No Cars Go

by Eric Martin

These 2010 midterm elections were going to be difficult for Democrats under just about any circumstances: the typical swing of the pendulum, as well as some improbable Dem victories in 2008, meant that the GOP was poised to make big gains in the House and, less so, the Senate.  Add to that, lingering high unemployment and economic sluggishness, and it's no wonder that the Democrats are bracing for a rough Tuesday.

What gets lost in the election coverage - and the focus on gaps in enthusiasm and other horserace chatter - are the many significant achievements of Obama's first two years including health care reform, financial reform, student loan reform and an economy saving stimulus package.  Not that the Democrats, Obama included, have been particularly good about touting these accomplishments.

Nevertheless, Jonathan Cohn highlights another big Obama victory that is receiving far too little attention: the rescue of the domestic auto industry.  Cohn remarks:

General Motors made news twice this week. First it announced that it was investing $190 million in a Michigan factory that will build its newest Cadillac and, along the way, create 600 jobs. Then it announced it would be buying back some of the preferred stock now owned by the Treasury Department, further reducing its debt to the government.

Even after the repurchase, GM will still owe the taxpayers around $40 billion. And the new GM workers are making a lot less money than old ones do. But the news is still pretty good--and, more important, it’s not isolated. The Detroit Three are making money these days and, if you believe the automotive magazines, they are making good cars, too.

Of course, you wouldn’t know it from the political debate. President Obama’s critics have vilified the auto industry rescue and most Americans, weary of bailouts, seem to oppose it. But...the signs of success are becoming impossible to ignore. You don't even have to take my word for it.

Back in the spring of 2009, when Obama was debating what to do with the car companies, the Economist magazine came out hard against a rescue. It’s about what you’d expect from a publication that extols the virtues of the free market so consistently and without qualification. And it’s why their subsequent change of heart, published a few weeks ago, is worth taking so seriously:

Many people thought this bail-out (and a smaller one involving Chrysler, an even sicker firm) unwise. Governments have historically been lousy stewards of industry. Lovers of free markets (including The Economist) feared that Mr Obama might use GM as a political tool: perhaps favouring the unions who donate to Democrats or forcing the firm to build smaller, greener cars than consumers want to buy. The label “Government Motors” quickly stuck, evoking images of clunky committee-built cars that burned banknotes instead of petrol--all run by what Sarah Palin might call the socialist-in-chief.

Yet the doomsayers were wrong. ... Mr Obama has been tough from the start. GM had to promise to slim down dramatically--cutting jobs, shuttering factories and shedding brands--to win its lifeline. The firm was forced to declare bankruptcy. Shareholders were wiped out. Top managers were swept aside. Unions did win some special favours: when Chrysler was divided among its creditors, for example, a union health fund did far better than secured bondholders whose claims should have been senior. Congress has put pressure on GM to build new models in America rather than Asia, and to keep open dealerships in certain electoral districts. But by and large Mr Obama has not used his stakes in GM and Chrysler for political ends. On the contrary, his goal has been to restore both firms to health and then get out as quickly as possible. GM is now profitable again and Chrysler, managed by Fiat, is making progress. Taxpayers might even turn a profit when GM is sold.

That's a lot of jobs saved, up and down the automobile vertical: from assembly line workers, to dealerships.  Well done.

Comments

[Marty]

Eric,

Two things:

First this list

health care reform, financial reform, student loan reform and an economy saving stimulus package

are not universally considered successes. They are not forgotten, they are a large part of the perceived problem. It is the Democrats political assessment that they should not dwell on them too much.

Second: The auto bailout has, in fact, been more successful in a short amount of time than most CAN imagine, not could.

However, Detroit, and the auto industry in specific, is still an area of huge unemployment(Michigan 13.1% in Aug, Detroit 15.5%). Once again we saved the company but haven't replaced the jobs. It is hard to get a lot of credit in that environment.

