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Source link: http://archive.mises.org/14179/op-ed-warriors-defend-the-bailout/

Op-ed Warriors Defend the Bailout

October 8, 2010 by

Bailing out Bear Sterns while letting Lehman fail, the two TARP votes, the incessant clamor about (nonexistent) systemic risk, and so on were all geared toward justifying bailing out Wall Street firms that found themselves on the wrong side of housing risk. Saving them fed into a climate of uncertainty that persists to this day. FULL ARTICLE by Christopher Westley

{ 27 comments }

Franklin October 8, 2010 at 9:09 am

Election day is a handful of weeks away. The desperate worry of establishment leftists are becoming increasingly evident and you’ll see many more of such pieces. As I’ve written before, it’s a senseless worry, since the next Congress will do nothing to stem the swelling government appetite and commensurate stomach. Sadly.
I was puzzled as to this one sentence: “But this is why _Frau_ Harrop matters to establishment thinking.” Does Harrop choose to use this salutation, or is everyone with statist tendencies German and vice-versa?

Philip Lewis October 8, 2010 at 9:41 am

Paulson and Bernanke did engineer a “triage” manner to save the USA’s financial condition from something much worse. How much worse, we’ll never know. I was an opponent of the Congressional $800B stimulus … now, my position is changed. The main problem with the stimulus is not the amount … it’s the target(s). Much of the money was wasted … real infrastructure investment would have had value. Much of the actual spending was union pay-offs and special interest pork … not very productive. I suspect that much of the money was likely stolen.

Wall St. remains a corrupt, deceptive, greedy entity … protected by the political elite. DC exists to screw the citizens and control us through excessive regulation. We do need regime change. It remains to be seen what we might get. Buy gold (ha).

Fallon October 8, 2010 at 9:49 am

Those corrupt greedy bastids would have been cleaned-out by the market response. You want your cake and to have it too?

Fallon October 8, 2010 at 9:58 am

s.b. eat your cake and have it too.

Franklin October 8, 2010 at 10:09 am

“Paulson and Bernanke did engineer a ‘triage’ manner to save the USA’s financial condition from something much worse. How much worse, we’ll never know.”
This is senseless. If you state you don’t know “how much worse”, then you don’t know if it would have been worse at all.
And yet you support it.
Below you then call for “FAIR” tax and condemn the inequitable distribution and special interests. Above you applaud Paulson and Bernake for the $800B special interest bailout.
Not sure what you define as an entitlement — for now, the NEA, Social Services, ACLU, and a thousand others will have their own definition, which may or may not be the one that is written in the tax code.
And not sure what “national” dishonesty means either.
Why I even bother….

RTB October 11, 2010 at 10:11 pm

It was nothing more than an attempt to save a corrupt system. It’s held off the Reaper for awhile. The question is: how much longer can the final accounting be put off?

Philip Lewis October 8, 2010 at 9:45 am

Speaking of taxation (?): We need a flat tax or FairTax. The rate is not the problem, the issue is a matter of the inequitable distribution of burden … the existing code (who knows what it is) includes far too many deductions and special interest perks. There are far too many citizens with no “skin in the game” … we should all pay for defense and entitlements. The whole thing (tax code) stinks and encourages national dishonesty.

Eric October 8, 2010 at 10:47 am

In your first post, you argue that without a bailout, things would have been much worse.

This is merely the other side of the coin that always says the X intervention didn’t work because it wasn’t big enough. Choose your own poison for X – this time it’s the bailout.

Then you complain that the bailout was mishandled because of who got the bailouts.

Do you not understand that all decisions made by politicians will be with political motives? It’s the nature of the beast. Can you really expect a politician not to be partial to their supporters; not to help their friends and punish their enemies? That’s how they remain in office. It’s the way democracy works. If the powerful couldn’t control the masses through a democratic system, they wouldn’t let it continue. And the money folks have always run the show.

This banking bailout was different only in the way they didn’t even bother to try to hide anything.

And finally, you fall for the trap of the tax shell game. You think that if you can get these hustlers to pass a different way of cutting your throat that this time YOU will survive while the bad guys get their just rewards and finally pay up. Do you really think you can out-rob the professional robbers? After all, they actually convinced the stupid masses that if we had an income tax it would only tax rich people?

RTB October 11, 2010 at 10:21 pm

hehe, “the issue is a matter of the inequitable distribution of burden”. Please, layout your plan. We’re waiting…

All kidding aside, I see where you’re coming from. A straight forward, no loophole or conditions flat tax would be so much better, by far, than what we have now. But, this is really only a bandage over the wound. And quite frankly, I don’t think “we” should be paying for entitlements. Other people aren’t “entitled” to my money, my labor or my time of life.

