Brown's Ice Cream in York, Maine -- Summer, 2009
By Daily Bail Contributor Dr. Pitchfork
Did the bailouts save the world?
If you work at 200 West St., 270 Park Ave., or 1585 Broadway, then the bailouts saved your bacon (and your fat bonus). If you happen to work, or have recently worked, at 33 Liberty St. in NYC, or at the Eccles Building in Washington, D.C. -- in other words, if you have been a complete and total failure as a bank regulator -- then the bailouts are probably the only thing standing between the pitchforks and your sweet, bureacratic ass. But if you live and work in the real world, then the bailouts are nothing but a massive, heretofore unpunished crime against you, your children, and your children's children. And let's not forget about your eighty-year old grandma.
Jeff Harding of The Daily Capitalist has a great post on the bailouts, epistemology and basic economics. Did the bailouts save the world? Harding says bailout apologists should prove it. (They can't.)
David Wessel, I have five words for you: post hoc, ergo propter hoc.
Mr. Wessel is the Wall Street Journal’s chief economics commentator, and is often the face of the Journal on television. He wrote an article recently (“Bailouts Save Day, Win Scorn“) that laments the fact that, despite the fact that the bailouts saved the world, Mr. and Ms. America don’t believe it. In fact, he points out that Americans’ distrust of government and large corporations has grown as a result of the bailouts, something they see as unfair, and an example of cronyism between Wall Street and Washington.
Mr. Wessel is a bright guy, a star of a pro-capitalism newspaper. Yet he makes serious economic and logic errors that are not based on theory or the record. He needs a lesson in economics and epistemology (the science of how we know what we know).
I could further argue that the bailouts have actually harmed the economy and have delayed recovery because some of these large financial institutions were bankrupt and should have been allowed to go under in an orderly manner. The pain would have been intense, but short. Now we are still in pain, the economy is on the verge of setback, and we have saddled future generations with the cost of paying for it.
There is no basis to say that fiscal or monetary stimulus has saved the economy. I challenge Mr. Wessel to prove this assertion as well.
Since the Fed had boasted that it could easily manage recessions by pumping money into the system, why hasn’t that worked? Why are we still having a credit freeze? Why is money supply continuing to decline? Why is unemployment, especially U-6 unemployment, growing? Why are we experiencing deflation instead of inflation? Why does he assume that Keynesian fiscal stimulus has any lasting effect?
What really happened to us was the Great Panic of 2008. I’m not talking about the collapse of Lehman Brothers. I am talking about the panic of Hank Paulson and Ben Bernanke. They had no idea what was happening at the time and didn’t know what to do.
Pitchfork here. This deserves it's own post, but here's the Minneapolis Fed's analysis of the "credit crunch" and how it affected non-financial companies.
UPDATE: I'm pissed just looking over Harding's article, so I'm adding to my post.
Just to put a fine point on this:
1. The bailouts DID NOT save the world.
2. Jamie Dimon, Lloyd Blankfein, and Ken Lewis have received tens of millions of dollars SINCE the bailouts.
3. Meanwhile, YOU, Joe and Jane Taxpayer, got bent over and used like easy pieces of meat.
4. Finally, after being raped by the Titans of Paper Asset Trading, asswipes like David Wessel come along and tell you it was all for your own good and that you should just learn to enjoy being used and abused.
How does that make you chumps feel? It makes me want to hurt some people. Real bad.
Share your story -- how do you feel about being used and abused like this? Are you a chump?