[Eric Martin]

Marty,

True they are not considered universal successes, but then there's a lot of confusion out there.

I mean, people think Obama raised taxes (he cut them) and that he increased the deficit (his budget shrunk Bush's last).

But, yeah, the Dems aren't selling them, but they should be. People's perceptions need to be better informed.

Not sure what this means, though:

Second: The auto bailout has, in fact, been more successful in a short amount of time than most CAN imagine, not could.

[Hogan]

In historical terms, passing a large and ambitious piece of domestic legislation, especially in a difficult political environment, is considered a success for a president, apart from its policy merits. Passing NCLB was a success for GWB, whether or not it's working well.

Would unemployment in Detroit, Michigan and the auto industry be higher or lower without the bailout?

[someotherdude]

I have been wondering what the lack of credit has done to the average person, as well. It seems that many Americans were able to borrow credit, whenever something tragic would befall the. During the 1990s and early 2000, Credit Card availability seemed to act as a bit of an opiate for the masses. Since that “social net’ has been taken away, how much of the pain these folks are experiencing is that much more painful.

The untold story, is how much credit has been a “pain killer” for many American consumers.

[Sebastian]

I was mostly against the car bailouts because I thought that politics would help GM avoid bankruptcy (which is how GM tried to use it). When Obama allowed GM to go into reorganization through bankruptcy, that was a tough political choice that he should get a lot of credit for. I still don't think it was the best approach (The government backing a debtor-in-possession loan would have been better, because it would have staved off all of the feared problems of part-maker collapse without making an auto-exception to the bankruptcy rules).

The key feature that makes the GM bankruptcy a success so far as it is (GMs long term success is anything but secured) is that the government was in quickly, pushed through the bankruptcy, and out. We'll see if it takes that approach anywhere else.

[Eric Martin]

The key feature that makes the GM bankruptcy a success so far as it is (GMs long term success is anything but secured) is that the government was in quickly, pushed through the bankruptcy, and out.

Agreed, and yo uare right that long term success is not guaranteed. But the bailout gave GM an opportunity for that, where none existed before.

[Marty]

"Not sure what this means, though:

Second: The auto bailout has, in fact, been more successful in a short amount of time than most CAN imagine, not could."

Or, hopefully clearer, most people can't grasp the scale of the bailout or success of the turnaround (to date) even after the fact.

However, if you wipe out all the debt (except the government), cut salaries (don't recall specifically how much) and benefits of every worker, lay off to the level of profitability then making money for a few quarters is easy.

I used to have a Chairman who chided me that making money the quarter after a "reorganization" should be easy, after GM's it should be a certainty.

Also:

True they are not considered universal successes, but then there's a lot of confusion out there.

I mean, people think Obama raised taxes (he cut them) and that he increased the deficit (his budget shrunk Bush's last).

These two things are unrelated and subject to discussion. He did increase the deficit except for the taxes he raised. Its called HCR. Dems are just as confused as Reps, which is really the point.

He tried to sell unpopular, or in the case of the stimulus ineffective, legislation by sayings "you'll see, it will be better" and it isn't.

Then coming back and saying "it would have been worse" isn't a good answer. Worse than doing nothing? Did anyone suggest doing nothing?

It isn't better, take responsibility and move on. Exactly what he has done.

[Eric Martin]

He did increase the deficit except for the taxes he raised. Its called HCR.

Huh? Obama cut taxes. He did not raise taxes. And HCR has not raised taxes or increased the deficit.

Not sure what that sentence means.

He tried to sell unpopular, or in the case of the stimulus ineffective, legislation by saying "you'll see, it will be better" and it isn't.

Then coming back and saying "it would have been worse" isn't a good answer. Worse than doing nothing? Did anyone suggest doing nothing?

Yes. Plenty of people suggested either doing nothing, or putting together a smaller package comprised entirely of less-stimulative tax cuts. Those people being every Republican legislator in Washington.

