When Stabilization Isn't Stimulus

Quote of the day comes from Neel Kashkari:

Treasury Assistant Secretary Neel Kashkari, who is heading up the government's implementation of the rescue plan, defended the department's actions, saying that no one should expect the plan to solve all of the nation's economic problems. "It's not a stimulus, it's not an economic growth plan," Mr. Kashkari told lawmakers. "It's an economic stabilization plan."

You understand the difference, right? An economic stimulus plan is what happens when the economy is looking shaky and the government spends lots of money in an attempt to stop things getting worse. An economic stabilization plan, on the other hand, is what happens when the economy is looking shaky and the government spends lots of money in an attempt to stop things getting worse -- and minimize the number of job losses at Goldman Sachs at the same time.

Incidentally, when it comes to revisionism, the Democrats are just as bad as Paulson and Bernanke:

Lawmakers were especially critical of Treasury Secretary Henry Paulson's announcement earlier this week that the $700 billion rescue plan likely wouldn't be used to purchase troubled assets from financial institutions. When conceived during negotiations between Treasury and lawmakers, the plan originally was to have the federal government buy up the assets in order to unfreeze credit markets.

"I think it's fairly obvious that Congress would have never passed the [rescue plan] had it known how Treasury would marshal the resources it was given," Rep. Dennis Kucinich (D., Ohio), chairman of the subcommittee, said during his opening remarks.

No, Dennis, that's not obvious at all. As I recall, the main criticism of the TARP was precisely that buying up toxic assets was a silly use of $700 billion, and that it would be much better to just inject that money directly into the banks in the form of preferred equity -- which is exactly what Treasury ended up doing. If you're willing to vote for a vague plan to shore up the financial sector by buying mortgage bonds, you'll definitely be willing to vote for a much more concrete plan to shore up the financial sector directly.

Comments

[Suziclue:]

I think we just need to cut the BS and stop raising Taxes. These stimulus packages are crap when it's money that was taken from us originally. It's not helping to lower the prices of our homes. Look at the current trend, everyone is losing a big chunk in the value of their house on a weekly basis!

www.homepricetrend.com

2008 Nov 15 03:44 AM

[Gem Hudson:]

What they were producing for Chairman Mao grate leap forward. Forgive them. They knew not what they were manufacturing in their back year furnace. They were not making their steel as good as their American made could. They were not selling as good eighter and they were not getting as rich by his leaping forward.

You go from your rags to your riches. How ever your business works for you. Work it the business out until your business works for you.

2008 Nov 15 10:12 AM

[Gem Hudson:]

That is because what is supplied more than what is demanded of. Deflationary is a lack of money to buy the house. We have to return to a capitalist society.


On Nov 15 03:44 AM Suziclue wrote:

> I think we just need to cut the BS and stop raising Taxes. These
> stimulus packages are crap when it's money that was taken from us
> originally. It's not helping to lower the prices of our homes. Look
> at the current trend, everyone is losing a big chunk in the value
> of their house on a weekly basis!
>
> www.homepricetrend.com/

2008 Nov 15 10:17 AM

[dr.doolittle:]

Great Stuff! The cat's out of popularity bag on this one! This is to the Democrats what Iraq was to the Republicans, and the Dem's (and a few Republicans) know it. Obviously taking equity stakes in banks can be understood and measured as success/failure in a way rescuing the mortage market could never be (and don't we already have fannie and freddie you dumb ass socialist from Clevland?) In that sense it's an "understandable" use of taxpayer dollars. Is it a good use, though? Now the bailout demands are coming from all corners of the economy! Here's the problem with calling it a "Stabilization Plan." Doesn't that imply our banks are unstable? Are they? What does Kaskari know that nobody else does? Why should I buy a bank stock when the government who is giving them money says they're in trouble? My approach would be far simpler and in the words of Henry Kissinger "happen to be true" as well--we're giving money to perfectly healthy banks not because they need it but because we're creating a certainty of mega-winners once the dust settles on this one. Sure, a bunch of clowns from Chicago have taken over the executive branch in Washington, but New York is taking over the entire federal bureacracy lock, stock and barrel. Now if only the Dems would proceed to lose the war you could then see NYC actually run the place.

2008 Nov 15 12:07 PM

[Cjhies:]

If Pelosi and the rest of the Dems were not in such a hurry to try to push through any BS at any price it would have been determined back then. Just more of the same blame game.

2008 Nov 15 12:18 PM

[Socialist:]

When Bush (the slow one) went on national TV and declared the economy to be DOA he pushed both Dems and Repugs into a corner. Surely, just the proclamation of doom would sink the ship if immediate action wasn't forthcoming. The fact that the DOW is still above $10 says that he was lying again, but we are way beyond that being important outside the confines of the Senate hearings concerning his treason that should be taking place at this moment.

America, forever hoping for the best from it's leadership, got conned again. The problem with this particular con is that it is self fulfilling. Wall St and credit based institutions operate on trust. Once trust is gone nothing short of a complete restructuring will bring it back. Throwing more meat at the crocs doesn't get the swamp drained.

Turn the Justice Dept loose on Wall St with their own freedom dependent upon their results. There is surely enough political collusion involved to at least make them break a sweat. Confiscate fortunes and empty offshore funds and swiss bank accounts, militarily if necessary: Place some silk suits in communal living arrangements with those convicted of stealing much less: and finally show the world that America really does have values not measured strictly in dollars by making sure that no one not at fault for their situation is made hungry or homeless while America takes out it's garbage.

2008 Nov 15 04:48 PM

[john s. gordon:]

claw back executive bonuses from failed institutions. no more bonuses until profitability returns (& is verified).
> jack

2008 Nov 15 05:51 PM

[James G:]

The TARP plan is wat I expcted. A tarp is very useful to cover up valuables.

2008 Nov 15 06:58 PM