Video: Cavuto and Ben Stein scream at each other over the bailout
posted at 6:04 pm on November 24, 2008 by Allahpundit
A follow-up to the last bailout post: What exactly do opponents like Cavuto think/hope will happen if we don’t rescue mega-banks like Citi? It’d be one thing if they believed everything would resolve itself after some sort of correction, but my hunch is that they expect the worst-case scenario — a depression with unemployment in the double digits — and greet it as somehow salutary, as a necessary lesson to Americans about spending habits and to financial institutions about recklessness. Maybe I’m wrong. Bailout naysayers, explain to me again why we shouldn’t be doing what we can to forestall a systemic collapse by injecting huge amounts of capital into the market. Granted, it might not work, but if you’re using hoses on a fire hoping to put it out, you’ve at least got a chance. Going the laissez faire way this time feels like standing there and watching it burn, hoping against hope it’ll burn itself out. While reading “The Road to Serfdom,” natch.
Blowback
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Because I would rather have the economy fail than the Government. Call me a radical, but $3TT deficits are not sustainable. See Valejo, CA.
bigbeas on November 24, 2008 at 8:07 PM
…me culvert es su culvert.
Chewy the Lab on November 24, 2008 at 8:08 PM
Allah, are you serious? You don’t understand the “Good money after bad” theory? They are talking about taking (pick a number – the Fed says $2 Trill-with-a-T-ion dollars) and giving it to heretofore private, profit-oriented businesses who have effed up all by themselves, in a Hail Mary play that they quite candidly say they have no idea if it will “save our economy”.
I don’t claim to be smarter than these guys, but that’s a lot of money, and if it does not do whatever it is they think it could/might do, we’re screwed.
Jaibones on November 24, 2008 at 8:08 PM
Brilliant!!
knat on November 24, 2008 at 8:14 PM
I agree, scary, scary times, but we need to knuckle-under and be super vocal (in a cyber-kind of way) to get Chit done!!!
Chewy the Lab on November 24, 2008 at 8:15 PM
Quoting acorcoran discussing Alinsky-ism:
More: Retired intelligence officer shows how Alinsky influenced Obama
heroyalwhyness on November 24, 2008 at 8:17 PM
Sigh, here goes, sorry, let me get my soapbox out and dust it off: Yup, this crap scares me. Badly. But (and I’m as guilty as anyone): quitcherbitchen! Act! Call your congressperson, volunteer ‘fer somethin. Run ‘fer somethin.
Good gosh, if we all band together, what a force we could be!!! Seriously!!!!. Let’s think about the positives for goodness sake! Hate to be Pollyanna-ish but I really do think the old saw (WWJD) should be WWR[eagan]D (Not that I think Reagan is Jesus…jut f’gured those on this site who didn’t know what WWJD means, would get totally befuddled and it could get entertaining.
Chewy the Lab on November 24, 2008 at 8:29 PM
You’re wrong. Hoses on a fire is a bad analogy.
A better analogy is trying to stop a Mack truck with some gauze.
fossten on November 24, 2008 at 8:30 PM
LOL!
We’ve been shanghaied.
FloatingRock on November 24, 2008 at 8:33 PM
Wood working and Jack Daniels don’t mix. At least not with power tools—though chisels can be dangerous too.
FloatingRock on November 24, 2008 at 8:41 PM
What will happen is that all the people who have deep roots in wall street and have our politicians in their pockets will end up OUT of power. New blood will replace the old and that scenario is being ignored.
The narrative is real but fake….Yes, the system will collapse…but only the system being run by the same people (who are STILL in power BTW) that caused it in the first place! The system they are propping up is a dismal failure.
What will happen, if these bailout shills had a pair of balls bigger than peas and refuse all bailouts, is that the old guard will fail and immediately in their place will rise the young Turks.
The politicians will lose the people who get them elected with huge campaign funds and influence peddling. They will be faced with trying to find new money people to whore themselves to, or face re-election on a level playing field against candidates that have better ideas.
