Aside from being very light on facts (and wrong), the Atrios/Huffpo argument rests on the right-wing economic idea that the financial markets are all knowing. Actual liberal/left economists like Keynes are not so convinced that stock traders are so smart. Keynes compared stock markets to a game where you try to guess who will win a beauty contest - you try to guess what other people will find beautiful. In fact, if there is one fundamental difference between liberal and right-wing economics it is that "the market" is a kind of Divine Power according to the right, a Divine Power that must be obeyed and appeased. Liberal economists are generally dubious of this idol worship, noting that financial markets are just something produced by fallible human beings. J.K. Galbraith said that by attributing powers to "the market", economists were able to pretend that there were no special interests involved. "The market" is really the sum of decisions of wealthy investors and managers of "other people's money". These people get caught up in panics and fads and may be greedy or shortsighted or just plain dumb. John Paulson made billions before the crash betting that "the market" was deluded about the high values of housing and billions more after the crash betting that the market was in an irrational panic about the value of stocks and commodities. The faith of false-liberals in what "the market" wants is, I think, evidence of how dominant right wing "freshwater" economics became during the last 30 years - to a point where it was the natural mode of thinking even for many economists who considered themselves "liberals" or "on the left". And this produced some really incoherent analysis that bounced back and forth between left wing solutions (like nationalizing banks) and right wing market idolization or a fixation on finance as if manufacturing was a simple side effect. Many of the false-liberals also were pretty ludicrously convinced that they were a lot smarter than anyone who disagreed. Here's Duncan Black citing Paul Krugman in March 2009.It's basically this. Administration officials were greeted with sarcasm and laughter Monday night when they briefed lawmakers and congressional staff on Treasury Secretary Tim Geithner's new financial-sector bailout project, according to people who were in the room. The laughter was at its height when Obama officials explained that the White House planned to guarantee a wide swath of toxic assets -- which they referred to as "legacy assets" -- but wouldn't be asking Congress for money. [...]
Appreciate that condescending "need to sit Geithner down and explain to him"? Note that the "shitpile" he is discussing there is exactly what Treasury is now selling at a 5%/year profit. When the false-liberals were not explaining that Geithner and his boss were stupid, they were coming up with less generous explanations. Here's Dr. Black a little later in March 2009.As Krugman explains, someone really needs to sit Geithner down and explain to him that all those pieces of shitpile are indeed really shitty. This fantasy of undervalued assets is just a fantasy.
- [...] Why do officials keep offering plans that nobody else finds credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as “toxic waste,” are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go away.
So, these "liberals" not only were dead wrong, but they were pushing a right wing view of economics and telling the public that the Obama administration was both corrupt and naive. The disagreement with the Obama administration was never expressed as a respectful difference of opinions, instead it was used as an excuse to denigrate the morals, courage, and intelligence of the Administration. Nothing prevented this same argument from being made as if it were a disagreement among people who wanted the same thing. But the sheer ugliness of the attack meant that as things improved, they got no notice.
Banksters, just pull the cash out of my back pocket during our group hug.
In his office's quarterly report to Congress in January, Barofsky said that "on the financial side, TARP's outlook has never been better," since the congressional Office of Management and Budget had lowered its estimate of TARP's cost to taxpayers from $341 billion in August 2009 to $25 billion in November 201Even worse, as things improved, certain critics went from wildly incorrect analysis to just plain fabrication. Here's Nomi Prins in a post with the title "Aren't Geithner and Bernanke eerily quiet about the Foreclosure Crisis?
The Fed owns nearly $1.5 trillion toxic assets that already have no bid (actual buyer), and will have less of a bid the more uncertainty there is about the loans that fill them. The Treasury is directly backing $400 billion of GSE securities, and is behind another $6.8 trillion of indirect backup to the GSE's. Both entities are desperately hoping the financial market doesn't seize up (yes the market, they don’t seem to be bothered about individuals and their homes), so they don't become the only bid again (well, actually still) behind any securitized asset. That would ruin their story – that the bailout worked even though it did absolutely nothing to help borrowers at the loan level, or by extension the general economy.When this article was written in October 2010, there was a huge and active market for the assets Ms. Prins was calling "no bid". And since then:
WASHINGTON — Profits at the Federal Reserve banks rose to a record $82 billion last year, a windfall for taxpayers that also underscores the depth of the Fed’s continued involvement in the nation’s financial markets. [..]If we had an actual liberal netroots, instead of making up fake scandals about TARP we could have actually tried to advocate liberal policies. TARP is a great example of a missed opportunity. In its original incarnation, the TARP funds remained with Treasury as a revolving fund. Instead of screaming about Timeh and the Banksters, an actual liberal netroots could have advocated to keep the fund available for investments in manufacturing and other job producing investments. TARP was already allocated money that could have been the infrastructure investment bank. But by insisting that TARP was a scandal, a criminal activity, the false left helped prevent the Obama administration from repeating the success of the auto industry bailout. It's never too late for admitting mistakes and moving on although the false liberals seem to be in no mood to try that. But it can be too late for real liberal economics if we continue to let the false liberals shout down any dissent from their wacky world view.
“It’s interest that the Treasury didn’t have to pay the Chinese,” the Federal Reserve chairman, Ben S. Bernanke, told Congress in January, after the central bank released a preliminary estimate of the annual transfer.
The financial statements show that the Fed earned about $3.5 billion last year from the Maiden Lane subsidiaries it created to buy assets from the investment bank Bear Stearns and the insurance company, American International Group.
The Fed also made $45 billion from its portfolio of roughly $1 trillion in mortgage-backed securities, which it amassed to help maintain the availability of mortgage loans.
And it made $26 billion from its portfolio of $1.1 trillion in government debt, acquired as part of a continuing effort to stimulate economic growth. [my bold ]
What do our opponents mean when they apply to us the label "Liberal?" If by "Liberal" they mean, as they want people to believe, someone who is soft in his policies abroad, who is against local government, and who is unconcerned with the taxpayer's dollar, then the record of this party and its members demonstrate that we are not that kind of "Liberal." But if by a "Liberal" they mean someone who looks ahead and not behind, someone who welcomes new ideas without rigid reactions, someone who cares about the welfare of the people -- their health, their housing, their schools, their jobs, their civil rights, and their civil liberties -- someone who believes we can break through the stalemate and suspicions that grip us in our policies abroad, if that is what they mean by a "Liberal," then I'm proud to say I'm a "Liberal." President John Kennedy.
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