Andrew Sullivan Defends TARP, Criticizes Libertarians for "utter disengagement" with "political reality" (Like That's a Bad Thing)


Get out of town!

Responding to my post from yesterday that attempted to discuss the apparently non-newsworthy topic of what Christine O'Donnell actually campaigned on in her successful Senate primary run in Delaware, Andrew Sullivan lasers in on my description of the defeated Mike Castle as "just another TARP supporter":

Does even the most devoted libertarian really believe that any responsible president of any party would not have tried to save the economy from a total financial meltdown? Do they recall that the Congress initially did turn it down and then changed its mind? And would it be possible for them to acknowledge that the bank bailout seems to have been far more successful than almost anyone believed at the time?

As readers know, the Dish is very libertarian-friendly. But sometimes they drive us nuts with their utter disengagement with, you know, political reality.

Taking those in order, with the caveat that I'm hardly "the most devoted libertarian":

1) When you assume as axiomatic both a looming "total financial meltdown" and a presidential ability to "save the economy," the only drama left is the final number of digits on the blank check. From inarticulate fears and unrealistic savior-dreams come panicky, incoherent, power-aggrandizing policies whose details don't matter to their biggest supporters, as we learned the hard way twice under George W. Bush. Let's recall the nightmare scenario that the 43rd president said would rain down on our heads unless Congress took "immediate action" to pass TARP:

Nope, still don't miss you

More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically. And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs. Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And ultimately, our country could experience a long and painful recession.

Anything on that list not happen after Bush got his way? Yet the people who were warning about the dire long-term consquences of nationalizing downside risk, of granting vague yet colossal and open-ended powers to the executive branch and Federal Reserve, of continuing to artificially prop up housing prices and kick difficult decisions down the road, it is these people who the Andrew Sullivans of the world want to portray as blind devotees of an unworkable faith, impervious to reality. I invite anyone who thinks that way to read our coverage at the time, including this Sept. 25, 2008 roundtable of free-market economists discussing TARP and other potential government interventions. There you will find people scrambling in real time to put hard numbers and economic principles on fuzzy notions like "total financial meltdown," and concluding frequently that some things needed to be done by the federal government, just maybe not an Iraq War-sized toxic assets fund that never got around to buying up toxic assets.

Note duct tape

2) Yes, we are more than aware that Congress changed its mind on TARP, after arm-twisting from the president and authoritarian hysterics from the likes of David Brooks. I have no idea what that's supposed to add to a debate about TARP's effectiveness two years later.

3) It is not remotely true that "the bank bailout seems to have been far more successful than almost anyone believed at the time." You don't need to take my word for it; just re-read that Bush quote above about what the bailout was designed to avert. That was safely mainstream opinion in the fall of 2008. Meanwhile, as Tim Cavanaugh pointed out yesterday, ongoing skepticism of TARP's effectiveness probably has something to do with the fact that "performance of the economy has been even worse than interventionists claimed it would have been without any intervention."

4) As for "utter disengagement" with any kind of reality, let alone "political," I for one am always happy to plead guilty, since reality bites (or at least the movie did). But even so, I prefer my version of realism to a Sullivan Planet where cash-for-clunkers was "right" and "helpful," the administration's economic policies "are defensible for the large part from the perspective of the actual circumstances we face," and where Obama and the Congress "should both get the benefit of the doubt." The world just doesn't look that way through my eyeballs, no matter how hard I squint.

While I don't begrudge Sullivan or anyone else adapting their political and economic views to changing circumstances (or even just for the hell of it), I'd find the arguments a lot more persuasive if he (and they) dropped the pretense that it's only their opponents who are being ideological in any given debate. Do-something mentality, "pragmatism," and deference to power can all be just as ideological as libertarianism, even if they don't have their own seven-syllable descriptors and bad taste in prog-rock. More pressing to the matter at hand, they can be wrong, and they usually hold the power. It's gonna take more than the absence of bread lines to make me believe this particular P.R. campaign.

NEXT: Wait—There Are Other Sites Selling Sex?

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  1. You deserve all the stupid you get if you stoop to reading Sullivan.

    bad taste in prog-rock

    Fuck you, Matt. Fuck you.

    1. I would have wagered being strapped to a Jezzebel poster and being forced to listen to John and MNG go at it for three hours that you would be NOT ONLY the first poster but bring a link along with you.


    2. That sounded Dream Theater after someone smashed their balls with a ball peen hammer…and that ain’t saying much.

      1. Wait, James Labrie doesn’t sound like he’s had his balls smashed with a ball peen hammer (cf. 2:10-2:35)?

      2. Didn’t Steve Morse steal their drummer?

        1. Sort of. Mike Portnoy plays in Transatlantic, a side project with Niel Morse, not his brother Steve.

          They’re pretty good, but far too formulaic.

      3. Dream Theater fucking sucks. I wish someone would emasculate them with some kind of blunt object.

        Hammer Smashed Face

        1. What the fuck is it with bands like this? They sounded good until the singer opened his fucking mouth. Jesus.. get a singer.

          1. It’s Cannibal Corpse. They have a history of sucky vocalists.

            Here’s Chris Barnes.

            NO WAAAAAAR.

        2. Dream Theater is dead.

          And y’all need to stop talking shit about Opeth. They fucking rule.

        3. Hammer Smashed Face

          You too want to smash MC Hammer’s face?

        4. Corpsegrinder’s gonna hurt his neck doing that shit.

        5. Sounds like jealousy Genital Warty.

      4. Are the last 5 words of my comment invisible?

        Dang, I wish we had blinky back, then you’d see.

