Word: markets
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Dates: during 2000-2009
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George H.W. Bush extends Reagan-era steel-import quotas--limiting them to 20% of the U.S. market--for an additional 2½ years...
...choice. But it's also clear that the authorities--then Treasury Secretary Hank Paulson, in particular--didn't want to intervene. The Fed and Treasury had taken a lot of flak for their earlier bailouts of Bear Stearns, Fannie Mae and Freddie Mac. It was time to let the market work...
Within days of Lehman's failure, it was apparent that the market wasn't up to the task. There was a run on money-market funds after the Reserve Fund (which had pioneered the money-fund business in 1970) revealed that it owned a lot of suddenly worthless Lehman debt. London-based hedge funds that relied on Lehman for day-to-day financing found themselves unable to do business. Similar dislocations played out around the world, and financial institutions became paralyzed by fear and confusion. They simply didn't trust one another anymore and didn't want to lend...
...overseas agreed that the panic had to be stopped at any cost. And it was, through a bailout that placed trillions of taxpayer dollars at risk. It was expensive, messy and unfair. It struck many people as un-American. But it worked. "I've abandoned free-market principles to save the free-market system" is how President George W. Bush described it last December...
Mission accomplished--so far, at least. In the face of a financial shock probably worse than the stock-market crash of 1929, massive government intervention averted a second Great Depression. Yes, we still got the worst economic downturn the U.S. has seen since. But while there are surely lots of potholes and wrong turns ahead, the economy--both in the U.S. and worldwide--appears to be in the early stages of a rebound. We have decisions made by government officials to thank for that...