Why Conservatives don't care if the bailout was a success
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 ( Read more... )
Take the TARP "bailout", often inaccurately characterized as a $700 billion giveway to ( Read more... )
Didn't you just accuse me of giving you a false choice? Were the Apollo Missions a failure because they were also a money hole, or were they a success because we spent money in the successful pursuit of accomplishing a goal? It's a money hole *and* a success.
TARP was a success in that it accomplished what it set out to accomplish - it decreased the TED spread, restored the frozen credit market, recapitalized the banks, and prevented systemic failure. It's an even bigger success because the size of the money hole is a third to a sixth of its estimated cost depending on which numbers you choose. 42% of the cost of the 1980 S&L bailout which was arguably a much smaller crisis.
The article I was thinking of as the 'main' article, because you linked to it with "TARP was about avoiding systemic collapse", doesn't mention TARP or explain any way in which TARP might actually do that.
Correct. Excellent reading, sir. That article illustrates the ( ... )
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The paper market might well have been frozen for investment banks with possible exposure to toxic loans, but for the Caterpillars and even the Servicemasters of the world, it was just expensive.
So, TARP is more like eating dead soccer players while in an overpriced restaurant. Say, Applebee's. I'm saying they should have sucked it up and ordered the Wonton Tacos.
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[citation needed]
The paper market might well have been frozen for investment banks with possible exposure to toxic loans, but for the Caterpillars and even the Servicemasters of the world, it was just expensive.
First, a quibble. Caterpillar wasn't selling commercial paper, which usually has a term of 30-60 days. They were issuing 5 and 10 year bonds. The bond market is a completely different market, and bonds hadn't frozen yet. Commercial paper, being the most liquid market, froze first.
But you're otherwise correct. "Companies with few or no ties to subprime home debt, such as Caterpillar Inc. and General Electric Co., [had] less trouble selling commercial paper." Those companies could get less money than they needed at usurious rates only. It's a nonsequitur, though, because there was not general concern that the earthmoving vehicle industry was at risk of systemic collapse and ( ... )
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You have to click through a couple of menus. Volumes dip as much as 83% for one of the maturities at the nadir - so, still shy of "two tacos for a crowd". More like two tacos for someone who usually gets a super burrito and a plate of nachos.
What do I believe? I believe that someone who tells you that you have to spend $700b, RIGHT NOW, is not to be trusted. 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.
I also believe that too much debt can get a nation in deep souvlaki.
Against that, I find the evidence for possible collapse (precedented TED, not-frozen commercial paper) unpersuasive.
I notice that you've scaled back from total economic collapse to total financial sector collapse. I would further hope to convince you that the Schwabs of the world would have been fine without TARP. Per this, they didn't take TARP funds at least. I don't know of a way to look up ( ... )
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First, you're starting this analogy from a false point. Nobody but a complete glutton eats "a super burrito and a plate of nachos" for dinner. You're making the unfounded assumption that banks and businesses were writing commercial paper wastefully, which you're welcome to prove, but haven't. On its face this doesn't fit the facts though. Commercial paper is very liquid, very short-term. If you need to pig out on a ton of credit you go to bonds not paper. That's not what paper is for.
Second, if you take the FDA's recommendation of a 2000 calorie/day diet, an 83% dip would leave you with 340 calories. One can of Coke and one taco. Not to go Godwin, but that's half as many calories as the Jews got during the Holocaust. So assuming that your 83% figure is true, that level of decrease from normal is quite substantial.
What do I believe? I ( ... )
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In fact, my position came from using reason and evidence. Yours, to judge by your links, came from listening to a very simplified version of things on NPR and then assuming you knew everything about it.
I think we're done here.
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Absolutely correct. I listened to very simplified versions of things on NPR and I assumed that I understood them. You've offered minor factual corrections, which has improved my undestanding, and for that I am thankful, but it doesn't change anything of significance.
For example I was 17% wrong about commercial paper volume. I thought it dropped 100%, but it only dropped 83%. That doesn't exactly change the overall picture. If this page was 17% wrong and the Jews actually received 702 calories per day would they not have been starving anymore? If the figures on Deepwater Horizon were 17% wrong and it only spilled 58000 barrels of oil instead of 70000 barrels would that mean it was no longer a disaster? Of course not ( ... )
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And you're 0 for 0, because you've provided 0 actual positions to defend.
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First, your position didn't come from anywhere because you don't have a position. You're not actually saying that there was or wasn't underlying systemic risk, that the risk was or wasn't in the process of collapsing, to what extent the collapse would have occurred, and how damaging those consequences would have been.
The only meta-position you could be said to have - that I'm wrong about something - came from starting with that conclusion and working backward to see whether you could find anything to correct me on. And you've succeeded admirably by correcting a bunch of things that I got wrong. Which still doesn't bring support to your position, which you don't have.
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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 ( ... )
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