So, Obama's Big Government, Liberal Bailouts with billions of taxpayer dollars...worked?

[NightWatcher]

http://www.businessweek.com/news/2010-10-20/bank-bailout-returns-8-2-beating-treasury-yields.html

Bank Bailout Returns 8.2% Beating Treasury Yields

Oct. 20 (Bloomberg) -- The U.S. government’s bailout of financial firms through the Troubled Asset Relief Program provided taxpayers with higher returns than yields paid on 30- year Treasury bonds -- enough money to fund the Securities and Exchange Commission for the next two decades.

The government has earned $25.2 billion on its investment of $309 billion in banks and insurance companies, an 8.2 percent return over two years, according to data compiled by Bloomberg. That beat U.S. Treasuries, high-yield savings accounts, money- market funds and certificates of deposit. Investing in the stock market or gold would have paid off better.

When the government first announced its intention to plow funds into the nation’s banks in October 2008 to resuscitate the financial system, many expected it to lose hundreds of billions of dollars. Two years later TARP’s bank and insurance investments have made money, and about two-thirds of the funds have been paid back. Yet Democrats are struggling to turn those gains into political capital, and the indirect costs of propping up banks could have longer-term consequences for the economy.

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http://voices.washingtonpost.com/ezra-klein/2010/10/the_governments_pretty-good_in.html

And that doesn't even count the benefits of avoiding the wholesale collapse of the financial system. TARP remains one of the most unjustly maligned policies in recent American history. The Democrats and Republicans who voted for the policy saved the economy and will probably, when all is said and done, have made the taxpayers some money, but it's a vote that many of them will lose their jobs over.

By Ezra Klein

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http://theweek.com/article/index/208409/wait-tarp-turned-a-profit

Wait... TARP turned a profit?
The much-maligned Wall Street bailout program has made American taxpayers $25 billion richer. Will this make them hate it less

[AngryAmish]

1. Yup, TARP worked. But we are still getting fucked by Fannie and Freddie

horray.

[zipplewrath]

2. TARP worked, the stimulus worked

The stimulus unfortunately didn't work as well as they said it would, or needed to work. And TARP helped some people more than others. The GM bailout worked, and saved alot of union jobs. HCR saved the federal government alot of money.

In the old days, the GOP used to move the bar alot. We'd create a food stamp program to prevent people from starving, and they'd declare it a failure because it didn't end poverty. It wasn't suppose to end poverty

Now, we screw ourselves over. We create a stimulus package, and tell folks it will keep unemployment under 8%. When it doesn't achieve that, it is labeled a failure, even though it kept unemployment from reaching 15%. We pass an HCR bill that will save the feds billions and people see their premiums climb. We sold it on the pitch that "you can keep what you've got". Problem is, for various reason, people can't, or won't. We should have sold it for what it was, a major cost reduction for the feds. They bail out the banks, and folks can't get those banks to modify their mortgages. People wonder why they didn't get bailed out (with a bonus).

We gotta get our story straight BEFORE we pass the bills.

[obxhead]

3. HCR has not taken full effect. I wouldn't count those

savings until the full law comes into effect with its complete lack of cost controls.

I have a feeling that by 2015 some very different numbers will be reported to us.

[HughMoran]

5. At least you're an optimist

:rofl:

[zipplewrath]

9. It's always a "savings"

It's a cost reduction versus "what would have been". Basically the negotiated the medicaid rates with the hospitals and Big Pharma.

[SlimJimmy]

4. I disagree somewhat. I think TARP worked as advertised and helped us to

avoid a global financial meltdown. OTOH, I don't think the stimulus worked well at all. Borrowing money to stimulate the economy is always a bad idea. Government should use surplus funds to stimulate the economy, if they are going to do that at all. But that's not what happened. So here we are, two years later, deep in debt with not a whole lot to show for the trillions spent.

[zipplewrath]

10. Both "worked"

It's a bit of a semantic exercise, but without the stimulus, or something similar, the unemployment would have been much worse. FWIW, borrowing money to stimulate the economy isn't "always a bad idea". It may not always be your best choice. And there are ways to do it more "efficiently" that others. But it does "stimulate" the economy. The longer term consequences shouldn't be ignored either. But overall, it was about all that anyone could do. One can argue whether we "got our moneys worth" or not. i.e. 800 billion worth of stimulus for 200 billion worth of result. The 3- 5% that aren't unemployed probably think it was "worth it".

TRAP did avoid the meltdown, in the banking industry. The real estate industry is still in a melt down, and they really have done much there at all. Everyone wants to talk abou it being "stablized" but that's only because we are at property values from 10+ years ago. The banking system would be "stabilized" right now too if we had done nothing. It would be "stable" with alot fewer banks and the world in a massive depression. But it would be stable.

[SlimJimmy]

11. The Keynesian economic theory is pretty straight forward.

The government can, and should on occasion, stimulate the economy by injecting cash (through projects). But they should only do it from a surplus. Injecting cash from a deficit is counter-productive in the long run. We may very well disagree on what stimulus should do. I don't believe that federal money should pay to save local or state jobs. Each state should manage their budget in such a manner as to cover those costs. I know, easy to say, much harder to do. But spending federal dollars to prop up state budgets is a very short term and short sighted fix to what ultimately amounts to a state issue. And when the federal government borrows money to do it, it makes it that much worse. Still, I'm sure all those folks continuing to work are grateful for the reprieve. But federal dollars (our taxes) can't prop up the states forever. We can't continue to borrow to keep them afloat - it's just unsustainable. And for the record, I've been out of work more than once in my lifetime - so I do understand the hardships involved.

Now, don't even get me started on what the out year costs of Freddie and Fannie are going to be. We, as a nation, have waited too long to take thatbitter pill. Bottom line, we can't continue on this path and expect that everything will just turn out fine. It won't.

[zipplewrath]

12. Yes, it is a short term/long term question

Basically, one can be successful with the stimulus, on borrowed money, as long as in the long term we get back to a surplus. If so, we're just spending a future surplus now. The problem of course is that the moment there is a budget surplus, there will be a huge push for a tax cut, instead of paying down the total debt. Where have we seen that before??????

[SlimJimmy]

13. I won't argue with your logic since it's pretty sound.

I would say that we we better be damn sure to get back to a surplus before the bill for Fannie and Freddie needs to be paid. 300+ billion the last I heard.

[zipplewrath]

14. It ought to be the inverse of the "business cycle"

They are fairly well established. There are several of different peaks and valleys, but really there probably should generally be 5 years of deficit with roughly 15 years of surplus on average. The GOP would never tolerate it though.

[zbdent]

8. "food stamp program" "didn't end poverty" ... also, blaming the union teachers for

kids' bad grades (when more than just the teachers are factors in why a school doesn't do so well).

Why aren't there calls for massive firings of gym teachers, because childhood obesity is on the rise? (oh, right ... football ... the alleged "path" for some kids to get higher education)

Why aren't there calls for churches to cease, since evil still exists in the world?

[ramapo]

7. Billions more for F&F

There is really no choice but to keep Freddie and Fannie propped up. To allow collapse would result in a very ugly and far reaching domino effect. Remember that China is a significant stakeholder. They would not be happy to see their holdings go down the tubes. In fact, they might be so unhappy as to lose confidence in the trillions in treasuries that they hold. If they start to dump treasuries then kiss our economic asses goodbye.

It is truly astounding how quickly and easily China won the war. Most Americans never realized we were fighting one. They were too busy buying and using cheap crap.

[mopinko]

6. the stress tests also helped