    3. The keyboard player needs a real Hammond B3. Like this one.

  2. Sullivan is a feeble-minded, fickle, authoritarian douche who fancies himself a back-page intellectual.

    People who give a damn about individual rights should ignore Sullivan, lest we grant him an ounce of attention. (Attention, of course, is what he craves with his inane posts and prattles)

    1. It’s funny how Sullivan went all-in for Bush’s massive expansions of the entitlement state, deficit spending, centralization of authority, overseas adventurism, alarming assertions of executive privilege, blanket use of state secrecy, and assertion of the right to torture enemy combatants and detain American citizens without due process of law. And then he ‘saw the light’, and went all-in for Obama’s massive expansions of the entitlement state, deficit spending, centralization of authority, overseas adventurism, alarming assertions of executive privilege, blanket use of state secrecy, and assertion of the right to kill American citizens without due process of law.

      But don’t worry, he’s “very libertarian-friendly,” after all.

      1. I love Washington DC, and, gosh, darn it, this town cares.

  3. Bad prog? Hmph.
    (shuts off computer and cranks up his playlist of the second Asia album, Aphrodite’s Child, Side two of Tubular Bells, and more than a few Camel songs)

    1. Camel is pure win.

  4. Duh, oh no disengagement with any kind of reality is never a bad thing. Jesus Christ, what fucking adolescent asshole Matt Welch is (especially for his age).

    1. Max! Father Mulcahey has asked you time and time again not to take the Lord’s name in vain! I know how much you enjoy your little praying sessions together, and you wouldn’t want to do anything to ruin that, now would you?

  5. Being a libertarian is never having to grow up.

    1. Seriously, Max?

      *Tries to digest this statement from max*

      Not working.

      Really? Really?

      1. Seriously? Seriously?

          1. Honestly?

      2. “Being a libertarian is never having to grow up.”

        Part of growing up is going out in the world and making friends, Max.

        I know it’s hard, but you wouldn’t be so lonely.

    2. Seeing as how Team Red and Team Blue seem to genuinely believe that money falls out of the fucking sky, that problems caused by government can be solved by more government (or digging the hole deeper), and that its alright to ruin people’s lives so long as you have really good intentions (Drug Warriors, Social Engineers, Tough on Crimers and Rehabilitationists), the libertarians are about the only adults in this messed up romper room called the United States.

      1. You know nothing he says indicates a good faith attempt to engage in any sort of reasoned argument, right? He’s a blatant troll who makes provocative, argument-free declarations in order to get undeserved attention, to which he probably jerks off.

        Don’t be his pron.

    3. And growing up is…what? Trolling?

    4. Cookie! Cookie!

    5. Max, again, please die in a fire.

    6. Oh, Maxie! I hope you never grow up, sweetheart! At least right now it’s the least of my worries.

    7. Love for Big Government means never having to say you’re sorry.

  6. I read Sullivan several times a week, because his blog is full of lots of different stuff, and entertaining to browse.

    Every time I do so, though, I can’t believe how consistently stupid, inconsistent (there’s that word again, I must be an ideologue!), and detached from actual reason his political musings are.

    I can’t figure out what his “philosphy” is – I think he has none. He’s a conservative, right? One of the “serious”, “adult” ones too, right? Is that all there is to it? Tone? Somber deference to the suits in DC who “know what they’re doing” when (their) shit hits the fan?

    1. You want to know his philosophy? He worships power. He figures out who the popular, strong, handsome politician of the day is, declares he’s the one who can save us all, and is a sniveling sycophantic apologist for everything he does for the next 6 years, after which he looks for the next big man to boost for. He might move on from Obama early, of course, if it looks like he might lose power in 2012.

      He is the avatar of everything that’s wrong with America’s ‘political class’.

      1. He worships power.

        Like many in the legacy media, he sucked up to the bullies when he was a kid, and figured out how to do it for a living when he got older.


    2. I can’t figure out what his “philosphy”

      Sullivan assembles it anew every day, based on his biases, prejudices, moods, and tastes. Nothing more. That which aligns with his peculiar tastes is “conservative”; that which does not is not.

    3. Hes about as libertarian friendly as David Frum.

    4. I see the something similar. Every now and then someone says he’s made a good point and I follow it over. But when reading his position you find he’s rested it on such absurd misreadings of just about anyone/anything not to the left all you can do is shake your head.

      I find it depressing to read him. How can anyone considered respectable by the mainstream have such idiotic views of people he disagrees with? He has a more distorted view of his opponents than Ann Coulter does, and at least with her you can hope it’s all an act. The fact that he isn’t laughed out of public commentary tells me there’s no real hope for any kind of better America.

  7. It’s gonna take more than the absence of bread lines to make me believe this particular P.R. campaign.

    On drudge there is a link to a story that 1 in 7 americans live in poverty and that it is a 50 year high.

    Not a bread line but it is close enough for horse shoes.…..98_pf.html…..ab49a.html

    1. It’s gonna take more than the absence of bread lines to make me believe this particular P.R. campaign.

      “Bread line” is so 1930’s. Today we have food pantries.

    2. Actually if you look at the presented poverty data, the poverty rate for ppl 65+ actually dropped to somewhat like 8.9% (don’t know if that’s a record low).

        1. One could argue that Social Security is the only anti-poverty program that really worked. Probably due to the fact that oldsters don’t use the money on booze, drugs, and as an excuse to have kids they can’t afford.

  8. Rejecting the proposition that TARP was necessary to save the economy is not some wacko position that only libertarians adhere to.

    1. Well, it is debatable, you dogmatic piece of shit.

      1. Well, it is debatable, you dogmatic piece of shit.

        1. By the way the above post was the fault of the reason squirrels.

          After the Max quote i had the bestist response ever conceived by man…but now that it is gone i have decided not to repeat its awesomeness.

