Just about every single major economist believes that without government intervention into the crisis, our economy and country would be in shambles.

agreed Jon

Well color me impressed. Oh, wait ... scratch that.

I think it's two seperate issues here. One is what it took to save the economy and our country from collapsing. The other is the moral dilemnia of fixing the issue. They weighed both and decided that not destroying the lives of most of our country was worth the moral implications of helping a failing company survive.

I will state that those companies that did go insolvent and required our assistance should have been saved, and then disbanded when the trouble was over. It would have to be done in a way that didn't dramatically alter our economy and wouldn't instill panic. I feel for the smart banks who played by the rules and don't get to take over the marketshare that they should have by being smarter than their competitors.

Yeah, but do they mean TARP or ARRA?

I originally thought TARP was mostly a psychological thing (if the populace see that something's being done, they'll be less likely to panic) but the greatest influence was due to two actions by the Fed:

1. Arranging bank takeovers by the strongest banks (i.e. JPM, BofA, Citi).

2. Loosening lending as much as possible to unfreeze the credit markets (this was actually lots of little actions).

Actually, if anything stopped the Second Great Depression, it was probably the actions taken by the Fed and the European Central Bank just after the failure of Lehman to stop a massive and electronically-triggered run on banking institutions as a whole. Left unchecked, this would clearly have rendered most institutions completely illiquid (if that's a word).

To me, neither did ARRA stop (nor will it stop) the Second Great Depression. What it'll do, in the best case scenario, is cushion the blow of what's going to be a multi-year "non-technical" recession.

I think you are right to ask flere, and I think they'd say it was TARP which was main thing that preventing crisis.

That's not to say I disagree with Jon on the point that most of the people in DC who drove this stuff through the legislative process should be taken out and shot.

I'm not a big fan of TARP because of the lack of oversight and accountability built into the bill ("Hey, let's give Hank Paulson $700 billion to give his friends on Wall Street!").

I'm not a fan of the Waxman energy/climate bill due to its single-minded attention to coal (even to the exclusion of, say, natural gas, to say nothing of "clean" energy sources).

I'm not a fan of cash-for-clunkers because it effectively let people trade in their older SUV for a newer and slightly more efficient SUV.

And while I like the idea behind ARRA, plenty of it leaves a lot to be desired, as will any appropriations bill that's essentially a free-for-all for Reps to get projects for their constituents.

I know I shouldn't be surprised at this point, but sometimes I wonder if you value the expertise of anybody else, or if you just think that you're always right, even about subjects where you don't have the specialized education and training?

I mean, are you the sort of person who thinks they can diagnose what's wrong and how to fix it better than a doctor? Do you go to a lawyer for legal advice (wills etc) or just draw that stuff up yourself?

Why is this any different?

Yes. He is that kind of person. And if you don't agree with him, then you are committing treason and should be shot.

C'mon DT, you're smart...

:D

I'm not advocating believing someone just because they have a degree, let me make that clear. But I think if you have a panel of 100 economists and 80 of them agree that TARP saved us from what would have been a much worse situation then it's incumbent on you as an intelligent person to think "hmm, maybe those 80 people know more about this than me."

The majority isn't always right.

Of course not, but more often than not if you take the side of the majority of highly educated people on a subject, you'll be right. I've never studied DNA and don't have a clue about the science behind it, but I'm going to go with the majority of scientists who believe this or that on the topic.

It's also worth noting that those who said TARP was unnecessary (guys like Laffer) were the ones who said that the market was fine and would continue to go up a year ago when we were at 14,000 on the DOW.

Then again I've also seen quite a few of these allegedly reputable economists acknowledging that they're pretty much just guessing themselves. I suspect at least those who've been that honest wouldn't be offended by my disagreement.

All in all, I figure them to be about as reliable as TV weather forecasters & take them with about the same grain of salt. As I recall one memorable instance, someone called to ask when the talking head was "coming over to shovel this four inches of partly cloudy off his doorstep".

A weatherman isn't a bad example. While they have a large error rate, they still have a much higher rate of success than a guy who looks at the sky and tells me next week's forecast.

