Now that tea bagging has failed what is next for the right wing?

[Ramo]

Because most of the bailout money purchased equity and assets which will eventually be sold, recouping certainly most, if not all or more of the initial outlay.

Most is very likely. But we're in the hole significantly more than than the $700 billion due to TARP. Lots of money from the Fed (i.e. all that quantiative easing and the 85% insurance in the Geithner plan), large appropriations to the FDIC, plus who knows how many much more directly to Treasury. An order of magnitude less than the stimulus means virtually everything is returned (in real value). Which is a possibility, sure, but not one that I have that much confidence in.

Wondering about your stimulus objections. What are your specific problems?

[Ramo]

a) I doubt that the fiscal multiplier is anything even close to 0.5.

What do you think is a realistic upper bound for fiscal multipliers? What would you associate with, say, unemployment insurance and food stamps?

And do you include or exclude the AMT fix (1/7 of the total) when considering the stimulus?

c) I'd speculate that NSF funding has an even lower return. Probably negative. In other words spending a dollar in general on the NSF costs the government more than a dollar.

That's why I mentioned the time scale. You don't think the NSF is a good long term investment?

NIH? Health IT? Alternative energy and mass transit funding?

[The Mad Monk]

Man their signs are loony

JM

I'm curious. Which signs do you find "loony"?

[Imran Siddiqui]

Yeah, I am mad about this too. I voted for a republican last time because he voted against the bailout last fall.

Jon Miller

[chequita guevara]

voting GOP
voting Democrat
Voting Socialist

[KrazyHorse]

You don't think the NSF is a good long term investment?

No.

NIH?

Mostly no.

Health IT?

Possibly

Alternative energy and mass transit funding?

DEFINITELY no.

[KrazyHorse]

But we're in the hole significantly more than than the $700 billion due to TARP. Lots of money from the Fed (i.e. all that quantiative easing and the 85% insurance in the Geithner plan)

The Fed should make public that they will monetize any debts incurred due to quantitative easing.

large appropriations to the FDIC, plus who knows how many much more directly to Treasury. An order of magnitude less than the stimulus means virtually everything is returned (in real value). Which is a possibility, sure, but not one that I have that much confidence in.

I have actually a decent amount of confidence that the gov't will turn a profit on the TARP. Not, however on the latest Geithner plan. That seems like a giveaway.

[KrazyHorse]

And do you include or exclude the AMT fix (1/7 of the total) when considering the stimulus?

I am AMT agnostic. You can drop that out of calcs if you'd like. The point remains.

[Ramo]

You don't think the NSF is a good long term investment?

No.

NIH?

Mostly no.

That strikes me as a fairly radical position. You really think that basic science is a bad investment? Um. Why?

[KrazyHorse]

That strikes me as a fairly radical position. You really think that basic science is a bad investment?

a) Yes, I think basic science tends to be a bad investment.
b) Even if it were not a truly bad investment on its own terms I think that government subsidization of basic research leads to a large opportunity cost as scientists who would be better employed elsewhere are instead allowed to indulge themselves. In other words I think that the cost of paying scientists to do basic research is lower than the true marginal cost of pulling these people away from other forms of work. A large part of the compensation to doing basic science is non-moneatary

[Dinner]

Man their signs are loony

JM

Yep.

[Jon Miller]

I am still unsure as to whether the bailout was a good idea or not.

Given what has happened since, I am leaning more toward it being a good idea than previously. I am leaning against the stimulus package (which is of course going to end up costing the US taxpayer at least an order of magnitude more than the bailout).

The stimulus package does a lot that I want to happen. It doesn't do stimulus though.

The bailout didn't do anything I wanted it to.

JM

[KrazyHorse]

The bailout stopped, I think, chain collapses of banks. And the loss of a large fraction of the banking system would have been catastrophic.

[KrazyHorse]

TARP was basically an exercise in liquidity management. It should have been done by the Fed, but the Fed doesn't have the authority. They should.

[Darius871]

TARP was basically an exercise in liquidity management. It should have been done by the Fed, but the Fed doesn't have the authority. They should.

I'm genuinely curious what parts of the FRA (and its dozens of amendments) grant the Fed authority to lend so many hundreds of billions as the "lender of last resort" and yet denied the authority to do something analogous to TARP. It definitely can't be the distinction between system members and non-members (as the $85B to AIG shows), and my gut impression is it isn't an arbitrary distinction between a "loan" and a "purchase" because the Fed reportedly received not only a security interest in AIG's assets but also immediate vesting of warrants, derivatives, and dividend veto rights, which certainly blurs the line between "collateral" and "consideration" IMHO. What black-letter provisions exclude Fed authority to arrange ~$1B worth of similar transactions in a severe liquidity crisis where Congress dangerously drags its feet, should the Fed so choose?