Has TARP worked?

[Excaliber]

Troubled Asset Relief Program, TARP. Dozens of banks are now scrambling to pay back the Government loans from this program. They put a nice spin on it, "Thank you America". But it's pretty clear they simply want the Gov out of their business. That's OK with me, I don't really care WHY there paying back the loan(s), just do it.

Now let's take the next step. Break up the "mega banks". I say let the Government CONTINUE to "mess with their heads". No bank should be allowed to exist that is so big it MUST be protected from bankruptcy by the tax payers. If they are that big, it's time to downsize! What we need here is more Government intervention. Yes, MORE Government control, of big business. Unless you think Wall Street can be trusted to police it itself?

Or, maybe we should have just let Wall Street and the mega banks "crash and burn"? Let them continue to have multiple off shore subsidaries escaping US tax? Let them continue to grow even larger so they can once again threaten the WORLD economy? After all, they can always fall back on the taxpayers...

[392cobra]

Sure didn't take long for Oregan to start moving you from a simple Socialist to a Commie.

Here is some history for you...

Argentina was the U.S.

Subject: How a rich Argentina became poor and how America is following its model.




CAN'T WE LEARN FROM HISTORY?



In the early 20th century, Argentina was one of the richest countries in the world.. While Great Britain’s maritime power and its far-flung empire had propelled it to a dominant position among the world’s industrialized nations, only the United States challenged Argentina for the position of the world’s second-most powerful economy.

It was blessed with abundant agriculture, vast swaths of rich farmland laced with navigable rivers and an accessible port system. Its level of industrialization was higher than many European countries: railroads, automobiles and telephones were commonplace.

In 1916, a new president was elected. Hipólito Irigoyen had formed a party called The Radicals under the banner of “fundamental change” with an appeal to the middle class.

Among Irigoyen’s changes: mandatory pension insurance, mandatory health insurance, and support for low-income housing construction to stimulate the economy. Put simply, the state assumed economic control of a vast swath of the country’s operations and began assessing new payroll taxes to fund its efforts.

With an increasing flow of funds into these entitlement programs, the government’s payouts soon became overly generous. Before long its outlays surpassed the value of the taxpayers’ contributions. Put simply, it quickly became under-funded, much like the United States’ Social Security and Medicare programs.

The death knell for the Argentine economy, however, came with the election of Juan Perón. Perón had a fascist and corporatist upbringing; he and his charismatic wife aimed their populist rhetoric at the nation’s rich.

This targeted group “swiftly expanded to cover most of the propertied middle classes, who became an enemy to be defeated and humiliated.”

Under Perón, the size of government bureaucracies exploded through massive programs of social spending and by encouraging the growth of labor unions.

High taxes and economic mismanagement took their inevitable toll even after Perón had been driven from office. But his populist rhetoric and “contempt for economic realities” lived on. Argentina’s federal government continued to spend far beyond its means.

Hyperinflation exploded in 1989, the final stage of a process characterized by “industrial protectionism, redistribution of income based on increased wages, and growing state intervention in the economy…”

The Argentinian government’s practice of printing money to pay off its public debts had crushed the economy. Inflation hit 3000%, reminiscent of the Weimar Republic. Food riots were rampant; stores were looted; the country descended into chaos.

And by 1994, Argentina’s public pensions — the equivalent of Social Security — had imploded. The payroll tax had increased from 5% to 26%, but it wasn’t enough. In addition, Argentina had implemented a value-added tax (VAT), new income taxes, a personal tax on wealth, and additional revenues based upon the sale of public enterprises. These crushed the private sector, further damaging the economy.

A government-controlled “privatization” effort to rescue seniors’ pensions was attempted. But, by 2001, those funds had also been raided by the government, the monies replaced by Argentina’s defaulted government bonds.

By 2002, “…government fiscal irresponsibility… induced a national economic crisis as severe as America’s Great Depression.”


* * *

In 1902 Argentina was one of the world’s richest countries. Little more than a hundred years later, it is poverty-stricken, struggling to meet its debt obligations amidst a drought.

We’ve seen this movie before. The Democrats’ populist plans can’t possibly work, because government bankrupts everything it touches. History teaches us that ObamaCare and unfunded entitlement programs will be utter, complete disasters.

Today’s Democrats are guilty of more than stupidity; they are enslaving future generations to poverty and misery. And they will be long gone when it all implodes. They will be as cold and dead as Juan Perón when the piper must ultimately be paid.


Don't know who wrote the preceeding but I hope it might help pull someone on this site out of their self induced fog.

[Excaliber]

...the state assumed economic control of a vast swath of the country’s operations...

How do you make the jump from "controlling the size of mega corporations" (so large they threaten GLOBAL economic conditions) and the Government "taking over a vast swath" of the country's operations? That's a pretty big leap right there!

[Bill Bess]

I love history, it provides many examples of man's greatest adventures and failures.
You would think our leaders would use this resource as a reference and guide them to better judgements.
Basics are always the best path, be creative, work hard and pay for what you need and don't barrow on the future.

[Ron61]

Bill,

You would think our leaders would use this resource as a reference and guide them to better judgements.

The only thing our leaders are interested in is getting more power and money for themselves. They could care less about the average people. As for the Govt. taking control of anything, I don't like it. Use the mega corps. to start with and then work their way down until they control everything and everyone. Why was nothing said about the oil companies and Chevron which just completed another mega deal? The Govt. ordering the lending institutions to loan money to people to buy those over priced homes was a big part of the problem to begin with. Now I see that The Glorious Leader is telling banks they should loosen up their loan policies and loan to people with less means to pay it back. Starting this all over again before it is even cleaned up from the first crash.

