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Sure, taxpayers hate bailouts, whether of banks or nations, but they need to stop and consider...

Sure, taxpayers hate bailouts, whether of banks or nations, but they need to stop and consider the "costs of the panic and destruction" that would have ensued without them, James Pethokoukis argues. TARP bought U.S. banks time to raise private capital and restore confidence; the European plan "is in the same vein."
Comments (70)
  • Count me in the liquidate everything column. Bail outs beget bailouts and encourage profligacy and the culture of entitlement. Look at Greece. It's coming to a theatre near you.
    10 May 2010, 06:29 PM Reply Like
  • brave, brave words from the Ayn Rand wannabees. easy to say hard to do.

     

    capitalism as you imagine it does not and has not really ever existed. and if did - raw and unrestrained - I am quite sure that more than a few of would all find it a tad uncomfortable.

     

    E
    10 May 2010, 11:04 PM Reply Like
  • Those who follow Ayn Rand many think of her in Adam Smith terms, but her Objectivism is quite a different character as Smith's notions were formed in the sun of Enlightenment Liberalism, while hers were more a product of individualistic, dark rebellion against the social fascism cum progressivism of the early and mid 20th Century.

     

    Mere priggish dismissal only increases your derision quotient, not your intelligence quotient. You don't really need to do that. Besides Rand's wildly self-centred individualism bears only an art-deco relationship to the Bauhaus of Capitalism.

     

    Sorry, I liked the phrasing even though the metaphor is wholly wrong...reminds me of Gary Cooper.
    10 May 2010, 11:17 PM Reply Like
  • Then prepare for the Next Great Depression. That's exactly what you would get.

     

    Vengeance does not make good public policy.
    11 May 2010, 02:18 AM Reply Like
  • To the contrary, Any Rand had a romantic notion of capitalism whereas Adam Smith was a realist.

     

    Any Rand never wrestled with the dark side of unrestrained capitalism. Adam Smith believed that businessmen were morally dubious creatures only restrained by market forces. In fact, he believed that businessmen rarely met without the meeting ending in a conspiracy against the public good.
    11 May 2010, 02:24 AM Reply Like
  • yes ..I agree. If you have bad managers. You get rid of them. That why a New and better experienced team is best.
    11 May 2010, 03:32 AM Reply Like
  • Please, give me the so-called 'dark side' of unrestrained capitalism any day of the week, month, year or decade over the soft glowing white light of government paternalism.
    3 Dec 2011, 05:46 PM Reply Like
  • The choice to ignore Mercantilism and Corporatism, both of which are like leeches on the back of hard working capital investments, makes for the pictures painted by those who desire to be the ones benefiting from Mercantilism and Corporatism; much like Mencken's comment about those who exhibit the urge to "save" humanity, as it is almost always a false front for those who wish to control it.
    4 Dec 2011, 02:43 PM Reply Like
  • so you really want to have totally uncontrolled free market?
    thats what most call chaos.
    as there are no courts (that restricts free market)
    and freedom only exist for those who can pay for it.
    which is only the 1%.
    4 Dec 2011, 07:13 PM Reply Like
  • "so you really want to have totally uncontrolled free market?"

     

    Yes.

     

    "thats what most call chaos."

     

    Oh noes! Scareey.

     

    "and freedom only exist for those who can pay for it.
    which is only the 1%. "

     

    I know. Against the nhinetee niners right?

     

    heh
    4 Dec 2011, 08:18 PM Reply Like
  • Economic anarchy is my dream. No controls. Total market dynamics uninhibited. No permits. No taxes. No regulations. No SEC. No Washington. No bailouts. No subsidies.

     

    Open up your lemonade stand on any corner of any street in any neighborhood and charge whatever you like.
    4 Dec 2011, 08:21 PM Reply Like
  • Lemonade, or heroin, or guns, or fake Rolexes, or copied software, or fake pharmaceuticals, or snake oil or whatever. It's all capitalism right?
    5 Dec 2011, 06:08 PM Reply Like
  • That's right. Caveat Emptor.