I cannot believe that there are people on this blog who are basically suggesting that we should have propped up the old Soviet regimen over the fear of it’s collapse!!! The system was flawed and being run by corrupt people! It needed to go! GOOD GOD PEOPLE!!! Wake the F up will ya!?
csdeven on November 24, 2008 at 9:01 PM
Didn’t Ben Stein say these financial institutions wouldn’t ever get into this situation in the first place? I’d believe Cavuto long before Stein.
Wyznowski on November 24, 2008 at 9:10 PM
Exactly.
*Polishes pitchfork and tightens wadding on torch*
It’s coming…
turfmann on November 24, 2008 at 9:15 PM
Damn! Right said!
mr.blacksheep on November 24, 2008 at 9:22 PM
Yes it is! Allah ignores some basic facts. The initial bailout was supposedly so financial institutions would start lending money again. When they didn’t do that, Congress didn’t go back and demand they live up to their end of the deal- they started figuring out how to bailout other industries. No analysis. No accountablity. No plan! Just billions in tax dollars being squandered in the name of economic recovery.
Allah and the rest of the “we have to do this” crowd need a recalibration of their agendas. Yes, some infusion of cash federal cash is probably necessary but not this no-questions-asked giveaway that is demanded by Allah and others. I’m willing to prop up the American economy but not in this half-assed “just ask” fashion. Show me the plan and the intended outcomes before you spend billions of dollars. When did fiscal responsibility become a bad thing?
highhopes on November 24, 2008 at 9:24 PM
……………. Maybe because the cause of the problem in the first place hasn’t been fixed, and those who caused it are not being held responsible or accountable?
But that’s just …………………. me.
Seven Percent Solution on November 24, 2008 at 9:25 PM
So would I but that’s beside the point. Allah is a very good stone thrower at contrarians but weak on facts in this case.
The initial bailout, caused by the failure of Fannie and Freddie was supposedly to give financial institutions the resources and incentive necessary to start lending again. Instead these institutions marshalled the cash they got and haven’t loosened up in their lending. What did Congress do when their initial plan failed? Did they go back and demand greater loan activity????? NO! They decided to simply “restructure the bailout” and infuse billions more in any and every company about to go under. If I were an unemployed Lehman employee I would be seriously pissed that they are essentially the only big company that has been denied a federal bailout.
What Allah and the rest of the “we need to do this now” crowd refuses to answer is where the analysis, accountability, and plan comes into the equation. Where’s the analysis about bang for the buck? Where’s the accountability so that lenders get federal dollars without any obligation to lend them? Where’s the overarching plan as to why this makes sense?
In Allah’s world, the Feds should just provide the funding to whomever asks without any serious discussion about repayment or purpose. If thinking that there should be more control over how those federal dollars are spent is radical, call me a radical. I really am a fiscal conservative and it doesn’t matter if we are talking hundreds, thousands, or the billions Allah is willing to piss away without purpose.
highhopes on November 24, 2008 at 9:40 PM
Fox stages these screaming matches. Cavuto on Saturday mornings is nothing but 5 people yelling and talking over each other. Evidently it gets ratings. I wish some news program would have a serious discussion as to what is really going on.
I believe the bigwigs know and are not telling us the truth. I’m sure every one but me already knew that, but it still pxxxxx me off. It’s not fair that bigwigs know where to put their money for safe keeping and we are left to take the losses.
huckleberryfriend on November 24, 2008 at 9:44 PM
“Oh noes! These crappily-run companies are too big to fail! We can’t let them!”
Yes, we can.
Harpazo on November 24, 2008 at 9:52 PM
Allah lives in New York City. The human psyche can only endure such a thing for so long before Stockholm sets in and begins its warping work. Urbanites tend toward nanny-style governments rather than minimal government and maximal individual liberty. NYC dwellers are no exception.
(And no, I’m certainly not jealous of NYC or those who live there. Small towns beat NYC with a big, broad stick. Of course, thanks to Giuliani the city finally became an okay place to visit. For a few hours. In select parts. Unless you drove in.)
Harpazo on November 24, 2008 at 10:03 PM
AP,
The problem is that the only solution being proposed is that we throw money at failed companies.
