Red States Spend $2 Billion MORE, Just To Spite ACA

[MagickMan]

It's clear that your considerations are based on flawed ideology rather than reality.

No, not really. When you reinforce the idea that some institutions are "too important to fail" you create a hierarchy that no one can effectively control or topple (if needs be).

 

[fskimospy]

http://www.usnews.com/opinion/econo...bank-bailouts-are-an-incentive-to-be-reckless

Oh, an old op-ed from a right wing think tank, the usual standard for evidence.

Just an FYI, the 'too big to fail' subsidy that he bases his point on no longer exists: (look at the chart on page 3)

http://www.gao.gov/assets/670/665162.pdf

So if there's no longer a meaningful risk difference, it seems like his point is now invalid. Do you want to reconsider?

I'm seeing the polls were split, what evidence do you have to support that?

I'm seeing exactly one poll, the Pew poll, that showed majority support for it at the time of the crisis. It used wording that was dramatically different from all the others, and while I think it actually accurately captured what the bailout did, it did not accurately capture what Americans THINK the bank bailout did. Polling support for it has been nearly uniformly negative.

 

[realibrad]

Not only did you mix up the order of Wilson->FDR, but the first two farm subsidy statutes were passed in 1922 and 1929, under republicans. The one you mention under FDR was the third.

I did get the order of the presidents wrong and I can admit that.

What subsidies are you talking about in 1922 and 1929?

In 1922 I find Capper-Volstead Act which was not a subsidy but was protection from anti-trust laws.

In 1929 you get the Agricultural Marketing Act of 1929 which is interesting. It was passed by Hoover so not a D. It also distorted the market and farmers started producing more crops because they realized they had a guaranteed purchaser of goods.

Again, R's have done shit too. I am not trying to say that R's are better for the economy. The difference is that when the R's do something, its usually under the idea to help the top. When the D's do something, its to help the bottom when in reality it helps the top.

If you are going to try to imply that subsidies are not a D thing right now, then I dont know what to say. The R's push for less government which would reduce subsidies. In reality, they just want less government in some areas to benefit the wealthy. The D's want more government to protect the bottom which ends up costing the bottom more in the long run and usually benefits the top.

Farm subsidies are a perfect example of this.

 

[realibrad]

Oh, an old op-ed from a right wing think tank, the usual standard for evidence.

Just an FYI, the 'too big to fail' subsidy that he bases his point on no longer exists: (look at the chart on page 3)

http://www.gao.gov/assets/670/665162.pdf

So if there's no longer a meaningful risk difference, it seems like his point is now invalid. Do you want to reconsider?



I'm seeing exactly one poll, the Pew poll, that showed majority support for it at the time of the crisis. It used wording that was dramatically different from all the others, and while I think it actually accurately captured what the bailout did, it did not accurately capture what Americans THINK the bank bailout did. Polling support for it has been nearly uniformly negative.

This analysis builds on certain aspects of prior studies, but
important limitations remain and these results should be
interpreted with caution. GAO’s estimates of differences in
funding costs reflect a combination of several factors,
including investors’ beliefs about the likelihood a bank
holding company will fail and the likelihood it will be rescued
by the government if it fails, and cannot precisely identify
the influence of each factor. In addition, these estimates
may reflect factors other than investors’ beliefs about the
likelihood of government support and may also reflect
differences in the characteristics of bank holding companies
that do and do not issue bonds. Finally, GAO’s estimates,
like all past estimates, are not indicative of future trends.

Seems like they are saying it could go either way no?

 

[Jhhnn]

No, not really. When you reinforce the idea that some institutions are "too important to fail" you create a hierarchy that no one can effectively control or topple (if needs be).

Weak sauce because the moral hazard was already there when the crisis occurred. Both the S&L bailout & the LTCM affair established the Greenspan Put. When Bush regulators gave them the green light, lenders acted accordingly & put the pedal to the metal. Drag racing in the heart of the financial system.

In the meanwhile, Dodd-Frank changed the rules. The big investment banks were also forced to reorganize as better regulated commercial banks.

Both Lenders & Repubs are doing their best to roll it back & return to their risk taking ways. Imagine that.

Google "Dodd-Frank Republicans".

You exhibit the usual backward looking recriminations that distract us from the future. TARP & the bailout are done, history. So we have to figure out how to structure the system to avoid those moral hazard conflicts of interest or be prepared to live with the consequences of history repeating itself in boom/bust cycles that do not serve the interests of the vast majority of Americans. We actually did that decently well under New Deal guidelines pre-Reagan.

The world of finance has obviously changed in the meanwhile & we need to change our headsets to account for that if we're to be reasonably safe from the, uhh, overexuberance of lenders.

It's a really simple choice currently drawn along partisan lines with Repubs showing no concern for moral hazards in the whatsoever.

 

[fskimospy]

Seems like they are saying it could go either way no?

I think they are trying to measure something that's really hard to measure so they picked a composite of more than 40 different models. Most of them show no effect.

 

[realibrad]

I think they are trying to measure something that's really hard to measure so they picked a composite of more than 40 different models. Most of them show no effect.

I thought the paper said that there might be a reduction in risk, or there might not be. I did not get the sense that anything had changed.

Am I misunderstanding the context of this? I did jump in a little late.

 

[fskimospy]

I thought the paper said that there might be a reduction in risk, or there might not be. I did not get the sense that anything had changed.

Am I misunderstanding the context of this? I did jump in a little late.

They are saying there might not be a reduction in risk but the major majority of their models show a risk profile that's indistinguishable from the average bank.

 

[realibrad]

They are saying there might not be a reduction in risk but the major majority of their models show a risk profile that's indistinguishable from the average bank.

Well, the big banks might be as likely to fail, but the reason they are an issue is that they are too big to fail. If a small bank fails, ok. If a large bank fails, it can take down so many that it causes panic.

The way I took your statement was that too big to fail was not an issue because there were not banks that were too big to fail anymore. I may be misunderstanding you though.

 

[fskimospy]

Well, the big banks might be as likely to fail, but the reason they are an issue is that they are too big to fail. If a small bank fails, ok. If a large bank fails, it can take down so many that it causes panic.

The way I took your statement was that too big to fail was not an issue because there were not banks that were too big to fail anymore. I may be misunderstanding you though.

No, it's saying that the market thinks that they are not.