     

    And one more I might add: personal responsibility. I know, not a big phrase in today's lexicon of Big Goobermint's paternalism and the infants who whine and clamor for more of it aka the OWS variety.

     

    In the end, most people want to continue their lives as children needing protection from all the scary bad monsters, not realizing that government is the monster.

     

    As far as...

     

    "Lemonade, or heroin, or guns, or fake Rolexes, or copied software, or fake pharmaceuticals, or snake oil or whatever. It's all capitalism right?"

     

    Sounds like Hong Kong. The entry costs to doing business are exactly zero. I dream of a day when anyone, I said anyone, can wake up and become their own boss without the constraint nor the weight of the state in every matter under the sun.

     

    I don't need Big Bro. Especially when Big Bro is now the ultimate crime syndicate aka John Corzine.

     

    As far as pharma. We, the taxpayer, subsidize it, pay the inflated costs(R&D) and then Mexico and Canada are left getting the benefit. Sounds pretty screwed up to me. I'd rather not have any FDA at all.

     

    Fake Rolexes. Oh no! Frightening.

     

    Heroin? Put them in a room. Let them run needles into the ditches of their arms until they bleed out.

     

    Guns? What's wrong with guns? They're great.
    5 Dec 2011, 06:51 PM Reply Like
  • ? We HAVE heroin, guns, fake Rolexes, copied (and free) software, fake pharmaceuticals AND snake oil now, in the black market. You know the most effective regulators? Customers. I'd want a real Rolex, so I'd steer clear of the black market.

     

    I regulate my own purchases. I assert the right of all people to consensually trade without someone interfering in the transaction.

     

    There's a huge difference between informing the public of potential dangers (a proper regulatory system), vs. preventing them from exercising their right to take their own risks (the tyrannical regulatory system we have today). Consumer Reports is a great template for free market regulatory agencies, where people can choose to take their advice, or ignore it at their own risk.
    5 Dec 2011, 09:00 PM Reply Like
  • Indeed you are right. The consumer is always more apt to be the regulator. Don't tell that to the War on Drugs crowd. Little do they know we'll always have drugs with us and even if we didn't you could huff a can of paint. I guess we should outlaw paint.

     

    There will always be those who will clamor for more government. These are the people who need surrogate parents. But its more perverse than that. These same people want to force all of us to become their adopted kids by force of the same Federal Parent.

     

    They can't just leave us alone. Its not enough that we want to assume our own way. They must insist themselves into our lives by way of the tribe. Its always the tribe with the left. Always the mob. Force. That's what today's Left is. Total coercion.
    5 Dec 2011, 11:57 PM Reply Like
  • Well, Wyatt, you are free to live in Hong Kong under a communist government but you might find there are a few regulations. Fake drugs. Suppose the statin you take turns out to be soda powder and salt, which definitely cuts manufacturing costs, or worse, contaminated with some biological or chemical agent that actually kills you. With no FDA that's not unlikely. You might have been born a century later than you want, but the good old days had their problems if you read history.
    6 Dec 2011, 08:36 PM Reply Like
  • "Well, Wyatt, you are free to live in Hong Kong under a communist government but you might find there are a few regulations. Fake drugs. Suppose the statin you take turns out to be soda powder and salt,"

     

    Suppose the moon is made of cheese and the wheels fall off your tricycle. Oh no! What then, hand wringer?

     

    BTW the FDA kills thousands of people everyday with its backlog and delays. And even if that wasn't the case, most drugs already FDA rubberstamped are destructive in one way or another by virtue of the inherent side effects.
    6 Dec 2011, 10:21 PM Reply Like
  • Ah Wyatt, if only was as simple as an old black and white movie with black and white hats, where you just shoot the cheaters. What you are saying is far right and ignores the real costs. Yes regulation has costs, so does none.

