Bailouts DID help...but at what cost?

Neil Barofsky, the Special Inspector General in Charge of oversight for the bailouts, essentially a government watchdog, is releasing a report today in which he gives a blunt assessment for the TARP bailouts started under Bush and expanded by Obama: The Bailouts saved our economy, but cost us more in the long term.

TIME:

[Barofsky] said the $700 billion bailout for the financial industry played a major role in rescuing the economy over the last year but also engendered anger and distrust among Americans because of secrecy and confusion about the way the program was handled...

"Despite the aspects of TARP that could reasonably be viewed as a substantial success," he wrote, "Treasury's actions in this regard have contributed to damage the credibility of the program and of the government itself, and the anger, cynicism and distrust created must be chalked up as one of the substantial, albeit unnecessary, costs of TARP."

Barofsky said public suspicion was fed by Treasury's decision not to require banks to report how they used their rescue money and its "less-than-accurate" statements describing the financial condition of nine large banks that benefited from large infusions of aid...

Overall, Barofsky said the cost of preventing a financial collapse fell into three categories:

•Taxpayers: The government has spent more than $454 billion through TARP programs. Forty-seven TARP recipients have paid back nearly $73 billion. That means more than $317 billion remains available. The program is set to end Dec. 31, but the administration could seek an extension until next October. Despite the repayments several of the program are not expected to yield returns to the taxpayer, including a $50 billion mortgage modification plan and some of the money injected into auto companies.

•The integrity of the industry: Many firms considered "too big to fail" last year, and thus in need of government assistance, are even bigger now. "Absent meaningful regulatory reform, TARP runs the risk of merely reanimating markets that had collapsed under the weight of reckless behavior," the report sates.

•The credibility of the government: Barofsky wrote that public antipathy for the bailout is fueled by "the lack of transparency in the program." Over the course of the year, Barofsky has called on the Treasury Department to seek more information from banks on how they use their taxpayer assistance.
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Basically, the bailouts worked in the short term. But because of government ineptitude and all the secrecy, distrust has been seeded instead of consumer confidence, which is what was really needed for the market to correct itself. A full disclosure and better oversight in the bailouts would've helped, but both Bush and Obama almost gave the money away without really looking at the causes of the collapse; in essence both Presidents merely put a bandaid on an infected shotgun wound, when what we really needed was to fix the root of the problem and cover the wound. We should've given the bailouts and broken up the "too big to fail" companies to make sure it never happened again.

Distrust of the Federal Government

The Distrust of the Federal Government, a cause currently being championed by the right, has begun reaching critical mass. With the tea parties, 9/12 marches, and bloggers blaming all the worlds' ills on the Federal Government in general, and Obama specifically, something was bound to happen.

And happen it did, with the murder of Bill Sparkman, a Federal Census Bureau field worker, who was found strung up in a remote section of the National Forest in Kentucky, with the word "Fed" written on his chest.

Currently, people like Glen Beck are trying to fan the revolutionary flames, with his quoting of obscure provisions of the US Constitution, mis-interpreting what the founding fathers intended in States vs. Federal power, taking portions of our history and lamenting a golden age and laws that were in actuality not about States rights, but about continuing slavery indefinately. The founding fathers disagreed amongst themselves whether power should be centralized in the Federal Government or in the States, and they never specified which. We decided to mix them when we went to war with the South, prohibiting them from secession in order to keep the Union strong, which is why we won World Wars I and II, not to mention the Cold War. We wouldn't have been able to win any of them had we been a fractured nation of State-Countries with nothing more than a Federal Mail service for the president to preside over.

I only forsee more of this in the current political climate. While the anti-government sentiment is currently being sown by the Republican Right, it wasn't too long ago it was the Democratic Left when Bush was in office. Both sides are guilty, and both sides forget their own atrocities when the other is in office. The PATRIOT act, Gtmo, wiretapping, and extraordinary rendition are quickly forgotten by the right, while the left forgets it was Clinton who repealed Glass-Steagall, and it is them that currently is printing trillions of dollars to stop a recession and reinflate the bubble that burst last year.

This has got to stop. The Federal Government, for the most part, does what it is supposed to do. Looks out for the common good. It overreaches at times, and that's why we have checks and balances. But labelling someone as treasonous because they support one party or another is ridiculous, and it needs to stop. Otherwise, more people are going to get strung up on trees.

Man charged $23 quadrillion dollars

A New Hampshire man went home one night after running errands to check his bank balance online. This is what Josh Muszynski's online banking said his account balance was:

-$23,148,855,308,184,500...plus a $15 overdraft fee.

What did Muszynski buy?

A pack of cigarettes at the gas station.

Muszynski called the bank about the string of numbers on the screen and a $15 overdraft fee the bank tacked on to his mysterious debt. After two hours on the phone, Muszynski said, the representative on the line had no idea what to say.
"She just tried to assure me that everything would be fixed, and I couldn't see something like that being fixed," Muszynski said.

Nearly 24 hours after the hole formed in his bank account, Muszynski checked his statement again. The bank corrected his statement a day later.

I especially liked what he said he'd do with the money if he really had that much, and here's where the politics comes in:

If he had $23 quadrillion, Muszynski said he would give it all away, and maybe also bail out General Motors a few more times.

HA!