And the stimulus bill wasn't "ineffective." The CBO and every other non-partisan observer has concluded that it generated and/or saved millions of jobs. It just wasn't big enough to counter the state-level contraction. Federal govt pushed out stimulus while state/local govts cut spending at almost the same levels.

[Marty]

"putting together a smaller package comprised entirely of less-stimulative tax cuts"

You mean those tax cuts that the President said last week that he should have let the Republicans push through? Again, nobody said we should do nothing, what he said would happen didn't. The rest is just selling.

[Sebastian]

"And the stimulus bill wasn't "ineffective." The CBO and every other non-partisan observer has concluded that it generated and/or saved millions of jobs."

I know this sounds like me being argumentative, but I'll try not to be by putting my priors out there. I really do believe that stimulus can work, and that maybe that one did. I don't however like appeals to what essentially is begging the question. Macro-economic models are very poorly understood, very sensitive to tiny conditional changes, and aren't as accurate in extreme conditions as they seem to be in normal ones (which depending on your take, may just be a restating of 'poorly understood'.) In many respects you should think of them like discussions of applications of the Gaussian copula function to finance. When the CBO concludes that "the stimulus" "generated/and or saved" "millions" of jobs you have to understand that they have a macroeconomic theory with a formula. You put $X into the stimulus part of the formula. This gets you X jobs at the end. Putting in the proper value for the stimulus is always going to get you a specific number of millions of jobs at the end of the equation. The CBO reports that number. It should be read as: if our macroeconomic theory is correct in general, and if our macroeconomic theory is correct in these extreme cases, and if our equation is a proper reduction of these theories to math, and if there aren't other negative or positive figures that we don't understand changing the analysis, there should have been X jobs created/saved.

The way it most certainly should not be read is as if they followed the money from the programs and observed the jobs being created, discounting for other jobs being diverted or hurt. The CBO report was not a scientific observation in support of a theory. It was just a restatement of the theory and what results the theory expects given a stimulus of $X.

Now, for the most part, I happen to agree with the Keynesian theory, in the sense that it seems more likely than any other theory I've heard. But it doesn't have the huge support for it that things like gravitational theory, or gas law, or Mendelian genetic theory, or other scientific theories. If you based a result on a calculation derived from those theories, I'd feel pretty confident. Economics in general, and macroeconomics specifically, isn't anywhere near that.

So while I'm inclined to believe that the stimulus helped, the CBO equation plugging isn't really any evidence whatsoever in support of that.

[Eric Martin]

You mean those tax cuts that the President said last week that he should have let the Republicans push through?

What do you mean?

The stimulus bill contained a lot of tax cuts. The GOP wanted more, with no spending.

Again, nobody said we should do nothing, what he said would happen didn't. The rest is just selling.

Actually, some people DID say we should do nothing. That is a fact. And others said that we should pass a smaller bill with less stimulative tax cuts.

That is a fact. The rest is just selective memory.

So while I'm inclined to believe that the stimulus helped, the CBO equation plugging isn't really any evidence whatsoever in support of that.

Seb, out of curiosity, what would constitute evidence?

[Bernard Yomtov]

He tried to sell unpopular, or in the case of the stimulus ineffective, legislation by sayings "you'll see, it will be better" and it isn't.

Then coming back and saying "it would have been worse" isn't a good answer. Worse than doing nothing? Did anyone suggest doing nothing?

Eric answered this pretty well, but I'd like to add a couple of things. First, even a partisan Republican observer (Mark Zandi, McCain's economic adviser) has said the stimulus accomplished a great deal. Second, just because, "It would have been worse" is not, admittedly, a phrase to stir souls, doesn't mean it's wrong. Indeed, things would have been worse without the stimulus package.

OTOH, I have to agree that Obama really did a poor sales job here. He trapped himself by not arguing for a much bigger stimulus (though he did make some useless but politically needed concessions to satisfy Susan Collins), so now he's sort of stuck with his claims.

