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Bailouts Benefits For Economy Wont Be Immediate

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by Zubin Jelveh
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Sep 23 2008 8:01am EDT

Bailout's Benefits for Economy Won't Be Immediate

If history repeats itself -- as it often does, just in unexpected ways -- the passage of the bailout plan won't be an immediate panacea for the U.S. economy.

After the introduction of the Resolution Trust Corporation in August 1989, it still took three years for home prices to start rising again and for the unemployment rate to peak, point out Merrill Lynch economists:

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However, the '89 bailout came one year before the onset of a recession while the current bailout will likely pass almost one year into a downturn. That might mean that the end is closer than the charts imply, but with the events of the past week and the large size of the bailout proposal, this recession could be deeper and longer.

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