Suppose we give the Big 3 Autos ANOTHER bail out. Is that going to make their business better? Are they going to sell more cars magically because they have taken taxpayer money?
The problem is the government WASTING money. This is a black hole. It is a money pit. It’s like the Congress saying we want to dry up the Atlantic Ocean so that we can drive to England. Try all you want, spend all the money you want, but you aren’t going to dry the oceans with sham wow’s. Plus it isn’t the government’s job to bail out companies that have failed.
The Big 3 are failing because of the business model. They should fail so that we can break up the Union. Otherwise, the bailout will merely pay the union contracts that they hardballed. Toyota, Honda, BMW are all doing fine WITHOUT unions.
A bailout prolongs the pain that needs to happen. Union contracts must come in line with the competitive wages in the industry.
AP, throwing more money at it is a fantastic solution. . . as long as it isn’t your money.
Here’s the problem too AP. . . INFLATION. It isn’t a concern right now because of the downturn. But when it turns back around, it will skyrocket uncontrollably. If you give everybody money to make sure they don’t go broke, then the value of the money you give to them is worth less.
They are going to create a NEW bubble with these programs. Bad banks should fail. Bad companies should fail. They need to destroy homes that are foreclosed to eliminate the glut in the market. Destroy the foreclosed homes and the values will stabilize.
ThackerAgency on November 24, 2008 at 10:10 PM
I agree. Hayek would have flipped out when Carter passed the damn law; now the government is just trying to fix the damage the government itself caused. I hope they can, before they destroy us.
At some point, they have to repeal the phony credit standards and restore sanity to the mortgage market. Until then, they are throwing good money after bad. And they probably will do this until there is a collapse because not one person in DC has the guts to demand what’s really needed.
PattyJ on November 24, 2008 at 10:10 PM
I believe the operative word here is fear. Now that we’re all panicked, terrified and the sky is falling, we’ll welcome the HUGE government expansion and intervention. Besides, why should we trust the same government who got us into this fix to get us out?
alwaysright43 on November 24, 2008 at 10:16 PM
Naysayer: Because the march to Socialism will have a worse and longer lasting devastating than the alternative.
- The Cat
MirCat on November 24, 2008 at 10:18 PM
Besides it’s a a kick the anthill over sort of thing.
- The Cat
MirCat on November 24, 2008 at 10:19 PM
You were doing great right up ’till that last part.
FloatingRock on November 24, 2008 at 10:20 PM
One can try.
Practical problems:
1. The money has to come from somewhere and since the Feds have none of their own, they must borrow (bad), tax (worse), or inflate (worst of all) to get it.
2. The money govt gets, apart from being taken (in some form) from private citizens, is — by definition — going to be put to a use other than what the market has decided it should be used for. All history and sound economic theory says that the govt is NOT smarter than the market about how to allocate investment.
3. It creates massive uncertainty. Private investors can not know what the govt will do next (they don’t know themselves). That keeps private money on the sidelines.
Moral problems:
1. The money does not belong to the government. To remove it from private citizens — for any purpose, no matter how allegedly practical, noble, or desirable — is theft, pure and simple. Govt steals all the time, but it’s never a good idea to encourage it. The more they steal, the worse the problem becomes.
2. Moral hazard — risks have to be borne by private individuals who do not run their businesses in ways the market says are good. Otherwise, irresponsibility is encouraged.
3. It violates property rights for the govt to take the money.
4. It is simple injustice for the govt to even be talking about taking money. It presents the idea that they are rulers and the people are subjects.
Legal problems:
1. It’s unconstitutional. (Violates 5th Amend protection of private property; Violates 9th Amend.)
2. It’s ex-post facto legislation.
Need I go on? Please, please, please try to stop being a pragmatist for five minutes. Stop thinking in terms of ‘social utility’, making the pain go away in days, etc. etc.
Please study some sound economic theory, then study the history of the depression (and the rest of the 20th century) and ask yourself whether that theory matches the history.
Mises, Hazlitt, Rand, Rothbard,… start anywhere!