[Sebastian]

Evidence would involve tracking the money and seeing where it--did it hire people who didn't already have jobs; did it hire people who were about to lose jobs; did it save jobs that were on the edge; did it go to people whose jobs weren't in trouble?

Plugging numbers into a macroeconomic equation pretty much isn't. Especially when we have good reason to believe that macroeconomic understanding isn't very advanced (see for example the fact that nearly every major economist as recently as 2002 and for most still by 2004 or 2005 bought into the idea that neo-Keynesianism had brought about the Great Moderation, which had evened out wildly fluctuating economic cycles and the worry of severe long-lasting downturns--that was by far the consensus point of view as recently as six to eight years ago).

Economics is not advanced enough where we can just assert that some amount of stimulus must have caused X million jobs because the equation says so. You can't trust a macroeconomics equation the way you would trust plugging numbers into the inverse-square law, or predict heredity of certain small number of allele genetic traits, or predict velocity based on air resistance, mass and force. You can trust those because they have been verified thousands or millions of times, and the reduction to equation is relatively exact.

Economics isn't like that. It isn't even close.

[Rob in CT]

I am pleased that the GM bailout appears to have worked out reasonably well. I was against it, largely because I believed the government would "save" GM by pumping in a bunch of money and allowing the company to kick the can down the road. It appears that basically didn't happen, so yay.

As for the rest...

The stimulus is hard to sell. Macroeconomics is wonky stuff and you basically end up having to rely on others... which in turn means you believe what "your side" is saying. If you are inclined toward liberalism maybe you listen to Krugman. If you're conservatively inclined you listen to Manzi or somebody further to the Right. Plus, if you want to figure out what the Stimulus did and did not do, you have to factor in state and local spending (aka "fifty little Hoovers"). That's hard to do (and easy to fudge, I figure).

The whole HCR debate was insane and remains so. It's immensely frustrating.

People are mad and they're going to take it out on the party in power. The Dems made it worse than it would have been by, well, being Democrats. They suck at political negotiation and messaging.

[Hogan]

Economics isn't like that. It isn't even close.

So how do you decide what to do, and how do you determine whether what you're doing is working (or at least helping, or at the very least not making it worse)?

[wj]

Not only does it appear more likely than not that the Treasury will end up making a profit on the auto stocks, it also looks to make a quite nice profit on the bank bailouts. The government actually turning a profit in two different areas is little short of miraculous -- but it seems to be happening.

Of course, since the TARP funds were proposed by Bush, I suppose he should get most of the credit there. But acknowledging that Bush proposed them would make it harder to bash Obama for them....

[russell]

People are mad and they're going to take it out on the party in power.

That is likely so.

If the party they are going to vote for instead to make their great big point had a track record that was one iota better as regards the things they are angry about, it might even make sense.

As it is, the likely result of their adventure in pique will be that the federal government will be wrapped around the axle for the forseeable future.

Splendid.

[Bernard Yomtov]

Sebastian,

I understand what you're getting at, but I think you are overlooking a couple of things about CBO's work. They did, in fact, try to gather data from recipients. The reliability of this data has been much criticized, but, occasional sillinesses aside, I think it's a reaonable attempt at doing what you describe.

In addition, even if done perfectly, that exercise would omit some important matters, such as the multiplier effect. You might find out that ten jobs at the local factory were saved directly, but miss the two jobs at local merchants that also were saved.

Also, their models are not simply pulled from thin air. These are commonly used models, based on historical data. As CBO says,

Macroeconometric forecasting models of this sort are widely used, and they underlie most of the forecasts offered to paying clients of economic consulting firms. In addition, the models that CBO uses generally produce results that are roughly in line with the consensus of private-sector forecasters, as compiled in the Blue Chip Economic Indicators. However, some analysts criticize this sort of model for being based on historical relation- ships among aggregate economic variables, such as income and consumption, rather than being built up from clearly specified rules governing the behavior of households and firms. In particular, some critics argue that models based on historical relationships will not provide accurate predictions in the face of new policies or new circumstances. Partly to address that concern, CBO presents a range of possible effects rather than a single number for each economic variable.

