Cynical Nation

To be fair, I'm not sure how much of the decline in lending should be attributed to TARP not working and how much is due to the global economic slowdown in general.

LIBOR isn't back to "normal" but it has eased.

>LIBOR isn't back to "normal" but it has eased.

LIBOR is following all interest rates down, but with Treasuries at essentially zero, the TED spread is pretty firmly stuck at about 1%, which is still much higher than its historical average.

Of course low interest rates don't matter much if the banks aren't actually lending as a result. By this measure, it's hard to regard TARP as a success.

At the time of the bailout, it seemed that the financial system was in free fall. Every day there was news that one big financial institution was about to go under. Lately, there have been layoffs with retail companies going under, but the sense of collapse seems to have faded.

That might've happened, anyway, but maybe enough money was infused to prevent collapse without enough to produce a healthy lending environment.

>That might've happened, anyway, but maybe enough money was infused to prevent collapse without enough to produce a healthy lending environment.

I expect we'll be hearing this theme a lot from TARP proponents in the months to come -- "If we hadn't done it, things would have been even worse."

It's hard to argue with that kind of speculative assertion, which is exactly why they'll say it. It magically renders the claim "TARP was a good idea" into a non-falsifiable premise.

It's hard to argue with that kind of speculative assertion, which is exactly why they'll say it. It magically renders the claim "TARP was a good idea" into a non-falsifiable premise.

Isn't that kind of just the reverse of your premise here? ;-)

Without knowing how much the global slowdown has impacted lending, I can't speculate as to the effectiveness of TARP.

That might've happened, anyway, but maybe enough money was infused to prevent collapse without enough to produce a healthy lending environment.

I'm with Megan McArdle on this one: the burden of proof that that money did anything is on those who made use of it.

The Treasury Secretary has been given discretion over the use of hundreds of billions of dollars; "maybe it would have been worse otherwise" doesn't really cut it for me.

>...the burden of proof that that money did anything is on those who made use of it.

Seems fair. And it would pretty much be the only requirement ever imposed on Paulson upon being handed the Big Checkbook.

"The Treasury Secretary has been given discretion over the use of hundreds of billions of dollars; "maybe it would have been worse otherwise" doesn't really cut it for me." (Adam)


Absolutely, speculation CAN'T be used as an assertion.

If they can't prove that the bailouts actually avoided a fiscal collapse (a tall order) than the existing results (AS THEY ARE) are all that count.

Look, Democrats politicized" the WoT, so it's only natural that Republicans are going to "politicize" the failues of Keynesian bailouts and "non-stimulating stimulus packages."

The key difference is that while MOST Democrats voted in favor of the WoT, they knew and DID NOT dissent on coerced interrogations and voted in favor of the NSA wiretaps WITH the Telecom immunities, the bulk of the GOP DID NOT vote in favor of the stimulus Bills....not September's (where the ONLY real opposition came from Conservative Republicans and Blue Dog Dems) and not the current one.

While the GOP could point to the 77 - 23 Senate vote in favor of Senate On the Joint Resolution (H.J.Res. 114) on October 11, 2002, 12:50 AM "A joint resolution to authorize the use of United States Armed Forces against Iraq," which not only passed 77 to 23, it passed with 29 Democratic votes (MORE than the number of Dems opposed) as proof a the bipartisn support for the U.S.-led invasion of Iraq (http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=107&session=2&vote=00237), there is no way to claim bipartisanship on this current stink-burger.

If we get a "re-Carterization" of the economy, or worse, it's all on one Party.

@JMK

The TARP program was first proposed by a Republican President, with the firm endorsement/panicked request of the Fed Chairman and Treasury Secretary that said Republican President appointed.

enough of the Republicans in the House opposed the first version of the TARP bill to stop it from passing that time. But then another two hundred pages of pork were slapped on and they were happy enough to give their "YAY" where there had been a "NAY".

Maybe the Republicans (what's left of them) have found their integrity and their balls now, but it's a moot point. The stimulus package is no more interventionist than the TARP program--the latter of which is the subject of the present discussion.

You'll forgive me if I have even less patience for Republican partisans pretending this is a big government Democrat problem than I do for people with half-assed justifications for TARP. Republicans are at least as responsible for TARP as the Democrats. Neither party has covered themselves in glory.

I'm a partisan Conservative.

I remain a registered "Zell Miller Democrat." I am ideologically alligned with the old "Boll weevil Democrats (many of whom later switched Parties).

The votes on the October bailout Bill went completely along ideological lines, with the Senate passing H.R. 1424 (74 - 25) with the overwhelming bulk of the opposition coming from Republican Conservatives like Brownback, Shelby and Sessions and Blue Dogs like Tester, Johnson and Nelson.