     

    The real facts are without regs, it is a race to the bottom. The winner is the one who sticks the public with the long term costs.

     

    I live close to a refinery and a major oil infrastructure is all through So Cal. I have seen refineries, pipelines blow up and worked on them. As an electrician I understand how dangerous the barely knowledgeable are. The costs to lives far after the original person, that saved a couple of dollars on a dangerous installation, are gone. What, you shoot the wife of the dummy that sold danger that kills your family if he is gone? Get a lawyer? Don't worry about the toxins that USED to leak into groundwater around refineries?Cancers have no costs?

     

    You're rhetoric appeals to people that are stuck with rose colored glasses looking at the past. Do I like ALL the regs-of course not and would LOVE to see some SPECIFIC streamlining, unfortunately the Repubs with your rhetoric, just ask their biggest donor what they don't like and go after whatever makes them the most money, rather than the truly inefficient. We are no longer an agrarian culture with miles between neighbors and self sufficient. The "rights" we all have need to be balanced. I am not happy with the balance right now, but suggesting we just all fight it out, like the OK corral? That certainly fosters equal opportunity-for the biggest and richest or most willing to die.
    6 Dec 2011, 10:33 PM Reply Like
  • Listen Erin Brokovich, you just described my ideal world. My favorite scene in There Will Be Blood? It was when the pulley broke in the oil well and clocked the worker in the head and they just kept working after the 5 minute improvisational funeral.

     

    I prefer freedom to the state every time. Even if that freedom means death. At least then I can say I was at one time, even for a moment, a free man.

     

    At the bare minimum, if I am to give any of your schtick an ounce of credence, it would be that two thirds of all federal regulations, whether they be EPA, employment law or civil/legal, are not only useless they are constricting to productivity and a healthy engaged society. The problem is not that we need more laws or regulations. The problem is that we aren't sunsetting them fast enough. For every new law, two old ones should be summarily killed. That should be the mandate to pass a law.

     

    You either abide by the 10 commandments or you are cursed with the 10,001. ~ Mamonides.

     

    And I would add: ... and their lawyers.
    7 Dec 2011, 12:26 PM Reply Like
  • "Le TARP"
    10 May 2010, 06:39 PM Reply Like
  • I especially love the Republican and some Democrat representatives doing their best Andrew Mellon impersonations safely and comfortably esconsed in their privelige. Very nice.
    10 May 2010, 11:17 PM Reply Like
  • And at point do you draw the line? How many bailouts are you willing to grant in order to save the world? Piling debt upon debt and printing money to buy the debt is a recipe for disaster at some point. James Pethokoukis says TARP bought time. I think it just postponed the reckoning. Hopefully I am wrong or dead if I am right.
    10 May 2010, 06:58 PM Reply Like
  • I think you draw the line at the banks. Banks are different creatures from steel or software companies.

     

    Each large bank's balance sheet is tied through the wholesale market to every other large bank.

     

    That's your systemic risk. Every major national bank is lending from and borrowing to other major player. All the balance sheets are intertwined.

     

    That creates the potential domino effect.
    11 May 2010, 02:31 AM Reply Like
  • We've considered the costs of panic and destruction and they are not as great as the costs of continuous bailouts and the moral hazard they create.
    10 May 2010, 07:19 PM Reply Like
  • You obviously haven't considered the cost of panic and destruction because you have no sense of history. Great Depression is an excellent model for our recent experience.

     

    And moral hazard is a problem intrinsic to the type of capitalism we practice - incorporated, limited liability.