This is from the Appendix to their reports on the effect of the stimulus, which contains a good discussion of modeling issues.

I think this Appendix makes clear that claiming CBO is just running a classroom exercise whose results are essentially assumed in their model is unfair criticism. Macroeconomics is not Newtonian physics, true, but neither is it devoid of logic.

[Sebastian]

It has plenty of logic, but if you don't have the right premises perfect logic gets you nowhere.

And so far as logic goes, there is no getting around the question begging of the current system. Why didn't the stimulus get the overall unemployment numbers down? Well the claim is that it wasn't big enough. How do we know? Because if it were big enough, the unemployment numbers would have come down. Why didn't they come down, then? Because the economic situation was getting worse at the same time, so it actually saved jobs that would have been lost even though the overall numbers didn't come down.

Now, as it happens, I believe that explanation.

But that doesn't mean that the CBO statement is proof that the explanation is true. It isn't proof. The CBO statement is just a restatement of their theory on macroeconomics: if you stimulate with $X you should get Y jobs, the fact that unemployment didn't decrease by Y jobs means [under the theory] that what happened was that the economy got worse and we mitigated the damage.

Again, I happen to agree with the assessment, so far as I understand the issues. I happen to think that this macroeconomic model is hugely flawed, but the best we have. But I think it is super-important to be humble about how advanced macro-economics really is. We are at the very very very beginnings of understanding it. Using statements of theory as evidence of fact in such a case isn't wise, because we are at a stage of development in macro-economics where there is plenty of crap, we don't know which parts are crap, and we aren't going to be figuring out which parts are crap by pretending that restatements are evidence.

Basically think about a light switch. I don't understand all of the science perfectly. But I do know that in almost 100% of cases if I flip the switch, and the light doesn't go on, it is a problem in the structure between the switch and the light, or the power plant and my house, NOT something confusing in the science of how electrical switches work.

But in economics, if we flip a switch and the light doesn't go on, are we confident that we know what happened? No.

And we aren't going to learn what happened by saying things like "the model predicted that there would be jobs, therefore there were jobs" even when unemployment goes up.

[Bernard Yomtov]

And so far as logic goes, there is no getting around the question begging of the current system. Why didn't the stimulus get the overall unemployment numbers down? Well the claim is that it wasn't big enough. How do we know? Because if it were big enough, the unemployment numbers would have come down.

This overlooks the fact that before the stimulus passed there were those arguing that it was too small and would not do the job. So I don't think it's quite the question-begging you claim.

The CBO statement is just a restatement of their theory on macroeconomics: if you stimulate with $X you should get Y jobs, the fact that unemployment didn't decrease by Y jobs means [under the theory] that what happened was that the economy got worse and we mitigated the damage.

I think are demanding a degree of accuracy that is just unavailable outside the physical sciences.

Have you read the CBO analyses? Maybe you have, and are just simplifying, but if so I think you've overdone it by far. CBO uses a combination of actual data and a number of modelling approaches, and the theory is not something hatched inside CBO walls. The models, as they point out, are widely used in that fabled land called "The Private Sector," where, as we know, the slightest misjudgment is fiercely punished by a mysterious magistrate called The Market. So maybe they have some validity.

If your point is that these are estimates, and that the computations are less reliable than those we (well, someone, not really me) can use to determine the orbit of Saturn then you are right of course. But there is historical data involved here, so the models are not as completely abstract as all that.

There is undoubtedly a lot we don't know about macroeconomics. The data isn't great; we can't run controlled experiments, etc. But that doesn't mean the ideas we have are worthless. CBO's evidence might not stand up in court, but that doesn't make it meaningless. Maybe we can think of it like other statistical results - an estimate with a large confidence interval.

