I recommend everyone at least read this summary of a recent publication by two economists at The Levy Economics Institute of Bard College (summary taken from this website):
"In this Special Report, Levy scholars Ajit Zacharias, Thomas Masterson, and Kijong Kim provide a preliminary assessment of the 2009 American Recovery and Reinvestment Act (ARRA), a package of transfers and tax cuts that is expected to provide relief to low-income and vulnerable households especially hurt by the economic crisis, while at the same time supporting aggregate demand. By the administration’s estimate, ARRA will create or save approximately three and a half million jobs by the end of 2010; while the ameliorating impact of the stimulus plan on the employment situation is surely welcome, say the authors, the government could have achieved far more at the same cost by skewing the stimulus package toward outlays rather than tax cuts. Their analysis points toward the necessity for a comprehensive employment strategy that goes well beyond ARRA. The need for public provisioning of various sorts—ranging from early childhood education centers to public health facilities to the “greening” of public transportation—coupled with the severe underutilization of labor, naturally suggests an expanded role for public employment as a desirable ingredient in any alternative strategy."
If you are interested in reading the complete article (only four-and-a-half pages), it can be directly downloaded here.
Showing posts with label Bailout. Show all posts
Showing posts with label Bailout. Show all posts
September 03, 2009
May 08, 2009
A fascinating look at some banks.
Update: The link to the WSJ graphic is now included. Sorry about that.
The Wall Street Journal has posted a great "interactive graphic" that compares the 19 stress-tested banks on a number of criteria including new capital needed, tier 1 common capital ratio, and amount of TARP funding received.
A related aside: I love complex graphics along these lines and don't think that the value of such graphics can be overstated when one considers the graphics' ability to convey different depths of information for those of different intelligence and interest levels. Nate Silver does a great job with his graphics, for example "A Starry-Eyed Look at the 2012 Republican Field." The most cursory glance tells you nothing more than which candidates are present and which candidates might be similar to one another simply because there is little distance between them (basically the level of focus shown by someone who just wants to pretend to be smart around others, e.g. "I'd say Huckabee, Romney, Jindal, and Palin are the favorites."). The next level of information gets into actually looking at those axes and understanding what they imply. The third level takes into account the size of each bubble: the larger the bubble the greater the public support for that candidate. Finally, one can, as Nate suggests, consider the implications of the political 'gravity' exerted by each of these 'planets.' That is, one can imagine that when one politician gains support (that is, his planet grows) it must be pulling that support from elsewhere (that is, exerting a political gravity on the supporters of the other planets, pulling them away).
Honestly, this post did begin as a quick post only focused on that banks graphic; it spiraled out of my control once I started talking about the always riveting topic of graphics! I hope it all made sense.
The Wall Street Journal has posted a great "interactive graphic" that compares the 19 stress-tested banks on a number of criteria including new capital needed, tier 1 common capital ratio, and amount of TARP funding received.
A related aside: I love complex graphics along these lines and don't think that the value of such graphics can be overstated when one considers the graphics' ability to convey different depths of information for those of different intelligence and interest levels. Nate Silver does a great job with his graphics, for example "A Starry-Eyed Look at the 2012 Republican Field." The most cursory glance tells you nothing more than which candidates are present and which candidates might be similar to one another simply because there is little distance between them (basically the level of focus shown by someone who just wants to pretend to be smart around others, e.g. "I'd say Huckabee, Romney, Jindal, and Palin are the favorites."). The next level of information gets into actually looking at those axes and understanding what they imply. The third level takes into account the size of each bubble: the larger the bubble the greater the public support for that candidate. Finally, one can, as Nate suggests, consider the implications of the political 'gravity' exerted by each of these 'planets.' That is, one can imagine that when one politician gains support (that is, his planet grows) it must be pulling that support from elsewhere (that is, exerting a political gravity on the supporters of the other planets, pulling them away).
Honestly, this post did begin as a quick post only focused on that banks graphic; it spiraled out of my control once I started talking about the always riveting topic of graphics! I hope it all made sense.