The laws of economics (though less well known and harder to quantify) are no more flexible than the laws of physics.
JDPerren on November 24, 2008 at 10:20 PM
If the economy tanks, depression style, it can and will come back. When we give in to “a little more socialism to save the economy” how hard will it be to drag the feds, kicking and screaming, from the institutions they’ve swallowed?
Damn hard.
pugwriter on November 24, 2008 at 10:22 PM
I don’t get it: Ben Stein was on CNN before the election stating that Bush and Co. had destroyed American Capitalism and they need to go back to smaller government…a few weeks later, he’s now saying we need to spend more?
Ben, what happened to you?!?
Richard Romano on November 24, 2008 at 10:47 PM
OT: But I was once criticized for using that term by a PC-public school-influenced self-righteous prig who said that it was racist because it implied criticism against the Chinese. I just rolled my eyes.
onlineanalyst on November 24, 2008 at 11:02 PM
What forestalling? This exact same scenario has played out before Allahpundit. I do not keep posting “It’s 1976″ for no reason. But it is not 1976. We are not 50% of the world economy anymore. We are 22% and we are a debtor nation we will be cut off from borrowing, the world no longer needs us. After we raised our interest rates to save the currency foreign nations still lent us money. We will see massive inflation. We will see sky high interest rates. This is a delay of the inevitable for political reasons. The choice is delaying the inevitable for an even bigger collapse. Allahpundit the Fed seems to be tanking the dollar on purpose. They are proping up these banks and you know what they are going to invest in? China. Bank of America has already done it. These a-holes are getting good paper to invest in profitable markets. The bankers get good money to invest and the government gets the bad debt then the Fed tanks the dollar and the people that bear the brunt are you and I through inflation and high interest rates. Get it?
Might not? Can you find anyone describing how it is going to work? All I ever hear is that it is neccesary. Beyond that no one in favor of bailouts is explaining the inflationary consequences. You are trying to put out a magnesium fire with a garden hose. You sure are pumping a bunch of water but it is still burning
Theworldisnotenough on November 24, 2008 at 11:08 PM
Based on his overoptimistic “buy” recommendations from a year or two ago he likely has a vested interest in one or more of these faulty companies now requesting a bailout.
Everybody, let’s bail out Ben Stein!
Not…
FloatingRock on November 24, 2008 at 11:11 PM
Who let the comedian in?
Good one! :)
Sapwolf on November 24, 2008 at 11:51 PM
“It’s a buying opportunity especially for the financials maybe…I’ve never seen before in my entire life.” -Ben Stein
FloatingRock on November 24, 2008 at 11:52 PM
There is NO guarantee or even anyone that will promise this “bailout” will do anything but delay the inevitable. This “bailout” is not a fire hose on a fire its a nothing more than a asbestos suit for the idiot execs that made bad business decisions causing this thing to begin with.
Capitalism has natural cycles of up, down, and flat. The top tier took on to many high risk high return loans, lived to high on the hog, got sloppy, and made all round bad business that made them unable to survive the next down cycle. The natural order should have seen those no longer top tier preforming execs/businesses be replaced by the 2nd or 3rd tier who were grunting and did good business. That 1st tier should have been allowed to crumble and be eaten by the lower tiers at pennies on the dollar.
The shock of this natural down turn would have been hard yes, (largely due to government meddling in the economy in the first place). Yes a large shuffle of money/power would have taken place. But at the end of the day the 1st tier would have been the strongest and not some old washed ups that only survived because they were a known quantity for regular campaign donations and new how to work the 8th hole.
Our forefathers left, fought, and then bled for generatia to fight the ideals of the ole country of noble classes and certain families/companies that were considered irreplaceable above the normal rules of law, business, man. This is foundational stuff!
WE ARE ALL SUPPOSED TO BE EQUAL ME YOU HIM HER NO MATTER OUR LAST NAME OR ECONOMIC STATUS. THE BAILOUT CHANGES THAT PRINCIPLE WE ARE NOW PEASANTS THATS DAILY FAILURE IS IRRELEVANT BUT FORD, AIG, CITI, GM, ETC…. WHY THEY ARE NOBLE, IMPORTANT, OF A HIGHER ORDER.
