ago that the TARP funds started being distributed. The economy was doing fairly poorly in much of 2008, and then fell off a cliff in the last quarter of 2008 and into 2009, shrinking at a 6 percent annual rate—an extraordinary drop in our national income. It is now by some very important measures the worst economic recession in the post–World War II era. Employment has dropped faster than ever before in this space of time.

We have a three-front problem: a housing market that went crazy as the housing bubble burst; a credit crisis, the most severe we’ve known since the early 1930s; and now a sharp drop in demand for goods and services and capital investment, leading to a severe recession. What gives us the jitters is that all of these are related. We have seen some deceleration in the rate of economic decline, and many people are saying that “green shoots” are showing. What is the actual state of the economy, and do we need a serious mid-course correction on the part of the Obama administration?

Bill Bradley: How far are we along in a recovery? When the market price of Citicorp drops from 60 to 1, and then comes back to 3, I don’t think that’s a recovery. Warren Buffett buys Goldman Sachs, and after he buys, the price drops 45 to 50 percent, and if he’s going to break even on the investment he’s got to earn 9 percent for the next twelve years, I don’t think that’s a recovery. The administration has put in place measures that, if they were to work, could offer some hope.

What I’d like to suggest is that if they don’t work, there’s an alternative. The national government has now made about $12.7 trillion in guarantees and commitments to the US financial sector, and we’ve already spent a little over $4 trillion in this crisis. Some institutions such as Citicorp, for example, received about $60 billion in direct assistance, and $340 billion in guarantees. So US taxpayers are into Citicorp for around $400 billion. If we look out to June, July, and if we see that the PPIP [Public-Private Investment Program, created by Treasury Secretary Timothy Geithner] is not succeeding, that the bank assets aren’t being bought at levels that they should be bought from the books of banks, then there is an alternative.

……[READ THE REST]

Runner-ups:
- Reagan Did It by Paul Krugman
- Profits and Balance Sheet Developments at U.S. Commercial Banks in 2008
- JPMorgan Hires Supertanker for Storage, Brokers Say
- Plan to Help Banks Clear Their Books Is Halted

Related posts from the blog:

• Article of the week (20/2009): My Personal Credit Crisis
• Article of the week (13/2009): The Big Takeover
• Article of the week (21/2009): Joseph Cassano: the man with the trillion-dollar price on his head
• Article of the week (14/2009): My Manhattan Project
• Article of the week (18/2009): Geithner, Member and Overseer of Finance Club