Paul Volcker: Bailout “Distasteful” but Necessary
October 14, 2008
Author: Paul Volcker, International Council Member, Belfer Center for Science and International Affairs
Paul Volcker, speaking at a lecture in Singapore, said the U.S. economy faces a "considerable recession." Below are a summary of his comments from Bloomberg News and the Wall Street Journal. Volcker is a member of the Belfer Center's International Council. Read the full article here.
On the bailout:
- The bailout is "distasteful" and "not consistent with a capitalistic system" -- but "however distasteful, they are necessary to restore stability to the financial system."
- The bailout will help turn an "inevitable recession into something more manageable and that will last not too long."
On the economy:
- The U.S. and Europe face a "considerable recession."
- The global financial system is in "intensive care."
- "A strong recovery is beyond any reasonable expectation...a bigger [budget] deficit [is needed] to save the economy."
On the need for stimulus:
- "There is a need for stimulus measures on the budgetary front" to combat the recession..."A higher deficit is needed."
- "Inflation is not going to be a problem in the short run....But it's something we do have to guard against when we get out of the recession."
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