Without our foundational ideals we are nothing and bound to nothing.
C-Low on November 25, 2008 at 12:20 AM
The pork in the first obscene bail-out exposed the un-seriousness of Congress about that supposed crisis. Or they are just psychopaths. Bush should have vetoed it, but he sided with Congress.
Looking at all the bad decisions of this administration, it becomes harder to believe he’s not deliberately trying to wreck this nation. A magic eight-ball would randomly produce more pro-American decisions.
If these bail-outs are such a good thing, would they pass if the corporate slime at the top were forced to bet all their real assets and paper profits (or gold, more likely) on a positive outcome for the American people?
Is their any benefit (other than personal satisfaction) in pulling investments out of scum corporations (internationalist cheaters, illegal alien caterers) and putting them into honest companies that build things here, and whose executives don’t loot the company?
Feedie on November 25, 2008 at 12:22 AM
My prediction:
This bailout will only delay and worsen the inevitable. However it will give the failed rich that ran their companies into the ground some moving money. The politicians well anyone that thinks they went into a literally 24 hr non stop session without some serious graft is just idiotic. Never in my life have I seen such not 9-11, GW1 or 2, Bosnia, Recesion, Boom, Bust, NEVER in my memory. But when their is 700 billion in slop on the table all bets is off and even hogs understand they don’t have to fight while they feast (plenty to go around).
We have been sold out and this 700 billion bailout which I think Bloomberg earlier today called somewhere around 7 TRILLION will only deepen that natural downturn and will go down as the largest single robbery of nation ever done without bloodshed.
C-Low on November 25, 2008 at 12:32 AM
Don’t bet on that one. If the bailouts don’t work and the country goes into an extended tailspin like the Great Depression there sill be some bloodshed. It is just left to be seen who will be shedding it. Americans are pretty fed up with their government and the graft that is taking place. An event like that would trigger a big time response. I only fear that the result will be similar in tone to the French Revolution and that the result may not be what we would hope for.
Hawthorne on November 25, 2008 at 1:11 AM
None of these guys knew crap before it hit, and they laughed at people like Schiff, so why are we listening to them now.
DFCtomm on November 25, 2008 at 1:14 AM
There’s the rub. It’s an unaccountable one-party elite, openly giving us the finger, and no visible democratic means of pushing the reset button. Even if they deserve it, “be careful what you wish for” remains a good rule-of-thumb.
I’m keeping faith in our system for now, but there are so many idiots who vote based on envy or what makes them feel good that I question the universal franchise. Robert A. Heinlein comes to mind, but I can think of some plausible variations.
Feedie on November 25, 2008 at 1:50 AM
Excuse me but I know what my neighbors in the auto industry make, but can someone explain to me what exactly Wall Street manufactures and how it’s at all akin to creating wealth by turning raw materials into finished products (or by mining or growing things)?
rokemronnie on November 25, 2008 at 2:20 AM
Maybe I’ve missed something in the news or on this discussion thread, but I have yet to see anybody in government admit to the real reasons for this mess (government interference and illogical mandates), yet to hear a single banker admit to a single mistake, and yet to hear a single Congress critter suggest FIXING anything with the mistaken legislation and faulty Congressional oversight that got us into this mess.
All I hear about is flushing our grandchildren’s future down the toilet by mortgaging the gross national profit of 3 generations.
fred5678 on November 25, 2008 at 2:21 AM
Hey Allah… I think thecollegepolitico.com might be going under soon. I’ve been losing readers lately. Maybe you should send me your readers to keep me afloat?
I mean, yea, sure, I may not have been posting enough. And yea, my recent posts may be convoluted and my research may be lacking. But if I go under… there wont be any college conservatives left.
All you need to do is convert the front page of Hot Air to redirect everyone to thecollegepolitico.com and the world won’t collapse in on itself.
.
.
.
.
.
Well… that is until next time when I’m gonna need hotair.com and michellemalkin.com to bail me out because I learned absolutely nothing from this. And your decision to artificially prop me up will, inevitably, lead to a far greater down fall for everyone in the end.
