- October 2010: Vol. 22 No. 9

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The Time Value of Pain: How Government Intervention and Policy Decisions Will Make This Downturn Very Different

by Paul Dougherty

During the recent “Great Recession,” the federal government has engaged in unprecedented manipulations of the economy in an attempt to prevent further economic collapse. In fact, I would give the most credit to the Federal Reserve for implementing 11 programs, including the TALF (Term Asset-Backed Securities Loan Facility), that helped stabilize the markets by “lending into the panic” largely through their emergency powers. Following its significant efforts to rescue the money-center and investment banks, the government has been attempting to forestall a deluge of commercial real estate repossessions — as occurred in the aftermath of the savings and loan crisis of the 1980s.

No doubt a crashing commercial real estate market would be catastrophic for the United States economy, but government initiatives are not the solution. Left in place, these government policies will have significant unintended consequences. For example, government intervention is providing lender

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