Marco Polo October 8, 2010 at 10:54 am

Thanks for the introduction to Pearls Before Swine. I got me my daily laff.

greg October 8, 2010 at 11:30 am

First of all, Pickles gets my vote for the best comic, only because I can relate to it.

Love it, hate it, TARP looks like the government will get back more than 75% of it after GM goes public. With any luck, they may make money on the program.

The problem with the stimulus program was that it was never invested into the public sector, rather it was spent to support excesses in state and local governments for which we did not get a single percentage point of return. Because of this, the stimulus did not work and Obama will pay the price in the next couple elections.

Dave Albin October 8, 2010 at 1:20 pm

I don’t know where the 75% return of TARP comes from, but, not only do I never believe an estimate like that for many reasons, but you are forgetting that the money to prop up GM came from everyone via the threat of force – that’s right, companies and people who were responsible and economically savvy were forced to keep GM and the unions afloat. How is that ever right? The market would have cleaned up a large amount of GM, and kept the profitable parts. GM could be on their way back up by now if they were left alone.

J. Murray October 8, 2010 at 10:46 pm

The best comics aren’t carried in the paper – Dr. McNinja and Axe Cop.

Anthony October 8, 2010 at 11:42 pm

Axe Cop is indeed excellent…

J. Murray October 8, 2010 at 10:47 pm

It only got 75% because the pundits conveniently left out GMAC, which conveniently turned itself into a bank and spun off GM just to get extra money. All told, GM is responsible for $109 billion in handouts, of that only some 6 billion came back. Try 6% returned.

Franklin October 8, 2010 at 12:56 pm

What a deal. I’ll act as fiduciary next time. Give me a few hundred bilion and I’ll make sure you all get back “more than 75%.”

“The problem with the stimulus program was that it was never invested into the public sector, rather it was spent to support excesses in state and local governments….”

Oh, I see the difference now.

Craig October 8, 2010 at 1:52 pm

My money’s on Mallard Fillmore for best comic.

Isn’t it amazing how no one compares this administration to Hoovers? “The last 3 years have been a time of unparalleled economic calamity.” Substitute unprecedented for unparalleled and you’ve got Obama.

“Two courses were open to us. We might have done nothing. That would have been utter ruin. Instead, we met the situation with proposals to private business and to the Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put that program in action.

Our measures have repelled these attacks of fear and panic. We have maintained the financial integrity of the Government.” Hoover from 1932 acceptance speech.

And the columnists would probably be a little ticked off if they knew they sounded like him, too.

Franklin October 8, 2010 at 3:31 pm

Excellent.

P.T. Bull October 8, 2010 at 4:04 pm

Once you can claim that no matter how bad you fail, things would have been far worse than if you hadn’t acted, there is really no yardstick, just thin air. Keynesianism has always resorted to this, has always had to.

Walt D. October 11, 2010 at 8:47 pm

This is like telling a football fan whose team has just lost 38-13 that things could have been worse – they could have lost by 35 points instead of 25 points.

Dave Albin October 8, 2010 at 4:27 pm

What kind of Honduran coffee do you like? I always want to know what’s out there that I have not tried.

Paul Marks October 8, 2010 at 6:19 pm

The statists (and yes, on this they do include Charles K.) really do seem to believe that TARP prevented the depression – rather than put it off, at the cost of making it worse.

What are they going to say when it comes anyway?

Oh of course, they will say the bailouts and “stimulus” should have been bigger.

Gerry Flaychy October 9, 2010 at 4:56 pm

Without the bailout, things could have been much worse … or much better.
How much worse or how much better?

How can we know for sure ?

Brett in Manhattan October 10, 2010 at 12:32 am

Just wunnerin’, did these two geniuses have a model that predicted the crisis beforehand?

maruta October 11, 2010 at 8:29 pm

Which TWO GENIUSES did you mean??

maruta October 11, 2010 at 8:32 pm

Whom by “these two geniuses” did you mean?

Brett in Manhattan October 12, 2010 at 12:18 am

“Her justification for these figures? It is a paper published this past summer by economists Alan Blinder and Mark Zandi, who argue that Washington actually saved our economic hides.

But any economist worth his or her salt who has read this paper would not want to bet the bank on its findings. For one thing, it presents only one simple model, which is scientifically unheard of when addressing something as complex as the US economy. Secondly, it doesn’t even measure the effect of the stimulus on the macroeconomy. If you accept the single model (constructed by Zandi), you simply learn how the economy would have progressed today absent any intervention”

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