[Tom M]

What gets lost in the election coverage - and the focus on gaps in enthusiasm and other horserace chatter -
What always gets lost in election coverage is this from the only columnist in the NYT worth reading.

KRUGMAN (4/21/06): So what's left of the conservative agenda? Not much.

That's not a prediction for the midterm elections. The Democrats will almost surely make gains, but the electoral system is rigged against them. The fewer than eight million residents of [Utah, Idaho, Wyoming and Nebraska] are represented by eight U.S. senators; the more than eight million residents of New York City have to share two senators with the rest of New York State.

Meanwhile, a combination of accident and design has left likely Democratic voters bunched together—I'm tempted to say ghettoized—in a minority of Congressional districts, while likely Republican voters are more widely spread out. As a result, Democrats would need a landslide in the popular vote—something like an advantage of 8 to 10 percentage points over Republicans—to take control of the House of Representatives.

What 2008 did was get us Democrats in red states and they want to stay in Congress. Thus we get the Ben Nelson effect in the HCR. (the only thing unpopular in HCR is the narrative; the individual provisions are either popular or formerly Republican ides).
Government shutdown in the first budget debate. I'll take the under.

[Tom M]

Again, nobody said we should do nothing,
Paulson did. How do you think Lehman happened?
Everything financial/economic after that was a reaction to the reaction.

Dow 9/12/08 DJIA= 11,421.99 (falling from the high of 14,164 on 10/9/07)

12/31/08 DJIA= 8,776.39

The Fed and Treasury did do nothing. For a while.

[Sebastian]

"Have you read the CBO analyses? Maybe you have, and are just simplifying, but if so I think you've overdone it by far. CBO uses a combination of actual data and a number of modelling approaches, and the theory is not something hatched inside CBO walls. The models, as they point out, are widely used in that fabled land called "The Private Sector," where, as we know, the slightest misjudgment is fiercely punished by a mysterious magistrate called The Market."

I've read them, and the data they use isn't impressive. There is lots of it, but it mostly consists of lists of money spent. That isn't really relevant to the question. And I'm certainly not claiming that private models can accurately predict the economy. I don't think anyone is good at it.

Ultimately their *proof* is just that their models demand that when you add stimulus money there must be jobs created. You can't use that to then prove that the model is correct, especially when overall jobs are lost.

Again, I believe the theory is probably likelyish to be true, but I can't go along with appeals to the CBO proving that the stimulus worked when all they have proved is that according to their models it should have worked. We knew that in January.

"CBO's evidence might not stand up in court, but that doesn't make it meaningless. Maybe we can think of it like other statistical results - an estimate with a large confidence interval."

I didn't call it meaningless, but look at Eric above, it is being treated as on par with a scientific result. It isn't anything near that.

If you are willing to give a VERY large confidence interval, I'd agree. Say a 40% chance of being close to right (+ or - hundreds of thousands of jobs), an additional 20% of being right in idea but radically off the numbers (+ or - a million or so jobs) 20% of being largely wrong (stimulus doesn't work the way we think except in general sign of the change), and 20% of stimulus doesn't work the way we think at all?

I would say there is something like a huge chance (30-40% range) that we are so wrong about the theory that the people who say "what stimulus, we lost jobs in the period" might be closer to be right than we are. And I would say that even people really confident in Keynesian theory really shouldn't put the chance of being completely wrong at lower than 15-20%. We really understand it that little.

(Take for example the fact that even the people who in 2002 were predicting serious trouble for the economy were totally wrong about where the danger was--they almost all said it was in the trade imbalance with huge risk of correction there. And those who properly called the housing bubble, didn't predict the enormous catastrophe surrounding it. The one person who did was only one year ahead).

[Tyro]

health care reform, financial reform, student loan reform and an economy saving stimulus package
are not universally considered successes.

Marty, just out of curiosity, what is the Republican plan to address these issues?

[Tony P.]