In the House it went along those same ideological lines 263 - 171 (with all the Blue Dogs among the 63 Democrats opposed to it) and with Conservative Republicans outvoting the Rockefeller-wing, aided by a lot of WH arm-twisting 108 against to 91 in favor.

The purpose of politics is not and should not be "covering one's self or party in glory," if "glory."

Newt Gingrich didn't cover himself or his Party, for that matter, in glory, he merely delivered the impetus for some of the lowest Misery Indexes in four decades and a string of budget surpluses...all thanks to those federal budget cuts.

Newt Gingrich SHOULD be a Boll weevil Blue Dog Democrat.

>The stimulus package is no more interventionist than the TARP program...

True, it's no more interventionist, only more massive. Republicans do a fine job of fighting government spending when they're out of power, but when they're in power? Not so much.

I have few illusions about the Republicans who oppose this stimulus bill, but I *do* agree with them. Whether they're doing it from newly-rediscovered "principles" or simply knee-jerk partisan opposition is left as an exercise for the reader.

But one thing is for certain -- conservative talk radio blowhards like Hannity and Limbaugh are unlistenable now for exactly the reason you describe. They're painting Obama's stimulus bill as the slippery slope toward socialism -- which would be fine if they hadn't been docilely led along by the Bush Administration on TARP.

"I have few illusions about the Republicans who oppose this stimulus bill, but I *do* agree with them. Whether they're doing it from newly-rediscovered "principles" or simply knee-jerk partisan opposition is left as an exercise for the reader." (BNJ)


The reason for that is because the GOP is a very flawed vehicle for Conservatism.

At best, it's new "NASCAR Conservative base" has, at best, a tenuous connection with its effete and elite Rockefeller-wing.

The GOP's base is about 85% hardcore, "rock-ribbed" Conservative small busines owners, professionals and other workers, but 85% of its funding comes from the 15% of its Country Club Republican membership.

Buchanan was right and he DID try mightily to get the Moderates to do the right thing and "Just put up your scratch and shut the f*ck up," but sadly, to no avail.

The Moderate-wing forced Bush-Sr (a Keynesian who derided the Supply Side policies that decreased the Misery Index EVERY YEAR under Reagan, as "Voodoo Economics") on Reagan, who'd wanted either Paul Laxalt or Gerry Ford as VP.

It's also why the Gingrich years were followed up by the pork-barrelling Delay and Hastert acts.

Paulson, to his great discredit made the first bank bailout Bill seem like a "now or never," life or death" Bill - A "No time to look at other options" kind of deal.

That $700 BILLION to the banks with virtually NO stipulations (the Conservatives fought to mandate the monies ONLY be used for lending, barring banks from using it for bonuses and buying up smaller banks) was sold as the tonic for what ails the economy.

What it's turned out to be was exactly what its critics said it would be...just the beginning of a tsunami of spending that will do little to stimulate and a lot to harm the economy shortly down the road.

Newt Gingrich didn't cover himself or his Party, for that matter, in glory, he merely delivered the impetus for some of the lowest Misery Indexes in four decades and a string of budget surpluses...all thanks to those federal budget cuts.

Newt Gingrich did jack squat. The political climate shifted more favorably towards people like him. Had he not existed someone else like him would have been there instead.

As a student of economics I'm always amused by the willingness of people to just tack on an explanation like "federal budget cuts = lowest Misery Index rating". Really? You really think the cause and effect is that straightforward, or that immediate and measurable?

This kind of explanation also lends itself to big government libertarianism; we won't talk about all the wonderful innovation and entrepenuerial enterprises that went on, it was just "federal budget cuts".

When you put government policy on a pulpit like that--even if it's deregulation or cutting down the scope of its activites--when you worship at the alter of the Primacy of Politics--you end up with a very warped understanding of how the world works and just how significant a particular politician or a particular party really is.

The Republicans are not a "vehicle for conservatism", flawed or no. They are a political party that survives by getting candidates in office that are operating under its brand. When they are big and strong they don't have to give a damn about what they're pretending to represent. When they are small and weak they have to close ranks and create a firm opposition to whatever it is the Democrats are pretending to represent.

At the end of the day individual politicians may be judged for their own character and their beliefs, but parties are just vehicles for concentrating power. No more and no less.

"Newt Gingrich did jack squat. The political climate shifted more favorably towards people like him." (Adam)

Not so. Those federal cuts made it possible and more profitable for people to innovate. Moreover, NO Republican after him (not DeLay and not Hastert) did the same despite their majorities in BOTH Houses.

