TARP

I was driving yesterday and today and I'm currently on a break. As usual when I do hours of driving on end, I listen to NPR. Today I listened to a show carried by the local Philadelphia affiliate, Radio Times with Marty Moss-Coane. The first hour should be required listening for anyone who wonders why so many of us are inherently skeptical of big government solutions to crisis situations. It featured investigative journalists Donald Bartlett and James Steele, who published an expose in Vanity Fair of the TARP program, better known as the bank bailout. I couldn't find a transcript, but you can listen to the podcast here. 

My Obligatory AIG Post

The AIG bailout/tax issue is all over the blogosphere. My take on it is pretty straightforward. 

1. There should have been no bailout. I have been, and am now,  against all government bailouts of private industry.

2. I oppose punitive retroactive taxation to fix government mistakes made when bailing out companies that should never have been bailed out in the first place. That sort of tax sets a terrible precedent that will almost certainly lead to abuses in the future. If you must hand taxpayer money to failing, mismanaged companies, do so with strict guidelines on how they can use it. Otherwise, expect them to misuse the funds and live with it.

Two More Economists Speak Out

There's an article up in today's Wall Street Journal by two economists, one from the University of Pennsylvania, and one from UCLA titled, "How Government Prolonged the Depression." This is sure to produce sputtering rage on the left, from those for whom Roosevelt's New Deal is some sort of holy grail of government economic policy. The whole article is worth reading, but here are some key points.

the facts do not support the perception that FDR's policies shortened the Depression, or that similar policies will pull our nation out of its current economic downturn.

Why should we be wary of following in FDR's footsteps?

New Deal labor and industrial policies prolonged the Depression by seven years.

They argue that the U.S. emergence from depression by World War Two, was actually assisted by a reversal or at least weakening of key New Deal policies.

The wartime economic boom reflected not only the enormous resource drain of military spending, but also the erosion of New Deal labor and industrial policies.

So what is the main lesson they found from their New Deal research?

wholesale government intervention can -- and does -- deliver the most unintended of consequences.

That might be something to keep in mind, instead of looking to the government out of panic, dismissing any voices of caution or disagreement, and just blindly supporting big government intervention -- whether in the form of bailouts, spending packages, or any other knee-jerk reaction based on shaky theories.

Read it and Weep

According to Politico, the Bush administration & Congress have given us a Christmas package that consists of 

$8.7 trillion dollars’ worth of potential taxpayer commitments for loans, guarantees and other bailout goodies for businesses and distressed homeowners.

One analyst, James Bianco, points out that in adjusted dollars the current bailouts make the Marshall Plan and even the New Deal look like tiny expenditures. When asked how much money we are really talking about with regard to these bailouts and the planned "stimulus" package, Bianco said to "just use the number infinity." As he pointed out, no one understands the scope of these numbers, including the people pushing the bailouts.

If Senate Republicans don't apply a brake -- as they did temporarily in the case of the auto bailout -- who will? Part of the Senate Republican minority, along with a couple of fiscally conservative Democrats, form the last line of defense against endless bailouts.

The Irrational Left & the Auto Bailout

The reaction to the auto bailout failure in the Senate demonstrates yet again the irrationality of what passes for analysis amongst much of the left.  The Blogometer's 12/12 roundup has the excerpts from the blogosphere.  The basic left-wing view is that evil, nasty Republicans don't care about the economy.  They just hate the UAW and that's why they opposed the bailout. Seriously, they really believe that.  Here's a representative sample:

Jane Hamsher at Firedog Lake: "I think this erases all doubt -- the Republicans quite plainly want the economy to fail"

Digby at Hullabaloo: "At this point, the only route they see power is to make things worse and blame it on the Democrats. What else do they have?"