Ron

[Tommy]

It appears to me that TARP was beneficial to the country as a whole. And I have no problem with the government placing some limits on business via anti-monopoly laws or controls on businesses that could cause an economic catastrophy for the nation. In both of these cases I see the government more as referees trying to keep the game fair for all the players.

[Ron61]

Tommy,

There are already anti monopoly laws on the books, they just don't give the Govt. the power that this administration wants. And the SEC used to keep control of Wall Street until they became as corrupt as the Wall Street Gang. And even when they catch one of them stealing millions from people or with insider trading all they do is slap their hands. I don't know what the answer is, but giving the people we have in power total control isn't it.

Ron

[Excaliber]

The issue here is TARP and limits on the size of mega corporations, not health care, climate gate, Afghanistan or multiple other pet peeves each of us may have with the current administration.

We have fairly good anti-monopoly laws, so that the mega corps can "fairly" compete against each other. But that doesn't necessarily limit their individual size. Their global reach also allows them to escape mega taxes with holdings and branches in foreign countries. They are essentially a foreign power with great impact on our National economy should they fail.

If we don't take positive action to limit this mega corp power they WILL have to be bailed out again, by the USA. I think the Administration should move on this while they still have some momentum to get it done. Americans have very short memories...

[Ron61]

Ernie,

I agree with you in principal, but with this administration it seems everything they do is geared to giving them more power and taking more from the people. If they would just put some legal and logical controls on the mega corporations and banks, then I would agree with you. And Wall Street does need some kind of regulations as the SEC is as corrupt as they are.

Ron

[Excaliber]

I suspect the only way to limit their size would be through some serious legislation. When THAT hit's the floor (fan?) of the House/Senate you can bet it will be viewed as a "power grab". It's a slippery sloap, but one I fear must be traversed.

[Tommy]

Originally Posted by Ron61

And Wall Street does need some kind of regulations as the SEC is as corrupt as they are.

Ron

How about giving the SEC regulators a financial incentive for rooting out wrong doing? Do you suppose they might have looked more closely at Madoff if the regulator could have claimed a small percentage of the fraud uncovered?

[Excaliber]

Hmmmm, an interesting point Tommy. I wonder how the "whistle blower" laws come into play in that regard. Would SEC have the ability to effectively place limits on "size" of a corp?

Madoff is a classic example of why Wall Street cannot be left to police itself, as it was previously allowed to do under the last Administration.

[Ron61]

That is a good point and it might work unless the people like Madoff offer them more than what they would get for turning them in. I don't believe the SEC has the authority to limit the size of a corp. They are supposed to police the Brokers and exchanges for insider trading and other violations. But they have all but admitted that some of their investigators took pay offs from Madoff and others at times. The signs of what Madoff was doing were there for quite a while and they supposedly investigated him and found nothing wrong. Maybe a new bunch of SEC authorities and give them a percentage of any fraud they uncover.

Ron

[Ron61]

I just read this and thought that it somewhat fits in with what Ernie has been saying about limiting the size of big banks and corporations.

http://www.bloomberg.com/apps/news?p...IHM30H8&pos=11

Ron

[Excaliber]

Good link Ron. Interesting that this guy is proposing limits world wide, all countries and that these limits need to be imposed at about the same time.

...it looks more hopeless than ever! I was thinking in terms of the USA and how difficult it would be HERE. Let alone a global scenario of limiting size.

[1ntCobra]

Didn't the government give out some of the TARP money on the condition that some of the bigger banks buy up banks that were about to fail. If that was the case, the government was creating even bigger banks with TARP. So wouldn't suggesting downsizing be the opposite of what the government has done with TARP?

[Ron61]

In a way yes. But then he also said before he was elected that Govt. needed to be downsized and it is a lot larger now than it was then. By the time he gave all of his friends and people that contributed to his campaign Govt.jobs, Czars and so on, it has grown a lot.

Ron

[Excaliber]

Well, I don't know that it's size has grown any larger, more like a change of people. Typical of every new administration. But 1ntCobra makes a good point, big banks getting bigger as a result of TARP.

As we were facing an IMMEDIATE financial crisis IMMEDIATE decisions had to be made. I recall the "heat" Bush took for his Iraq surge program, no one knew if it would work or not. It did, Bush was a hero, could have been a zero!

Same thing with TARP, virtually ALL the economists had their fingers crossed, the public was outraged, the new administration taking some serious heat. No one was really sure if it would work or not. But SOMETHING had to be done, and fast. TARP is far from perfect, but so far, it seem's to be working out well. It was critical to save some banks right away, even at the expense of others. No doubt that was a tough call, who to save, who to let go. Yup, some banks got bigger than ever! Now, let's get a handle on that with TARP, phase II.

[Ron61]

Ernie,

Even Obama has admitted that the Govt. has grown in size since he took office but it was something that had to be done and he wasn't lying when he said before he was elected that we needed less Govt. He has replaced a few people with new ones but he has created a big amount of new positions. This is true because HE said it. Not a media report.

Ron

[Feffman]

Our firm (we've taken no TARP money and are sitting on a significant pile of cash) made a bid for AIG's American investment and insurance operations several months ago. We were outbid by a firm that took TARP money so we walked away from the potential purchase (CEO said we couldn't outbid the US Government). A week or two later the firm that outbid us also walked away for their bid and shortly thereafter, AIG went back to the Fed's for about $32 Billion more in assitance. My favorite TARP story.

Feff