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How so? Even if it is just a loan, it is -- as the post says -- the largest outlay in American history. The other expenditures listed are just for comparison,

by jcl 18y ago

How so? Even if it is just a loan, it is -- as the post says -- the largest outlay in American history. The other expenditures listed are just for comparison, to give a sense of scale. Like the bailout amount, all the expenditures were made with the expectation that the country would be better off having made them; no attempt is made to calculate the value of the social and scientific dividends of the moon landing, for example. Only up-front costs are given, which are reasonable to compare to the up-front costs of the bailout.

evgen 18y ago
The post is factually incorrect because the items listed are _expenditures_ and that means it is money which was spent, the bailout is a loan guarantee and we will get a lot of it back (and in fact might make a profit on the whole thing.) If you take out a loan and spend it on comic books then that is an expenditure, but if you take out a loan and invest it in something there is a possibility that the investment will pay out and you will be able to pay back the loan and potentially make a profit on the venture. The claim that no attempt was made to calculate the social and economic dividends of any of the other ventures listed is a complete fallacy, there are numerous hand-waving (and a few well-researched) papers describing the long-term costs and/or benefits of each expenditure. The difference is that in the case of the other ventures there was very little known at the time about the cost of doing nothing but we can see quite clearly that the cost of doing nothing now will be far greater than the amount we are proposing to use to prop up the system.
- jcl 18y ago
  I still don't see how that makes the article factually incorrect. The article doesn't claim that the bailout is not an investment. It simply says "Hey, this is an awful lot of money that's all going out at once". Never mind that we may or may not get it back (although if the parties involved could measure risk accurately, we wouldn't be in this mess) -- but the bailout amount is so much that we have nothing else to compare it to other than these massive expenditures. There's no other way to get a sense of scale. If you only want to compare it to investments, the only thing I can think to compare it to is the Chrysler bailout, which IIRC we eventually made some profit on. The S&L bailout is already in the list, and we lost on that one. But both of these are orders of magnitude smaller than this bailout. (And when I said that no attempt is made to calculate dividends, I meant within the article, not within human history.)
  - krschultz 18y ago
    Yes it does. "If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars. " These are not costs, they are guarantees. A cost is 100% sunk, no one knows exactly what percentage of these guarantees will ultimately be costs. But if it nears 50%, the bigger problem will be the number of homeless people in this country not the amount of money spent trying to prevent this from happening. And considering now a lot of mortgage companies are renegotiating and trying to prevent foreclosure, it is unlikely a lot of this money will end up being spent. He makes no acknowledgement of that and therefore it is mis characterizing the expenses.
    - jcl 18y ago
      Hmm... It seems a big fuss over the semantics of a single word, then, especially as you seem to be using it in a non-standard way. No one says, for example, "I bought a car yesterday, but I won't know how much it cost until I eventually sell it." The bailout has an up-front cost -- an opportunity cost if nothing else. That's $4.6 trillion that suddenly cannot be used for something else, right now, regardless of the value of the assets we are purchasing.

by jcl 18y ago

evgen 18y ago

The post is factually incorrect because the items listed are _expenditures_ and that means it is money which was spent, the bailout is a loan guarantee and we will get a lot of it back (and in fact might make a profit on the whole thing.) If you take out a loan and spend it on comic books then that is an expenditure, but if you take out a loan and invest it in something there is a possibility that the investment will pay out and you will be able to pay back the loan and potentially make a profit on the venture. The claim that no attempt was made to calculate the social and economic dividends of any of the other ventures listed is a complete fallacy, there are numerous hand-waving (and a few well-researched) papers describing the long-term costs and/or benefits of each expenditure. The difference is that in the case of the other ventures there was very little known at the time about the cost of doing nothing but we can see quite clearly that the cost of doing nothing now will be far greater than the amount we are proposing to use to prop up the system.

jcl 18y ago
I still don't see how that makes the article factually incorrect. The article doesn't claim that the bailout is not an investment. It simply says "Hey, this is an awful lot of money that's all going out at once". Never mind that we may or may not get it back (although if the parties involved could measure risk accurately, we wouldn't be in this mess) -- but the bailout amount is so much that we have nothing else to compare it to other than these massive expenditures. There's no other way to get a sense of scale. If you only want to compare it to investments, the only thing I can think to compare it to is the Chrysler bailout, which IIRC we eventually made some profit on. The S&L bailout is already in the list, and we lost on that one. But both of these are orders of magnitude smaller than this bailout. (And when I said that no attempt is made to calculate dividends, I meant within the article, not within human history.)
- krschultz 18y ago
  Yes it does. "If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars. " These are not costs, they are guarantees. A cost is 100% sunk, no one knows exactly what percentage of these guarantees will ultimately be costs. But if it nears 50%, the bigger problem will be the number of homeless people in this country not the amount of money spent trying to prevent this from happening. And considering now a lot of mortgage companies are renegotiating and trying to prevent foreclosure, it is unlikely a lot of this money will end up being spent. He makes no acknowledgement of that and therefore it is mis characterizing the expenses.
  - jcl 18y ago
    Hmm... It seems a big fuss over the semantics of a single word, then, especially as you seem to be using it in a non-standard way. No one says, for example, "I bought a car yesterday, but I won't know how much it cost until I eventually sell it." The bailout has an up-front cost -- an opportunity cost if nothing else. That's $4.6 trillion that suddenly cannot be used for something else, right now, regardless of the value of the assets we are purchasing.