Sunday, October 10, 2010
Geithner Gets One Right
Nice editorial by Secretary Geithner in the Post today describing the myths of TARP. As I've said before, TARP, as it was originally intended to be a safety net for the entire economic system, was a stunning success. It has since been bastardized by the Obama administration, using it as a piggy bank for every union-saving pork project imaginable.
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You really want the Federal Government buying stock in private businesses and telling them how to operate? That's your definition of success?
ReplyDeleteEven the excuse, the financial crisis, only existed BECAUSE of government interference in the private economy. The last thing we needed was more government interference. What these people "fixed" is the Constitution. They made that document one bit more irrelevant.
Look at the Constitution. Can you point to the clause where Congress has to authority for TARP? Of course not.
What TARP represented was another sign of moral decay. A bunch of scared fools panicked and allowed the Washington elite to "protect us". That elite used the financial crisis to grab still more power for itself. Now that elite pats itself on the back and seeks to grab still more power.
Point by point.
ReplyDeleteNo, I don't want the government buying stock in private companies, but I don't want the financial system to collapse either.
The financial crisis did not exist because of government interference. Take the panics and crashes pre-New Deal. Those were caused by cycles in the economy, which are just the price of a free enterprise system. It's not the result of govenerment interference. In fact, I'll bet you can't show me any evidence that government regulation caused the financial crisis (don't get me wrong, I don't like regulation, but I don't think it was the primary cause of the meltdown, either)
Congress has the authority to take any action necessary and proper. TARP was both.
TARP is a sign of moral decay? Really? I don't put Hank Paulson in the same category as Lady Ga Ga.
Lloyd - People argue about what causes economic cycles. For good reason, lots of people, like myself, think economic cycles are driven largely by government interference in the economy.
ReplyDeletehttp://citizentom.com/2009/02/09/the-stupidity-cycle/
Now look at what you say Congress has authority to do, "any action necessary and proper." For all practical purposes, you have just said the Constitution does not matter. Do you really want Congress to do anything to the economy Obama thinks necessary and proper?
Look at the housing market. It use to be hard to get a loan. In a strictly private economy, banks cannot make money unless almost every debtor pays off on their loans. Government interference changed that.
What caused the housing bubble? Our government bought bad loans. Fannie Mae and Freddie Mac are government sponsored agencies. When they bought bad mortgages from lenders, they encouraged lenders to make bad loans. When they soled that debt to others, there was an implied guarantee that they would make good if the debtors failed to pay up.
Thus the balloon expanded. When oil prices went up, the stress on the debtors caused the balloon to pop.
"Now look at what you say Congress has authority to do, 'any action necessary and proper.' For all practical purposes, you have just said the Constitution does not matter."
ReplyDeleteDude, that IS the Constitution!
Lloyd - Somehow I expected you to say that. :-)
ReplyDeletePut 'any action necessary and proper.' in context. See Article 1, Section 8, Clause 18.
"To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof."
Where in Article 1 is Congress empowered to buy automobile companies, mortgages, write health insurance policies, sell retirement insurance.....? That all comes under regulating interstate commerce, right? Do you really believe that is what the Founders intended?