John Cole at Balloon Juice: "you do have to be crazy to be able to pretend that somehow any principles are at stake other than union busting"

Read pretty much any left-wing site, and the theme is similar.  That brings up a few questions. What about the most evil Republicans of all, Bush & Cheney?  Oh yeah, they favored the auto-bailout.  What about the ten Republicans that voted for it?  How do they fit in to the dirty union-busting Republican theme?  How about all the Republican senators who voted against both the $700 billion rescue package and the auto bailout?  Could it be that maybe they don't think bailouts are a good idea at all?  No, of course not; they just want to destroy the economy.  What about the four Democrats who opposed the auto bailout?  Did they want to crush the union too, or do they get to have principles by virtue of being Democrats?  Eight Republicans didn't even vote.  They must have missed the memo about busting the union.  And if the auto bailout was so crucial to our economy, why did vice-president elect Joe Biden not even bother to vote on it, along with Ted Kennedy, John Kerry, and Wyden of Oregon.  Do they not care about the economy? But they're Democrats.  I thought only Republicans wanted to send us into a depression.

Here's the roll call on the financial bailout, and the roll call for the auto bailout.  Of the 31 GOP senators that voted against the auto bailout, 13 of them also voted against the financial bailout. So even assuming the worst, only 18 Republican senators could be accused of targeting the union and refusing to vote for the bailout, even though they were willing to support a much greater bailout.  But that doesn't stop the left from ascribing the worst motivations to Republicans in general.  Why?  Because they know that Republicans are evil and always act based on bad motives.  

How many times have we had to listen to left-wingers whine and snivel about the right questioning their patriotism?  Yet they feel free to portray the entire Republican party as an unprincipled organization bent on destroying the economy for political purposes, based on nothing more than policy differences regarding one vote.

Yet Another Reason to Oppose Bailouts

Bloomberg.com reports that the Federal Reserve refuses to divulge information about what it has done with $2 trillion in emergency loans:

The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.

Bloomberg is suing under the Freedom of Information Act.  

Not only is the government handing out unprecedented amounts of taxpayer money, they don't think the taxpayers even have a right to know where that money is going.  It's only $2 trillion, why should we worry about it?  I'm sure they'll use it wisely, just like the government always uses tax money.

Senate Republicans Get Something Right

Congratulations to Senate Republicans, who finally developed a spine and killed the auto industry bailout -- at least for now.  With the large Democratic majority in the House, the Senate is the last line of defense against more bailouts.  I had given up on on the GOP Senate minority after it acquiesed to the horrible, panic-driven $700 billion "rescue" plan.  It's good to see that they aren't going to go along meekly with every government handout,  after some weak protests.

Bailing Out Christmas

The Wall Street Journal reports that 

the Treasury Department is drawing up plans to bail out Christmas. "We have reason to believe," said a person close to the matter, "that without an immediate capital injection, Santa Claus will fail before December 24."

The whole article is pretty funny.

Rational thoughts from Robert Scheer

I know, rational thought & Robert Scheer don't normally go together.  But he has a new article up at The Nation that makes a surprising amount of sense, aside from the obligatory attempt to to link the roots of our current problems to Reagan. Speaking of the bailouts, Scheer writes: 

It's enough to drive one back to the invisible hand of Adam Smith. Personally, I would rather we took our chances these days with letting the corporations sink or swim on their own without government interference.

Is this really Scheer, or is someone impersonating him? There's more: 

we all may end up on the public dole, scrambling for droppings from a too heavily laden nationalized table. Socialism for the rich is not the way to go.

Scheer argues that we should look after the workers who become unemployed as a result of corporate failures, rather than bailing out the companies that got in trouble through mismanagement.  I was shocked to find myself in agreement with many of his points.

No-strings Bailout Money

From todays Washington Post:

Bailout Oversight Lacking, GAO Says: Investigators Find Few Safeguards or Gauges of Success

Wow, what a surprise.  Who would have thought that the government would be so careless with taxpayer money? According to the article, the Treasury department has given out over 150 billion of the 700 billion "rescue" package.  How are the 52 firms involved using this massive handout of tax dollars?  Who knows?  Treasury hasn't gotten around to doing any monitoring yet, so they have no idea what's going on.  Could there be conflicts of interest?  Well, the Treasury department "currently relies on the firms to disclose any conflicts."  That sounds like a great idea -- let's let the companies getting the funds decide whether or not they are using them as intended.  What could go wrong?  It's only taxpayer money anyway.