How to evaluate the success of a relief plan?

Alright, let's discuss how to determine if a "bailout" is truly successful.

Evaluating a Rescue Plan: Like a Comprehensive "Health Check" for the Economy

You can imagine a financial crisis as a person suddenly falling gravely ill, like a heart attack, on the verge of collapse. The "rescue plan" introduced by the government at such a time is akin to the emergency medicine and subsequent treatment prescribed by a doctor.

So, how do we judge whether this treatment plan is effective? We can't simply declare it a success just because "the patient is still alive." We need to assess it comprehensively from several angles, much like a doctor writing a "health report":

Step One: Assess the "Emergency Rescue" Effect — Has the Market Stabilized?

This is the first indicator to look at, just as a doctor first checks if the patient's heartbeat and breathing are stable during an emergency.

• Has the stock market stopped falling? Is it no longer plummeting like a waterfall every day, but instead stabilizing or even rebounding? This indicates that market panic has eased.
• Has the credit market thawed? This is crucial. Simply put, are banks willing to lend to each other again? Can businesses still borrow from banks to pay salaries and buy raw materials? If banks are too scared to lend, the entire economy's blood flow would coagulate, which is the most dangerous sign. If a rescue plan can get money flowing again, it's the first step towards success.

In short, this step is about whether the "bleeding has stopped." If the bleeding can't be stopped, there's no point discussing anything further.

Step Two: Assess the "Recovery" — Is the Economy Getting Better?

Once the patient is rescued, the next step is to see if they can get out of bed, walk, and resume normal life.

• Has the unemployment rate decreased? This is the most direct indicator of people's livelihoods. If everyone can find work and earn an income, it shows the economy is improving.
• Has GDP grown? GDP (Gross Domestic Product) can be understood as the nation's overall "income." If it turns from negative to positive and continues to grow, it indicates that the economy's "physical functions" are recovering.
• Are businesses and individuals willing to invest and consume? If businesses dare to invest in building new factories and hiring new staff, and ordinary people are willing to spend money on cars, houses, and travel, it means confidence in the future has returned.

This step is about whether the economy has moved "from the ICU to a regular ward" and begun its recovery.

Step Three: Assess the "Side Effects" — How Big Was the Price We Paid?

Any strong medicine has side effects, and rescue plans are no different.

• How much taxpayer money was spent? The money spent on rescue plans is, in the final analysis, taxpayer money. How much of this money was eventually recovered? Was it a profit or a loss? This is the most direct cost.
• Did it create "moral hazard"? This is a very important concept. Simply put, by rescuing large companies that got into trouble due to their own "recklessness" (e.g., excessive speculation, poor risk management), will it make them feel that "no matter how badly I mess up, the government will always bail me out," thereby encouraging even more reckless behavior in the future? This indirectly encourages irresponsible behavior.
• Did government debt increase sharply as a result? Large-scale bailouts typically burden governments with heavy debt, which can affect fiscal health for many years to come and potentially lead to future tax increases or welfare cuts.

Assessing side effects means looking at how severe the "after-effects" of this treatment are, and whether, in curing this heart disease, we ended up damaging the liver and kidneys in the process.

Step Four: Assess the "Long-Term Efficacy" — Did It Address the Root Cause?

A good doctor not only cures the illness but also advises the patient on what to watch out for and how to prevent recurrence.

• Were systemic loopholes plugged? A crisis outbreak usually indicates loopholes in the existing financial regulatory system. After the rescue, did the government introduce new regulations and strengthen supervision? For example, are capital requirements for banks higher? Are there stricter restrictions on complex financial derivatives?
• Has the financial system become more robust? After reforms, has the entire system's ability to withstand risks improved? Can it handle similar shocks on its own next time, rather than constantly needing "government rescue"?

This step is about whether we have "learned from our mistakes" and built a healthier system to prevent history from repeating itself.

In Summary

Therefore, evaluating the success of a rescue plan is a very complex task. You can't just listen to the government say "we successfully stabilized the market," nor can you just look at how much the stock index has risen.

An ideal successful rescue should be:

Stabilizing the situation as quickly as possible with the minimum cost, promoting steady economic recovery, and successfully fixing the systemic loopholes that led to the crisis, making the entire system healthier.

This is like a perfect "health report": not only do all indicators return to normal, but the patient's lifestyle has also improved, making their body stronger than before. Of course, achieving this in the real world is extremely difficult.