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Club Blasts the Bailout

Submitted by Patrick Ruffini on Mon, 09/22/2008 - 16:43
in

From a release:

Washington – The Club for Growth condemned the massive government bailout proposed by the Treasury and the Bush administration as unnecessary, unfair to taxpayers, and fraught with serious costs to the American economy.

Eighteen months into the credit crunch, many largely capitalized financial services firms are experiencing serious difficulties but the overall economy continues to grow. GDP growth over the past 12 months was 2.25 percent and 3.5 percent when excluding the drag imposed by the housing sector. Even within the financial sector, many banks are doing well. Regional bank indices had risen significantly since the lows of last July—prior to the bailout announcement—and thousands of community banks are thriving. It is extraordinary that a massive government intervention in the economy is considered inevitable when the economy is not even in a recession.

At the same time, socializing economic risks come at a great cost to the American economy by misallocating capital, inviting political manipulation, and putting taxpayers on the hook for possibly a trillion dollars. Such a large takeover by the government will surely be accompanied by adverse, unintended consequences. Already, other companies and industries are lining up at government’s door asking for their own bailout. And if the government incurs $700 billion in debt to finance the purchase of bad bank assets, the danger that it will eventually monetize that debt and trigger dramatic inflation is very worrisome

“The Treasury’s bailout proposal will likely cause more harm than good,” said Club for Growth President Pat Toomey. “Instead of launching the largest government bailout since the Great Depression, the government should be implementing policies to stimulate the economy. These include, at a minimum, cutting the tax on capital gains, cutting corporate taxes, reviewing and considering repeal of FAS 57 which requires banks to mark-to-market most securities, and emphasizing the need for a strong dollar.”

“Finally, many politicians are using the current struggle to make free-market capitalism the scapegoat for the economy’s troubles, when in fact, government played a major role in getting us into this mess in the first place. Free-market capitalism is alive and well, and we should be embracing its tenets, not rejecting them.”

 

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Comments

Question?

Submitted by gunthestops on Mon, 09/22/2008 - 17:48.

Where were all you guys against big spending when the Bush administration added 4 trillion of debt to the national debt in the last 8 years---lol????

Answer

Submitted by boqueronman on Mon, 09/22/2008 - 18:16.

Objecting to the "big spending" sponsored by the Repubs/Dems in Congress and the Bush administration.  Where were you?

Say No to the Bail out -- let the Fail out happen.

Submitted by AdrianS on Mon, 09/22/2008 - 21:04.

Now let me understand this. Fail out wants $700 Billion to $1 Trillion dollars.

That's one thousand Billion dollars.  A Billion dollars one thousand times.

Where's it going to come from?  Don't you dare let this happen.  The minute the money printing presses start cranking out one thousand billion dollars, the dollar in your wallet is going to be worth, maybe, 5 cents.

The more money that gets cranked out into circulation, the less each dollar will be worth.  Got $10.00.  You'll have maybe 50 cents.  It will be inflation on STEROIDS!  Let's NOT let it happen!

It will be a very cold day in hell when the federal government decides to help Mr. John Smith with his failing family business.

Why should the government help Morgan Stanley,Goldman Sachs, Bear Sterns, Lehman Brothers, AIG or any other failing businesses?  The government is NOT in the business of doing business or owning businesses -- unless, of course, you agree to a bit of fascism.

Perhaps a little socialism?  I say NO.

And, the failed businesses are scaring the public with the threat of no more loan money if they don't get their way.  Sounds like a Mexican kidnapping and hostage taking with ransom demand -- muscle-style.  Just say NO!

Let those who have made miscalculations and bad judgments face the music.  The guys who handle the oil are NOT giving us any breaks at all.  Why should we give them anything?

After all they're just a few, right?  And, how did they all happen to fail at the same time? -- along with Freddie and Fannie.  Talk about choreographing and orchestrating the Ponzi scheme.

Let them fail.  Remember AMC motor cars? Remember Gulf+Western oil?  Remember CompUSA?

When businesses run out of money and ideas; it's time for someone else to take the place of those failing businesses.

It's called Capitalism.

Fight the bail-out.  Let them fail-out!

Corrections

Submitted by Freedoms Truth on Mon, 09/22/2008 - 22:29.

A few points:

1. It will not cost $700 billion

2. Debt is being added, but not money created. Thus, its not necessarily inflationary. Inflation is a monetary not a fiscal phenomenon.

3. "Let those who have made miscalculations and bad judgments face the music.  The guys who handle the oil are NOT giving us any breaks at all.  Why should we give them anything?" -

I would like to answer that for the $500 billion a year we give to old people for social security, or the $400 billion a year we spend on welfare, or the $200 billion farm bailout, or the $250 billion we just gave away for the owners of Fannie Mae debt. While nobody deserves welfare less than wall st fat cats, the fact is that this bailout is intended to salvage the credit system ... it's a welfare program for the consumer-based economy itself.

