Drudge Retort: The Other Side of the News
Wednesday, August 27, 2014

Former Federal Reserve Chairman Ben Bernanke, a prominent student of the Great Depression, contends that the 2008 financial crisis was actually worse than its 1930s counterpart. Bernanke is quoted making the statement in a document filed on Aug. 22 with the U.S. Court of Federal Claims as part of a lawsuit linked to the 2008 government bailout of insurance giant American International Group Inc. "September and October of 2008 was the worst financial crisis in global history, including the Great Depression," Bernanke says in the document filed with the court. Of the 13 "most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two."

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Asked why he thought it was essential for the government to rescue AIG, Bernanke said, "AIG's demise would be a catastrophe" and "could have resulted in a 1930s-style global financial and economic meltdown, with catastrophic implications for production, income, and jobs."

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Could is also have anything to do with re-distributing wealth upwards in the face of an economic failure of national proportions? Golly, since the events of 9/11 were investigated soooo thoroughly I have great confidence in bailing out corporate interests who are stealing homes from families.

#1 | Posted by redlightrobot at 2014-08-27 01:29 PM | Reply | Flag:

2008 - the great Southern California housing market crash. How could I forget.

#2 | Posted by CalifChris at 2014-08-27 06:22 PM | Reply | Flag:

It probably didn't feel as bad to most Americans this time, because in the 30's we didn't have any significant social safety net in place.

#3 | Posted by Whatsleft at 2014-08-27 07:07 PM | Reply | Flag:

Too Big to Fail. Trillions in Derivatives. Bank De-Regulation. These are just a few of my favorite things.

#4 | Posted by JROD at 2014-08-27 07:13 PM | Reply | Flag:

Then we'll need an even bigger war than WWII to pull us out of it.

#5 | Posted by Huguenot at 2014-08-27 07:24 PM | Reply | Flag: | Newsworthy 1

Too Big to Fail. Trillions in Derivatives. Bank De-Regulation. These are just a few of my favorite things.

#4 | Posted by JROD

When the dog bites, when the bee stings,
When I'm feeling sad,
I simply remember my favorite things
and then I don't feel so bad!

#6 | Posted by donnerboy at 2014-08-27 07:44 PM | Reply | Flag:

Bernanke is crazy. The great depression lasted more than 10 years and the country averaged around 25% unemployment.

#7 | Posted by mcmlcxx at 2014-08-27 08:05 PM | Reply | Flag:

Bernanke is correct, but not for the reason that he states.

The oil is running out; and no amount of financial chicanery can do anything about it. Dieoff is inevitable.

#8 | Posted by Shawn at 2014-08-27 09:07 PM | Reply | Flag: | Funny: 1

"September and October of 2008 was the worst financial crisis in global history, including the Great Depression," Bernanke says in the document filed with the court. Of the 13 "most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two."

That's about the level of failure you'd expect from Dumya MBA.

#9 | Posted by reinheitsgebot at 2014-08-28 01:18 AM | Reply | Flag:

Bernanke is correct, but not for the reason that he states.

I had a feeling you'd say that.

#10 | Posted by Ben_Berkkake at 2014-08-28 07:50 AM | Reply | Flag:

2008 was worse than the Great Depression because failures used to go bankrupt back in the Great Depression. In 2008 they were enriched in an attempt to maintain the status quo for as long as possible.

#11 | Posted by Ben_Berkkake at 2014-08-28 07:51 AM | Reply | Flag: | Newsworthy 2

As a scholar of financial crises, I would not argue against Bernanke. I doubt any DR players were around to see or fully grasp the Great Depression. Having been in the financial services business at the time, I could see some panic, others have no historical reference to help guide their actions and some try to just soldier on. Read Geithner's 'Stress Test' for a taste of what some saw. VERY frightening to look over the precipice into the void into which many of the top money center banks and insurance companies were about to fall...

#12 | Posted by catdog at 2014-08-28 08:14 AM | Reply | Flag:

Then we'll need an even bigger war than WWII to pull us out of it.

#5 | Posted by Huguenot

It looks like we're already working on that.

#13 | Posted by WhoDaMan at 2014-08-28 08:38 AM | Reply | Flag:

"Bernanke is crazy. The great depression lasted more than 10 years and the country averaged around 25% unemployment."

I didn't live during the Great Depression but my parents did and what they described to me was a thousand times worse than what we experienced in 2008. I think Bernanke is trying to polish his resume a bit here, pretending he led us out of a depression of the scale we faced in 1929, utter nonsense. He should be laughed off of the public stage for uttering such nonsense.

#14 | Posted by danni at 2014-08-28 08:52 AM | Reply | Flag: | Newsworthy 2

I agree with Danni. Inside some financial institutions there may have been more mayhem and potential damage, but unemployment never reached the great depression levels, and because of social programs like unemployment, it never reached great depression levels.

#15 | Posted by eberly at 2014-08-28 08:56 AM | Reply | Flag:

Bernanke is crazy. The great depression lasted more than 10 years and the country averaged around 25% unemployment.