March 19, 2009
Arrogant, Incompetent, and Greedy? I thought Obama was only one of those things ...
(and I mean that in the best way ...)
Just picture someone saying "It's the principle of the thing!" and you've probably got in mind someone who is at least 80 years old, and one way or another could be described by the word "crusty."
Well that's just what's going on with AIG. $165M is a lot of money, but the undeserved portion of that (due to arrogance, incompetence, or greed) is a far smaller number. Generously calling it half, I'll say this $80M is not that much to get worried about, and it's certainly not anything worth upending the structure of our legal system for.
That said, "someone" secretly removed a provision from the stimulus bill that would deal with this issue of AIG bonuses. And no matter which side of the argument you are on, you can bet that when there's a sixth of a billion dollars on the table, Principle can't afford a ticket to the show.
So who might have been a little more than friends with the folks at AIG? Let's check out the top ten list from OpenSecrets.org and see who's been getting the most contributions from AIG in the past 20 years:
An interesting list, to be sure, but still not the way I like it. Let's find out how much AIG has been shelling out to these guys on an annual basis:
Now look, I'm not out-and-out accusing Barack Obama of being corrupt on this one, though I wouldn't be surprised either. But if you're mad about AIG, it's hard not to take a look at this list and think things through.
And honestly, if you really want to know who I think is behind this "secret revision" in the stimulus bill, my money's on Chris Dodd. That's one corrupt (looking!) dude right there. (Side note) And increasingly, the rumor is that his Senate seat might be in jeopardy, something unheard of for a 34-year, extremely powerful Democratic Congressman from a very blue state.
Just picture someone saying "It's the principle of the thing!" and you've probably got in mind someone who is at least 80 years old, and one way or another could be described by the word "crusty."
Well that's just what's going on with AIG. $165M is a lot of money, but the undeserved portion of that (due to arrogance, incompetence, or greed) is a far smaller number. Generously calling it half, I'll say this $80M is not that much to get worried about, and it's certainly not anything worth upending the structure of our legal system for.
That said, "someone" secretly removed a provision from the stimulus bill that would deal with this issue of AIG bonuses. And no matter which side of the argument you are on, you can bet that when there's a sixth of a billion dollars on the table, Principle can't afford a ticket to the show.
So who might have been a little more than friends with the folks at AIG? Let's check out the top ten list from OpenSecrets.org and see who's been getting the most contributions from AIG in the past 20 years:
| Dodd, Chris (D) | $281,038 | ||
| | Bush, George W (R) | $200,560 | |
| Schumer, Charles (D) | $111,875 | ||
| Obama, Barack (D) | $110,332 | ||
| McCain, John (R) | $99,249 | ||
| Baucus, Max (D) | $90,000 | ||
| Kerry, John (D) | $85,000 | ||
| Johnson, Nancy L (R) | $75,400 | ||
| Sununu, John E (R) | $69,049 | ||
| Clinton, Hillary (D) | $61,515 |
An interesting list, to be sure, but still not the way I like it. Let's find out how much AIG has been shelling out to these guys on an annual basis:
| Federal Candidate | Total | Yrs | Annual | |
| Obama, Barack (D) | $110,332 | 4 | $27,583 | |
| Bush, George W (R) | $200,560 | 8 | $25,070 | |
| Dodd, Chris (D) | $281,038 | 20 | $14,052 | |
| Clinton, Hillary (D) | $61,515 | 8 | $7,689 | |
| Sununu, John E (R) | $69,049 | 12 | $5,754 | |
| Schumer, Charles (D) | $111,875 | 20 | $5,594 | |
| McCain, John (R) | $99,249 | 20 | $4,962 | |
| Baucus, Max (D) | $90,000 | 20 | $4,500 | |
| Kerry, John (D) | $85,000 | 20 | $4,250 | |
| Johnson, Nancy (R) | $75,400 | 18 | $4,189 |
Now look, I'm not out-and-out accusing Barack Obama of being corrupt on this one, though I wouldn't be surprised either. But if you're mad about AIG, it's hard not to take a look at this list and think things through.
