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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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 Posted: Mon Dec 14, 2009 3:58 pm Post subject: The Secrets of Stability |
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Fareed Zakaria has hit another home run. 
"This revival did not happen because markets managed to stabilize themselves on their own. Rather, governments, having learned the lessons of the Great Depression, were determined not to repeat the same mistakes once this crisis hit. By massively expanding state support for the economy�through central banks and national treasuries�they buffered the worst of the damage. (Whether they made new mistakes in the process remains to be seen.) The extensive social safety nets that have been established across the industrialized world also cushioned the pain felt by many. Times are still tough, but things are nowhere near as bad as in the 1930s, when governments played a tiny role in national economies...
"The world today is characterized by three major forces for stability, each reinforcing the other and each historical in nature...
"The first is the spread of great-power peace. Since the end of the Cold War, the world's major powers have not competed with each other in geomilitary terms...
"The second force for stability is the victory�after a decades-long struggle�over the cancer of inflation...
"And the third force that has underpinned the resilience of the global system is technological connectivity..."
http://www.newsweek.com/id/226425/page/1
Chortle, chortle. No doubt there will be those 70 years hence who will still be posting that it was the wrong approach, just as some are still posting that it was the wrong approach in 1933. |
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Sergio Stefanuto
Joined: 14 May 2009
Location: UK
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| Posted: Mon Dec 14, 2009 5:28 pm Post subject: |
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| Ya-ta Boy wrote: |
| "This revival did not happen because markets managed to stabilize themselves on their own. Rather, governments, having learned the lessons of the Great Depression, were determined not to repeat the same mistakes once this crisis hit. By massively expanding state support for the economy�through central banks and national treasuries�they buffered the worst of the damage. |
Have you any idea how simplistic and ridiculous that is?
Obviously not.
Golly, I'd rather invest in subprime than take economics sermons from the likes of Fareed Zakaria. |
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Rusty Shackleford
Joined: 08 May 2008
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| Posted: Mon Dec 14, 2009 5:32 pm Post subject: |
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| There are probably at least a dozen counter factuals in that excerpt. I would hate to read the whole article. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Mon Dec 14, 2009 7:26 pm Post subject: |
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| I will admit the lack of at least one conspiracy theory in the article is problematic. |
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Rusty Shackleford
Joined: 08 May 2008
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| Posted: Mon Dec 14, 2009 7:32 pm Post subject: |
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| Name one conspiracy theory that either Stefanato or I subscribe to. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Mon Dec 14, 2009 9:21 pm Post subject: |
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Ya-Ta is subconsciously merging his hatreds: conspiracists and libertarians. Pay it no mind.
The Zakaria article is not serious. I'm providing some level-headed alternatives.
Was the bailout effective?
The Congressional Oversight Panel has an audit here.
| Indiviglio wrote: |
It's pretty clear that the U.S. government used it to establish an implicit guarantee of large financial institutions. That calmed markets.
So, yes, government guarantees calm people down. No surprise there. But that doesn't mean that the TARP was completely effective. In fact, there are seven ways in which the TARP failed, according to the report. |
Failures include:
Getting Credit Flowing
Regional Bank Failures
Removing Toxic Assets
Preventing Foreclosures
Slowing Job Losses
The Market Still Reliant On Government
Created An Implicit Government Guarantee Of Big Banks
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And here's Elizabeth Warren, head of the COP, weighing in on the situation.
Frankly, there were better ways than TARP at upshoring stability. The US could have nationalized a few of the more troubled, larger banks, and used them to buy up toxic assets. Once bought up, the banks could have, you know, actually tried to assess their value. This probably would've been just as expensive, but you wouldn't have the Capitol subsidizing Wall Street.
Last edited by Kuros on Mon Dec 14, 2009 9:24 pm; edited 1 time in total |
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Fox
Joined: 04 Mar 2009
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| Posted: Mon Dec 14, 2009 9:22 pm Post subject: |
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| Rusty Shackleford wrote: |
| Name one conspiracy theory that either Stefanato or I subscribe to. |
I would think you'd subscribe to the conspiracy theory regarding the Federal Reserve's actual goals being different than it's stated goals. It's a pretty well-founded one. Even I subscribe to it, more or less. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Mon Dec 14, 2009 9:28 pm Post subject: |
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From the COP report cited above.
| Quote: |
There have been 149 bank failures between January 1, 2008 and November 30, 2009.
