PDF link So basically, the US Treasury only selectively reports profit. Also, in the "duh" column:- Debunking of the claim, Short version
No one argued that every bailout was profitable, only TARP taken as a whole. EDIT: Since you're so fond of analogies. Farmer Joe: We had a good harvest this year, the apples are fresh and will fetch a good price on the market. Leo1: Nu-uh! I count three rotten applies! And this is why the GAO is such a shit agency, this is literally a moral argument when the topic is a straight numbers calculation.
And of course, only selectively reporting profits has no bearing on whether TARP was profitable as a whole, right? False analogy. Don't be ridiculous. Moral hazard entails indirect costs. Indirect costs are still costs. ROFLMAO. So you think the concept of "moral hazard" is one that should not be taken seriously? Are you on drugs? Or do you simply have no idea what the hell the phrase even means?
TARP? You mean the thing that kept banks from collapsing and US credit flowing? I mean, I think it's hard to talk moral and indirect costs without noting the huge moral and indirect costs of not doing it. Profit was not the point, any profit was a bonus. If we had only gotten 50% back, much less than we have, it'd be worth it. There's been a huge amount of money recovered, but I think you may be overlooking the "It stopped the economy from dying," aspect of the program, which is somewhat critical.
They are not selectively reporting profits, you aren't reading at all. The treasury is only going into detail on programs that are profitable, but there is no reason to suspect their overall number to be flawed or false. Perfect analogy. You are literally arguing that TARP as a whole isn't profitable because a few program components weren't profitable. "Moral hazard" is a vague and worthless argument with varying definitions depending on who you ask. It is not an indirect cost, an indirect cost would be, for example, the environmental damage from Farmer Joe's runoffs, which can be calculated in terms of dollar sums. What is the dollar cost of this "moral hazard"? Of course, this is ignoring the direct benefit of TARP, which was that it saved us from a liquidity death spiral. "Moral hazard" is the kind of crap people spew so they can justify banning pot, rock music, and gay marriage. It has no place in a simple math calculation.
You're talking gibberish - there's no "moral hazard" from not bailing out banks, the very notion is inherently nonsense. In any event, this is a red herring. The claim that TARP "stopped the economy from dying" is simply absurd propaganda.
Oh for fuck's sake, that's the same damn thing, and that's exactly how this report is being reported by everyone who has read it. I mean really Why, given that they apparently don't feel the need to go into details on programs that aren't profitable? Is there a reason for that? Actually what I did was link what the GAO was saying about Treasury's claims. So the analogy remains false. Oh bullshit, its an entirely legitimate and well established concept and even a kid in fucking kindergarten could understand it. What about an individual / institution not taking the full consequences and responsibilities of its actions, and therefore acting less carefully than it otherwise would on the expectation that it will be bailed out for its own malfeasance and incompetence, is "vague and worthless", exactly? Are you serious? What did GAO just say? Yes, it is ignoring the thing that's totally irrelevant to what GAO is talking about. Shocking, I know! ROFLMAO. Explain how the concept of "moral hazard" applies to banning pot, rock music and gay marriage please.
They do report in detail about programs that aren't profitable yet, such as the AIG bailout. They just don't mention these programs in their "TARP is profitable" headlines. However, the treasury discloses all financial transactions, and the un-profitable programs are included there. Oh don't even try to backpeddle, you support and agree with the GAO's argument. Quick, let's ban welfare because of the "moral hazard" of allowing people avoid taking responsibility for their own failures! It's vague and useless because you can't put a price tag on it. What's the dollar cost of this "moral failing"? The GAO didn't say anything about the dollar cost. If you are counting "moral hazard" as a cost then certainly the direct benefits of the program would also have to be included. That's like counting the "moral hazard" of industrial farming while ignoring the direct benefit of preventing half the world from starving to death. First pot, then cocaine. First rock music, then death metal. First gay marriage, then wild orgies and the disintegration of the traditional family unit. Leading to a breakdown of the fundamental underpining of human society!
Correct, it is a false analogy. Farmer Joe: We had a good harvest this year, the potatoes were good, the corn was good, the wheat was good, we'll turn a profit. Leo1: Nu-uh! The apple harvest was a bust, we're dooooooooommmmmeeedd
The idea of a "moral hazard" is actually a very specific one in this context - basically it's the notion that a party that doesn't have to bear the costs of its actions will engage in more risky behavior. It usually comes up in this discussion as an argument that, if banks and other financial firms are guaranteed bailouts, they will have no incentive to rein in the risky behavior that necessitates the bailouts in the first place, which may lead to chaos. Naturally it may not be a particularly useful or rigorous idea, but I'll let other people argue about that. The point is that you're picking on it for the wrong reasons; it really doesn't have awfully much to do with morality writ large.