Moreover, innovation doesn't happen in a vacuum...."people respond to incentives."

The Gingrich-led Congress forced the first federal budget cuts of the 20th Century...they also had the Capital Gains rate cut by a third (30% to 20%) which made innovation and entrpreneurial action more profitable/possible, while it also generated MORE Cap Gains revenues.

To date, the Republican tax cuts were done to hike revenues and some tax revenues DO increase as rates are cut.

Income tax revenues go up as rates are cut (at least down to around the 20% level), Capital Gains revenues went up dramatically after the Gingrich cuts and rose again after G W Bush cut the rate from 20% to 15%.

A libertarian would want to see those rates cut down to the point where they'd force government to shrink.

While I think it's undeniable that there's a lot of government waste, critics who claim the federal government could be cut by a third without any major repurcussions probably aren't that far off...EXCEPT, would all those former federal employees have a skill set that would translate well in the private sector?

I'm betting that most of them would come to manage fairly nicely.

To believe that Gingrich (a guy who did something not done in over 100 year previous and not done since) warts and all, wasn't a unique politician and one of the few who really understood the economy, can only be rooted in a faith-based bias that goes something like, "All politicians are the same."

And while that is overwhelmingly true, it isn't in the case of Gingrich, who forced a shut down of the federal government to get a reluctant Executive Branch to go along with the first federal budget cuts in over a century.

The political Parties actually serve one fairly vital purpose - to keep those who fall much outside a relatively narrow ideological band out of the political mainstream and making sure nothing very innovative happens politically.

My Dad's side of the family were all into the Tammany Hall machine. Now THAT was "politics."

We've become a lot more "transparent" and the voting process, a good deal less coercive since then, if somewhat less honest about things. In the early days, the Tammany bosses all ran their wards out of various Volunteer firehouses. When the fire companies arrived on-scene they went about looting the stricken property, while attempting to suppres the blaze. It kind of made clear what politics really is - more or less an organized "protection scheme."

Those federal cuts made it possible and more profitable for people to innovate.

I don't really think you're in a position to accuse anyone of "faith-based bias" when you take the liberty of dropping unsubstantiated claims such as the one in italics above.

I do not believe that all politicians are the same. I do, however, think that what they can accomplish is extremely constrained, and that Gingrich's accomplishments said less about his personal abilities than they did about the political climate of that time. I don't pretend to know that for a fact, but I'd love to see you demonstrate how your perspective involves so much less faith or bias.

The political Parties actually serve one fairly vital purpose - to keep those who fall much outside a relatively narrow ideological band out of the political mainstream and making sure nothing very innovative happens politically.

Political parties pool the reputation of all the politicians within the party in exactly the same way that a brand like McDonalds pools the reputation of all its local stores. It holds a body of politicians accountable for the actions of others within their party, giving them an incentive to reign in anyone doing something that would reflect badly in the political climate of the moment.

That is all. I think you'd be hard pressed to make a case that they keep a narrow ideological band in the mainstream, when the range of ideologies within each party is quite broad.

To get back to the subject of the post...

B, I don't know how into podcasts you are, but I recommend the latest EconTalk for its explanation of why banks that are getting the TARP funds still aren't lending: http://www.econtalk.org/archives/2009/02/cochrane_on_the.html

But one thing is for certain -- conservative talk radio blowhards like Hannity and Limbaugh are unlistenable now for exactly the reason you describe. They're painting Obama's stimulus bill as the slippery slope toward socialism -- which would be fine if they hadn't been docilely led along by the Bush Administration on TARP.

I agree with the "unlistenable" part...Hannity sounds like he's trying to relive the White Rose society with his "conservative underground" schtick

But were L & H for the TARP bill? I thought they were against it and criticized W for pushing govt money. I wasn't listening to AM radio last year.

>But were L & H for the TARP bill?

I guess I'm really the wrong person to ask, since I barely listen to either. I do remember SH at least questioning the TARP bill. My impression was, however, that will Kudlow on board and Newt panicking and flipping, he reluctantly came around.

Either way, his criticisms then seemed far more muted than with the stimulus package now.

Heh, "White Rose." :-)

Hopefully it is the last Bush screw-up that will haunt us. Well, it wasn't really a screw-up, it was just him grabbing a last few extra handfuls of middle class taxpayer money and giving it to his rich criminal friends, who simply stole it.

Yep, the Republicans fought hard to see that there would be no oversight of the money. This is what happens without oversight.

Time for the Democratic party to clean up the mess the frat boys made again.