          I shall instead savor it as it beats its death in my fading memory.

          1. It’s better when we can’t read it, and are forced to imagine what an incredible smackdown it was. The stuff of legend.

      2. Lloyd Blankfein and Jamie Dimon thank you for your support.

      3. Debatable only if you don’t understand economics.

        1. A lot of people thought they understood economics until they realize they had to throw all their beliefs out the window in order to save the economy. Like that pragmatic compromiser George W. Bush and that moderate Alan Greenspan. The adults in power had to admit when they were wrong. The theorizers in the cheap seats have no such imperative.

          1. The Greenspan/Bernanke put. It got exercised.

            Everyone in finance and their dog knew that the Fed would bail them out if the market went south. Risk on. You can understand this whether you’re partial to Stiglitz or Hazlitt.

            The idea that these folks were shocked (shocked!) when the inevitable results of their policies flew right back in their faces makes them either evil or incompetent, not responsible.

            1. I don’t think finance needed Greenspan’s help to underestimate risk. Maybe if they were forced to stay in the business until they were 70 they would have tempered their enthusiasm for short-term gain at the cost of long-term stability. The current retirement age for financiers is obviously unsustainable.

              1. The low interest rates definately helped though.

              2. Do you know what a put is?

                It’s an option that profits from downside, or here, where it’s hedging the business itself, lets you disregard downside risk. It’s not a matter of mispricing downside; dude, you have no downside. If there’s only upside, you might as well bet the bank.

                Also, most banks are run by old people, and their investors are long term-oriented. These were the guys calling the shots, not 25 year-old floor traders. (And bankers and investors here in Japan have an even longer term focus, yet they’re much, much more retarded.)

                If you want to make the argument against OPM (Other People’s Money) in i-banking, sure, I’d probably agree with that, or that banks mispriced certain derivatives, sure. But the killer was that we were leveraged to the hilt, and investors would be far less tolerant of that if we didn’t have deposit insurance for all, cheap money, government-subsidized mortgage insurance, and the confidence that the Fed will reflate some bubble during downturns.

  9. tl/dr: Sullivan wastes time responding to an asshole.

    1. fucking need an edit button on here.

      tl/dr: WELCH wastes time responding to an asshole.

      Sorry, Matt.

      1. Borderline illiterate pre-psych majors call that a “Fruit-n-sleep”.

        1. I thought that said “Fuck-a-sheep”.

  10. “And would it be possible for them to acknowledge that the bank bailout seems to have been far more successful than almost anyone believed at the time?”

    119 banks have failed in calendar year 2010…and counting!

    …it’s the end of the world as those banks knew it, and all of their depositors feel just fine!

    Oh, if only the rest of the failures on Wall Street had gone the way of Bear and Lehman. Sure, it was scary at the time–but for the economy two years later? The lion’s share of those failed assets would already be back in play.

    Now the economy has to fix the aftermath of that meltdown plus all the damage TARP did too.

  11. Why do people come running to libertarian/Austrian economists after they’ve driven the car into a tree, demanding, “Well, ha, your flimsy economic theory couldn’t fix this!” The response needs to be, “Well, I wouldn’t have granted cheap deposit insurance to investment banks and subprime-lending thrifts; held Fed Funds low to reflate a bubble after the tech crash; engaged in arbitrary decisions to subsidize JPMorgan (Bear, WaMu), French banks (AIG), Goldman/Morgan (BHC charters), bad borrowers (HAMP), trading firms (TALF/MM bailout/TSLF/PDCF), and then question why there’s uncertainty in the markets. I wouldn’t have misdiagnosed this as a liquidity shortfall rather than a balance sheet-driven recession. I wouldn’t have built a market where the government takes on all default risk via the GSEs and then pays banks a servicing fee for the privilege. I wouldn’t have funneled cheap money into ARM lenders via the FHLBs. I wouldn’t have done all the things that let financial markets socialize risk and then come running when a private lending-led bubble blew up into a housing meltdown that — as they expected — led to banks getting bailed out by the Fed. You did. Fuck off.”

    Their only solution is to reflate bubbles. I’m absolutely amazed at how many economists think it’s a great idea to prop up unsustainable conditions and “hold until the cavalry arrive.” We’ll be feeling the ill effects of TARP, the bailouts and the stimuli years into the future, and still act with the same confidence that the past was stupid but we’re smart for doing the same thing right now.

    Also, for those who aren’t retarded, we’re on bank failure #119 for the year and there are 800+ banks on problem bank list. TARP didn’t do jack to prop up community banks, so let’s stop this whole why-do-you-hate-your-community-bank strawman.

    1. The only banks which were actually propped up was the “too big to fail banks” who with their guarantee from the government can now access low interest borrowing so they can out compete other lenders who don’t have that government backing. The smaller banks on the other hand are thrown to the wolves since they don’t have the political backing of the establishment.

      So as you pointed out the community banks are just a straw man. Sullivan and other TARP supporters don’t care about them, they are in fly over country.

      1. When I’m visiting my parents I’ll go with them to play cards with their group of friends. One person in that group is the president of the local bank (~15 branches throughout the state). It has been very conservative in its lending practices over the years, and while its growth wasn’t as high during the up years, it has done well (relative to the financial industry) during this crisis. He was furious about TARP. They would have been poised for serious growth without it, and of course they didn’t get a sent.

        So there you go, TARP hurt my community bank.

        Disclosure: I own about 600 shares of said bank.

        1. What bank is that, VGO? When I move back to VT I’ll be sure to get my money in there.

    2. Best post I have read this week, and this thread even includes at least one Shultz post to give you some competition. Kudos, good sir.

      1. Except that he’s channeling Obama!

        “The other party drove this car into a ditch! And now they expect us to pull it out! I don’t mind cleanin’ up after ya, just don’t do so much talkin’!”

