4 ms·

> On the fallacy that the U.S. taxpayers made money on the bailouts > 8.6% is insultingly low compensation to use taxpayer money So, money was made? > could

> On the fallacy that the U.S. taxpayers made money on the bailouts > 8.6% is insultingly low compensation to use taxpayer money So, money was made? > could have been spent on more beneficial investments (infrastructure, education, healthcare) to bail out private companies who were the victims of their own greed and poor governance. Why couldn't it still be used on infrastructure, education, or healthcare?

ThomPete 12y ago
Money were made but not enough compared to the risk involved with lending them out. Thats the point.
- tomp 12y ago
  Bot possibly, even probably, enough compared to the risk involved with not lending them out (i.e. another depression).
  - ThomPete 12y ago
    Thats irrelevant to how you calculate what the return should be compared to the risk involved.
    - rayiner 12y ago
      Why? Loss of tax revenue to the government resulting from a depression is certainly money that the government needs to factor into the calculation.
      - ThomPete 12y ago
        Sure but so is the danger of going bankrupt for the banks or being completely nationalized. Also the country would survive a depression if it really came down to that, the bank wouldn't survive a bankruptcy. So the playing field are fairly even when it comes to having leverage.
      - jbooth 12y ago
        Because it's embracing too big to fail. Unless we want 'too big to fail' to be the rule going forward, and unfortunately it seems that it will be, we should reject the idea that the rest of us are the beneficiary of having to bail out the banks.
        rayiner 12y ago
        Whether we embraced it or not, it was part of the calculus. So was the fact that we'd need continued investment into the economy to work our way out of the financial collapse. That meant that options like nationalizing banks, which might drive investment overseas in the future, could have a direct negative economic impact that needed to be considered.
        jbooth 12y ago
        Sure, I agree that we had no choice at that point but to bail the banks out. But when reviewing the decision afterwards, I think we need to reject lines of argument that the government did really great on the deal so it's not that bad what happened. We don't want it to happen again, we don't want to be in a no-other-options situation.
        TheOtherHobbes 12y ago
        The total loss in tax revenue over the Great Recession period is measured in trillions. http://2.bp.blogspot.com/-nkdzCkw8Rr0/U-qiPe1Tf-I/AAAAAAAARSU/-lmGCQ8MK6E/s1600/Federal%2BRevenues.jpg http://2.bp.blogspot.com/-nkdzCkw8Rr0/U-qiPe1Tf-I/AAAAAAAARS... I'd suggest that's a much more direct and obvious economic impact than some maybe-perhaps about driving investment overseas. (How, exactly? Do you think money would suddenly stampede out of the US if regulators developed a spine and jailed the delinquent operators who caused the crash?) Anywway - clearly the decision was political. It was made for the benefit of the banker caste, and not for the general population. The underlying problem is unearned privilege. There's no rational reason for these bonuses. But bankers pay themselves these sums because they know they can, irrespective of the incredible damage they cause to the rest of the economy.
  - tormeh 12y ago
    You assume there's no other way to avoid a depression. The banks can be bypassed, even if that would be a bit unconventional.
- snowwrestler 12y ago
  The parent asserted that, but did not actually quantify the risk in any way. I could just as easily say that there was no risk at all since the government was obviously not going to allow those institutions to fail.
  - ThomPete 12y ago
    The claim that I answered where "Money were made" it didn't quantify it either so I fail to see the point.
  - marcusgarvey 12y ago
    One way to infer: what's the risk of lending to a company that's facing an existential crisis, that's in such dire straits that no one else would lend to it?
- smileysteve 12y ago
  This ignores the risk of not lending them out, which is difficult to quantify, but is considered significantly greater than 0.
  - ThomPete 12y ago
    Not sure I understand. The difficulty of lending them out should just increases the risk of lending them out and therefore the need to recoup that risk by a proper margin. Thats not what happened when the banks regardless of contracts still gave out large bonuses many times more than the return to the taxpayers. That simply doesn't add up.
    - smileysteve 12y ago
      The risk of not lending the banks out is a depression where the currency / global economy may have lost more value. Example: The gov only made 8.5%, but if the US costs have increased 16% over the same period (because of a depression), the overall return is more like 24.5%, ignoring the additional costs of a depression.
marcusgarvey 12y ago
"Made."
bmelton 12y ago
> So, money was made? I don't know the details of when the money was disbursed and when the money was recuperated, but if it were disbursed in 2008, and recouped in, say, 2014, there was a 10% rate of inflation, which devalues the currency to the point that no, money was not made. If 2013, the rate of inflation was 8.2%, which leaves a .4% "profit", assuming no other costs. If 2012, the rate of inflation was 6.6%, leaving a 2% profit, etc. Of course, this assumes the money wouldn't have performed in any way just sitting in the government coffers, and I honestly don't know enough to even begin to evaluate whether it would have.
- yummyfajitas 12y ago
  Inflation was 1.5-1.6%. http://research.stlouisfed.org/fred2/data/CPIAUCSL.txt http://research.stlouisfed.org/fred2/data/CPIAUCSL.txt edit: computation done by comparing Jan 1 2012 to Jan 1 2013, etc.
  - philh 12y ago
    Between which dates? If I'm reading this correctly, Jan 08 to Jan 14 is 212 to 234, which is about 10%. (This also matches the statistic that I happen to have memorized of 8% inflation between 2010 and 2014.)

