Getting harder to spin TARP as a failure...

cawacko said:
If we had let the dominoes roll without government interference we would have lost Bear, Lehman, AIG, Morgan Stanley and Goldman Sachs. What would have been the state of our financial markets at that point and would other company failures have continued?

This is not to argue that TARP was the right thing to do I'm just asking how it would have played out without government involvement.
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good question, then again look at how many other large companies, like WAMU were lost....the market got smaller and the strong survived, albiet some of the strong survived with government help....

IMO, i don't think we would have lost all those companies, if i recall morgan had decent books as well as goldman sachs, i think if the government had not intervened, morgan would still have come out good and possibly other companies would have come in and scooped up the failures just as morgan did and possibly smaller, not to large to fail companies could have stepped in to fill the void....

all speculation though
 
Onceler said:
We have disagreed about this. Yes, it is corporate welfare, but the pain that would have been felt by some of these companies failing, at that time, would have been staggering, imo. It was already a brutal year that touched just about everyone in some way. I think most would have seen deeper & more prolonged pain without TARP.

There is no way to prove that, but when I agree with Bush, and many economists on both sides agree, there must be something to it. At $42 billion, we got off cheap...
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fair enough...all i have is speculation as well
 
Before we annoint a king of future tarps in all the gushing contemplate this. Without the removal of mark to market accounting TARP would have been a huge failure. The act of removing mark to market did more to restore order than tarp ever would have.
 
Yay for bipartisan corporate welfare.

What's the one thing a partisan Democrat President and a partisan Republican President will agree on? Bail out my donors!
 
Yurt said:
good question, then again look at how many other large companies, like WAMU were lost....the market got smaller and the strong survived, albiet some of the strong survived with government help....

IMO, i don't think we would have lost all those companies, if i recall morgan had decent books as well as goldman sachs, i think if the government had not intervened, morgan would still have come out good and possibly other companies would have come in and scooped up the failures just as morgan did and possibly smaller, not to large to fail companies could have stepped in to fill the void....

all speculation though
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Morgan and Goldman were going down and they knew it. The shorts were coming after them next.

Check out Andrew Sorkin's To Big To Fail for the behind the scenes story. Those companies were going down. What would have happened to our economy then?
 
cawacko said:
Morgan and Goldman were going down and they knew it. The shorts were coming after them next.

Check out Andrew Sorkin's To Big To Fail for the behind the scenes story. Those companies were going down. What would have happened to our economy then?
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still speculation....

wamu went down and our economy is still here....i don't think our economy is so small that it couldn't have handled a few more banks/financial corps going down....those banks lent money they shouldn't have lent, fack them....i know many people suffering who didn't get bailed out, why should those lousy banks who made bad decisions get bailed out? i know, off track from your question....
 
Yurt said:
still speculation....

wamu went down and our economy is still here....i don't think our economy is so small that it couldn't have handled a few more banks/financial corps going down....those banks lent money they shouldn't have lent, fack them....i know many people suffering who didn't get bailed out, why should those lousy banks who made bad decisions get bailed out? i know, off track from your question....
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The economy can handle the loss of a big company. But the kind of domino effect we likely would have seen, and at that time in particular?

We agree it's just speculation, but man, I don't see how anyone can miss the ramifications of that, and the ripple effect that would have on all Americans, not just the fat cats. I don't think there is any chance we'd be where we are today if that happened.
 
What would have happened with more bankruptcy. A few thousand Yatch's in the East Coast would have been repossesed. Martha's vinyard would have been infested with middle class people buying distressed CEO properties.
As to the rest of the economy, we'd all have been much better off. Our grandkids would have trillions less in debt.
 
Topspin said:
What would have happened with more bankruptcy. A few thousand Yatch's in the East Coast would have been repossesed. Martha's vinyard would have been infested with middle class people buying distressed CEO properties.
As to the rest of the economy, we'd all have been much better off. Our grandkids would have trillions less in debt.
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Where do you derive that math, considering that TARP appears to have cost us $42 billion?
 
Yurt said:
still speculation....

wamu went down and our economy is still here....i don't think our economy is so small that it couldn't have handled a few more banks/financial corps going down....those banks lent money they shouldn't have lent, fack them....i know many people suffering who didn't get bailed out, why should those lousy banks who made bad decisions get bailed out? i know, off track from your question....
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Well when you have the CEO's of Morgan and Goldman saying they are going down next yes it is still speculation but hardly random off the cuff comments.

Again, I'm a free market guy I'm just asking how people think this would have played out. With trillions of dollars in derivatives and trades etc. intertwined in these companies how would the markets have unwound these contracts with the companies gone?
 
Also the gov buying mortgages that would prob be worth more if you just shit on them and got the methane out. That's a trillion right there.
 
Topspin said:
did you miss the explanation about mark to market???????
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It wasn't much of an explanation. I agree TARP wouldn't have done as well w/out it, but I think the return on TARP has shown it to be a worthwhile move on its own.

How can you, as a market guy, argue those results? They're getting $650 billion of it back. I would have been laughed off this board for predicting that last fall, and frankly, I never would have predicted it...
 
Onceler said:
It wasn't much of an explanation. I agree TARP wouldn't have done as well w/out it, but I think the return on TARP has shown it to be a worthwhile move on its own.

How can you, as a market guy, argue those results? They're getting $650 billion of it back. I would have been laughed off this board for predicting that last fall, and frankly, I never would have predicted it...
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Let's get a couple things straight, I never let anything get in the way of greed. I just past my pre crash 401K balance so I'm thrilled the market came back.

But, if you really care about it and want to learn. Go read and look what was going on, removal of mark to mark is what unfroze the credit markets.
Two, fannie and freddie buying the piles of shit with bows wrapped around then are part of the bailout as far as I'm convcerned it'll be years before we get the stench of that.
And though better than expected 42 billion loss is not a return.

Many economist and investors believe that 2 big to fail has and will foster more moral hazzard caused train wrecks.
 
Topspin said:
Let's get a couple things straight, I never let anything get in the way of greed. I just past my pre crash 401K balance so I'm thrilled the market came back.

But, if you really care about it and want to learn. Go read and look what was going on, removal of mark to mark is what unfroze the credit markets.
Two, fannie and freddie buying the piles of shit with bows wrapped around then are part of the bailout as far as I'm convcerned it'll be years before we get the stench of that.
And though better than expected 42 billion loss is not a return.

Many economist and investors believe that 2 big to fail has and will foster more moral hazzard caused train wrecks.
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I agree w/ that last part, and w/ what Damo has said on the subject.

I don't know; as someone who is not a fat cat, a big investor, a CEO or any of the others in the "select group" who were the supposed beneficiaries of TARP, I was mighty relieved that they passed it last fall, and actually thought it could have saved even more of the market if they passed it a week earlier. And I'm even more relieved that the price tag is turning out to be a pretty paltry $42 billion.
 
42 billion to prevent trillions, or even tens of trillions, in economic losses. This was possibly the best investment decision of all time.
 
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