…The 2012 Pelosi GTxi SS/RT Sport Edition!
…The 2012 Pelosi GTxi SS/RT Sport Edition!
The AP has come out with a story that provides details showing that Treasury Secretary Paulson “forced” at least nine banks to accept TARP funds. The most damning pieces of evidence are meeting documents “obtained and released by Judicial Watch, a nonpartisan educational foundation, the documents revealed “talking points” used by former Treasury Secretary Henry Paulson during the October 13 meeting between federal officials and the executives that stressed the investments would be required ‘in any circumstance,’ whether the banks found them appealing or not.”
Two thoughts immediately spring to mind after reading the article.
First, this kind of strong-arm power grab should make people think twice when they start talking about wanting more regulation in the private sector. I’ve been accused by a friend of acting as if we can have a world where the free market works perfectly and unfettered without consequences. I don’t believe that, but I do believe that the free market is the best system we have and that although some regulation is necessary, in general, the less regulation the better. If the TARP and housing bust situations have nothing else to teach us, they at least show us that government is just as corrupt and greedy, if not more so, than private actors in the free market.
My second thought could best be described as disappointment. It it no secret that I have admired George W Bush. I have always thought that history would be kind to him for exactly the reason the present hasn’t been. He dealt with a situation that was entirely new and foreign to our nation. He had to decide how to prosecute a unconventional war against not another nation, but rather, several groups that arguably don’t even believe that nation-states should exist and are bent on nothing less than the destruction of the Western way of life. But now, even if history does vindicate his positions on the war on terror, I don’t see how it can vindicate the fact that it appears that GWB, a Republican, began the largest expansion of the Federal Government into the private sector that our country has ever seen. I remember at the time of the Auto Bailouts and when TARP was being debated, GWB came out and said something like, I had to set aside my free market principles for the good of the country because we couldn’t let these businesses fail. Well first off I call BS on that. There are no businesses too important to fail. And really if we had just refused to help these companies and let them hash things out in bankruptcy court their road to recovery would be all the more speedy. Secondly, principles aren’t very principled if you can set them aside. And if you have to set them aside for the “good of the country” maybe they aren’t the principles you should be subscribing to in the first place. I don’t know to what extent Bush knew what Paulson was doing. But it seems he allowed himself to be flim-flammed by Paulson and Bernanke into agreeing to all this. For me that will forever taint my otherwise high opinion of him.
My wife and I were discussing the recent crazed spending spree that our new administration has embarked upon and how, pretty soon, we’ll have to start talking about our national deficit in gazillions of dollars. Anyway, Jonah Goldberg had a post that linked to this site that has a physical representation of what $ 1 Trillion looks like. It is mind boggling. He also had a reader email him with this:
Thank you for that cool link showing the pallets of $100 bills used to comprise a trillion dollars. As a physicist, when I first heard about the ginormous quantities of cash in this infernal porkulus bill, I couldn’t help but do a quick back-of-the-envelope calculation that yields a sense of the size of the trillion dollars my descendants will owe. It’s one thing to juggle exponents; it’s another to conceptualize how much a trillion really is.
After I navigated to your link, I used a Vernier caliper to make my calculation a little more quantitative. A stack of 4 bills is 0.5 millimeters thick, so ten bills are 1.25 mm thick. Let’s round down to 1.2 mm for a stack of ten bills.
Therefore, a trillion dollars is ten billion (1010) $100 dollar bills, corresponding to a stack of bills 1200 km or 740 miles high! If the bills were $1 bills, there would be1012 (a trillion) of them, and they’d form a stack 74,000 miles high, or 30% the distance to the Moon!
Suppose the bills were joined end-to-end. Dollar bills are about 6 inches or 15 cm long, so 10 billion $100 dollar bills would form a belt 1.5 x 106 (1.5 million) km long. That’s about 900,000 miles long, almost four times the Earth-Moon distance.
And if you string a trillion $1 bills end-to-end, you’d get a belt o’ bills a hundred times longer than that, or about 90 million miles. You’re past Mars’s orbit and entering the asteroid belt going away from the Sun, and in the other direction, you’ve about reached the Sun!
Do those guys spending our money really know how much cash that is?
I was going to write a brief post on Obama’s proposal to limit executive pay for companies taking TARP money, but Dan Mitchell did a post on National Review’s blog page, The Corner, that says everything I was going to say.
I have mixed feelings about President Obama’s proposal. Government-imposed pay restrictions are a very bad idea. We have 40 centuries of evidence showing that price controls always undermine economic performance.
But in the case of executives who came begging to the feds after mismanaging their companies: Sorry, guys, you asked for it.
Any government interference gets me very nervous, especially since it may lead to further meddling by politicians, but there is a silver lining. Bailouts are a major threat to the economy’s long-run dynamism, so we should discourage companies from sticking their snouts in the public trough. And if pay restrictions convince some of these CEOs that they should try to make money by serving the interests of consumers rather than hiring the slickest lobbyists in Washington, that creates a win-win situation for taxpayers and the economy.
The best option, of course, is to stop bailing out incompetent companies. But if we are forced to choose from second-best options, there is no ideal answer. Some argue, quite compellingly, that restricting pay for incompetent corporate executives of private companies is not a proper role of government (by definition, successful corporate executives do not need bailouts). On the other hand, companies mooching off the taxpayer are no longer private concerns. Corporate chieftains who run their companies into the ground should not be allowed to simultaneously shift the burden of their mistakes to taxpayers and expect multi-million dollar pay packages. Unless, of course, we think Fannie Mae and Freddie Mac are good role models.
Please, please, please let this be true.
There is a good blog entry by John Hood that gives conservatives some good resources for countering the inevitable name calling and obfuscating that liberals will be doing for at least the next four years.