Sebastian,

Outfits like the CBO, with their likelyish theories and their complex models, are responsible for all sorts of predictions, e.g. what debt-to-GDP will be in 2020, or what year Medicare will reach 50% of the federal budget.

You can believe, if you like, that macroeconomic theories and models are too imprecise to EVALUATE policy well after the fact, but you cannot simultaneously rely on them to PREDICT policy results in the future.

So, can we assume that you don't believe ANY of the dire projections about deficits and debt that "fiscal conservatives" are always on about?

--TP

[Sebastian]

I don't think it takes a very tricky model to be worried about ballooning debt. The implications for that are pretty straightforward and don't require much theory at all. If you want to worry that huge debt can cause the need for scary levels of taxation, I don't think you need a complex model to explain why. In fact I think you need complex models to explain why not. The why is obvious. Projections of future debt based on current spending are pretty much arithmetic. No fancy models needed for that.

But I almost never rely on projections of future growth or whatever. Those are pretty much crap, and the fact that they are taken seriously at all is just proof that when you put a number on something, reporters will report it.

[Brett Bellmore]

The auto company bailout wasn't good for "the automotive industry". It was good for the bailed out part of that industry, and bad for the part that saw their competitors being bailed out. Ford was doing pretty good their before the bailout. The Ford dealership across the street just closed it's doors. Think that would have happened if GM hadn't been bailed out? Maybe you're assuming that loyal GM drivers would have walked rather than bought a Ford, when their current cars broke down?

That's the fundamental problem with bailouts, in general: The function of a free market depends on firms which make stupid mistakes, or just do badly, losing out to ones that do better. Bailouts always subvert that process, and in doing so encourage business to pay less attention to getting their business fundamentals right, and more attention to paying off the right politicians.

Which is why politicians are fond of bailouts. You get the votes of workers at the companies you bailed out, can hope the guys who don't get hired at the companies they were competing against don't blame you, and count on businesses in general being more interested in slipping money your way.

"Too big to fail" is an incredibly damaging idea. NOBODY is too big to fail. The idea needs to die a well deserved death.

[Phil]

It was good for the bailed out part of that industry, and bad for the part that saw their competitors being bailed out.

It's been explained to you repeatedly that both GM competitors and OEM companies favored the GM bailout, as their collapse would have had negative industry-wide repercussions in parts availability and other areas.

That you refuse to understand it is your problem.

That you repeat the above as if it's established fact is everyone else's.

[hairshirthedonist]

Eric: Seb, out of curiosity, what would constitute evidence?

Seb: Ultimately their *proof* is just that their models demand that when you add stimulus money there must be jobs created.

Evidence or proof?

[Gary Farber]

It's possible to agree entirely with the idea that "too big to fail" sufficient to "deserve" a government bailout, however temporary and profitable, is an intolerable idea for a private entity, and to strive to eliminate such situations, and yet simultaneously believe that the place to start isn't with tens of thousands of ordinary working people, and those dependent on them and their having money to spend.

This is the difference between agreeing with a theory, and a goal, and the need to work towards it, and ignoring the real effects on real people in the meantime.

[hairshirthedonist]

Gary, if the free market decides it's time to annihilate humanity, so be it. Oh, and "socialism!"

[Countme?]

It's a shame TARP bailed out the too big to fail mortgage, investment banking, and insurance business, too.

The worldwide financial chaos, poverty, death, and destruction that would have resulted had too big to fail not been operational would have been a tonic and an elixir.

Big piles of dead f*ckers all over the place.

It might have given alternative and perhaps better banking practices a chance to supplant the previously catastrophic system.

Maybe this is a good idea:

http://www.khilafah.com/index.php/the-khilafah/economy/7954-islamic-finance-a-false-dawn

Maybe not.

But we'll never find out now, of course, because libertarians, among others -- as we speak .... today ---- are going to buy off THEIR elected representatives (not mine, I will no longer be represented after today) to regulate better ideas out of existence.