  12. Fuck you, Matt. Fuck you.

    The road to Twilight was paved by Opeth, Warty. I watched it happen. I have a flowchart.

    Listening to Morningrise now, knowing what’s come of it since, you can hear the million sparkly purple dildos squishing into the million lardo housewives. Listen. It was always there. We denied it, but it was.

    Opeth did this to us, man.

    1. the million sparkly purple dildos squishing into the million lardo housewives


    2. you can hear the two million sparkly purple dildos squishing into the million lardo housewives


  13. People who adhere to the “TARP has been successful” are idiots.

    TARP was the final portion of the IMPLICIT guarantee the government gave to the financial institutions in the case that their absurd bets went south. So if you think TARP was a success, you think telling CITIBank that the downside of their housing gambles will be covered by the government (err, taxpayers) is also a success.

    Pretending TARP and the implicit guarantee the goverment gave all the banks aren’t part of the same package is like pretending that milk just appears in a jug inside a grocery store.

  14. Total waste of pixels responding to Sullivan.

  15. HALP! I’m herpetically sealed!

  16. As readers know, the Dish is very libertarian-friendly.

    Is this an invitation to fuck up Sullivan comment section?

    I wonder if that back ground image hack will work there?

    1. Sully doesn’t allow comments on his blog. Hardly surprising; he’s an idiot.

  17. Not accepting the benevolence of the authorites through the magnanimity of teh TARP is ….. unAmerican.

  18. …the only drama left is the final number of digits on the blank check.

    Ha! Gotcha there, Mr. Smarty-Pants Welch. By definition, blank checks have no digits, do they? If they did, they wouldn’t be blank, would they? Well, would they?

    But, erm, yeah. Otherwise excellent takedown of Mr. Sullivan’s “argument.”

    1. Well, *someone* eventually fills those numbers in.

  19. Well, I think TARP succeeded beyond anyone’s wildest expectations.

    1. Goldman was the worst victim of all.

      Didn’t want it. They forced them to take it–then they forced them to change their corporate structure!

      Goldman was the worst victim of TARP. The worst.

      They didn’t need TARP for anything.

      1. Victims suffer. How has Goldman suffered?

        1. I think I understand now…

          It was all an elaborate conspiracy masterminded by Goldman to trick the Obama Administration into heavily regulating them.

          …and make their bonus checks smaller.

          Is that what I’m supposed to believe?

      2. Sure. BB&T did’t need it either, right? How many of those failed smaller banks did they buy with TARP? Besides, Goldman got it in the backdoor with the AIG bailout.

        You work for Goldman, don’t you? Rent Seeker!

        1. Oh, and Goldman changed their stucture so that they could access the Fed’s discount window.

          1. “Oh, and Goldman changed their stucture so that they could access the Fed’s discount window.

            That is the biggest joke of all! Goldman didn’t want to be bailed out! They didn’t want the money–and the regulators wouldn’t let ’em pay it back!

            They were forced! By regulators! They were forced.

            Now they’ve been FORCED to be a bank holding company–how do you think the prospect of being stripped of their investment banking operations looked to them?

            An investment bank that can’t do investment banking?

            Whenever thinking about why the investment banks did what they did back then, people need to stop focusing on Lehman and start focusing on Washington Mutual shareholders and Chrysler bondholders… Goldman wasn’t anywhere near as afraid of what happened to Lehman as they were afraid of the Obama Administration’s unbridled stupidity.

            The Obama Adminsitration was seizing assets from whoever they wanted to–it made Bush’s powergrab in the wake of 9/11 look tame by comparison.

            There was no arguing with regulators. We’re talking reign of terror. They were stripping shareholders of retail banks of their assets and forcing mergers with investment banks out of one side of their mouth–and out of the other side, they were screaming for legislation to bring back Glass-Steagall!

            If you think Goldman wouldn’t go back to the way it was–especially after they paid the money back–you’re out of your mind. And there’s no way the regulators would let them stop being a bank holding company now–there’s NO WAY the regulators or the Obama Adminsitration would let Goldman escape their regulation!

            No. Freaking. Way.

            If any of you had been paying attention to all this stuff while it was happening? You’d have already known that.

            Goldman was the victim in all this. And it’s sad to see my fellow libertarians suckered so badly into thinking they were the bad guys.

            Blame AIG. Blame New Century…


            Blame Goldman?

            You’re out of your mind.

      3. BS. See the cheap-as-hell lending facilities I mentioned above. It’s easy to make money as a trading firm when your cost of funds is zero and you have a bank holding company charter that enables you to access the discount window. Without the Fed and Treasury actively propping up the broker-dealer model, Goldman and Morgan would have fared much worse, and it would have been no one’s mistake but their own.

        And this is not to mention the AIG bailout, which gave money to Goldman. Even if you believe they were hedged, you can argue that they sold those hedges at a profit before the extent of the bailout was known.

        Even Wells didn’t really need it, and they sold their warrants to the Treasury for close to 100 cents on the dollar (versus something in the 20-40 range as I recall for BofA, Citi, GMAC, etc.). But they still wanted to hang onto the money until their hand was forced by Citi’s repayment. There’s a reason for that.

        1. Note: The above response supposes that your post was not meant to have <sarcasm></sarcasm> tags.

          1. I’m so not being sarcastic that I don’t understand why defending Goldman could be considered sarcastic.

            The Obama Adminsitration has managed to pull the flagship of American capitalism out of the water–and demonize it–just when we needed Goldman’s expertise the most.

            The way the Obama Administration went about doing what it did was deceitful, and we won’t see the end of the negative consequences in our lifetimes.

            …and there isn’t anything funny about it.

