Why Conservatives don't care if the bailout was a success

[tongodeon]

One of the best things I've written in the last year (if I may say so) is this post on John Haidt's Five Moral Dimensions. I keep coming back to that post, mentally at least, because it explains why people have such a hard time seeing eye to eye politically.

Take the TARP "bailout", often inaccurately characterized as a $700 billion giveway to

Comments

Re: Confidence timeline, bankruptcy and counterparties, TARP and markets

[tongodeon]

This is a hilariously subjective take on things, but whatever. It only serves as more evidence of the placebo effect in action.

New Rule: you can't discuss the placebo effect until you demonstrate that you understand the placebo effect.

The placebo effect accompanies sham treatments. People get better if they think that they're receiving a real treatment. The placebo effect also accompanies real treatments, and effective allopathic practitioners perform their treatment so that the placebo effect will be working with them.

There was an element of TARP that was political theater, designed to instill "hilariously subjective" confidence in panicked investors and markets. But the market itself was badly undercapitalized, as you can see in any bank's prospectus or the aggregate tables in any of the Problem Bank Lists or this table here. TARP solved both problems: the objective problem of undercapitalization, and the subjective problem of investor confidence caused by the undercapitalization.

>which brought TED up to 201 the next day - the biggest spike ever
How did you research this? It's false, and your link to the WSJ doesn't even mention TED btw.

You know what I'm tired of? You just making stuff up that I have to disprove with citations. Then, when I say something that's well-grounded in objective facts that are easily findable from a simple google search, you insist that they're not true because you can't verify them.

Bullshit. I'm not going to spoon-feed you a third serving of truth. Do what I just did. Go out, find the graphs for the TED spread for the week of September 15, find the timeline for when Geithner and Paulson started discussing TARP with each other, and cite your own damn sources for a change.

Lehman formally announced its non-bailout, non-rescue, non-white-knight Chapter 11 on September 15. TED went from 121 on 9/11 to 201 on 9/15 to 313 on 9/18, 2 days before the first bailout talks. If I'm wrong about any of this it ought to be trivial for you to prove me wrong.

It's called taking a loss. Taking a loss is OK. A couple of banks going under is OK.

Taking a typical loss is OK. A couple of banks going under is OK. These were not typical losses, and we weren't talking about "a couple of banks". What part of systemic failure do you not understand?

This wasn't some future what-if fantasy, this was something that we were already in the middle of. Lehman had gone under, the commercial paper market had frozen for all borrowers and investors everywhere, and TED was higher than it's ever been. I can't possibly make this plainer to you. If you don't see it then all I can say is that you have a novel, fringe view of history that few others share.

Re: Confidence timeline, bankruptcy and counterparties, TARP and markets

[ctd]

Here's what you should do when I tell you you're wrong - think to yourself, "well, I've certainly been wrong about plenty of other things - perhaps ol' CTD has a point here!" Then you should look up the historical TED spread and find that it's indeed been above 201 before. Then you should admit you were wrong.

The advantage of this is that you are now free to be right. I want you to be right, because then you can apply your rhetorical abilities and prodigious typing skills to supporting positions which have been critically considered rather than wasting them.

Re: Confidence timeline, bankruptcy and counterparties, TARP and markets

[tongodeon]

I was wrong to say "the biggest spike ever" in relation to September 15 2008, but that's a very minor semantic point that's irrelevant to what I'm trying to explain.

The Lehman failure happened on September 15, and it was a very important milestone, but the financial crisis did not begin there. Evidence of the most recent crisis begins in August 15 when Ted went above 100. Bear Stearns had its troubles in March which the Fed brokered a takeover for, then Fannie and Freddie started looking for rescue in July, which completed in September. Lehman was a trial of the "let it fail" plan - your plan - with disastrous results that I've already gone over many times. Congress passed the plan on October 3, and by October 13 when Paulson had his meeting with nine bank CEOs TED was on its way down again, and the commercial paper market gradually unfroze. And TED has stayed down, with commercial paper continuing to flow freely. TARP was a success by any subjective or empirical standard, accomplishing what it set out to accomplish, at a fraction of its projected cost.

But why are you even bringing this up? You said that TED rose "because the man saying, "everything's fine" had suddenly started telling everyone he needed a trillion dollars, immediately, to solve the worst.crisis.evar?" You're trying to skewer me by contradicting your own argument, pointing out that it rose months before anyone discussed TARP? I get the feeling that you don't actually have an argument of your own - you're just shifting the burden of proof, waiting for me to say something, and then trying to pretend that whatever minor semantic flaws you've found somehow invalidate the big picture.