And honestly, if you really want to know who I think is behind this "secret revision" in the stimulus bill, my money's on Chris Dodd. That's one corrupt (looking!) dude right there. (Side note) And increasingly, the rumor is that his Senate seat might be in jeopardy, something unheard of for a 34-year, extremely powerful Democratic Congressman from a very blue state.
January 21, 2009
God help us
We're in deeper shit than I thought.
Getting dressed this morning, I saw a financial expert on FOX News(!) who was saying that:
1. Obama's stimulus needed to be at least $900 billion.
2. The $700 billion TARP needed to be expanded to at least $1 trillion.
3. The government needs to nationalize the banks much more quickly than they are.
Oh dear god, help us now.
Getting dressed this morning, I saw a financial expert on FOX News(!) who was saying that:
1. Obama's stimulus needed to be at least $900 billion.
2. The $700 billion TARP needed to be expanded to at least $1 trillion.
3. The government needs to nationalize the banks much more quickly than they are.
Oh dear god, help us now.
January 16, 2009
That's a lot of money
Christopher Buckley, or C-Buckz, as I'm tempted to call him (just kidding, although that really makes me wish he'd marry Star Jones so she could be Star-Buckz - sorry, it's been a long week) has an article at the Beast trying to put a handle on how much the $1.2 trillion dollar deficit really is. And while I like what he does, he's taking a macro approach, and before I had read it I was already planning on taking more of a micro approach.
Let's start with Bernie Madoff. One fraud case, 50 billion dollars. That's a lot of money. A whole lot. It averages out to about $170 for every man, woman, and child in America.
Now, you didn't lose $170 in the Madoff fraud case, which you're probably pretty happy about. And that makes you like most Americans - almost all of them in fact. But for every American who didn't get ripped off by Madoff, that means that one of them who did lost an extra 170 bucks. Put another way, if you put all Americans on one side of a giant room with a big line down the middle, then for every single person that got to cross the line to the "didn't invest" side, some investor would have to pay $170. Just think about how long that would take ...
Now think about the stimulus. The tax rebate stimulus in early 2008 was $150 billion. Then TARP was $700 billion. Now Obama proposes another $825 billion. That adds up to $1.675 trillion (Just for fun: $1,675,000,000,000) There are 138 million taxpayers in the United States, so this amounts to $12,140 per taxpayer. That's incredible! Essentially, the federal government is forcing taxpayers to band together and go into (an additional!) $12,140 worth of collective debt each (albeit at a low interest rate, and of course the burden is not evenly distributed).
The entirety of the debt when Clinton left office was under $6 trillion. It's now over $10 trillion with $1 trillion deficits projected indefinitely. And we haven't even gotten to Social Security et al yet.
Let's start with Bernie Madoff. One fraud case, 50 billion dollars. That's a lot of money. A whole lot. It averages out to about $170 for every man, woman, and child in America.
Now, you didn't lose $170 in the Madoff fraud case, which you're probably pretty happy about. And that makes you like most Americans - almost all of them in fact. But for every American who didn't get ripped off by Madoff, that means that one of them who did lost an extra 170 bucks. Put another way, if you put all Americans on one side of a giant room with a big line down the middle, then for every single person that got to cross the line to the "didn't invest" side, some investor would have to pay $170. Just think about how long that would take ...
Now think about the stimulus. The tax rebate stimulus in early 2008 was $150 billion. Then TARP was $700 billion. Now Obama proposes another $825 billion. That adds up to $1.675 trillion (Just for fun: $1,675,000,000,000) There are 138 million taxpayers in the United States, so this amounts to $12,140 per taxpayer. That's incredible! Essentially, the federal government is forcing taxpayers to band together and go into (an additional!) $12,140 worth of collective debt each (albeit at a low interest rate, and of course the burden is not evenly distributed).
The entirety of the debt when Clinton left office was under $6 trillion. It's now over $10 trillion with $1 trillion deficits projected indefinitely. And we haven't even gotten to Social Security et al yet.