      4. If only they had one of their guys in place at Treasury to protect them. Not just any guy, it would take some balls for this kind of thing — would have to be some unethical weaselly sort of asshole, the kind of guy who cheats on his taxes but wants to oversee the IRS. Well, better luck next time, GS.

  20. Sullivan is absolutely correct. You guys ignore the facts and reality because they run counter to your precious dogmatic narrative. TARP was hardly perfect. It wasn’t enough to magically transform a crashing economy into lollipops and unicorns. But it saved the financial industry from collapse. What would y’alls’ solution have been? It’s easy being a dogmatist when you don’t have to govern, and being a dogmatist naturally entails believing things that aren’t so.

    TARP, imperfect as it was, cost significantly less than the response to the Savings & Loan crisis during Reagan and Bush I (3.2% GDP compared to less than 1% for TARP) for a much bigger problem. Most of it has been paid back. It could have been much better–we could have gone much more socialist–and STILL it is a complete refutation of your nonsense. That’s why you can’t believe in it.

    1. Yes, Tony you are correct; the economy is great. And in other news, you don’t vote for people that institute policies that keep minorities and the underclasses in a vicious cycle of poverty and violence…

      What are you doing here on thursday anyway, isn’t tonight when you are supposed to give your pet corpse mother a sponge bath?

      1. Actually it’s Project Runway night.

        And I specifically said the economy wasn’t made great.

        1. Obviously the economy hasn’t fully recovered, and I did see that you wrote that in your comment, but all of the horrible things that were supposed to transpire without TARP, or the stimulus for that matter, have come to pass.

          Therefore the question is: What the fuck was the point?

          You will no doubt retort that things would of been much worse had these things not passed, fine, but I can’t tell you who would have won on your show had different characters participated. It’s prophecizing the past, Tony, and you know it.

          Now my suspicion, and this is based solely on intuition so caveat emptor, is that TARP, and the stimulus to a lesser extent, were put into place to make sure the big boys had a few more innings to play, when the game was already over. But, that’s what you get when the umps are betting on the game. /torturedsportsmetaphore

          You know in your banker hating liberal heart that I am right too.

          1. Well we both can only speculate on how things would have come to pass sans TARP.

            What did transpire was slow growth instead of the great depression that everyone thought at the time was coming without any action.

            Now the only sensible alternative is more socialism. I know that you can’t possibly tolerate that. But you don’t have to. There’s always something you can find to complain about.

            1. Stigma may also have arisen due to deep public frustration that, whatever the TARP’s successes, it has not rescued many Americans from suffering enormous economic pain. Treasury claims that the pain would have been far worse if the TARP had never existed, but this hypothetical scenario is difficult to evaluate ? in part due to regrettable omissions in data collection on Treasury’s part. For example, since the Panel’s second report in January of 2009, it has called for Treasury to make banks accountable for their use of the funds they received. It has also urged Treasury to be transparent with the public, in particular with respect to the health of the banks receiving the funds. The lack of these data makes it more difficult to measure the TARP’s success and thus contributes to the TARP’s stigmatization.

              1. Stigma may also have arisen due to deep public frustration that, whatever the TARP’s successes, it has not rescued many Americans from suffering enormous economic pain.

                Indeed, the problem is the patent injustice. The people who were “rescued” and indeed profited from the crisis (er. Goldman Sachs et. al) are those most responsible for it.

                Those who have suffered, buth by the the economy, and by PAYING for the bailout … are the responsible taxpayers, people who didn’t invest their money in derivatives market, or in overpriced houses.

                The grotesqueness of the whole thing lies in that. Not only did it not “save” the economy, what it did save was those least deserving of rescure.

            2. There was obviously a decision that needed to be made. Do we go through a lot of pain for a short period of time, or a little pain for an extended period?

              The problem is, that the decision that was made, hasn’t done anything except postpone the inevitable. There are still billions of dollars of toxic assets on the books of the major financial institutions that are marked-to-myth. Eventually, those assets will mature, and show their true value, which is about 20 cents on the dollar. You know what happened to Enron, right? Same thing is going to happen to the banks. It’s inevitable.

              Of course, the Fed could buy all of those toxic assets with printed money, but then they run the risk of hyperinflation, which is a very real possibility.

              The only real way to restore the economy is to flush out all of those mal-investments, and restore the rule of law. Restoring the rule of law against fraud, will encourage investor confidence.

              Imposing accurate accounting standards, stopping high-frequency trading, quote-stuffing and front-running, and prosecuting fraud to the fullest extent of the law are prerequisites to restoring trust in our economy.


              If you don’t like Hayek and Mises because they are on the right, then listen to Hyman Minsky. He was a lefty, like Pauly Krugnuts, only smarter.

              See: Minsky Meltdown.


              1. Mr. Whipple, why not short those banks? You seem convinced you are right. Show us your statements, and then show us all how it works out for you later.

                Are you sure that an instrument can only “show its value” once it matures? No buyer (or seller) could possibly value it at 20% of par before maturity?

                1. Draco,

                  How about we restore FASB 157, and eliminate deferments to FASB 166 and 167 and see what happens? What do they have to hide?

                  The banks, in many cases do not have to show their losses, or mark their assets to market value until they mature, or are sold. You can’t short something that you can’t see. Off-balance-sheet, means off-balance-sheet.

                  Nobody knows for sure if the Fed is loaning to banks like JPM at 0% so that they can buy long term Treasuries at 3-4%, either, right? But everybody and their grandmother knows they are doing it.

                2. Draco: making investment decisions for or against a particular company’s success only works when that success is translated into investor dollars. When investor dollars are instead at the whim of trillion dollar government programs, you don’t want to bet on success, just on lobbyist connections.

