Comments: The Invisible Bailout

1. Link on the word _disclose_ needs to be fixed.

2. It's unfortunate (or convenient, I guess, depending on your POV) that criticism of the Fed is so strongly associated with rightwing nutjobbery. Because the Constitution has it right: The money supply IS supposed to be controlled by Congress, the (theoretically) democratic branch of government. Congress has unconstitutionally abdicated the responsibility for it, except, as you say, when they need to share the blame in emergencies.

The sovreign Republic has the right to create money, but instead, we borrow it. What a neat setup for the lenders.

Posted by Cloud at December 12, 2010 07:55 PM
This was an opportunity to get everyone else on the hook with them: both parties in congress, and both presidential candidates, each of whom would be under enormous pressure not to look "irresponsible." Even better, getting some TARP money from congress would create a huge distraction from the gigantic amounts of non-TARP money the Fed was shoveling out the door.

yes but was it also meant to kill direct investment & direct employment on the vine. they had to know the democrats were taking over, and we have decades of evidence the finance people leave minefields behind them.

Posted by hapa at December 12, 2010 10:15 PM

Yes, TARP was always the shiny balloon of bailouts. The way that Yggy is constantly pimping for it is proof positive of that.

I didn't see any mention from you or Bottari on how the Fed cleans up its balance sheet. Last year I noticed Obama and co. lifted the cap on the GSE's. I've suspected that they would filter the crap on the Fed's books through the GSE's, placing the onus on the taxpayers once again.

Any sign that this is the game plan?

Posted by Happy Jack at December 12, 2010 11:38 PM

GO, WALL STREET, GO!!!!

Posted by Susan at December 12, 2010 11:40 PM

Maybe its a shortage of paper and ink. Even at 10 thousand dollar denominations a trillion dollars would eat 10,000,000 documents, then 5 trillion+??? THAT'S a lot-o-paper. Add in printing, transportation, distribution, and security, THAT'S a lot-o-work.


POST AIG'S BOOKS ON LINE, call Pelosi @1-202-225-0100. Let's see just what WE've bought.

Posted by Mike Meyer at December 12, 2010 11:40 PM

For those of us who apparently still don't really have the slightest idea what's happened in the bailout, can you spell out for us:
1. What would have been the deleterious effects on Bernanke, Paulson, and the Fed had the Fed merely bailed out the financial industry by themselves, without TARP? How does shifting blame help them, or the financial industry?
2. What would have been different for US, had the bailout happened via the Fed only, without TARP (you seem to concede that SOMETHING had to be done about the commercial paper market)?
and
3. What the hell is really going on, here, anyways?

Feel free to not answer 3.

Posted by raincoat at December 13, 2010 01:09 AM

I have a plan!
First: Nationalize the Sun.
Second: Set a dollar value on sunlight/gravity etc.
Third: Add that amount of money daily to a fund.
Fourth: Declare that the deficit is gone, and that we are in fact trillions of dollars to the good.
NOTE: Do not set the value of the sun too high, or there will be kajillions of dollars suddenly available, and that would be silly.

Posted by Murfyn at December 13, 2010 01:19 AM

And most of amazing of all, to this day the Fed refuses to say exactly what they've bought for $1.3 trillion. Seriously -- congress has asked, and the Fed has basically said: screw you. (NOTE: Since I wrote this, the Fed was forced, over its loud objections, to disclose what it purchased.)

Only in America, is it legal for the FED to sell your ass into tax and debt slavery and not have to disclose why. They have no assets. The greatest fraud in the history of mankind rolls on.

Excellent piece.

Posted by Frankenstein Government at December 13, 2010 08:43 AM

raincoat: Answer no.3) WE are bogged down in two wars, one for oil the other for the heroin. 1&2) Not much if any difference. The TARP and other loans are meant to transfer the fruits of YOUR labor to the banks.

Posted by Mike Meyer at December 13, 2010 12:38 PM

"That's the first rule of political catastrophes: if everyone's guilty, no one can be punished."

No, that's a rule of political catastrophes, but I'm not sure it's near the top. The first rule of political catastrophes is that the truth has nothing to do with anything. The second rule is that you should always blame someone else. The third rule per my subjective ranking varies by polital party and consists of either a) form a harmless investigatory commission that will lie about everything and anaesthetize everyone; or b) start a war of aggression against a nation of your choice and kill a million innocent people.

Posted by N E at December 13, 2010 04:53 PM

Jonathan, I am anxiously awaiting for you to correct the bad hyperlink for the word "disclose." Or did you flub this up intentionally to mislead people?

Posted by Robert Nagle at December 13, 2010 11:04 PM

Take that, Mr. Nagle. And that. AND THAT!!!

Posted by Jonathan Schwarz at December 14, 2010 02:26 AM

This is the best explanation for the 3-page POS TARP bill draft that Paulson pulled out of his hole on September 20. It couldn't be incompetence. For awhile I thought the outrageous "no review" and lack of specificity was just to make whatever eventually emerged from Congress seem better by comparison. But I think you've nailed it. Bravo!

Posted by Norwegian Shooter at December 14, 2010 07:08 PM