So your entire problem with it is an accounting issue? That has nothing to do with my questions - which were to find a single dime that has been lost. All of that money was spent buying shares of banks. The government still owns those shares. Unless any of these banks fail, not a dime is lost. As for measuring what the funds are having on our economic situation, of course we can. SamFisher pointed to some of it in an earlier post with the LIBOR/OIS stuff. The fact that the US financial system is not gone today is also a pretty good measure. Your entire argument seems to be: I don't trust Paulson therefore this must be bad. You've yet to make a single argument based on the facts of the situation to suggest that the situation wasn't dire or the problem immediate. You haven't made a bit of a case that the the TARP has failed - just that there's not enough oversight right now to know how successful it was.
Just to clarify, his issue is what the banks did with the money, not what the government did with the money. Also, it really isn't fair to say they haven't lost money yet, the program is barely two months old.
Agreed - it may very well turn out to be a disaster - or it could be massively profitable. But rim's been posting these things as evidence that it IS a disaster, basically. But all it is really saying is that there are transparency issues - which I'd agree with. But that has nothing to do with whether the TARP was a bad idea and if we should have waited 4 months while Rome burned to come up with a plan with a Dem Treasury Secretary.
And I never will. I have argued that the plan we have is an abysmal response to the crisis. If we're going to spend $700,000,000,000 or with the Fed actions, several trillion dollars, I'd like something for that besides the promise that we might get back some of that money someday. Something like, oh, a Canadian Purchase...
You haven't really defined how it's abysmal though. You don't like the process - but I'm more worried about the result. How is the current result abysmal in the context of the other possible scenarios which could have transpired. Your proposed course of action was to do nothing. If the current situation is abysmal, I don't know how to describe what likely would have happened in your scenario other than as cataclysmal.
we are continuing to only address the short term. the govt is trying to continually bubble their way out of things. the snap back is going to be worse if we keep failing to address the issues and only try to inflate another bubble like what is going on with the fed buying treasuries now so the govt can try to finance the deficit spending at extremely cheap rates. nothing like some blatant market manipulation to save us. then today the treasury came out and said they were going to stop the slide in home prices by just dropping mortgage rates. it's like we are god. again both are not specifically the TARP but man things just look worse and worse going forward....yes the short term isn't as bad as it would have been without govt intervention but the mid to long term is looking very very bad. we continue to not address ways to deflate the bubble. our govt is only looking for ways to inflate our way out of it and it going to fail miserably.
Except each of those examples, except the Louisiana Purchase (which everyone agrees was a steal) was an expenditure - this is not. This is an asset purchase, which has no cost unless the asset declines in value, and a loan program, which has no cost unless the loanee goes under. It's not a promise that you might get some of it back someday. It's a guarantee unless the US financial system goes under, in which case the US is done as we know it regardless, so who really cares? And you continue to ignore the fact that the cost would be even higher had no TARP been in place. This is not a case of good option vs bad option. It's a case of bad option vs. substantially worse option. Yes, we could have chosen to not do the TARP. In the end, we as a country would owe far more and have a far smaller tax base to fund it with.
rimmy...you make some good points about this, but we disagree on this fundamentally. You distrust the Bush administration, and understandably so. However, the entire banking system was on the verge of collapse, and that was not going to get better with the passage of time. Waiting 3 to 6 months to get a plan in place could have been a recipe for disaster. In keeping with your theme...it is futile to show up with your heave fire fighting equipment once the house has already burned to the ground.
Yeah, totally agree. Paper trillions have been thrown around that I wonder if I'm being entirely pessimistic or even insane in the belief that it will get very very bad. So it's a daily question of whether I'm deluding myself with blind hope or feeding my gloom with taking preference over a narrow set of numbers and information rather than what the MSM says. Then I feel a peculiar sense of guilt by anticipating a sharp bust in January because if it doesn't happen I'd think the government is gaming the system again with fake riches, and if it does the uncertainty would gnaw even more. I don't even know why I read finance. It's not my field and I don't make any money out of it. There's feeling of powerlessness because I don't know how to respond with what I think I know.
Its not really trying to re-inflate the bubble, but rather keep some air pumping into the balloon so it doesn't shrink all at once. Credit is deflating as we speak, only options are falling off a cliff or falling SLOWLY off a cliff.
Not really Tarp but I've been thinking: In a consumer based economy, gradual decline is probably the normal condition and bubbles of growth are the anomaly. Bubbles are the result of disruptive technologies, new discoveries or artificial manipulation of the economic system, in the latest case, an unsustainable credit market. Think of economics in the same terms as thermodynamics; you can't continue to drain energy from a system and expect it to function at the same level, it requires input from outside the system to grow or maintain. 'Sustainable growth' in a consumer economy is probably an oxymoron, delayed decline might be the best real option. Investment, saving, invention, innovation and efficiency are the only foreseeable ways to maintain our quality of life until the next unforeseeable bubble adds outside energy to the system. A truly sustainable system would require that most of us create more value than we consume. With 300 million or 6 billion people that's not really possible.