[D]eep-seated problems in the commercial real estate sector are poised to inflict further damage on small and mid-sized banks
Some major financial institutions continue to hold the toxic mortgage-related securities . . . . These banks may be considered �too big to fail,� but at the same time, they may be too weak to play a meaningful role in keeping credit flowing
Foreclosure starts over the next five years are projected to range from 8 to 13 million
Since its inception, the TARP has gone through several different incarnations. It began as a program designed to purchase toxic assets from troubled banks, but it quickly morphed into a means of bolstering bank capital levels. It was later put to use as a source of funds to restart the securitization markets, rescue domestic automakers, and modify home mortgages. The evolving nature of the TARP, as well as Treasury�s failure to articulate clear goals or to provide specific measures of success for the program, make it hard to reach an overall evaluation. In its report of December 2008, the Panel called on Treasury to make both its decision-making and its actions more transparent. The Panel renews that call, as it has done with every monthly report since then. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Tue Dec 15, 2009 3:56 am Post subject: |
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| Kuros wrote: |
Ya-Ta is subconsciously merging his hatreds: conspiracists and libertarians. Pay it no mind.
The Zakaria article is not serious. I'm providing some level-headed alternatives.
Was the bailout effective?
The Congressional Oversight Panel has an audit here.
| Indiviglio wrote: |
It's pretty clear that the U.S. government used it to establish an implicit guarantee of large financial institutions. That calmed markets.
So, yes, government guarantees calm people down. No surprise there. But that doesn't mean that the TARP was completely effective. In fact, there are seven ways in which the TARP failed, according to the report. |
Failures include:
Getting Credit Flowing
Regional Bank Failures
Removing Toxic Assets
Preventing Foreclosures
Slowing Job Losses
The Market Still Reliant On Government
Created An Implicit Government Guarantee Of Big Banks
-------------
And here's Elizabeth Warren, head of the COP, weighing in on the situation.
Frankly, there were better ways than TARP at upshoring stability. The US could have nationalized a few of the more troubled, larger banks, and used them to buy up toxic assets. Once bought up, the banks could have, you know, actually tried to assess their value. This probably would've been just as expensive, but you wouldn't have the Capitol subsidizing Wall Street. |
Oh, fiddlesticks! There are two comments in that that accept that activist government was necessary: "So, yes, government guarantees calm people down." "The US could have nationalized a few of the more troubled, larger banks..."
I think what is getting your goat is that Zakaria's (not generally considered a bomb-throwing loon) thesis on how we avoided catastrophe in last winter's crisis is asserting itself as conventional wisdom: Activist Gov't 2--Free Market Lunacy 0.
While the great E. Warren might have preferred tweaking the approach, she doesn't disagree with the general emergency measures taken. I'm hoping Obama dumps Biden in '12 and puts her on the ticket as his VeeP. She's every bit as good a communicator as he is, at least on economic matters. (No idea about her political skills.) |
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Sergio Stefanuto
Joined: 14 May 2009
Location: UK
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| Posted: Tue Dec 15, 2009 4:16 am Post subject: |
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| Activist government caused the whole mess in the first place. Sorry to be rude, but it sounds as though you understand literally nothing about this topic. I'm certainly not going to waste my breath any further. Unless you're preaching to the choir, there's no point, because you won't read it. And even if you do read it, you won't understand it. And if you do happen to understand it, you won't remember it. And we'll be here in a few weeks, with yet another bumbling, bellicose piece of chauvinism from some utterly awful American mainstream plop like CNN. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Tue Dec 15, 2009 5:43 am Post subject: |
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| Ya-ta Boy wrote: |
Oh, fiddlesticks! There are two comments in that that accept that activist government was necessary: "So, yes, government guarantees calm people down." "The US could have nationalized a few of the more troubled, larger banks..."
While the great E. Warren might have preferred tweaking the approach, she doesn't disagree with the general emergency measures taken. I'm hoping Obama dumps Biden in '12 and puts her on the ticket as his VeeP. She's every bit as good a communicator as he is, at least on economic matters. (No idea about her political skills.) |
Did you read my post? I don't deny that the gov't needed to step in to guarantee the integrity of the entire system. But there were many ways to do that. Writing a blank check to the banks was perhaps the worst way they could have chosen.
I'm not against gov't activism during a genuine emergency. The Katrinas and the 9-11s require gov't response, as do economic crises. But that doesn't mean I agree with the responses taken during Katrina or following 9-11 or during the economic crisis. |
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visitorq
Joined: 11 Jan 2008
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| Posted: Tue Dec 15, 2009 1:59 pm Post subject: |
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| Sergio Stefanuto wrote: |
| Activist government caused the whole mess in the first place. Sorry to be rude, but it sounds as though you understand literally nothing about this topic. |
No need to guess. It's clear he absolutely knows nothing whatsoever about it. And it's actually kind of amazing to see (because he posts like this regularly, and I don't even think he's pulling our legs). I seriously think even a child could better grasp how our debt-based monetary system works than he does. |
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