Sunday, October 10, 2010

Geithner's Five Myths

Tim Geithner describes five "myths" of the financial industry bailout. Here's the condensed version:
  1. The TARP cost taxpayers hundreds of billions of dollars: Well, maybe, but not If we assume a best case scenario and ignore the cost of servicing the resulting debt, and if I divide up the amounts behind a cloud of words it doesn't sound like all that much, does it?

  2. The TARP was a gift for Wall Street that did nothing for Main Street: Haven't you ever heard of trickle-down economics?

  3. The TARP was a quick fix for the market meltdown but left our financial system weak: Our banks are bigger and more centralized than ever!

  4. The TARP worsened the concentration of the banking sector, leaving it more vulnerable to another crisis: Well, yes. But other nations have even more consolidation, for what that's worth. And if we pretend that recent legislation would actually prevent another taxpayer-funded bailout, we can all be happy.

  5. The TARP was the centerpiece of a strategy by President Obama to assert more government control over the economy: Nonsense. It was Bush's idea, and Obama simply ran with it.

Feel better now?

4 comments:

  1. I think his response to Myth #5 is particularly weak. Rather than directly addressing the idea that it was a government takeover he passes the buck to "a conservative Republican president", then speaks about President Obama having an exit strategy, without hammering home the point that neither President wanted or intended the bailout as a "takeover". Those who get through his nuanced response already know the facts, and he does a bad job of making his case to anybody else. But it looks like this is more of a, "I deserve an 'attaboy'" column, to rehabilitate his image, than it is an actual attempt to bust myths.

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  2. I suspect that Geithner is sympathetic to the idea that it's a wild-eyed government takeover, even if he simultaneously argues that it was necessary under the circumstances.

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  3. It isn't a government take over when the banks still own the government.

    CWD

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