January 09, 2009
Obama/Senate honeymoon over?
I saw this paragraph in an NYT article (as in, the paper version) this morning and thought the phrasing was hilarious:
"President-elect Barack Obama’s economic recovery plan ran into crossfire from his own party in Congress on Thursday, suggesting that quick passage of spending programs and tax cuts could require more time and negotiation than Democrats once hoped."
Don't you hate it when quick passage requires more time?
I could add some analysis of the stimulus, but 538's is more interesting. Apparently public perception of the "stimulus" is way better than the "bailout," so the opposition that the bailout saw from moderate Republicans just before the election is unlikely to be repeated, and Obama will likely get most of what he wants.
"President-elect Barack Obama’s economic recovery plan ran into crossfire from his own party in Congress on Thursday, suggesting that quick passage of spending programs and tax cuts could require more time and negotiation than Democrats once hoped."
Don't you hate it when quick passage requires more time?
I could add some analysis of the stimulus, but 538's is more interesting. Apparently public perception of the "stimulus" is way better than the "bailout," so the opposition that the bailout saw from moderate Republicans just before the election is unlikely to be repeated, and Obama will likely get most of what he wants.
December 12, 2008
Two Bailout Proposals
OK, so I didn't even read the first one. It apparently says that only two automakers should get bailout money, based on whoever will bid the lowest price. More interesting than the idea? The source. What's Eliot Spitzer doing back in the news?
Another idea ... Why do the taxpayers have to cough up this dough? How about the government does a 401(k)-style match, essentially a subsidy for investing in the automakers specifically, so that most of the money is still coming in from the private sector? Administratively complicated, but theoretically superior, at least as far as I can tell.
Another idea ... Why do the taxpayers have to cough up this dough? How about the government does a 401(k)-style match, essentially a subsidy for investing in the automakers specifically, so that most of the money is still coming in from the private sector? Administratively complicated, but theoretically superior, at least as far as I can tell.
Well that didn't take long ...
"Hey, you think we've waited long enough? Can we start calling our opponents un-American now that we've got the power?"
"Long enough? Jenny, we just won the election. Like, barely a month ago. I mean, hell, we haven't even taken office yet. There's still only 51 Democrats in the Senate and there's still a Texan in the White House. I'm not sure that counts as 'waiting'."
"Yeah, I guess that makes sense. But this auto bailout thing - I really want it! I can't believe I have to wait even longer. This is totally unfair!"
"Dude, you can just wait a month and then we'll be in power."
"But I want it now! You know what? Screw it, I'm calling the Republicans un-American."
"No! You can't do that! That'll make us look just like those oth- ... too late."
"Long enough? Jenny, we just won the election. Like, barely a month ago. I mean, hell, we haven't even taken office yet. There's still only 51 Democrats in the Senate and there's still a Texan in the White House. I'm not sure that counts as 'waiting'."
"Yeah, I guess that makes sense. But this auto bailout thing - I really want it! I can't believe I have to wait even longer. This is totally unfair!"
"Dude, you can just wait a month and then we'll be in power."
"But I want it now! You know what? Screw it, I'm calling the Republicans un-American."
"No! You can't do that! That'll make us look just like those oth- ... too late."
December 09, 2008
Stimulus/Rebate
I've heard from a number of source, not the first of which is this one, the following bailout proposal. Since the $350B left to spend in the bailout package is approximately equal to two months of federal government income, just have a two month holiday on all taxes of all forms.
This sounds totally reasonable, but the same way a flat-dollar rebate (though there were adjustments to fix this) is extremely progressive, this tax holiday would be extremely regressive. Many poor Americans pay no tax at all (and I suppose the shut off valve for taxes wouldn't take away earned income tax credits ...) and of course those who pay the most in taxes would see the most benefit. So of course conservatives are all over this but don't be fooled - it's a (thinly) veiled regression of the tax code.