And in case you’re sitting there thinking “they have definitely learned their lesson” here’s a fresh tip: Paulson is seeking to end market readjustment and make credit easier to get
thecollegepolitico on November 25, 2008 at 4:37 AM
Let me understand this … We didn’t do enough in 1929 so we should OVERcompensate by OVERdoing it in 2008?
Sounds like someone has OVERdosed on Kool-Aid.
Done That on November 25, 2008 at 5:05 AM
Using a fire hose on a fire is only useful if you know what caused the fire–if the fire is oil, for example, a hose in only going to make it worse.
The politicians suggesting we just keep hurling money at this problem either haven’t a clue about economics (or that little technicality called the Constitution), or are willfully denying the cause of the problem (or both). The last thing they should have is a fire hose in their hands.
DrMagnolias on November 25, 2008 at 5:59 AM
I am not going to read all the comments, but I will say that I do not remember Cavuto or anyone like him warning that anything like this was going to happen. Back when the DOW hit a record high they were not saying it was all crap. Oh nooo, they were congratulating themselves on a great market.
The only people I remember showing any real concern about the impending collapse of financial markets was McCain in 2005 when he tried to reform the system, and Bush in 2003 and several times afterward when he tried to move Fannie Mae to Treasury to clean up its books.And how much support did they get from the let them eat cake people?
Zip. Nada. Zilch. Now if they had somehow been able to tie it all up with ties to Harriet Miers or Dubai or Mexico, a lot of these guys might have given a rat’s behind. Otherwise they had nothing to say on the subject.
And Cavuto is a pretty rich guy himself. He might not care what happens to the rest of us, but if people like Cavuto have their way a lot of American taxpayers are going to suffer. They forget that part. There is something worse than paying income taxes, it is not having the income to pay the taxes on.
So unless and until some of these people can come up with a better plan, maybe they should ease up a little on the moral outrage.
Terrye on November 25, 2008 at 6:48 AM
ahahahaha “it’s keeping people ALIVE!”
if only we could eat the paper the Treasury is printing…
lodge on November 25, 2008 at 6:53 AM
My beef with it – both from a Congress and a bailed-out business perspective – is that the guys that f-ed this up in the first place are still in charge. *that’s* my beef with the bailouts. Any reason to expect that these same idiots will get things fixed with more trillions of our tax dollars after having not been able to make it with their own money.
No.
Midas on November 25, 2008 at 8:22 AM
I don’t understand. What are we doing, throwing IOU’s at IOU’s to bail out companies who deal in IOU’s and is it true that one of our large creditors (China) is beginning to want to cash in our IOU’s???
My pea brain thinks that we stopped producing wealth when our manufacturing base bailed out of America for cheap foreign labor.
Didn’t the Second World War pull us out of the last depression? Hmmm.
Ernest on November 25, 2008 at 9:23 AM
Capitalism works.
Rejiggered capitalism with the Government pulling the strings has never worked and will always fall prey to the law of unintended side-effects.
hillbillyjim on November 25, 2008 at 9:26 AM
This naysayer thinks it’s important to point out that the hose is not coming from the fire hydrant but from the fuel pump.
shick on November 25, 2008 at 9:32 AM
That infusion capital comes from the present economy through T-bills and from the future economy by way of inflation. Prove to me that the price of “bailouts” is less than a systemic failure.
The economy is thre legged – supply, demand and finance. I’m not against propping up one leg, but holding all three is akin to holding yourself up in a swing by the chains, thinking you can take your feet off the ground.
We were first going to “fix” the credit crisis. OK. But now, for that to work, we have to bail out the producers (automobiles, and maybe others) and debt-riddles consumers (economic stimulus packages). We’re attempting to make an economy out of nothing.
If people are buying less, the supply side should manufacture less and the financial side should finance less purchases and fewer investments. This is not a point in our history where increased investment will usher in an economic recovery. This is a pure supply-demand issue with debt loads being a heavy burden regardless of whose shoulders are burdened by that debt, government or business.
shuzilla on November 25, 2008 at 9:40 AM
The Irish in me says I should answer this with a question.