The problem with that argument is the corporations did end up shouldering the cost of the bailout. Corporations are made up of shareholders, and these shareholders lost nearly everything. Of course, the irony of a socialist like Leo1 making such an argument is thick enough to cut with a knife. You can make the exact same moral hazard argument about welfare.
Leo, refresh my memory, please. What exactly are your qualifications on the subject of the economy? Gamesguy, same request, if you please.
Oh? Where is that information? Therefore how is it relevant to what GAO is saying? I do. Its totally differnt from your strawman. That's an absurd strawman. Moral hazard as an economic concept has to do with taking on risk. That I'm actually watching the sheer hilarious spectacle of someone making the concept of moral hazard in that sense and try and make it analogous to the social safety net really does beggar belief. Its not a moral "failing". You're just engaging in trite distortions off the back of the word "moral", which is just a convenient shorthand for the very simple concept being conveyed, which has nothing to do with a "moral failing" and everything to do with actors making irrational and risky decisions because they think the taxpayers will bail them out if anything goes wrong. Exactly. Who says? The Miss Manners rules of niceness so as to avoid huwting the big banks poow widdle feewings? Grow the hell up. Neither the GAO nor anyone else is under any obligation to massage the balls of the big banks an their apologists. Moral hazard has nothing to do with the slippery slope fallacy.
Because welfare for shareholders and corporations and welfare for individuals who need money to support themselves is of course, the exact same thing. Seriously, argumentation like this makes me think you're engaging in an enormous trolling exercise. It simply cannot be serious. You're actually embracing "corporate welfare" as something other than a slur
Right here. How would the actual numbers involved in TARP transactions not be relevant to whether TARP made a profit? No, it's a perfect analogy. People are free to take on undue risk, such as quitting their job and spending all their money on alcohol and drugs, gambling away their savings in a casino, etc due to the presence of a social safety net ensuring they will never starve and always have a place to stay. It's the exact same argument. The fact that you fail to see this just goes to show the blinders you have on. It was a freaking typo, I meant to say moral hazard. The exact same argument applies to welfare. People are free to make irrational and risky decisions because they know the taxpayer will bail them out if anything goes wrong. So how can you say that TARP didn't make a profit based on a vague and worthless "moral hazard" argument? So in other words you agree that this is a biased argument and you don't care because you'd rather the banks and the government look bad than have any pretense of fairness or truthfulness. Unlike you, I'd rather have the truth, not the distorted lie you've been championing. It has everything to do with the slippery slope. You are essentially making a slippery slope argument that since the banks have been bailed out once, they will decide to rely on bailouts in the future and engage in undue risky behavior. Of course, that's completely ignoring the reality which is that currently banks are being so incredibly conservative that it's actually hurting the economy. Yes, the exact same "moral hazard" argument can be made for both. Why should people avoid taking undue risks when they know the government will always be there to bail them out with taxpayer money? This applies to individuals as well as corporations.
This here is a bold claim. Can you prove this and cite any unbiased sources, that involve some data analysis?
Because that's not the point of GAO's criticism. Duh? No, it isn't. You already agreed, did you not, that I was, and you quote:- That is completely correct. So ... where does the GAO say anything akin to your strawman? It doesn't now, does it? Wha-? Its not "the exact same argument" at all, because the social safety net doesn't ensure that these fantasy people you pulled out of your ass will be in the exact same position they were in before they quit their job - and again - requiring welfare to stay alive and live a meagre existence in abject poverty is hardly the position the bailout put the relevant corporations in, now was it? The bailouts are simply not analogous to welfare in any degree. It bears nothing that merely making a bailout - on any terms - is not an equal moral hazard to a bailout that is given on extremely favorable terms. Uh huh. As above - the notion of characterizing meagre periodic welfare payments as a "bailout" as opposed to meagre subsistence payments they actually are is so ridiculous that it refutes itself. When did GAO say that? Yeah, the GAO when writing a report on a specific topic should make sure to refute nonsensical claims of "bias" by including in the report things that have nothing to do with it. Brilliant. By way of analogy, if a scholar writes a paper on specific war crimes by Side B in War X, he must of course take the opportunity to point out that Side A in War X also committed war crimes. Even if it has nothing to do with the paper. Because otherwise its biased. That's not a slippery slope - an example of the slippery slope is for example the ridiculous "we can't allow the gays to get married because then people will marry animals". Nothing in moral hazard necessarily implies that "worse" behavior will result. Only that their expectation of getting a bailout may affect their decision making. It has nothing to do with a slippery slope. Moral hazard as a concept is not refuted merely because you say that banks are currently being conservative. Doesn't really seem to be hurting their bottom line any now does it? No it doesn't, and I explained why it doesn't. You'd do well to actually address the distinction made, rather than repeat yourself.