     

    The benefits of excessive risk to
    11 May 2010, 02:33 AM Reply Like
  • The 'so-called' panic is created by the beneficiaries of the said bailouts - namely the banks that need oodles of money sloshing around the system so they can collect fees from all sides.
    10 May 2010, 07:29 PM Reply Like
  • Extortion plain and simple.
    10 May 2010, 07:33 PM Reply Like
  • Wonder how much "under the table" money is handed to the rating agencies ???
    10 May 2010, 07:42 PM Reply Like
  • you thought it was under the table???nope it was right out front. the rating agencies were paid by the banksters directly.
    10 May 2010, 08:00 PM Reply Like
  • Actually it is the people being rated that pay the raters. Talk about conflict of interest.
    10 May 2010, 11:36 PM Reply Like
  • Total B.S.

     

    In fact, every dollar of NEW U.S. debt now causes U.S. GDP to shrink. This is the FIRST time in history the U.S. economy has been so debt-laden that it is IMPOSSIBLE to generate economic growth with new debt.

     

    In fact, TARP and the rest of the Wall Street bail-outs has only moved the U.S. CLOSER to implosion - only the banksters benefited from all the hand-outs. And no amount of phony statistics PRETENDING that the U.S. economy is "growing" will change those facts.

     

    "The U.S. Debt-Trap"
    www.bullionbullscanada...
    10 May 2010, 07:48 PM Reply Like
  • Jeff,

     

    Honestly, you don't know your ass from a hole in the ground.

     

    There is no debt trap. The Federal government's debt service is low and it currently borrows at the lowest interest rates over the last 60 years.

     

    Do you ever look at data or you are simply trying to push people's buttons to advance your dubious economic populism?
    4 Dec 2011, 11:42 AM Reply Like
  • Debt service is irrelevant when the size of the debt becomes so large that now ZIRP, artificially created by the Fed, becomes permanently mandatory. Government has gotten so large, its promises(indeed its treasuries are promissary notes) have extended beyond its ability to back them or repay them even at zero or negative IRs. I actually wish debt service was higher, much higher, since it would stop DC in its tracks on future obligations and freeze them in place. As it stands, the mirage exists that all this is sustainable because the debt service is low. *chuckle* You little Keynesian freaks will never learn.

     

    Until there is fiscal reform in DC from the chin all the way down to the nuts, there will be very little real private sector growth. Especially since the tax question is never resolved and held out as the sword of Damocles over every future investment dollar. Capital will, very simply, move to other more favorable climates with harder currency and less central meddling.

     

    But continue being a Krugman cheerleader and the punchline. Every party needs a clown.
    4 Dec 2011, 08:15 PM Reply Like
  • I agree a THOUSAND percent! I'll take the 'supposed' path of "panic and destruction" ANYDAY to this Global debt-fueled default we are all speeding toward...
    10 May 2010, 07:59 PM Reply Like
  • Raise capital?

     

    You mean the pump and dump secondaries that were made possible by going from mark to market, to mark to myth.

     

    All so the bankster's bonuses could continue while diluting shareholders that had already been recently raped?

     

    A day of reckoning will come due, just a matter of when.
    10 May 2010, 09:00 PM Reply Like
  • "Hey Dad, can I borrow $10K? I also need $1,500 to bail me out for getting caught with that prostitute at the illegal poker games downtown, and the DUI last week.

     

    I'm going on a short trip to Vegas for a job interview tomorrow. Since tomorrow is Sunday and the liquor store is closed can I take that bottle of Dewar's and Absolut of yours? I promise I'll replace them and pay you back when I get this job.

     

    Ummm...and...the transmission in my car is acting up and I'd be afraid to drive it all the way to Vegas...if it broke down you're the only one I could call for help...so...can I borrow your Beamer for the trip?"

     

    Rationalizing his dysfunctional enabling and rescue instincts the Father says yes to the Son, then says to himself:

     

    "Phew! If I had said 'No' to him just imagine the trouble he would have gotten himself into here in town because he was so upset that I wouldn't help him out"
    10 May 2010, 09:06 PM Reply Like
  • These bailouts are like taking a cash advance on your credit card to pay the minimum balance each month, assuming that each month the credit card company raises your limit. Governments appear to get an infinite credit limit, but last week's violent pullback on very high volume serves to illustrate that this house of cards will eventually crumble. I just hope my timing is good enough to let me make some money.
    10 May 2010, 11:59 PM Reply Like
  • What about the "costs of panic & destruction" that will may ultimately occur because of the bailouts. Judging the success of the bailouts at this point is ridiculous. It could take years to see the results.

