Editors' Summary (Editorial‪)‬

THE BROOKINGS PANEL ON ECONOMIC ACTIVITY held its eighty-seventh conference in Washington, D.C., on April 2 and 3, 2009. The conference occurred barely six months after the collapse of the investment bank Lehman Brothers, an event often used to date the transition from a largely conventional cyclical downturn, characterized by a strained financial system and mild recession, to a full-blown financial and economic crisis. In keeping with the Brookings Papers' tradition of providing timely analysis of current economic events, three of the papers in this volume address the role of various factors in the initial downturn and the ensuing crisis, including the response of policymakers, the behavior of bond markets, and the role played by the oil market. The two remaining papers examine the impact of tax cuts on government spending, and the role of corruption in undermining popular support for market-oriented policies. In the first paper in this issue, Phillip Swagel provides an insider's account of the policy debates as they unfolded in real time during his tenure as assistant secretary of the Treasury for economic policy in the last two years of the Bush administration. Swagel's account is both a blow-by-blow history of the policy response to the crisis and a lesson in economic realpolitik. He documents that the Treasury under Secretary Henry Paulson was quite aware of the fragility of the financial system as early as 2006, and indeed, interagency work was well under way to develop a strategy for dealing with a crisis should one occur.