This sounds totally reasonable, but the same way a flat-dollar rebate (though there were adjustments to fix this) is extremely progressive, this tax holiday would be extremely regressive. Many poor Americans pay no tax at all (and I suppose the shut off valve for taxes wouldn't take away earned income tax credits ...) and of course those who pay the most in taxes would see the most benefit. So of course conservatives are all over this but don't be fooled - it's a (thinly) veiled regression of the tax code.
December 03, 2008
The Big Three Killed My Baby
Reason 8,756 I love The White Stripes: Occasionally topical songs! (Very rare, as Jack White doesn't believe in political music as an effective means of creating change.)
"The Big Three Killed My Baby" is a song that rips into the Big Three, with some fairly entertaining lines like, "Better ideas are stuck in the mud," and, "Don't let 'em tell you the future's electric/ 'cause gasoline's not measured in metric."
If you would like the song just email me.
Lyrics:
The big three killed my baby
No money in my hand again
The big three killed my baby
Nobodys coming home again
Their ideas make me wanna spit
A hundred dollars goes down the pit
Thirty-thousand wheels a rollin
And my stick shift hands are swollen
Everything involved is shady
The big three killed my baby yeah yeah yeah
The big three killed my baby
No money in my hand again
The big three killed my baby
Nobodys comin home again
Why don't cha take the day off and try to repair
A billion others don't seem to care
Better ideas are stuck in the mud
The motor's runnin on tucker's blood
Don't let 'em tell you the future's electric
'cause gasoline's not measured in metric
Thirty-thousand wheels a spinnin
And oil company faces are grinnin
And now my hand are turnin red
And i found out my baby is dead yeah yeah yeah
The big three killed my baby
No money in my hand again
The big three killed my baby
Nobody's comin home again
Well i've said it now
Nothings changed
People are burnin for pocket change
And creative minds are lazy
And the big three killed my baby yeah yeah yeah
And my baby's my common sense
So don't think im puttin up some esense
And my baby's my common sense
Yeah im about to have another blow up (2x)
"The Big Three Killed My Baby" is a song that rips into the Big Three, with some fairly entertaining lines like, "Better ideas are stuck in the mud," and, "Don't let 'em tell you the future's electric/ 'cause gasoline's not measured in metric."
If you would like the song just email me.
Lyrics:
The big three killed my baby
No money in my hand again
The big three killed my baby
Nobodys coming home again
Their ideas make me wanna spit
A hundred dollars goes down the pit
Thirty-thousand wheels a rollin
And my stick shift hands are swollen
Everything involved is shady
The big three killed my baby yeah yeah yeah
The big three killed my baby
No money in my hand again
The big three killed my baby
Nobodys comin home again
Why don't cha take the day off and try to repair
A billion others don't seem to care
Better ideas are stuck in the mud
The motor's runnin on tucker's blood
Don't let 'em tell you the future's electric
'cause gasoline's not measured in metric
Thirty-thousand wheels a spinnin
And oil company faces are grinnin
And now my hand are turnin red
And i found out my baby is dead yeah yeah yeah
The big three killed my baby
No money in my hand again
The big three killed my baby
Nobody's comin home again
Well i've said it now
Nothings changed
People are burnin for pocket change
And creative minds are lazy
And the big three killed my baby yeah yeah yeah
And my baby's my common sense
So don't think im puttin up some esense
And my baby's my common sense
Yeah im about to have another blow up (2x)
The big three
This is the best source of information on whether or not the big three should be bailed out that I have seen.
November 19, 2008
Let's make the best of the bailout...
...by letting China do it for us!. The author goes on to point out that any offer from a Chinese firm could put US legislators in a tough spot where they must decide between: 1. Denying China something it really wants while at the same time ignoring a legitimate bid for a company in a capitalist market in favor of either bankrupting the company or financing it with taxpayer money; and 2. Allowing the Chinese to acquire some of the American Brand. Tough spot for them. It should be interesting to see how ideology holds up with the Chinese making a play along these lines.
Romney cedes 2012?
I guess you NYT people saw this, but Mitt Romney, who idiot pundits liked to say could have carried Michigan because he graduated high school there in 1965, has an article out today in which he says that the automakers should be allowed to fail.