     

    In my opinion, the painful lessons of failure would have been better for society in the long run. Short term thinking will be our ultimate demise.
    10 May 2010, 09:12 PM Reply Like
  • It would have been better to not have the bailout and take the hit then. It would have been better to not provide real estate credits and take the hit then. We are removing the band-aid inch by inch rather than all at once.
    If we had taken our medicine then we could look forward to a bright tomorrow rather than postpone the inevitable.
    10 May 2010, 09:12 PM Reply Like
  • Taxpayers like bailouts. Or, I mean voters like bailouts, I mean entitlements.

     

    It's an entitlement when one receives it.

     

    It's a bailout when somebody else receives it.

     

    Either way, it's the nanny state.
    10 May 2010, 09:19 PM Reply Like
  • People being mad that they're told to get back to work= panic? No, this is lazy ass Europeans (pardon the redundancy, Germans excluded) wanting their hammocks back. Sorry, but if I'm in Germany I'd be pretty ticked that I'm financing a healthy 50 year old Greek's retirement for the next 40 years when I can only hope to retire at 68 with whatever I've saved. G*d help Europe if the Germans get mad enough to maybe, fund their military again....?
    10 May 2010, 09:22 PM Reply Like
  • What work?
    11 May 2010, 09:15 AM Reply Like
  • Work meaning Jobs that miraculously appear when wages are not artificially inflated out of existence. There is work that needs doing, just not at the rate and overhead associated with the absurd rate and regulations required in Europe.
    29 May 2010, 08:08 AM Reply Like
  • what happens when all the money runs out and we all end up with wheelbarrows full of Euros and dollars?
    10 May 2010, 09:24 PM Reply Like
  • Save the world? You mean save the rich and sign up for the eternal servitude program?
    10 May 2010, 09:24 PM Reply Like
  • Doesn't anyone remember any history? Even relatively recent history? 70's; Latin American countries borrow a lot to build infrastructure, 80's recession and oil price shock, couldn't pay their sovereign debt. IMF, Brady bonds gave them time to fix their structural problems. They got healthy. Asian debt crisis; particularly S. Korea, huge short term sovereign debt piled up, couldn't pay it, problems with government money in Chaebols.KIA goes broke, Daewoo goes to GM, IMF funding (US), time to fix the structural problems. Got healthy, Argentina. 98. in fact defaulted, IMF bailout, got time to fall into Hugo Chavez's sphere of influence. IMF paid back, got somewhat healthier. Mediterranean countries, 2010, still meeting obligations but running structural deficits exacerbated by the mortgage backed financial downturn. IMF, EU, gives them time to fix their structural problems. Future unknown, but structural problems don't get fixed over the weekend. All the previous IMF/US bailouts were accompanied by currency devaluations, since the Mdeiterraneans are EURO denominated, we get a devaluation of the EURO and the EU banks are likely to get debt restructuring, also known as discounts., but that's the orice of defending the EURO. Anyway, the Latin American debt crisis din't end the financial world, neither did the Asian debt crisis nor Argentina's default and neither did the Russian default. PIIGs default, bailout or restructuring isn't lilkely to end the financial world either.
    10 May 2010, 10:03 PM Reply Like
  • True, but all those episodes you listed happened pretty much in isolation. There was enough demand in other countries to help pull out the troubled countries out of recession, but nowadays almost everyone is in trouble and almost everyone's indebted. You need a large consumer base of last resort and I am not sure the Chinese are there yet, but who knows really? In the past I would have counted on the US consumer but arguably they are in the same state as Greece. Everything I think basically hinges on the continuing willingness of rest of the world to continue financing the U.S. deficit, but there's presumably a limit, otherwise why not simply print money from the start and dole them out.
    10 May 2010, 10:40 PM Reply Like
  • "Argentina. 98. in fact defaulted, IMF bailout, got time to fall into Hugo Chavez's sphere of influence. IMF paid back, "

     

    And Argentina basically defaulted again just a couple of years ago. But by nationalizing private retirement accounts, (stealing private property) it seems to be doing better. HaHa!

