http://www.boingboing.net/2009/02/09/rep-kanjorski-550-bi.html <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/_NMu1mFao3w&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/_NMu1mFao3w&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object> DISCLAIMER...I don't agree with the number they put out there saying 5.5 trillion dollars would have been withdrawn. We have no clue what the number would have been since they cut the lines off. I also think it is funny that Kanjorski acts like the $250k guarantee actually matters to the uber-wealthy. Also, just to put things in perspective this net $445 billion (-$550 billion + $105 billion from fed) being withdrawn would have taken out $4.45 trillion in lending from the U.S. banks.
That's some heart stopping stuff right there. With everything being automated, things can go from really good to really bad in a blink.
That's the scariest thing I've ever heard. I wonder how much of the problem is just the news. Do you think their was an acceleration of fear on loss of confidence because all the doom and gloom headlines on CNN and Fox news.
This anti-TARP guy is not surprised. We knew there was a run back then. In spite of your best efforts at trying to conflate the two, the question was never is there a real crisis or not... the question was whether TARP was the best way to respond to that crisis. The choice, in spite of your best efforts to conflate the two, was never between TARP and doing nothing. Any sane person knew something had to be done and any sane person knew that any something dreamed up by the people that got us into this mess and executed by the Bush administration was a bad deal. (I will concede that they manipulated the system so that at the point when the plan went to the Congress it probably was TARP or nothing... but it didn't start out that way.) TARP was screwed up. We could have done better and we will eventually have to do better when we find out it's at best delayed the reckoning (though I suspect when all is said and done, it will have made things worse and that the momentary stabilization was due more to the efforts of the Fed). We need wholesale changes in the way we do business. Yes, heads must roll and more banks must fail and we need to puncture the myth of the masters of the universe and wake up their enablers who admire them so much. We need to fundamentally change not just the way these guys do business, but the way they think about business and the way a significant part of America thinks about the way these guys do business. These guys may be smart, but because they have massive egos and incredible wealth, they think they are smarted than they really are. They are guilty of groupthink and are blinded by their pursuit of material wealth, forgetting that there are things more valuable. Wall Street is like high school on steroids and the rest of us are the geeks. Some of the geeks look up to the popular kids and wish they were them. Others don't care and still other resent the hell out of them, some on principle and some on jealousy. What is constant is that the actions of the Masters have harmed the lives of everyone and the structure they created cannot be allowed to stand. You will undoubtedly come back and ask me what specific financial reforms I would put in place. I don't know. It's a huge problem and I don't have enough knowledge to figure out where the best place to start might be (I'm leaning towards nationalizing the banks... invoking socialism to save capitalism as it were... if the amount of debt that is out there is anywhere close to what's being reported we'll have to get there eventually), but lacking specific answers to an intractable problem does nothing to negate my criticism of TARP and the people that supported it.
The criticism that most people had with the TARP was that the Bush Admin was saying it was needed immediately and how quickly it was rushed through Congress. No one claimed it was perfect - but the issue was that it had to be done, and it had to be done fast. There was no time to wait for a new administration to come in with a new philosophy. As we see from the interview, we were an afternoon away from the complete collapse of the economy. AS robbie points out, what the Fed did was simply stick a finger in the dam - a $250,000 guarantee means nothing in the long run to major players. If Congress had debated a plan for 3 months and waited until the Obama administration to pass something, the dam would be long gone. Only the prospect of knowing that a rescue was imminent staved off collapse in the immediate weeks (I believe they announced it that night) until it got passed.
Robbie 380, thanks for the informative post. That was scary. It doesn't exactly give you confidence. Particularly when he said we aren't any better off than 3 months ago.
Bull. There were other options to TARP. We've been over this several times before, but again, TARP was not the only answer that was floating around out there. Nobody (and I'm mainly criticizing Dems here because I expect so little of Repubs under W) stopped to say, "Hey, let's take a look at this or that or see if TARP might have some unintended consequences." Much less was there any hesitation even after sordid details about how TARP had been planned and proposed came out. And again, the trillion or more that the Fed pumped in was probably the difference maker... TARP was just stupidity on a national scale designed to help the Masters and their minions save face and keep pretending that all was right with the world.