                3. They have nothing in common with a free market since they have the almost unlimited backing of the FED and US Treasury. So shorting is not an option because it all about politics not economics.

              2. Do we go through a lot of pain for a short period of time, or a little pain for an extended period?

                More like, do we quit drinking now and suffer through the hangover, or do we keep chugging all the booze we can steal until we die from liver failure?

                Our Enlightened Leaders chose the latter.


            3. I like how you admit firstly that we can only “speculate” whether a particular outcome was more probable, and then seek the wisdom of the crowd to contradict this statement. All this an attempt to bolster former assertions. Wow.

              An aside:

              I have always found it humorous that liberals/conservatives will cite as evidence the beliefs and averments of their party men to further an argument and use the same of the opposition as proof of imbecilic ideas.

              Yes, Tony anyone elected is automatically wise and by extension their appointees enjoy an osmotic acumen. That’s why everyone agreed that we needed to attack Iraq, or further the drug war, or…

              I don’t even know why I’m talking to you, you support a president that thinks your romantic relationships are of a lesser type, not to be afforded the rights of any other American. Sycophant.

              1. Because I know that American politics is a binary situation. Better a liberal who takes a moderate stance on gay issues than a fucking psychopath who is just short of calling for my stoning.

                1. It is only as binary as you make it, Tony.

                  Do you think this conversation would even be happening, you know, the one where we debate the relative merits of our black president’s views on gay marriage if people thought in a binary manner?

                  The only we any of us will be truly free is if as individuals we are each free. When we start dictating it is easy for control to become as a drug; the effects never live up to our collective expectations. But you act as the conservative does, though in a chiral manner. He will give up his economic convictions to accommodate the biblical base view of reality. Whereas the liberal, such as you, will negate all of the good that could be a modern liberal for a Faustian sell out to redistribution of wealth…that doesn’t even work to meet its ends.

                  Excuse me for not bringing up your petrified mother as I am feeling magnanimous…and drunk.

                2. Tony, you silly little drama queen. It’s so cute to watch you pretend that there’s any significant difference between Bush and Obama.

                  No, I don’t mean cute… What’s the word? Oh, yeah: fucking asinine!


    2. They should have let it collapse. Its an archaic system sucking up waay more than its fair share of the economy as it is, for something that adds no value. It could have been replaced with something better by now.

      Yeah and they shouldn’t have bailed out the savings and loans’ either. But at least they’re gone now anyway.

    3. It saved certain financial institutions from collapse.

      My solution – let those institutions fail. Let other institutions move in and feast on their corpses.

    4. Political Reality and REAL REALITY are two different things. Political reality is the reality of what is perceived. It has little if any bearing to what actually happens in real reality.

  21. Sullivan is so 2003. (Not that there’s anything wrong with that.)

  22. Sullivan takes a break from his ongoing Palin Gynecological Exam and THIS is what we get?

  23. Sullivan lives in a constant state of near hysteria. He’s a poodle, freaking out and barking at everything that moves. And like someone said upthread, every 4 to 6 years he realigns his loyalties to fit whichever crowd he thinks is cooler at the moment. He worshiped Bush – praised him to the skies — until Bush said he supported a Constitutional ban on gay marriage. Then, and only then, did Sullivan decide the Iraq war was a bad idea and, oh yeah, Bush was teh evil.

    And then several years later he crawled up Sarah Palin’s vagina and has been there ever since, bravely reporting from inside enemy territory because that’s just the kind of Serious, Principled Journalist he is.

    And he is the ultra-statist liberals’ favorite pet conservative, much like Glen Greenwald but not as honest nor as principled.

    1. Greenwald runs circles around Sullivan’s weak shit.

    2. Be kind to poodles. I had one when I was a kid, and it didn’t freak out at everything that moves.

      It did, however, howl when you played the harmonica, which was a blast.

    3. Does or did Greenwald self-identify as conservative?

      1. I think he’s saying that Greenwald is libertarians’ favorite pet liberal.

        I had to reread that sentence a few times.

        1. No, I’m saying Sullivan and Greenwald are both the pet “conservatives” of the ultra-statist lefty liberals and the media. The media love Glenn and Adrew because they self-identify as conservatives yet never ever seem to take conservative positions on anything – I’m not talking about social con issues, but about issues of economics and civil liberties. On the latter, Greenwald is much better than Sullivan, but that’s not difficult.

          Sullivan’s understanding of economics rivals that of my third grader’s, and his concerns about civil liberties are confined to gay marriage. He spent the first few years of the Iraq war screaming about fifth columnists and I don’t recall he had any problems with the Patriot Act until GWB broke his heart.

  24. just issued a report today, and the Executive Summary hardly looks like a ringing endorsement of how TARP has been implemented. These are hardly rabble-rousing libertarians, either. Elizabeth Warren is the head of the COP, I believe.

    But that’s just my first take on it, so…

  25. Ok. While I agree with Sullivan (and apparently Tony! shudder) that TARP (in its original manifestation before the GM bailout) wasn’t the essence of pure evil and that not everyone who voted for it should be strung up, the fact that he has something nice to say about cash for clunkers – the single most perfectly moronic government program of all time – is making me reconsider my opinion on TARP.

    1. TARP was far more moronic than Cash for Clunkers, because it’s far more destructive.


  26. Hey just because politicians and economics are wrong nearly every single time they try to predict the future in economics, it doesn’t mean their prediction can’t be used as a control group to prove the success of their actions…

  27. More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically. And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs. Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And ultimately, our country could experience a long and painful recession.

    More importantly… is anything on this list even a valid reason for complaint?

    You stock market investments lose value? So the government must intervene to protect them?

    You house could lose value? So it’s the state’s business to prop it up?