As a politician who currently holds no office and one assumes is still aspiring towards one, why on earth would you say something like that? What if it happens? Thousands of jobs will be lost, even if the greater long-term interest is actually served. You alienate blue-collar workers, who are becoming more important to the Republican party in the new economy (young white-collar workers did mean that Colorado, Virginia, and to a lesser extent North Carolina were actual shifts in the map this year, just as older, less-educated Missouri also shifted to the right). You certainly aren't gaining any votes by making this proclamation. I could go on, but I guess you guys get the point. Right or wrong, I don't see how coming out with this helps you at all. I suppose there's a chance the majority of Americans favor letting them fail (only with some sort of line about how they've been digging their own grave, which I suppose is fair) but they won't be too happy about it if they get what they want and unemployment spikes. It just seems like a no-win statement.
As a politician who currently holds no office and one assumes is still aspiring towards one, why on earth would you say something like that? What if it happens? Thousands of jobs will be lost, even if the greater long-term interest is actually served. You alienate blue-collar workers, who are becoming more important to the Republican party in the new economy (young white-collar workers did mean that Colorado, Virginia, and to a lesser extent North Carolina were actual shifts in the map this year, just as older, less-educated Missouri also shifted to the right). You certainly aren't gaining any votes by making this proclamation. I could go on, but I guess you guys get the point. Right or wrong, I don't see how coming out with this helps you at all. I suppose there's a chance the majority of Americans favor letting them fail (only with some sort of line about how they've been digging their own grave, which I suppose is fair) but they won't be too happy about it if they get what they want and unemployment spikes. It just seems like a no-win statement.
November 14, 2008
Car talk
I can't remember in which thread Chris asked about opinions on the possibility of a bailout for the automakers in the USA, so I decided to start a new thread.
Overall I think the bailout is necessary. Because the credit markets have dried up completely the major automakers would be unable to file for chapter 11 bankruptcy, which requires the company to continue operating during the proceedings. Without access to credit they would be forced to stop operating, which drops them into chapter 7 bankruptcy, also known as total liquidation. I would love to support the free-market argument right now, but I am not sure that the efficiency gains that would be brought about by the death of these dinosaurs of companies, these iconic names of America, would offset the negative effects of the layoffs, the further drop in (The Conference Board's index of) consumer confidence (already at its lowest level since the index was created in 1967), and the ripple effects felt by supporting industries (e.g. car sales lots).
All that said, I really wish I could see domestic car companies die because of their stupid decisions (e.g. non-military Hummers). But allowing these companies to die as the economy heads into a recession may significantly increase the likelihood that the recession becomes a depression, a risk I do not think this country should take, particularly as the 'untouchable' Eurozone declares itself to be in a recession.
Overall I think the bailout is necessary. Because the credit markets have dried up completely the major automakers would be unable to file for chapter 11 bankruptcy, which requires the company to continue operating during the proceedings. Without access to credit they would be forced to stop operating, which drops them into chapter 7 bankruptcy, also known as total liquidation. I would love to support the free-market argument right now, but I am not sure that the efficiency gains that would be brought about by the death of these dinosaurs of companies, these iconic names of America, would offset the negative effects of the layoffs, the further drop in (The Conference Board's index of) consumer confidence (already at its lowest level since the index was created in 1967), and the ripple effects felt by supporting industries (e.g. car sales lots).
All that said, I really wish I could see domestic car companies die because of their stupid decisions (e.g. non-military Hummers). But allowing these companies to die as the economy heads into a recession may significantly increase the likelihood that the recession becomes a depression, a risk I do not think this country should take, particularly as the 'untouchable' Eurozone declares itself to be in a recession.
November 12, 2008
What to do about the Big 3
Well this is an active morning at the message board. So here's my question: what should we do with GM, Ford, and Chrysler?
I don't want to poison the well or whatever the phrase is, so I'll hold off a bit before commenting.
I don't want to poison the well or whatever the phrase is, so I'll hold off a bit before commenting.
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