Tuesday, October 05, 2010

Economic Lies Yesterday On CNBC

David Goodfriend, billed as a 'former Clinton White House staffer,' was a guest on Larry Kudlow's late-morning CNBC slot yesterday. He was the Democratic liberal of a pair debating the TARP program on the day of its notional closure. Never mind that billions of TARP funding still support AIG and Citigroup.

Goodfriend's comments provided an excellent example of how careful you have to be in believing what you hear on CNBC.

At least twice, I heard him baldfacedly state that 'every economist agrees that TARP helped us avoid what was going to be the next Great Depression.'

His exact words may have differed a bit, but not the sentiment. He was very clear that "every economist" agreed that, but for TARP, "we would have had another Depression."

No question, no debate. Goodfriend said so.

Later, Goodfriend professed to not have wanted the TARP, then offered what he felt should have been required attachments to TARP fund conditions. These included the laughable notion that banks would have been given the funds with the requirements that they be lent out, with no particular way of ensuring that such government-mandated loans wouldn't become the next chapter of the Fannie and Freddie credit policies which started the whole financial meltdown in the first place.

Such is the nature of Goodfriend's intellect, awareness of economics and finance, and prejudices.

However, it turns out that Alan Reynolds, and economist, has written several Wall Street Journal editorials, about which I wrote posts, found under the 'Alan Reynolds' label, specifically disputing the egregious use of federal power to prolong and deepen this recession, just like FDR did in the 1930s Depression.

Phil Gramm, former Democratic House Member and Republican Senator also wrote a recent Journal editorial along the same lines. He, too, disputed the need for the excessive federal measures of the past few years.

Goodfriend is wrong. He lied.

It is simply untrue that every American economist agrees that TARP was necessary and appropriate.

It's bad enough that CNBC has guests who lie, but its worse when nobody even bothers to challenge the lies. And it was the sort of 'big lie' that, left unchallenged, leaves many uninformed people simply believing that it must be true that there wasn't one economist in the US who disagrees with the proposition that, if not for TARP, the US would have been in another Depression.

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