Tuesday, November 25, 2008

No New Deal Again

Long time, no blog. There are so many things going on. But I think I must add my small voice to the bailout mania.


Although Bush 43 has been portrayed by some on the left as a type of ur-conservative, he was never that. He did cut taxes but restraining spending was never very important to him. The creation of large slush funds to bail out whoever has the political capital to stake a claim seems wildly wrongheaded.

Perhaps Obama, to the disgust of the netroots, won't continue this policy. So far, his appointments in the economic area, in sharp contradiction to his campaign rhetoric, seem largely in line with the Reagan consensus.

But then there is this is this talk of a two year recovery plan and massive infusions of government cash into the economy as if passing money through Washington somehow creates value that was not there before it passed go at the Potomac. This hasn't worked in the past and seems unlikely to work now.


Anonymous said...

The bailout's aren't all bad, you just have to know where to look. Most people don't realize how much money there is out there. During economic times like this, there is more money to be had than ever. Because of the bailouts and economy, lenders are bending over backwards to bail you out too. Believe it or not, there is people getting tons of cheap money nowdays to start businesses, buy homes, pay off debt, and more. Bailouts for Everyone

Anonymous said...

As the FY09 federal budget deficit is roughly equal the amount of money we've "invested" in Iraq, why are you adamant that a similar investment in US infrastructure is such a bad idea? Bush a fiscal conservative? Not hardly.

tom paine said...

Mbernis said... "bailouts aren't all bad." Well, that may be true, but it sure has me fooled. Here's my take:

By now, all of the clever financial bailouts should have made one thing very clear to average Americans (that would be anyone not wearing a white shirt on Wall Street):
Whenever President Bush, Sec. Paulson, or anyone else is passing out taxpayer money and telling us "This is to help you" it most definitely is not to help you.

Let's look at the scorecard.
AIG: $152 billion.
Citicorp: $45 billion.
JP Morgan: $25 billion.
Wells Fargo: $25 billion.
BofA: $15 billion.
Goldman Sachs: $10 billion.
Merrill Lynch: $10 billion.
Morgan Stanley: $10 billion.
PNC: $7.7 billion.
US Bancorp: $6.6 billion.

Please keep in mind that a single $1 billion is 1,000 million of our dollars.

So AIG alone cashed in for 152,000 millions of our tax dollars. I wonder how smart you need to be to burn through that amount of cash? I'm thinking jail time smart.

But here's the really funny part, our government has also agreed to be responsible for $306 billion of Citicorp's bad and toxic assets. And yes, although that may sound like a really sweet deal for Citicorp....you again just have to keep remembering that it is to "help" us!

Now, if any average American has gotten any of the tax dollars given to all of those financial firms listed above per "loosening" or "freeing up" or "trickle down" or whatever the term of the day might be, you might want to contact the Guinness Book of World Records.

I propose a new law that requires any money that is "to help" average Americans be sent directly to our home addresses. Not that I don't trust the slimy Wall Street white shirts...but a check in our mailbox rather than waiting for the crumbs to trickle to us will just make us all sleep better!

Anonymous said...

Personally, I don’t know enough about economics to have a valuable opinion about how to fix the financial mess we are in. I suspect my ignorance is more common than not, but it is interesting how many people there are in the bloggosphere offering passionate comments and advice as if they possessed deep understanding of economics. Pardon me if I don’t give them much weight. Few economists saw this thing coming; I doubt many of the commentariat did better.

Another reason to be skeptical of much bloggonomic commentary is that it focuses on how the blogger thinks we should manage our economy in “normal” times. Although that is a worthy topic for discussion another time, I think (imho) that it misses the point.

If I might be permitted a metaphor: I have rules in my house; not that I’ve ever actually announced these particular ones but our boys seem to have picked-up on them any way. The rules are “no spraying water around the house nor breaking windows nor chopping holes in the walls.” I suspect a lot of homes have similar rules.

However, if there’s a fire in my home, I will use that special phone number (911) to call professionals to my home; pros who will bring large pumps and axes and hoses and spray water all around and break windows and chop holes in the wall as they see fit to put the fire out. And I will thank them for it afterwards.

Many of the rules we live by in normal times go by the board when a crisis arises. We have to respond to the crisis in front of us first, and restore normalcy later. I am not going to re-arrange my furniture when my home’s on fire.

We have to respond to the present crisis first; we must save our economy first. We can figure out how to better manage our economy later.

Certainly we need to think about how we respond to the present crisis (crises?) but I am skeptical of criticism coming from bloggers; the only thing their wildly variable opinions have in common is that they are free and probably overpriced.

sean s.

The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty and we must rise with the occasion.” – A. Lincoln

Rick Esenberg said...

I don't think that Bush governed as a fiscal conservative. Investment in infrastructure might well be a good thing but only if the investment makes sense on its own terms, i.e., a new road that will add more value than its cost.

Building roads that don't otherwise make sense to create jobs is, I think, a bad idea. It doesn't - can't - create value. It can only drain resources away from more productive uses.

Anonymous said...

Sean, I do love the "free and overpriced comment", as my posts probably fall fit right in there. But the firemen you just called have done this before...the fire in question was in your garage and would have burned itself out. Now it may have caused a lot of harm, and taken you some time to clean up the mess. But these firemen are going to chop holes in your house and spray water around randomly. You are granting to goverment way too much wisdom. They may all know the bailouts are a collosal waste of tax dollars that will push off any recovery, as they did in the great depression. However to sell themselves for reelection, they must do "Something"...so they spray money around and send us the bill. And we'll call them back again.

tom paine said...

Curt, there is a little flaw in your reasoning. You say that the bailouts are because of gubmint needing to "sell themselves for reelection" so they toss money around.

If you recall, this all started with the Bear Stearns fiasco. Bush and Paulson gave $29 billion to JP Morgan so that they could get Bear Stearns basically for free and with no risk.

Who was trying to get "reelected" there?

Same with all the billions tossed at Paulson's former firm and all the rest of the Wall Street welfare beggers. No "reelection" at all seemed to be involved. It looked more like cronyism...plain and simple.

Yes, a politician's main job is to get reelected, but in this mess the facts indicate it was mostly just the clever Wall Street guys using their connections to get tax dollars.

Anonymous said...

Replying to my house fire analogy, Curt wrote “the fire in question was in your garage and would have burned itself out.

Well, perhaps. But if there has been any constant in this financial crisis, it’s that people keep underestimating just how bad it is. You may think the situation is not too bad, I get a sense this might be very bad. Time will tell. Will this fire in my garage burn itself out? Or burn out my neighborhood? I am not inclined to wait to see.

Curt also wrote, “. . . the firemen you just called have done this before . . . these firemen are going to chop holes in your house and spray water around randomly. You are granting to goverment [sic] way too much wisdom..” Obviously you have a special lack-of-fondness in your heart for government. I personally think they are no more or less wise than you or I. It is foolish to trust anyone too much, and foolish to distrust too much too.

And as you say, these “firemen” have done this before (at least on smaller fires) and what they do may seem “random” but that is probably because you and I don’t understand what they are doing.

Curt also wrote, They may all know the bailouts are a collosal [sic] waste of tax dollars that will push off any recovery, as they did in the great depression.

I am sure you can find folks who will claim that the New Deal delayed recovery in the Great Depression; but I think the consensus of economists and historians is that, although the New Deal was imperfect (what isn’t?) it contributed more to our recovery than not.

I won’t even bother to respond to comments about “doing something” to get reelected; if you read the Federalist Papers you will see that is precisely what the Framers expected. There are no saints among us.

sean s.