     

    Throwing money at a broken system does not fix the system.
    11 May 2010, 03:29 AM Reply Like
  • Let's consider the eventual fallout of a western destabilisation of the financial system triggered by the overly ambitious thought of controls that politicians thought they had in the EU...but didn't.

     

    Who wins if everything goes down?

     

    Better, first, who loses, that is easier. Most all of us in the West.

     

    Who is likely to get up first? Probably the Germans, given the current US administration's apparent preference for reducing that country to penury.

     

    But back to the winners. Are there any coming out of this? What country or group doesn't have their next paycheque tied to the massive Ponzi scheme that is developing a lot faster than I'm comfortable with? The Chinese? Nope, they are tied to the US. How about the Indians? Maybe. The Arabs... sort of, but they have a customer dependency that is heavier than a crack habit.

     

    Who can identify the potential winners coming out of this potential collapse? I don't like being alone out here on this limb....

     

    While history shows areas that have had massive problems - those have been areas. With the US, Canada, and the UK being sucked into the EU drain, should it happen, do we expect China to pick up the slack? As noted above, they are tied to the US. That is why I'm just a bit concerned about the breadth of this spread.
    10 May 2010, 10:15 PM Reply Like
  • There has to be millions of people out there rethinking their citizenship. Oh wait, that's crazy talk.
    10 May 2010, 10:19 PM Reply Like
  • Not entirely. I've been outside the US for over 20 years and it looks like I'll stay ex-pat for a good while longer. It does give you a bit more horizontal perspective, by the way.
    10 May 2010, 10:51 PM Reply Like
  • Central Banks = Inflation. That's all they know how to do.

     

    Problem is - its not working this time. They can't induce credit expansion, because the system is choking on existing debt.

     

    IMF bailouts, etc - can only work if the credit markets are growing and the money supply is expanding.

     

    We've got a money supply falling like a hot knife through butter. That basically guarantees that financial obligations can't and won't be serviced.

     

    There's nothing quite so useless as a central bank incapable of creating inflation.
    10 May 2010, 10:37 PM Reply Like
  • Your analogy is wrong. The banks could make a lot of loans. The problem is that they made a lot of bad loans in the past. Their net worth has been severely damaged.
    11 May 2010, 02:36 AM Reply Like
  • At some point, you must step back from the barn door and watch the structure burn. No matter how many buckets you throw at it, this is a conflagration that will not be contained.
    10 May 2010, 10:43 PM Reply Like
  • If you subsidize ethanol, you get more ethanol.

     

    If you subsidize risk, you get more risk.

     

    If these governments and central banks keep bailing out risk taking in the financial sector, eventually that financial sector will create losses that are beyond the financial capability of governments to cover.
    10 May 2010, 10:47 PM Reply Like
  • There were plenty of severe financial crises in the 19th century. And there were few or no bailouts.

     

    Unfortunately, enough moral hazard remains due to limited liability and lack of human wisdom to rule out the solution you propose.

     

    The period of greatest US financial stability was 1935 to 1965 - the period of highest regulation.

     

    Ironically, Milton Friedman, the Prophet of Capitalism, believed the banking industry should be tightly regulated and even forced to maintain 100% reserve requirements.
    11 May 2010, 02:41 AM Reply Like
  • I'm not proposing a solution. I'm just pointing out that bailing out risk gone wrong will eventually lead to losses that are beyond the capability of governments to cover.

     

    This round of bailouts is two orders of magnitude above that of LTCM.

