Comments on Hope and Change: We're in the Money!

I would love to be around to argue with you about ...

2009-07-16T23:09:47.142-07:00

I would love to be around to argue with you about this in 100 years. My understanding was that much of the government money was used to buy smaller, weaker banks which allowed some of the big guys to come roaring back. My limited understanding of this was that it was the intention for this to happen although many Democrats got angry at it.

Maybe I am being silly in thinking that sticking taxpayer money into the economy like this is a bad idea because it doesn't teach anybody a lesson but I do understand the reasons for it. Would the world have ended if we just let the market sort it out? "Too big to fail" is the keyword but to me it seems to be "too big to be allowed to reap the consequences of your actions."

I am probably not qualified to have an opinion on this, just my gut feeling.

Given the experience we have all been through, of ...

2009-07-16T15:17:34.280-07:00

Given the experience we have all been through, of seeing so much apparent wealth disappear, it is probably natural to be suspicious of any claim of profits. But let's be clear what we are talking about. These are not phantom profits in the sense of phony money. The treasury is going to be paid back, with dividends, in real money. And these are not phantom profits in the sense that Bernie Madoff was making phantom profits. That kind of Ponzi scheme we would find out about eventually. No, these could only be phantom profits in the sense that investments that are generating profits today might turn sour tomorrow and generate losses that could outweigh those profits. Of course, Goldman Sachs would have no reason to want that to happen, but it is always a possibility. And of course that is what happened last year. I don't assume that is going to happen unless we are starting to enter another speculative bubble like we already experienced with stocks and real estate. But where is the bubble this time? I'm not seeing it yet.

And Harrison, as far as whether government intervention helped or hurt, we will probably argue about the for the next hundred years. Historians and economists are still arguing about which New Deal policies helped and which ones hurt, and whether we would have come out of the Great Depression faster or slower without this or that policy. That's the fun of being an historian or an economist I guess. My point is that we had a lot of smart people doing the best they could to get us out of the mess, and I would include Secretary Paulson, Chairman Bernanke, Congressman Frank, Senator Dodd, Secretary Geithner, Larry Summers, and a few others. I'm sure they all made some mistakes, but we seem to have avoided the total financial meltdown that everybody was worried about last fall, and we should be happy about that.

I don't think the maff is in as to whether the...

2009-07-16T11:14:14.536-07:00

I don't think the maff is in as to whether the government money helped or hurt.

In our numerous interactions, you have yet to addr...

2009-07-16T08:24:57.827-07:00

In our numerous interactions, you have yet to address the suspciion that these are phantom profits, generated by poor risk taking that has yet to be uncovered in the short-term and is really just setting us up for another insurance claim to the public coffer once the investments go bad.