"And, the failed businesses are scaring the public with the threat of no more loan money if they don't get their way.  Sounds like a Mexican kidnapping and hostage taking with ransom demand -- muscle-style.  Just say NO!" - This is not a threat. This is simple reality!! Lehman went BK and its business is now in pieces.

 

lol

Submitted by gunthestops on Mon, 09/22/2008 - 23:42.

Where do you get some of your financial info--comic books???

Well i can't speak for him I do believe he gets them from

Submitted by Big Ben 4 liberty on Tue, 09/23/2008 - 13:02.

accredited economists (since they they coorect economic facts) and not the DNC talking points where you apparently get your financial info.

How to address the credit crunch

Submitted by Freedoms Truth on Mon, 09/22/2008 - 21:51.

There has been a real credit crisis. It may have been aided and abetted by prior Government involvement, but the situation is serious enough that the price of doing nothing is worse than the price of doing this. We need to have a proactive view of what should be done and what should not be done.

It would be far better therefore to not talk about what we cannot do, but what we can do. More tax cuts will be a long-term help, and I think we need to restore confidence we should just make the Bush tax cuts permanent.

Newt Gingrich on Greta: She asks - "What would you recommend?"

He reels off the list:

1. Change mark-to-market (which is part of the liquidity crisis issue)

2. Repeal Sarbanes-Oxley "which did not warn us a single thing of these bankruptcies" Adds $3 million/yr for a small startup... not a single new IPO coming out. (He's right!)

3. Says the housing bill this summer is a lousy bill. It had nothing about housing. Mentions the billion that ACORN got.

4. Energy. "The US has more energy than any other country in the world, we are crippled by our own Government." - Tackles every element simultaneously.

5. The longer and slower this is, the worse it is. Govt will slow this down.

Against the bailout - Gingrich says the Bush policies are unRepublican. He wants McCain to vote no. His advice: "Get a better plan." - "do not go with this wall st based monstrosity"

Honestly, I am a supply sider and an economic optimist relatively, but the CfG sounds a bit out-of-touch even to me. Their response violates the simple political truism, you cant fight something with nothing. We cannot simply say no and throw in some irrelevent talking points.

I think Gingrich made a lot more effective points. You can point to multiple examples of the Govt dipping in and trying to help, but then the problem gets worse, or at least their help doesnt seem to matter: Bear Stearns shotgun marriage, then AIG, then housing, then Fannie Mae.

I would be for this bailout, if structured right, despite managing to agree with practically everything Newt Gingrich has to say. My reasons are this:  It will not cost $700 billion, but much less; and two, it creates an orderly mechanism to liquidate the products and get us through a credit crunch. The cost of this will be less than the cost of a credit system meltdown.

BUT ... it would have to be a clean way to do that, and NOT in any way subsidize the bad decisions, make US Govt own banks, etc. THAT is IMHO the line to draw, but it requires speaking specifically to the bailout, the reality of the credit crunch and the ways to get out of it.

In short, when Gingrich calls for "a better plan" the conservative critics need to supply one.

 

 

Correction to correction

Submitted by AdrianS on Tue, 09/23/2008 - 00:21.

Any addition to the money supply would be inflationary.  People who think monetary vs. fiscal are trying to get more money -- AIG, Bear Sterns, etc.  They're fiscals are worthless.

Besides, "I would like to answer that for the $500 billion a year we give to old people for social security" -- we don't give anything to old people, they've earned it.

Your analysis is ((@H(D&@.  Besides, $700 Billion dollars will be your great, great, great grandchild's debt -- if you have any.  Just say NO. 

According to a Rassmusen poll, only 28% of Americans favor the bail-out.  Too, bad.

 

 

soc sec and other redistribution bailouts

Submitted by Freedoms Truth on Tue, 09/23/2008 - 00:50.

"I would like to answer that for the $500 billion a year we give to old people for social security" -- we don't give anything to old people, they've earned it.

It's redistribution of wealth, from working men to non-working women mostly. From younger generation to older generation who paid in at lower rates. Just like everything the govt does. take from peter to give to paul. The fact that we tax people for the 'privilege' of giving them a bad deal on retirement and saying we are giving them 'security' only adds insult to injury.

"Any addition to the money supply would be inflationary." - Yes, but a fiscal expenditure is not adding to the money supply. its not a monetary event.

"  People who think monetary vs. fiscal are trying to get more money"

You have an argument  with Milton Friedman then.

"Your analysis is ((@H(D&@. " You are reduced to swearing. nice job.

 

 

AIG?

Submitted by Peterblack239 on Wed, 09/24/2008 - 06:14.

 American International Group Inc. said on Tuesday it completed the deal under which it is getting an $85 billion injection of taxpayer money, while the government gets an 80 percent stake in one of the world's largest insurer