    It might be more expensive to get credit? So the government has to ensure cheap credit for all?

    I mean, everything on this list, has pretty much been proven to be something that the government SHOULD NOT be doing. We all recognize the absurdities of having the government falsely prop up housing and stock market prices, don’t we? DON’T WE?

  28. Not surprised that Andy does not see the push for that Fed backed small business loan bill for what it is, and admission of failure by the establishment that their beloved TARP did not have any of the positive effects for, what was that all too used and now burned out term that was popular in the fall of ’08 by the backers of that abomination? Oh, yeah, Main Street.

    1. and admission of failure by the establishment that their beloved TARP did not have any of the positive effects for

      For the want of real time editing skills, sh-weez1

      an admission of failure by the establishment that their beloved TARP did not have any positive effects for . . .

  29. Is Andrew Sullivan even relevant anymore? I thought he was too busy sticking his pee pee in dirty places to care about serious issues.

  30. Bravo, Matt. Excellent rejoinder. I particularly like the ideology comment. If you’re pissing Sullivan off you must be doing something right. Especially if you’re reducing him to personal attacks instead of factual ones.

  31. Notice how Sullivan praises Michael Moynihan. That’s all you need to know about either of them.

  32. Good shit Matt. Damn that was a cathartic read.

  33. One wonders if there wasn’t a little tit for tat involved when the feds decided not to deport Mr Sullivan as required by law when he was arrested for drug possession.

    1. They should send your ass back to ratbaggistan for commenting with intent to distribute inane ideas.

      1. That wasn’t a very nice thing to say.

        …and in this case, it was right on the mark! Am I to understand, Tulpa, that you’re suggesting that the feds cut a deal with Andrew Sullivan not to deport him–but only if he agreed to publicly support TARP?!

        Good God, that’s hilarious!

        I’ll still be laughing about that one next week!

        It’s times like this that I really miss Jean Bart–he’d have had a field day with Tulpa.

  34. My bad taste in prog rock leads me to posting this gem, whose lyrics seem so appropriate for the discussion at hand.

    1. 1. Man, their keyboard parts were so much better with Kevin Moore.
      2. John Myung doesn’t age.
      3. I just saw them in Tokyo (Chiba, technically) where they played the whole Black Clouds & Silver Linings. I prefer their older stuff, but it’s their best album since SfaM, at least. Fans in Japan are great because they’re all really into it. Incidentally, that turned out to be their last show with Mike Portnoy.

  35. Sullivan is a shit-licking Obama-cocksucker.

    I don’t understand why anyone reads him.

    There are fire hydrants with more sense.

  36. Excellent post as usual, Matt.

    One quibble. “bad taste in prog-rock”

    au contraire

  37. “their utter disengagement with, you know, political reality.”

    It hurts!

  38. I am very conservative but have to sayt TARP was absolutely necessary. It was handled very poorly, but still absolutely necessary. I was working on a fixed income trading desk in London during TARP. During the second TARP vote, trading came to halt. Had it not passed it would have been Armeggedon. I’m telling straight out. Had TARP not passed, the markets would have crashed. It doesn’t matter how bad the economy really was or what the underlying fundamentals actually were. It would have been a nearly unprecedented disaster for the financial markets and the economy. One that would take a very, very long time to recover from.

  39. Libertarians have absolutely no control over any branch of government at any level. It always amazing to me how obssessed both sides are with getting libertarians to tell them that they’re right. I mean really, how insecure can you get?

  40. “Do-something mentality, “pragmatism,” and deference to power can all be just as ideological as libertarianism, even if they don’t have their own seven-syllable descriptors…”

    They could use protoneofascism. It has seven syllables.

  41. “…banks could fail…in your community. The stock market would drop…”


  42. I agree with Telemechus, which means I agreed with Bush and McCain at the time. TARP was wrong for all sorts of philosophical and moral reasons, but a necessary evil because the cost of picking up the pieces would have been worse than TARP. That said Sullivan and other defenders are uninformed idiots. First TARP was made very expensive by the AIG credit default swap bailout which was a backdoor bailout of Goldman and a bunch of Euro banks. Second, TARP was hijacked by the Obamaniacs and turned into a slushfund for the UAW and bailout of deadbeat home mortgage debtors. So I hold my nose and still think TARP was necessary, but there were huge costs and it was abused. SHUT IT DOWN NOW.

    1. Bush signed the stimulus too.And name one country with a strong mid,e class without stong unions….good luck.

      “ZERO jobs created the last decade of republican control…ZERO!!

      And the jobs that were there?..40% were in “finance” and 36 % in housing..SEE Bubble.Thats not an economy its an accident waiting to happen.

      We spent the last 30 years shipping our jobs ,infrustructure and technology to a slave wage totalitari?an Communis?t- country.

      What did you think would happen?

    2. @NK, wow, where do you get this stuff? Let me guess, you’re a birther too right? Idiot.

  43. George Bush rarely told the truth! At the time he was calling for TARP & spoke the following comment the man was certainly not telling the truth.
    “More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically. And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs. Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And ultimately, our country could experience a long and painful recession.”

    What he said was all he could afford to say. If he had told the American people just how much danger their own economy was in, then the whole world would have known & The Great Depression would have been just a little depression compared to what a disaster was likely because destructive fear would have overtaken the entire world.

    President Obama is in the same fix as George Bush was. He is still to damn scared to tell Americans about how dangerous the situation was when he became President, because the whole world economy is still too fragile to risk telling the whole truth & nothing but the truth.

  44. To the best of my memory, it was when the Bush administration decided NOT to bail out a failing institution that the market collapsed, lenders stopped lending and general panic ensued. Granted, panic is not the best state of mind when trying to make policy, and I don’t think anyone believes the bailouts and stimulus were handled well.

