A Carefully-Planned, Not-At-All-Slapped-Together Figure Pulled Out of Thin Air

Radley Balko | September 25, 2008

I don't know about you, but when this administration says, "just trust us," I think we'd all be justified to run screaming in the other direction.

[White House Deputy Press Secretary Tony] Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough.

That was Tuesday morning.  Tuesday afternoon an article went up at Forbes.com with this passage:

In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number." 

Comments

|9.25.08 @ 9:14AM|#

*shudder*

|9.25.08 @ 9:14AM|#

Wow, that is one crappy spokesman.

Fluffy|9.25.08 @ 9:18AM|#

This is how our foreign policy is run, why wouldn't our economic policy be run the same way?

|9.25.08 @ 9:20AM|#

"We just wanted to choose a really large number."

Trust me. I know what I'm doing.

|9.25.08 @ 9:25AM|#

Maybe he's not such a bad spokesman. At least this way it looks like they're either stupid or honestly stupid.

At least he didn't say "we were choosing a number that we thought was on the low end of what it will actually cost so that we can get approval, even though the number we picked is still really freakin huge," which is likely more the truth.

ed|9.25.08 @ 9:32AM|#

Re Congress and the bailout: If this is not the greatest example in world history of chickens coming home to roost, I'd like to know what is. "Fannie? Freddie? We're in charge of that?"

|9.25.08 @ 9:35AM|#

Wow, that is one crappy spokesman.

Yep. The ones who tell the truth don't last long in the profession.

|9.25.08 @ 9:43AM|#

How about showing us the crisis. I mean stock market is down, some banks are failing, but crisis? Show me why this is a crisis. Don't tell me it will get worse, tell me what will get worse and why it will get and what this bailout will do to fix it.


Every article I read starts from the premise the government must do something, I would like to see proof the government must do something.

BakedPenguin|9.25.08 @ 9:44AM|#

...when this administration says, "just trust us"...

How do they say "fuck you" in Hollywood?

|9.25.08 @ 9:44AM|#

Oh my. Most depressing quote I have read in a week of very depressing news. All I can do is laugh.

shecky|9.25.08 @ 9:50AM|#

In Russia, number chooses you.

|9.25.08 @ 9:51AM|#

Well, I just called my congressperson's office for the first time ever and urged her to vote against any kind of bailout. It was a terrifying experience and I froze, but at least I'm on record.
I also engage in other exercises in futility, like trying to herd cats, and trying to explain economics to my brother-in-law.

dhex|9.25.08 @ 9:58AM|#

epi - is sledgehammer worth watching? it seems like it from the wikipedia description but also, you know, laugh tracks.

|9.25.08 @ 10:01AM|#

I contacted my Senator, Hume Cronyn, I mean John Cornyn, to urge him to vote against this mess. Since my rep is Ron Paul, no urging is necessary.

guy in the back row|9.25.08 @ 10:01AM|#

I think we should drop this democracy stuff and go with a randomocracy, a government of those radomly chosen and forced to serve out a term.

It can't be any worse than what we got, and could be a lot better.

|9.25.08 @ 10:09AM|#

"Since my rep is Ron Paul, no urging is necessary."

You lucky son-of-a-bitch, having a Congress critter who NEVER needs to hear from you!

|9.25.08 @ 10:10AM|#

We just wanted to choose a really large number.

Mission accomplished!

I guess its just a coincidence that this really large number, plus the previous really large bailout, equals the very round sum of one trillion dollars. [puts pinky to corner of mouth]

|9.25.08 @ 10:10AM|#

epi - is sledgehammer worth watching?

Like many shows from one's early childhood, it looms larger in memory than in reality. It still has its moments, but it's completely tame compared to today's fare. Rent it for some amusement, if you like.

"A cop is a one-man zoo with a gun."

Jerry|9.25.08 @ 10:15AM|#

We just wanted to choose a really large number.

Cause this is Am'rica, where we always want to do things big.

|9.25.08 @ 10:18AM|#

Well, that answers one of the questions I had about The Bailout: Where did the $700 Billion number come from? Why am I not surprised that the answer is, "We just pulled a number out of the hat."