#7 | Posted by mcmlcxx

Well, it's been six years so far and if you count discouraged workers who have stopped looking for work and those working part time jobs who want full time work, real unemployment is over 20%, so...

But this time there are trillions of dollars sitting on the sidelines that corporations won't reinvest in America.

#16 | Posted by WhoDaMan at 2014-08-28 09:02 AM | Reply | Flag: | Newsworthy 1

"Well, it's been six years so far and if you count discouraged workers who have stopped looking for work and those working part time jobs who want full time work, real unemployment is over 20%, so..."

Everyone I know that wants a job has a job and I do know some who want "career positions" and are too good for the jobs available. This is nothing like the Great Depression of 1929 when my Dad quit school in the 9th grade to work in a fish market and brought 100% of his wages home and gave it to his Mom to help feed the family. He couldn't directly hand it to her because it made him so unhappy so he just left it on the dresser and she would take it after he left for work each day. He was "saved" by WWII when he joined the Navy and actually had an incredible career there.

#17 | Posted by danni at 2014-08-28 09:16 AM | Reply | Flag:

Besides the fact that actual unemployment is about 22%, another huge difference between the Great Depression and the 2008 meltdown is the debt the public carries, in the face of falling wages and even higher unemployment for recent graduates and minorities, in some groups topping 40%. But everything is going according to Greenspan's plan. Corporations enjoy record profits and wages are falling with Obama sounding the drumbeat of WWIII.

#18 | Posted by nutcase at 2014-08-28 10:46 AM | Reply | Flag: | Newsworthy 1

So why didn't W. bring back the CCC before leaving office?

#19 | Posted by Tor at 2014-08-28 11:00 AM | Reply | Flag:

#17 | Posted by danni
Everyone I know that wants a job has a job and I do know some who want "career positions" and are too good for the jobs available.

Danni, I can't believe you posted this. I am in agreement with you 90%+ of the time, but you apparently don't know any young black men. Unemployment among young blacks in inner cities approaches 50%. Also, the problem includes underemployment, which clearly has increased since 2008.

#20 | Posted by WhoDaMan at 2014-08-28 11:03 AM | Reply | Flag:

"Unemployment among young blacks in inner cities approaches 50%. Also, the problem includes underemployment, which clearly has increased since 2008."

I have to admit I wasn't thinking about that when I posted, I guess if you are a black person living in the inner city unemployment is very high but there are so many social programs that didn't exist during the Great Depression that even there the suffering is far less than it was back then.

#21 | Posted by danni at 2014-08-28 11:19 AM | Reply | Flag:

Not only that, but family income for everybody except the 1% keeps going down. That includes those working full time and with multiple jobs. If it weren't for the safety net programs (which I would remind you the "conservatives" would love to eliminate), it would be just as bad if not worse.

#22 | Posted by WhoDaMan at 2014-08-28 11:37 AM | Reply | Flag:

"If it weren't for the safety net programs (which I would remind you the "conservatives" would love to eliminate), it would be just as bad if not worse."

I don't disagree, the safety net helps those most hurt by economic down turns and it also keeps money flowing through businesses which keep other folks working. Austerity is the absolute worst thing you can do to a struggling economy and our growth and reduction of unemployment when compared to Europe, where austerity was the strategy, proves it.

#23 | Posted by danni at 2014-08-28 11:52 AM | Reply | Flag:

Ok, I still love you :)

#24 | Posted by WhoDaMan at 2014-08-28 12:01 PM | Reply | Flag:

"safety net programs (which I would remind you the "conservatives" would love to eliminate),"

sure. whatever.

#25 | Posted by eberly at 2014-08-28 01:04 PM | Reply | Flag:

The point Bernanke was making wasn't that 2008 was de facto worse than the Great Depression. His point was that unless the federal government stepped in and stabilized the situation, what WOULD have happened would have been catastrophically worse than the Great Depression because the entire global financial structure would have collapsed and everyone would have felt the reverberations far worse than anything we actually dealt with post 2008.

#26 | Posted by tonyroma at 2014-08-28 03:39 PM | Reply | Flag:

There was absolutely no reason to provide the Banks with free lunch. They should have been reined and still need to be reined in. Like GM, when taxpayer money was put up, someone representing the Government should have been put on the board of every bailed out Bank and issued stock in proportion to the bailout amount and net worth of the Bank at the time. Another word for this is nationalization. Later US stock could be resold as was done with GM.

#27 | Posted by nutcase at 2014-08-28 06:25 PM | Reply | Flag:

Ben Bernanke should know. He is so old he was probably there.

#28 | Posted by donnerboy at 2014-08-28 08:28 PM | Reply | Flag:

Exactly how much in housing housing derivatives did the central bank have to buy?

I've heard that it's sitting on anywhere between $4 trillion and $17 trillion in bad derivatives that it bought from banks at face value.

#29 | Posted by HeliumRat at 2014-08-28 08:42 PM | Reply | Flag:

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