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: Commercial paper, Liquidity, and Systemic Collapse

[tongodeon]

If he said everything was fine last week, that just makes his perspective less valuable. And when his peers work for some of the recipients of that cash, that should only heighten suspicion.

A few things. First, he didn't say "everything was fine last week". The TED spread was elevated for months. Bear, Fannie/Freddie, and Lehman had already collapsed and been bailed out. That was the whole point. "We can’t keep doing this" Bernanke told Paulson. TARP - and the collapse - had been happening for months. All that changed in mid September was Congress taking over.

You can keep referring to this as a "possible collapse", but the collapse was well under way before TARP, and continued afterward. AIG, Merrill, Wachovia, IndyMac, and many others. Honestly, what evidence is missing? If there *had* been an imminent collapse that TARP saved us from, what would you expect to see now that you don't see? You literally wouldn't know a collapse if it was staring you in the face, because one is, and you don't.

would further hope to convince you that the Schwabs of the world would have been fine without TARP.

I already agree. The Schwabs of the world would have been totally fine without TARP. The Schwabs weren't even holding any toxic assets. They were, however, the counterparties in contracts with companies that held those toxic assets. They didn't need TARP, their counterparties needed TARP, and the Schwabs needed their counterparties to get TARP. Without it, the Schwabs would have had to write down the losses caused by their counterparties bankruptcy and then they'd need TARP. But the Schwabs never needed TARP, because TARP worked.