How about something that might make a real difference, instead of continuing to pump air into a bursting balloon? http://gohmert.house.gov/Article.aspx?NewsID=1355 CONVERT PAULSON'S LAST $350 BILLION INTO TAX HOLIDAY, SAYS U.S. CONGRESSMAN Press Release : FOR IMMEDIATE RELEASE November 28, 2008 Convert Paulson’s Last $350 Billion into Tax Holiday, says U.S. Congressman "Billions of Dollars for Taxpayers, but Not One More Penny for Executive Bailouts" WASHINGTON, D.C. - As millions of Americans are hoping to maximize their holiday shopping budgets on today's Black Friday bargains, one U.S. Congressman is fighting to prevent more outrageous spending sprees by Washington with taxpayer dollars going to executive cronies. With $350 billion of the $700 billion bailout still available to Paulson pending Congressional approval, a conservative Texas lawmaker is proposing to put that money towards a tax holiday from both personal income tax and FICA tax for Americans during January and February of 2009. He stated, "By instating a temporary tax holiday, we could electrify the American economy and provide overwhelming relief to taxpayers, all for less than the cost of the current failed Paulson-Pelosi bailout system." "We need to give this money to the people who earned it. I am sick of Washington millionaires trying to decide which of their cronies should get the next wad of taxpayer money," Rep. Louie Gohmert continued. "Think about how much you would have if you didn't have any social security or income tax withheld from your pay check, or if you didn't have to pay those taxes for January and February! Americans could take and invest their own money where they believe it should go - to paying down mortgages, buying a new car, making credit card payments. The economy would get relief where it is needed the most. Why try to decide how to prevent foreclosures? Just give taxpayers their own money to catch up on their payments. Those in lower income brackets who are hit the hardest by the FICA tax would see huge money back, and then THEY could choose who should benefit from their hard earned money. Even the self-employed and small business owners would receive a fantastic amount of their own much-needed money, and they will be able to invest that back into their businesses and even create the ability to hire more people.” Gohmert is currently preparing a bill to declare the tax holiday for January and February of 2009 and is also gathering support at the same time. He said, “We can save more home mortgages, increase employment, and boost economic growth for a lower price tag with this plan than with any centralized bureaucratic program, all by giving the power back to the taxpayers. I am demanding that not another penny goes to executive bailouts, but these billions of taxpayer dollars should go to the taxpayers who earned them." According to American Solutions, a conservative think tank founded by former Speaker of the House Newt Gingrich, Americans pay $101.6 billion per month in personal income tax and $65.6 billion per month in FICA tax. Under Gohmert's proposed plan, all of these taxes would not be paid during January and February of 2009, and the money would stay in the hands of American taxpayers - the ones who best know where economic stimulus should be targeted. Gohmert's two month tax holiday would stimulate the economy while costing less than the remainder of the Paulson-Pelosi bailout plan. Rep. Louie Gohmert (TX-01) has also recently proposed returning all 2008 income taxes to American taxpayers as a solution to boost the ailing economy, as he believes taxpayers, rather than the government, should be using their hard-earned money to choose the economy's winners and losers. If you'd like to support Rep. Gohmert's plan and tell Congress to put an end to the government's excessive bailouts, sign the online petition at RedState.com by clicking HERE, or paste https://redstate.kimbia.com/taxholiday into your web browser.
Two things: 1. The bailout hasn't failed. 2. A tax holiday is no different than the rebate checks (except that the money flows more to the wealthy). We already know that's an inefficient solution. 3. A tax holiday would have an actual cost of $350B. The bailout does not because it's all (so far) being put into things that have a rate of return. This is pure political grandstanding.
I wouldn't lend California money, they are having serious problems, and if they were treated as a business, they wouldn't be leant money. I think if they thought TARP was the right thing to do, you would have seen a plan for the auto industry already. These banks haven't had the time to default. You don't continually lose billions, borrow billions, and manage to pay back billions, without borrowing from other people. A number of banks have accepted TARP, and probably could have survived fine without.
By what measure? The bailout has failed to do anything that it said it was going to do. Lending is less than it was before the bailout. The economy has contracted significantly more since the bailout than before. The only measure by which the bailout hasn't failed is that none of the banks that Paulson has pumped billions into have failed yet.
I'm not talking long-term loans - I'm talking about commercial paper. This is California having to pay daily payroll, but getting sales tax revenue once per month. So they take out short-term commercial paper loans which are paid back a few weeks later with the sales tax revenues. It's all cash flow management. Unless you think California is going under in the next 2 weeks, there would no reason not to lend money - unless your bank is hoarding cash and not lending in general, which is exactly what the problem was. After the TARP settled the credit markets, California was able to get their commercial paper loans, I believe. Why? The financial system was in danger of failing in days; the automakers are in danger of failing in months. So they are using this time to demand more out of them. At the end of the day, there will be an auto industry plan passed. Certainly - and if they default, TARP will have been a failure. But at this point, there is no evidence of that.
