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The ‘Lehman Trigger’ Myth Continues

tigar Wrote: Nov 03, 2012 1:11 PM
Let me give everyone the time line---and I never saw Harvard. Clinton starts it with Dodd-Frank telling the financial world to give loans to people that can't pay. Then Bush try's to put a stop on it, he cant because the Dem's have control and now the sled with fannie and freddy is going so fast that the real greed starts in the finance world the snow ball is out of control. and that my friends is the tale ---then we get a empty suit --Obama--that don't know as much as my dog catcher about how to run the country let alone the dog pound and that is why we are in trouble___GB

In yesterday’s defense of President Obama’s economic record, Alan Blinder starts, ”[A]fter the frightening financial panic and deep recession triggered by the collapse of Lehman Brothers in September 2008,” thereby repeating the myth that Lehman’s failure caused the recession.

Below is a chart of real (inflation-adjusted) personal consumption and civilian employment from January 2007 to December 2010.  Let’s recall that Lehman’s failure was in September 2008.  What should be immediately clear, even to such an accomplished economist as Blinder, is that both consumption and employment began their decline almost a full year before Lehman’s collapse.  So unless Lehman’s collapse caused some backward...