  45. You said
    “Anything on that list not happen after Bush got his way?”

    Answer: yes. The word “more”. Not all of those things didn’t happen more. Some of those things did happen more, some much more. But grownups distinguish between some and more and so on with numbers, research, arguments, evidance, and a process of decisionmaking that is subjective but is less subjective than painting everything broadly or in up-down, yes-no terms.

    It’s a legitimate argument how much TARP etc helped, or if it helped. Most people of any substance agree that it did help, and the range of positive (ie, less negative) outcomes is broad but broadly positive. That is, unless you factor in the cawing lunatics who assert that (something unspecified) equals an infinitely negative effect communism Kenya masturbation times 9,000 equals everybody who ever tried to really govern a for-real country is so bad that Christine O’Donnell is awesome. Those numbers add up.

    You folks remind me of the villains in Bond films whose plan is always to provoke some kind of shitstorm and carve an empire from the ashes and rubble. Except way meaner. It has always been amusing to imagine what such people would do when they found themselves in the driver’s seat of some real heavy equipment with a job to do. It became just ironic about 30 years ago, and starting now–with Jim DeMint in the swivel chair, stroking his cat–it’s now just ugly.


  46. There’s a lot of Sullivan bashing here, by people who apparently haven’t read much of his stuff. He doesn’t have a consistent philosophy, huh? He’s written an entire book — the Conservative Soul — about his brand of conservatism. You may disagree with him, but he isn’t a power-worshipping robot.

    This is a recent post he made about how Obama is an accessory to war crimes: http://andrewsullivan.theatlan…..-this.html

    But if you all want to continue to take the typical libertarian tack of accusing everyone who disagrees with you of being a useful idiot of authoritarianism, by all means do so.

  47. Yha granted, I do not have much bright bulbs; but I could not simply understand Matt. I was looking for his argument to point out why TARP was a failure. May be he would have done somewhere else & I am missing that.

    Apart from that, this response is hardly ‘telling’ anything to an average (ok, say below average) reader.

  48. Well you might have an argument if those teabagger candidates were more than money grubbing knownothing fruitloops.You guys backed the republican criminal cartel that bankrupted the whole fucking world and lied us into warleaving an internatioanl coup for Obama to have to cowtoe too..Even though if you had an honest bone in you body you could admit Clinton was the best republican president of our generation.Balanced the budget and left a surplus.who would want that.Well ya got what ya wanted a bankrupt country and yer still whinin.Now yer backing the teabaggers who are nothing more that knownothing wackjobs.And you want to put THAT in power?.Good thinkin!Havent done enough damamge to the country yet?

  49. “”Repost from Dawgspiel’s …

    statistics from the Department of Labor
    Unions are the problem…..WRONG!!

    All Employees: Hourly compensation costs in manufacturing in 32 countries in U.S. dollars
    Year: 2007

    Germany $50.73
    Denmark $47.54
    Canada $31.91
    Australia $34.75
    Austria $43.17
    Belgium $38.75
    Finland $39.74
    France $37.68
    United Kingdom $36.66
    Ireland $35.62
    Italy $32.19
    Norway $55.03
    Spain $24.55
    Japan $23.95
    Korea $18.63
    Singapore $15.43
    Netherlands $39.47
    USA $30.56

    Average wage in countries using the Euro: $40.71
    Average wage in Europe: $39.41

    Now, unemployment in Germany, for example, is far lower than in the U.S. because they paid companies NOT to lay off workers. Germany’s economy depends on manufacturing exports and they’re going great guns again.

    Automation has reduced the number of people involved in manufacturing, there is no avoiding that. But how can all these countries with similar living standards to ours, manage to pay people working in factory jobs more, in most cases, than companies pay in the USA? China can sell goodies to them too!

    You do not have to lower the standard of living for your people via lower wages to remain competitive in the world market. Labor, is only 10% of the cost of making a car, for example.

    What’s the difference? One is that the average CEO earns 25 times the average worker’s wages in Europe. Here, it’s 300 times.

    High labor costs is a straw man.

    Just not true.Are you bright enough to know it?No unions no middle class.And thats what we are going for isnt it.Thanks for that.

    1. Frog, good stuff, I did not know those stats, def makes the case that labor costs are not an issue here and are used merely as an excuse for excess.

  50. ZERO jobs created the last decade of republican control…ZERO!!

    And the jobs that were there?..40% were in “finance” and 36 % in housing..SEE Bubble.Thats not an economy its an accident waiting to happen.

    We spent the last 30 years shipping our jobs ,infrustructure and technology to a slave wage totalitari?anCommunis?t- country.

    Where the fuck were you genius’s?

    Wanna see crazy?…….look in the mirror.

  51. this is a stupid blog.
    big words, but lots of straw men.
    lose some of the flowery rhetoric and maybe it will appear to have more substance.
    OBVIOUSLY the question at hand is, would things have been worse or better than with or without TARP.
    I have no idea myself, but I do know that saying that things with TARP are worse than was posited pre-TARP sans TARP does not mean JACK. wtf do you think we are, palin and o’donnell? we have a brain, respect that please.

  52. I don’t think the scenario laid out in the above article is quite complete. The most dangerous aspect of the near meltdown was the rising tide of fear. Fear could have caused a wide spread shut down of the entire economy and the bail out did a lot to inspire much needed confidence. That was half the point of passing it.

  53. Apart from Ayn Rand, do all Libertarians read nothing but graphic novels?

    1. Well, we tend to read some economics. Anyway, who do you expect to read your piercing inquiry, Austan Ghoulsby (happy October)?

  54. It’s gonna take more than the absence of bread lines to make me believe this particular P.R. campaign.

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