The Washington Post Peddles Good TARP PR
Selling TARP is a hard job, but Robert Samuelson does a great job in the Washington Post:
It isn’t often that the government launches a major program that achieves its main goals at a tiny fraction of its estimated costs. That’s the story of TARP — the Troubled Assets Relief Program. Created in October 2008 at the height of the financial crisis, it helped stabilize the economy, using only $410 billion of its authorized $700 billion. And most of that will be repaid. The Congressional Budget Office, which once projected TARP’s ultimate cost at $356 billion, now says $19 billion. This could go lower.
You would hardly know.
Almost everyone loves to hate TARP. It’s a favorite political sport of liberals, conservatives, Republicans, Democrats — and the public. A Bloomberg poll last October asked how TARP had affected the economy. Forty-three percent of respondents said it weakened the economy; 21 percent said it made no difference; only 24 percent said it helped, with 12 percent unsure one way or another. Commentators in newspapers from the Wall Street Journal to the New York Times disparage TARP.
One lesson of the financial crisis is this: When the entire financial system succumbs to panic, only the government is powerful enough to prevent a complete collapse. Panics signify the triumph of fear. TARP was part of the process by which fear was overcome. It wasn’t the only part, but it was an essential part. Without TARP, we’d be worse off today. No one can say whether unemployment would be 11 percent or 14 percent; it certainly wouldn’t be 8.9 percent.
Wow, really? This article should read "advertisement" at the top and clearly disclaim that it was paid for by the Treasury and/or Fed, which they wrote off as PR.
The issue most reasonable people have with TARP is not how much we actually paid for it (because Big Daddy Bernanke is just going to print up a fresh truckload of $100 bills anyway, we might as well get something out of it) but the fact hat it happened in the first place.
Worse, the same financial rocket scientists who engineered the economy-collapsing securities and needed the government to swoop in and save them in the first place are now first in line at the trough to buy these same financial instruments. If you ask me, it looks like one big money laundering operation, in which the Bernanke Crime Family is the worst of the perps.
My other issue with TARP is that it was not packaged as the bailout free-for-all it ultimately became. If you remember (and I'm sure more than a few folks are hoping you won't - don't worry, your grandchildren won't when TARP is written into the publik skool textbooks), TARP was initially packaged as PPIP. Then Treasury Secretary Hank Evil Crooked Pinky Bastard Paulson said they intended to buy these so-called toxic assets (an oxymoron at best), removing them from the financial system so they could contain the infection. Cute but that's not at all what happened.
Moral hazard is never a good thing, especially when the message is clear: one nation under cheap money.
One day, we'll have to pay. And the final bill is going to be much, much larger than a measly $700 billion.