I think you linked to show how wrong Laffer was but what you actually did was show how spot on Peter Schiff has been for a long time. This is a guy who has been preaching what big government does to the economy well before the AIG/housing mess ever started. (both Bush and Obama) I believe he is running for Senate in Connetticut against Linda McMahon and Chris Dodd. Of course one of those morons will end up winning instead of somebody who actually thinks about what they are saying. A lot of people look at him as a huge bear on the market but it sure would be nice to have some of those in Congress when it comes to spending OUR money.

Yes, I've been a fan of his for a while. I wasn't always sure whether he was right , but he was able to articulate his argument time and time again in the face of "brilliant economists" who could do nothing but laugh. I suspect the laughter you saw from a lot of those people was not really due to thoughts of absurdity...I suspect they realized his argument was more technically correct and they were laughing it off as a "holy crap we cannot be THAT screwed...CAN WE?"

That's why I'm with JiMGa on "economists". Take them with a grain of salt until they collectively prove otherwise.

I can get a good look at a T-bone steak if I stick my head up a cow's ass, but I'll take the butcher's word for it.

Although I think it's way to early to consider Linda Mac the presumptive GOP nominee (the RINO claims could be fairly made) you could probably do worse than a successful business person in Congress. Granted, considering who she'd be replacing the bar would be set pretty low but still. Supposedly some of the better business decisions made by the WWE in recent years have come from her rather than VKM.

My problem isn't whether or not TARP saved us from a depression, my problem is that they did not also fix the underlying issues, nor punish the folks that got us into the problem in the first place. I'm fine with propping up AIG, but remember the bonus fiasco? The people who drove AIG to the brink and nearly killed our economy made a KILLING, with or without those bonuses. Who went to jail over this? Who paid fines? What regulations were changed and oversight added to stop them from doing it all again tomorrow?

Also a fact: my parents just moved here and bought a house. The mortgage company pre-approved them for about twice what they thought they could afford and what they were planning to spend. They were smart, but that's exactly the type of credit giving that got us in here. Yes, some things were tightened up in regards to WHO could get credit, but not much was tightened up on HOW MUCH they could get if approved.

i agree

Well thats been going on forever so I dont know what to tell you about the equation. Some people that Ive met have such fear of a the mortgage payment that they'll only take on a mortgage that is far far far below what they can actually afford....so Ive seen it go the other way too {shrug}

Point being Jon's insinuation was wrong.

+eleventy zillion

A friend of mine at work setup a lottery pool with 30 other co-workers. They each put in $10 and played powerball. Then next day they "won" $50 and I applauded their winnings.

Made me LOL.

had they not played the lotto would they all have been bankrupt? me guess not

Wasn't us all becoming bankrupt just a campaign scare-tactic though to help win the election?

The fundamentals of the economy were strong.

Wait, Bush wanted Obama to win?

Speaking of campaign promises...

AP sources: Gitmo closing goal of Jan. may slip
AP sources: Gitmo closing goal of Jan. may slip - Yahoo! News

And why might Obama's campaign promise to close Gitmo in 12 months not happen...


It's Bush's fault. Works everytime, but c'mon...that's lame.

I really don't think Bush cared much one way or the other, he was just ready to get the hell out of DC and let whichever fuck up won have it.

Yeah, everybody knows it's Clinton's fault.



Seriously, it doesn't look like closing Gitmo will mean much because too many other facilities with the same rules still are open. Shameful.

no, according to people smarter than you and I in regards to these things, no.

That Gitmo crap sucks! Michigan will take those people in a heartbeat and build a Supermax to boot.

Of course closing Gitmo in 12-months was always just a campaign stunt. Obviously as the terrorists are handled differently now, Gitmo was going to close sooner or later anyway. In any event, many other facilities? Which ones?

I don't know. I don't think it takes an economist to know that having every major bank and financial institution go insolvent would have probably been real bad for the country.

I'd love to see the evidence for this. Sure AIG was headed down the tubes, and Countrywide was in trouble, but Bank of America had no problem buying Countrywide, and Wells Fargo had no problem buying Wachovia. There were certainly institutions in trouble, but that just created opportunity for other institutions to step in and use their excess cash to pick them up and make themselves stronger. Buy low sell high, remember?