     

    Imagine financial losses that are two orders of magnitude above AIG+ FRE+ FNM.

     

    Could governments cover losses of that magnitude? Would the bond market lend them that much money? What happens if they don't?

     

    I'm negative on gold for the short and medium term, but when this cycle starts to turn over, i'm going to be buying.
    11 May 2010, 12:19 PM Reply Like
  • The Far East markets began with a boom... but as of noon in Tokyo, they are headed to neutral, strongly. Gee, do you think the shine has worn off the marvellous "deal" concocted by the EU so quickly?
    10 May 2010, 10:58 PM Reply Like
  • If the banks that needed TARP we're allowed to fail, the "private capital" they raised would have been injected via DIP fianancing or to new healthy banks.

     

    Just because banks benefitted from TARP doesn't make it a moral or proper policy decision. We as a country don't have the money to pay for TARP, so while the benefit has been consumed, we've yet to pay the cost.
    10 May 2010, 11:31 PM Reply Like
  • The benefits bank received was a sad by product of the more important loosening of the flow of money. The unfortunate fact is money is the blood that keeps the economy alive. Like it or not we were basically having a heart attack and due to the failure of the rating agencies and none of their own peoples retirement funds were going to be gone. I did not like the mechanics of how it was done, but the Monday morning quarterbacking is old and describing what might have happened without it completely unknown and more importantly unprovable.
    10 May 2010, 11:57 PM Reply Like
  • "Bank Failure Friday"

     

    Each week, smaller banks are closed down, assets sold to competitors with good balance sheets. The law is enforced, and the life's work of some gets wiped out over the weekend. The system can be harsh, but the law is clear, and those who manage their business poorly suffer the consequences. So be it.

     

    Our government, despite overwhelming opposition from its citizens, chose to reward some of the biggest offenders-- some would say the root cause-- of this crisis with bailouts. Common stock was not wiped out....bonuses remained intact....GS got a sneaky, back-alleyway $12 billion through AIG's bailout. Certain privleged citizens were protected. I suppose they now snicker about those saps who get taken out on "Bank Failure Friday."

     

    Laws already on the books should have been enforced. The rule of law has to mean something. It is a bedrock principle, not a suggestion or guideline.

     

    The argument that any bank or business is TBTF just does not cut it. But, for the sake of discussion, let's suppose that a bank exists that really is TBTF.....surely it cannot also be "Too Big To Break Up" and then sold off in pieces ? If it is too big to break up, what in the world is it ?

     

    TARP and the stimulus have been turned into "slush funds". The money is doled out to "chosen" businesses by government. We don't even know all that the Fed is doing (Not our business, they tell us... might cause inflation if it were disclosed. Still trying to figure that one out.)

     

    There is an assumption that when all of this is over, we will return to the vibrant, innovative nation that we recently were. But that is not a given. The severity of this financial crisis is beyond anything the world has ever witnessed. The entire international financial system lurches from crisis to crisis now, and there are many voices in this country demanding a "new type of capitalism", whatever that means.

     

    As a nation, we had better hope we do not look back on TARP as the real defining event of this crisis. Because, if we do, we will will be looking back from a country we no longer recognize.
    10 May 2010, 11:53 PM Reply Like
  • Excellent comment!

     

    "Bailouts R Us" is the new normal, I'm afraid. Capitalism requires failure, but we won't allow it, at least not for the politically connected. We push pain off into the future, to be dealt with another day, by others than ourselves hopefully.