What makes this different from the Robert Mugabe school of economics?
If we just print more money, we can pay off our debts. Oh, and make a single square of toilet paper more valuable than the U.S. Dollar.
BKennedy on November 25, 2008 at 9:48 AM
Your post is ignorant on so many levels it’s hard to figure out where to start.
First off, Cavuto is a reporter not a politician. Public policy isn’t part of his job.
Secondly, McCain was NOT the lone voice in the wilderness warning of impending doom. That little bit of propaganda came out cranky old bastard’s recent campaign.
Finally, how in the hell do you know what Cavuto is worth and how much he hates the little people? That’s nothing but your perception and you have nothing to back it up but your own ignorance!!!
highhopes on November 25, 2008 at 9:49 AM
Granted, it might not work, but if you’re using hoses on a fire hoping to put it out, you’ve at least got a chance.
Nice analogy, but an imprecise one.
It’s more like giving a man who has internal hemmoraging going on. Yes, you need to give him a blood transfusion to keep him alive.
But if you don’t fix the root cause, he’ll still bleed to death. And at some point, the Chinese and OPEC nations will stop lending us money.
What happens then?
However, now that we own Citigroup, it should be chopped up into sellable pieces, and the sold to interested buyers.
I R A Darth Aggie on November 25, 2008 at 10:17 AM
Have you a mirror in your house? If so, you might want to use it before you post again.
hillbillyjim on November 25, 2008 at 10:28 AM
Ben Stein said Peter Schiff was FOS. Who was right there?
BrianA on November 25, 2008 at 10:41 AM
Because the “capital” isn’t real which is how we got here in the first place. The C.R.O.’s that are bankrupting many of these companies basically produced illusionary assets for these companies, the ever escalating housing prices were artificially boosted by imaginary worth. Now a federal government with no no real money of it’s own will print up money backed by faith in the country to artificially give value to valueless companies that cannot stay afloat themselves, like auto companies.
For this to work the entire world has to play along, which they did when American consumerism drove their economies. Once we start spending less as we save and our taxes increase why would China continue loaning us money. When they stop what exactly happens?
Some people need to fail so the rest of us don’t. My wife and I save our money and have been screwed by low interest rates. But once the house of cards this economy was comes down we and millions of people like us could weather the storm unless we are on the hook to keep GM alive with extra taxes. The bailout spreads the misery to every single one of us, no bailout effects people who got themselves into trouble.
Rob Taylor on November 25, 2008 at 11:21 AM
I don’t greet it as salutary, but rather inevitable. The first bailout, predictably, isn’t doing anything but throwing this country further and further into debt, without fixing the underlying issues. Throwing money at Citi for acting irresponsibly does nothing to correct its behavior. Instead, it rewards Citi and sends the pretty clear message that Big Daddy will always clean up your crap.
A severe economic contraction is unavoidable at this point. All we’re doing with these bailouts is flushing money down the toilets and exacerbating the problems. And I don’t see the proponents of the plan displaying much economic acumen. Instead, they’re relegated to running around screaming that “the government must do something”. Forgive me if I see that as a bug, not a feature.
Physics Geek on November 25, 2008 at 11:48 AM
American taxpayers are already suffering, and will continue to suffer under the ongoing contraction. Tossing money onto the blaze of staggering national debt without any reform of the fubared system is beyond stupid.
Maybe something does need to be done, but it sure as heck isn’t this.
Physics Geek on November 25, 2008 at 11:57 AM
Terrye this is a nice, but long, article about some of the people who saw it coming.
DFCtomm on November 25, 2008 at 12:07 PM
Ben,
The Government WAS involved in the 1929 collapse of the Great Depression. They messed with the money supply.
Tim Burton on November 25, 2008 at 12:13 PM
“Don’t just stand there, Do SOMETHING” is the chorus from the anthem of the stupid.
Printing money leads to inflation.
Supporting businesses that do not profit does not help the economy.