Sigh...

ktc2|9.25.08 @ 10:20AM|#

Now would be a great time for the Ds to grow a set of balls amongst them. They could seriously take political advantage of this bailout as the corporate welfare scam it is. Of course, it wont happen they're just as evil as the Rs.

Dagny T.|9.25.08 @ 10:32AM|#

I also engage in other exercises in futility, like trying to herd cats

I'd really advise against wearing Tag bodyspray while so doing. Unpleasant results are guaranteed.

db|9.25.08 @ 10:32AM|#

You see, in businesses or even in family life, when we are faced with large unexpected expenses, we generally look through the rest of the budget to identify what expenses, luxuries, etc. can be foregone in order to cover the new expense.

For instance, maybe we have to give up purchasing piano lessons for a while, maybe drive a little less, perhaps even downgrade or stop the cable TV service.

Show me where the Federal Government is making an effort to reduce non-essential programs to cover this bailout (and the war, etc.).

Oh, wait, they aren't doing that? I forgot, they don't have to play by those rules. They points the gun and we pays the money.

Ken Silber|9.25.08 @ 10:42AM|#

The $700 billion figure is about 5 percent of outstanding mortgages in the U.S. It's an estimate of what portion of assets are unlikely to be paid back, based on historic rates of defaults and delinquencies. It may be right or wrong but it wasn't pulled out of thin air.

|9.25.08 @ 10:51AM|#

Unpleasant results are guaranteed.

"Mac, I'm gonna stop you right here. First of all, your breath smells like an old lady fart passing through an onion."

fyodor|9.25.08 @ 10:52AM|#

Didn't Bush run against fuzzy math? Another campaign promise broken....

|9.25.08 @ 10:56AM|#

How did the $700 billion figure come about? "It's not science to figure out how much is going to be needed to stabilize the firms and the markets," Mr. Bernanke said. The amount is roughly 5% of outstanding mortgages. "It seems like an appropriate size" given the scale of the problem, he said.

Basically, Bernanke doesn't know what will happen as far as delinquincies, so he made a guess based on past default rates. As he said, this isn't scientific, this is a cursory glance made manifest into a large number. They're guessing and they have no idea what the margin of error is.

T|9.25.08 @ 10:57AM|#

It may be right or wrong but it wasn't pulled out of thin air.

Who do I believe, you or the Treasury spokesmonkey? Hmm. I'll go with the spokesmonkey. They may be able to justify it using some bullshit, but the fact is they took a swag at a number and called it good. Nobody has any idea what this will cost.

Fluffy|9.25.08 @ 11:02AM|#

When I compared it to our foreign policy it wasn't just snark.

They just wanted to pick a really big number because they wanted to impress market participants with the seriousness of their proposal.

They're trying to reflate some seriously deflated assets, and to do that credibly they have to sound like they mean business.

It's a psychological number, not a practical number.

So like our foreign policy it's based more on showing "resolve" than on underlying facts.

|9.25.08 @ 11:13AM|#

I knew, deep down, that at some point, we'd actually have to pay for all this stuff.

Anonymous|9.25.08 @ 11:28AM|#

ktc2,

Now would be a great time for the Ds to grow a set of balls amongst them. They could seriously take political advantage of this bailout as the corporate welfare scam it is.

Considering that they engineered it in order to further liberalism (the poor people need homes given to them! bad corporations aren't loaning brown people money!), and considering that they are the party of corporate welfare, I don't see that happening.

But yeah, it's not going to happen because they're evil like rethuglicans, greedy bastards never loaning enough money to poor people.

Don the libertarian Democrat|9.25.08 @ 11:29AM|#

On the one hand it's a figure meant to scare people into acting, on the hand it might be too low. I don't consider that well thought out, and a very good reason to oppose it.

|9.25.08 @ 12:11PM|#

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

So are they going to say "seven hundred billllion dollars" in a Dr. Evil voice? Somehow I think that would be appropriate.

|9.25.08 @ 1:20PM|#

Is that five percent figure intended to mean 5.0%, somewhere between 4% and 6%, or somewhere between 1% and 9%? This may seem like a nitpick, but keep in mind that each percentage point of uncertainty represents nearly $150 billion.

|9.25.08 @ 3:48PM|#

I shudder to think of what the URKOBOLD would do to a spokesman like that.