Its not incumbent on me to prove a negative. Present some unbiased sources with data analysis that TARP "stopped the economy from dying". The very phrase is inherently propagandistic.
Yes it is, it's essentially arguing that the treasury lied in many of its reports when it didn't. Yes it does. You are arguing that TARP isn't profitable because certain programs with in it aren't profitable and the treasury glossed over them in their headlines. TARP didn't ensure that the same people would be in the exact same position before the bailout. You should ask the owners of the bailed out corporations on how they felt about losing everything. You're right, TARP was a loan. Welfare is worse, it's a subsidy. In otherwords, you have no credible rebuttal. You said it in the title. Except this report is supposedly a cost benefit analysis. So using your own analogy, if a scholar writes a paper on war crimes in WWII and ignore the war crimes committed by the Soviet Union it would indeed be a very biased paper. If it makes no implications then there is no cost to it, in which case the "moral hazard" is a giant red herring. Concepts do not prove that TARP wasn't profitable, which is a rather specific claim involving numbers and math.
Vanquisher's point remains, which is that you are declaring Leo1 to be wrong for the wrong reasons. Leo1 is right to have moral hazard as an important cost consideration when evaluating bailouts, but is wrong to apply that cost to the TARP specifically. Also the definition of moral hazard you offered is completely wrong. What you described is the slippery slope. Moral hazard has jackshit to do with the slippery slope, or for that matter social issues and morality. It is applied nigh exclusively to economic issues, and is where the term originated about 3 centuries ago. You assumed otherwise because you were completely ignorant of the term's meaning and just decided to make assumptions based on what it sounds like. Indeed, yes, you can. You can and I have. Then I dismissed it as a significant factor for pretty much the same reason you did for corporations. People don't decide to take risks that could toss them into poverty because they think welfare will catch them, they take risks that could toss them into poverty because they're dumb.
/shrug. I read moral hazard with no futher explanations and I automatically think gay marriage and smoking pot, that's the typical usage of the term. In anycase it's still irrelevant because Leo1 can't show any actual quantifiable costs of this supposed "moral hazard". Yes, European socialists like Leo1 are fond of double think.
No, its saying that its not communicating the full picture. No, I didn't. You invented that. Moving on. This is just amazing - you know what you do if you lose everything as the incompetent shitbag owner of said failed corporation? You go on welfare, like everybody else. (an absurd notion, these owners would still have far greater personal assets than anyone who needs to be on welfare, it really is amazing how you can spew this complete bullshit with a straight face) LOL. Because sweetheart loans on extremely favorable terms for corporations are worse than a meagre subsidy for the poor to stay alive The rebuttal is in the sentence, genius. Its a rhetorical device. Bzzzzt. Too late - you fucked your argument up. You already said I agreed with what GAO said. GAO never said what you wish they said for your strawman to hold true. No, this report is about costs. Did you even bother to read any of it? Of course not:- Reading is fun! I'm going to explain this as simply as I can:- moral hazard influencing actor's decision making ability being different from your incorrect characterization of moral hazard resulting in a slippery slope of ever worsening behavior in no way implies there is no cost. Is there a cost from moral hazard? GAO can't qunatify it. Which I quoted. As being "duh". As above.
Except the treasury does that everytime it discloses TARP transactions. Backpeddle faster. This has nothing to do with my argument. The owers of the corporation did end up losing a tremendous amount of money, and in this sense TARP is much more akin to welfare to troubled corporations than some sort of blank check for the corporations to continue business as usual. You argued that corporations didn't lose anything because they were bailed out, this is just bullshit. Corporations are made up of shareholders, and these shareholders lost a tremendous amount of money. Are better actually, because one is a loan and the other is a subsidy. These "sweetheart loans" kept the corporations from going under, and kept the economy churning. They were lifesupport for the economy. I said credible rebuttal. So you wish to backpeddle on the title of your thread as well as half the OP? Specifically the section with the meth addict analogy? Which agrees with my point. But that sure as hell didn't stop you from implying that TARP wasn't profitable, that the treasury lied, and that companies repaid TARP with government money given to them(lolwut).