And all the American automotive makers were in deep trouble and ready to go bankrupt, except Ford figured out how to make it on its own when they didn't like the strings attached to government money, didn't they?

As was discussed at the time, investment in infrastructure to create jobs to help offset the troubles in other areas was a pretty good idea, but handing cash over to the people driving us off a cliff was a big, giant, costly band-aid that still left the cliff there, we just yanked the car back up the hill a bit.

Part of capitalism is letting companies fail, which just creates opportunities for stronger / newer / leaner / whatever companies to fill the void left behind, if any.

wells fargo was the exception to the rule, and their digestion of wachovia hasn't been completely without pain.

BoA overreached with all of its acquisitions (which were driven in part by conversations with the fed where they were assured that the fed wouldn't let them fail) and they're having major digestive problems with those acquisitions now.

Well they had a gun to their head to buy Merrill.

You would agree with Paul Krugman from the New York Times who recently argued (in the link) that most economists had gotten so divorced from reality that it's really no surprise that they had little inkling about the extent of the financial crisis that was going to befall the U.S. and the world when it did. To me, that makes many of their pronouncements on TARP just as suspect.


:+1:

No one ever got to the bottom of the bad assets. No changes to regulation have been made (or are going to be made). Many financial institutions are back already to trading significant amounts of their money in very risky vehicles. The SEC (which, based on the evidence coming out after the Madoff trial, should just close up shop) has no more balls than before the crisis.

But, if you really want to make your blood boil, read/listen to this report from NPR's acclaimed Planet Money team (excerpts below):


The bolded bit is just wrong, wrong, wrong: everybody knows what the problem is, everyone knows what the fix for the problem should be, and everyone knows it won't happen because members of the House will not give up the power of their committee chairmanships.

At this point I formally do not need any more proof that the U.S. House is not only a completely dysfunctional organization, but is actually a detriment to success in this country.

Yeah, the lack of jail time, asset seizure, and just general smackdown is horrific. I knew this would be a joke when they basically let Madoff's direct family keep too much. Those fucks should all be in jail, along with the heads of numerous companies, as well as their underlings.

I mean, you'd prosecute someone for stealing Lunchables, but these guys commit fraud in the millions to billions range and it's a collective meh.

Gitmo makes me mad, mainly cause most of those guys in there should have been executed in 2002ish. Its unacceptable for them to still be in a state of flux 8 years later.

On not nearly enough sleep I won't begin to pretend to go along with every conclusion he draws, I'd do well to be able to follow the storyline of a nursery rhyme atm much less an eight pager on economics. But there sure seemed to be a number of good points in there & it was definitely good linkage.

I think it really comes back to what I was saying earlier about the weatherman thing, that it seems pretty clear that economists give us educated guesses at best but what Krugman points out several times is that even the education behind those guesses is legitimately suspect when viewed in the cold wind of reality versus the rarified air of academia.

You've got the gist of the article. I think you'll appreciate the detail when you have more rest and more time.

I was wondering where The Afoci has been.

It is really sad. There should be daily arrests being made and a lot of people in jail. Asset seizure and such should be extremely aggressive.

If you were running a gambling operation in your home, the cops would bust down the doors, seize everything in your home, cuff you and drag you away to jail. Bilk tons of people out of billions and you get to camp out in your Penthouse apartment, cut juicy deals to help your family, and allow them to maintain their comfy lifestyle.

I just don't get it. If I got caught with stolen property, I nor anyone in my family would get to keep it. But when it comes to money and these guys, it seems to be a finders keepers policy.

absolutely...ridiculous

Other than the obvious carnage created by con artists like this...the fundamental difference in how they, and their families, are handled is the type of stuff we really need to be worried about, IMO. It's the type of stuff that launches complete anarchy, revolts, overthrows, etc.

Imagine the type mob rule you'd see if actual townhalls turned into militia seizures and the like. I really think this country is on its way to seeing this happen on a small scale if we have a double dip recession and continue to see these types of things unfold.

couldnt help but laugh at the commentary of the Gator's game when they mentioned that Tebow was "actually born in the Phillipines." I immediately thought how upset the birthers should be :)