Friday, December 3, 2010
Big Fat Friday Free For All
Here it is once again Ladies and Gentlemen, BFFFFA! What's got your goat? Concerned about the civil rights of a home-grown Jihadi miscreant? Wondering what your tax rates might be come 1 January? Let it out, folks, let it out!
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11 comments:
CW you always maintained TARP good stimulus bad. I can't tell the difference these days. When I was in school we were told America could be described as socialism at the top and bottom and capitalism in between. I didn't always agree with that but I do now.
It seems business was paid off. When healthy firms like GE and Goldman Sachs get billions one can only describe it as a looting of the treasury. And it continues.
I am a small businessman. I believe in Capitalism. I am fully aware that most business people are money whores with no thought how they achieve their goals, and I don't think that's necessarily bad. We have laws, rules and regulations to keep them in check. But what Obama has instituted is ad hoc law. You get this because you're GE. You don't have to obey this law because you're McDonalds. This is insane and given enough time it will crash the system.
Let's be clear, the people responsible for this are not garden variety liberals. Liberals want a vast social welfare system, and all kinds of support for all kinds of things gov't has no business funding. But they're aware capitalism is the great engine that funds their largess. Recall what Obama said in the beginning, his goal was to FUNDAMENTALLY change the system. Well here it is. How do you like it?
Hammer, thanks for a thought-provoking post. Let me see if I can field it as well as it was pitched.
Firstly, there is now and there tends to have been throughout much of the past two centuries, a "fascistic" alliance of government and big business in the United States. Is it fascism? No. But is it over cozy and sometimes downright criminal? Yes. I imagine you've read Jonah Goldberg's "Liberal Fascism" by now, and he does a fine job detailing this.
So if you think there's something rotten in the general relationship between business and government in the US, well then, I would say you're spot on.
But TARP wasn't the general relationship. TARP was the economic equivalent of "repelling boarders". I realize now that the stock market has rebounded 50% and some think that while we're not out of the woods, we can see the fields--remember what September of 2008 was like? I do. I truly felt we were on the edge of a total, worldwide financial collapse. TARP represented to me a TERRIBLE incursion of the government into free markets--but less terrible than total collapse. If you think that the failure of major banks and corporations was something our economy could have withstood, then you'll disagree with me, and that is an honorable position. I however, remain hard over that TARP saved the world economy by 1) staunching the flow of blood 2) stabilizing financial markets and 3) providing liquidity to a system that had effectively ceased to operate.
I look at the world financial system sort of like a great old European market square clock. On the outside, you see hands moving and little wooden townspeople flowing out of doors on the hour, every hour. If you don't think about it, you might think that it magic drives the whole works. But it isn't magic. There is some kind of a drive mechanism geared to the end actors through a series of gears, cogs and clutches, all of which must work in synchronization for the clock to function smoothly. In September 2008, the clock stopped. TARP removed the sand in the works and lubricated the system so that it could slowly restart.
(Continued)
You say GE and Goldman were healthy firms? I bet to differ. They were great big gears in that system and they were not turning. Goldman had to change its operating status to a regular bank in order to keep from going under. GE Capital effectively destroyed 85% of GE's total corporate value in under a year.
TARP was an EMERGENCY measure that has largely worked, returning some measure of normalcy to the system. Now remember--that SYSTEM--the normally operating system--featured an already unholy alliance between government and capital. If this is what you wish to criticize, well then I am on your team 100%. Between regulatory capture and sweetheart deals for favored suppliers, there are serious flaws. But if what you're saying is that TARP wasn't effective or worse yet, that we should have done nothing, well then, I can't agree.
Turning now to the stimulus...
The problem I had with the stimulus is that a huge portion of it was not stimulative. Put another way, the primary difference between the stimulus and TARP is one of effectiveness. TARP put IMMEDIATE LIQUIDITY into the system. The stimulus would not spend half its money until two years after passage. Additionally, the stimulus poured money into one of the least effective mechanisms for actually stimulating economic activity--and that is local governement; whereas TARP poured money into one of the most effective mechanisms for atually stimulating economic activity--capital.
What we have here are two separate policy actions designed to solve two different problems. TARP was designed to provide emergency liquidity to world financial markets. It worked. The stimulus was designed to create jobs and increase economic activity. It has not been effective.
So, perhaps in a long winded way, I've helped define the difference between the two.
I don't know CW. We've had hundreds of small banks fail. This may have been good for Bank of America and CitiCorp but it didn't do a thing for Four Oaks Bank (corporate headquarters Four Oaks, NC).
A good example of my point is the GM bailout. The company was bankrupt so rather than go through the bankruptcy process where a judge would look at liabilities and assets, restructure debt, abrogate contracts (the key here) etc., they decided to just bail them out. And the last shall be first..the UAW.
What I'm saying is this, TARP and stimulus were the greatest scams in World history. Did they do some good, well I'm sure they did in some instances. But it reminds me of the old joke about Exxon...At Exxon we're into environmentalism, because we're into EVERYTHING!
I guess we're going to have to disagree. TARP in my view just kicked the can down the road. I would say in large measure it was designed to cover up the unholy alliance between big business and government at the expense of the middle class.
My contention is if we would have let the system work, make these businesses pay for their stupidity we would be out of this mess by now. In other words a free market approach to ill-advised quasi-fascism.
I say this, bail out no one under any circumstances. And the next time B of A is forced to give home loans to someone who doesn't have the proper id and couldn't get a Goddamned library card, they'll have enough forethought to get their ass on Meet the Press and tell everybody what they're being forced to do and the consequences thereof (and maybe hit K St. as well).
New Jersey Governor Chris Christie at the Excellence in Education Summit in DC earlier this week:
"...we said listen, we value teachers. The great ones should be carried on our shoulders everyday to school. We should pay them what they deserve and more because they care about our kids and they're doing a great job but we're tired of paying for mediocrity and we're tired for paying just because someone fogs up the mirror every year..."
Fogs up the mirror? Awesome! To hear snippets of Christie's keybote speach:
His Awesomeness
Ah, that would be keynote and not keybote in the final paragraph. I have yet to discover what a keybote is.
About that last paragraph, I believe speech is the word I was looking for.
Dope...I mean Doc, product of NJ schools?
Faux Shaux Linda baby, faux shaux!
Hammer and CW - Great discussion. Thanks for letting me listen in.
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