Article of the Week

As 2009 winds down, there is no question that this has been a tumultuous year economically. Though there are now more headlines lauding a stabilized economy than a year ago, the ranks of unemployed and underemployed have increased dramatically over the last 12 months.

Often my cynical perceptions are not assuaged by the optimistic headlines heralding recovery. The statistics and market segments cited are often offered as isolated variables rather than as part of a larger mechanism. There is no way of gauging whether the system is sound while simultaneously infusing billions into the economy via governmentally subsidized programs.

The merits and shortcomings of the TARP program have received considerable attention this year. The Congressional Oversight Panel, created to review the current state of financial markets and the regulatory system, maintains that TARP stopped the financial panic of 2008 and stabilized the banking system. However they admit that bailout programs have fallen short in many areas. The panel even suggests that TARP may have done harm by making some banks and firms, considered too big for regulators to allow them to fail, even bigger and by creating a new expectation that big banks will always be saved. The panel wrote that "implicit government guarantees pose the most difficult long-term problem to emerge from the crisis."  (Leslie Davis of the Atlanta Mortgage Examiner)