I didn’t realize that there were so many “conservatives” who mirror the reason & logic capacity of liberals. If the auto industry fails and the banks contract, it will be hard on all of us. But the pain of general Inflation will mean that we all feel more pain than we would of a contraction of failing parts of the economy.
StartinOver on November 25, 2008 at 12:24 PM
Read Thomas Sowell’s column at NRO today.
1. Things aren’t nearly as bad as the media says.
2. When Herbert Hoover had the government intervene it made things worse.
3. When FDR had the government intervene even more – it made things even more worse.
My own two cents:
We’re giving money to companies to keep their failed businesses going. These are basically giant sub-prime loans to companies who don’t qualify.
There are companies out there with cash. Wonder why they’re not stepping in to acquire these companies? Because they’re failures.
Just like the education system, throwing more money at the system won’t make it successful.
nlj on November 25, 2008 at 1:24 PM
Ok, so in the past 2 months we’ve spent 7 months of the entire GDP of the country on bailouts; with more to come (I’m not sure the new 600 billion today is covered in the 7.74 trillion racked up in yesterday’s Bloomberg report, so maybe 9 months now)…
So, in one quarter we’re going to spend not just the income of the U.S. Government; but the total income of the U.S. to stave off financial ruin. And next month will we have to spend another 3 trillion?
At some point you’re printing money like Zimbabwe, shooting for 5-7 digit inflation and taking the country into the toilet. You cannot spend more than the country’s GDP on Government spending every year and have an economy. It just isn’t possible.
As soon as you head that direction; every foreign country/national invested in T-Bills will rethink their investment; and the 6.3 Trillion of privately owned Government debt comes due as a new cost.
So the Government will find it will have to print 8 trillion dollars for the bailout so far, and 6 trillion to cover payouts on private debt, and who knows how much for bailouts just from now until New Years… maybe another 3 trillion?
When the Government spending exceeds the gross income of the nation as a whole you’re heading for trouble. When you spend triple the income of the nation as a whole (as we’ve done for the last few months) you’re insane.
That would be like me thinking I need to do something, so I spend my entire annual net income before taxes every month for 3 months… any bets on me avoiding financial ruin if I try this?
Finally, even if the economics worked (and they don’t) business is a competition. What we’re doing is favoring those with a losing strategy, losing money, and a losing business plan and helping them compete against everyone who was winning.
We’re supporting the losers and idiots and killing the winners in the process; rewarding failure and punishing success at every turn. We’ll preserve Ford and kill Nissan… and that can’t be a good plan.
When you cheat a race and let the slow fat kid win, you’re not encouraging anyone to run faster; you’re making everyone realize that running is for suckers…
And the Government is doing the same thing for work, success, business plans, responsibility, and leadership.
These are a fool’s game now; what you need is to go wild with the stupidest riskiest plans possible to may be either hit it big enough to pay off the Government and put you in the lead; or lose big enough to rate a bailout.
How the hell is this a good plan? Bailout supporters; given that we’ll spend 18 months of the GDP of the nation; or 5+ years of the country’s entire tax income to hold off the collapse for 4 months… what happens then? Do we spend another 12 trillion? And how, in any possible world can we ever pay back any of this? Who would loan us money ever again if we do this?
Would you loan Zimbabwe 2 trillion Zimbabwe dollars? Even if it only cost you $10 U.S.? Of course not; when they pay you back 10 trillion Zimbabwe dollars won’t be worth a penny.
But the U.S. dollar is going to go the same way at the rate we’re going. How can this work?
gekkobear on November 25, 2008 at 2:18 PM
If you let a free market be free, you get intermittent recessions. Two steps forward, one step back.
If you try to keep a free market from being free by inducing behavior with government intervention, you get sustained depressions. The law of unintended consequences becomes the driving force. Systemic thrashing ensues.
The credit markets are freezing for a reason. You don’t unfreeze them by pouring boiling water on them. You let them warm up over time, allow companies to restructure. An unsustainable growth rate cannot be sustained by government intervention. It just causes the normally turbulent, elastic system to vibrate out of control and break down.
spmat on November 25, 2008 at 4:04 PM
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