ThomPete 12y ago

Money were made but not enough compared to the risk involved with lending them out. Thats the point.

tomp 12y ago
Bot possibly, even probably, enough compared to the risk involved with not lending them out (i.e. another depression).
- ThomPete 12y ago
  Thats irrelevant to how you calculate what the return should be compared to the risk involved.
  - rayiner 12y ago
    Why? Loss of tax revenue to the government resulting from a depression is certainly money that the government needs to factor into the calculation.
    - ThomPete 12y ago
      Sure but so is the danger of going bankrupt for the banks or being completely nationalized. Also the country would survive a depression if it really came down to that, the bank wouldn't survive a bankruptcy. So the playing field are fairly even when it comes to having leverage.
    - jbooth 12y ago
      Because it's embracing too big to fail. Unless we want 'too big to fail' to be the rule going forward, and unfortunately it seems that it will be, we should reject the idea that the rest of us are the beneficiary of having to bail out the banks.
      - rayiner 12y ago
        Whether we embraced it or not, it was part of the calculus. So was the fact that we'd need continued investment into the economy to work our way out of the financial collapse. That meant that options like nationalizing banks, which might drive investment overseas in the future, could have a direct negative economic impact that needed to be considered.
        jbooth 12y ago
        Sure, I agree that we had no choice at that point but to bail the banks out. But when reviewing the decision afterwards, I think we need to reject lines of argument that the government did really great on the deal so it's not that bad what happened. We don't want it to happen again, we don't want to be in a no-other-options situation.
        TheOtherHobbes 12y ago
        The total loss in tax revenue over the Great Recession period is measured in trillions. http://2.bp.blogspot.com/-nkdzCkw8Rr0/U-qiPe1Tf-I/AAAAAAAARSU/-lmGCQ8MK6E/s1600/Federal%2BRevenues.jpg http://2.bp.blogspot.com/-nkdzCkw8Rr0/U-qiPe1Tf-I/AAAAAAAARS... I'd suggest that's a much more direct and obvious economic impact than some maybe-perhaps about driving investment overseas. (How, exactly? Do you think money would suddenly stampede out of the US if regulators developed a spine and jailed the delinquent operators who caused the crash?) Anywway - clearly the decision was political. It was made for the benefit of the banker caste, and not for the general population. The underlying problem is unearned privilege. There's no rational reason for these bonuses. But bankers pay themselves these sums because they know they can, irrespective of the incredible damage they cause to the rest of the economy.
- tormeh 12y ago
  You assume there's no other way to avoid a depression. The banks can be bypassed, even if that would be a bit unconventional.
snowwrestler 12y ago
The parent asserted that, but did not actually quantify the risk in any way. I could just as easily say that there was no risk at all since the government was obviously not going to allow those institutions to fail.
- ThomPete 12y ago
  The claim that I answered where "Money were made" it didn't quantify it either so I fail to see the point.
- marcusgarvey 12y ago
  One way to infer: what's the risk of lending to a company that's facing an existential crisis, that's in such dire straits that no one else would lend to it?
smileysteve 12y ago
This ignores the risk of not lending them out, which is difficult to quantify, but is considered significantly greater than 0.
- ThomPete 12y ago
  Not sure I understand. The difficulty of lending them out should just increases the risk of lending them out and therefore the need to recoup that risk by a proper margin. Thats not what happened when the banks regardless of contracts still gave out large bonuses many times more than the return to the taxpayers. That simply doesn't add up.
  - smileysteve 12y ago
    The risk of not lending the banks out is a depression where the currency / global economy may have lost more value. Example: The gov only made 8.5%, but if the US costs have increased 16% over the same period (because of a depression), the overall return is more like 24.5%, ignoring the additional costs of a depression.

marcusgarvey 12y ago

"Made."

bmelton 12y ago

> So, money was made? I don't know the details of when the money was disbursed and when the money was recuperated, but if it were disbursed in 2008, and recouped in, say, 2014, there was a 10% rate of inflation, which devalues the currency to the point that no, money was not made. If 2013, the rate of inflation was 8.2%, which leaves a .4% "profit", assuming no other costs. If 2012, the rate of inflation was 6.6%, leaving a 2% profit, etc. Of course, this assumes the money wouldn't have performed in any way just sitting in the government coffers, and I honestly don't know enough to even begin to evaluate whether it would have.

yummyfajitas 12y ago
Inflation was 1.5-1.6%. http://research.stlouisfed.org/fred2/data/CPIAUCSL.txt http://research.stlouisfed.org/fred2/data/CPIAUCSL.txt edit: computation done by comparing Jan 1 2012 to Jan 1 2013, etc.
- philh 12y ago
  Between which dates? If I'm reading this correctly, Jan 08 to Jan 14 is 212 to 234, which is about 10%. (This also matches the statistic that I happen to have memorized of 8% inflation between 2010 and 2014.)