     

    The new normal is morally reprehensible. It's heartbreaking. As a culture, we are lost.
    11 May 2010, 03:40 AM Reply Like
  • An oligarchy is great when you are one of the few. It sucks when you aren't. "Welcome to the new regime" is probably the realisation that has finally struck home for many, when they should have begun realising it in the late 70's or early 60's, when the signs became more manifest.
    11 May 2010, 12:23 PM Reply Like
  • However the other possibly more important point is in fact what has happened is a lowering of the interest rate, this in my opinion is huge. This also is why in fact the bailouts have worked to slow down the American crisis. Time is indeed a friend and lower rates are an even better friend to debtors.
    The real problem is, as you say, will the populations follow the agreed austerity measures?
    To me the correct analogy would be the people that converted high interest credit card debt to longer term lower rate housing debt. This in itself is of course not a cure, but if the overspending can be stopped and the credit card not run up again, is the best way to go.
    Again only if the interest savings are used to pay down debt more quickly. Of course most Americans and I suspect Greeks are not willing to live within their means.
    The real test is if the Greeks can stay on the austerity agreements and Americans can begin to make the cuts both parties have promised to their voting base.
    For a little perspective Greek's debt that is due to foreign sources within 3 years is 2x their GDP-ours is one quarter of our current GDP. Not by any means good and I have been banging on the debt drum for many years, but nowadays it is mostly political fodder for newly awakened Republican's or Gold pumping "fiat" currency doomsayers.
    We absolutely need to live within our budgets is agreed.
    11 May 2010, 12:16 AM Reply Like
  • There are far too many truly intelligent people who have posted here and far too many economically ignorant people in D.C. who believe everyone out here is stupid and uninformed. We all see the likely outcome of what is coming and there's darn little we can do to stop it.

     

    The hope of postponing the inevitable seems to be for the purpose of buying a vote. Most voters, I'm afraid, will fall for that. We are in desparate need of another Ronald Reagan. With Reagan, I felt empowered. Now I feel just the opposite, powerless. I really despise the feel of it all - the bailouts, the greed, the power-mongering, the waste, and the lies. Would somebody with some sense please come forward and save our country.
    11 May 2010, 01:37 AM Reply Like
  • TBTF? Really?

     

    The bank bailout is old news.

     

    Welcome to medicaid and social security default. The real detonator.

     

    Pretty soon, old people will have to go to EZ Credit to cash their Uncle Scam paper and the only way they'll be able to cash it is by offering up their gold molars as collateral.
    11 May 2010, 02:08 AM Reply Like
  • The best solution is for our US Gov to get back to logistics....Meaning direct investment in communities. How was this done before....Bases all up and down california was an establishment of bases of which cities grew surrounding them. This was Direct investmnet but the contracts with these communities become dulled by private contracts.
    And now clearly benifits no one.
    29 May 2010, 06:17 AM Reply Like
  • Methinks, American in Paris & Econdoc likely make their living off the status Quo.

     

    Hence their insistance on supporting such, with blatant disregard for that nuisance "Sustainability" thing.
    4 Dec 2011, 03:15 AM Reply Like
  • Methinks Conehead should try to look at economic data for a change. I suspect Conehead probably predicted three recessions over the last three years (hint: there has only been one).

     

    Methinks Conehead should grow up and quit imagining a banking system collapse is in America's interest.
    4 Dec 2011, 11:52 AM Reply Like
  • It is not important whether we think an American banking collapse is in the country's best interest - we are irrelevant as we play with the consequences. Those who can make it happen - and I suspect there are a select number of folks who are probably on a first name basis in this category - are the ones in whose interest we should be concerned that it might be. Was that English?

     

    In a system riddled and complicated by international government obfuscation, cartels, croneyism, and corruption as this one is, there probably is no sort out before a complete destabilisation across one or both current camps: the USA and Europe on the one side vs. the rest of the world on the other (including China and India).

     

    There are those who predict the "soon to come" unravelling. I'm not so sure, but the corruptly intricate and unstable system that exists either can wobbly serve the monetary interests of the very few for a while or it can be unwound and sensibly return to a rational market to serve the interests of the very many, the latter choice likely driving a great deal of global suffering in the process. But, if you'll pardon the gross nature of the simile, should it happen it will be like the relief at the end of weeks of bowel constipation.
    24 Jan 2012, 03:59 PM Reply Like
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