The Democrat Thread

[StrangeSox]

The FBI has protected us from another one of its own bombing plots!

 

http://www.aljazeera.com/news/americas/201...9157983635.html

[southsider2k5]

Why did the two economists from UofC strongly disagree with your assertions that private capital was available?

 

Maybe they didn't google Ford?

[StrangeSox]

Wow, strong argument!

[southsider2k5]

Wow, strong argument!

 

Ford had a credit line that didn't get canceled. You have an automotive company getting money during the crisis. If things were as bad as being stated, they sure wouldn't have kept it under the guise that repayment would have come at some later date if they would have collapsed. If things were that bad, that wouldn't have been good enough, because the bank could very well have collapsed in terms of capital ratios by the time they were to have received those loan repayments from the government.

[kapkomet]

Ford had a credit line that didn't get canceled. You have an automotive company getting money during the crisis. If things were as bad as being stated, they sure wouldn't have kept it under the guise that repayment would have come at some later date if they would have collapsed. If things were that bad, that wouldn't have been good enough, because the bank could very well have collapsed in terms of capital ratios by the time they were to have received those loan repayments from the government.

 

 

Just give up, because they don't want to understand how a market really works. They just don't. It's easier to say that the government had to step in to defend the point that the government now has to step in on everything because it's the only mechanism that works to save the world of all of the fallacies of an evil capital market. It was a payoff, everyone knows it except those who want to scream there was no money. And yes, George W. Bush did it. And it was wrong.

[southsider2k5]

Just give up, because they don't want to understand how a market really works. They just don't. It's easier to say that the government had to step in to defend the point that the government now has to step in on everything because it's the only mechanism that works to save the world of all of the fallacies of an evil capital market. It was a payoff, everyone knows it except those who want to scream there was no money. And yes, George W. Bush did it. And it was wrong.

 

Except for MF Global, because Obama wanted them to fail.

[Balta1701]

Just give up, because they don't want to understand how a market really works. They just don't. It's easier to say that the government had to step in to defend the point that the government now has to step in on everything because it's the only mechanism that works to save the world of all of the fallacies of an evil capital market. It was a payoff, everyone knows it except those who want to scream there was no money. And yes, George W. Bush did it. And it was wrong.

 

 

Except for MF Global, because Obama wanted them to fail.

Frankly, Bullsh*t.

 

You guys just don't want to admit that the policies you guys favor completely blew up everything, and that the government stepping in worked.

[Balta1701]

Ford had a credit line that didn't get canceled. You have an automotive company getting money during the crisis. If things were as bad as being stated, they sure wouldn't have kept it under the guise that repayment would have come at some later date if they would have collapsed. If things were that bad, that wouldn't have been good enough, because the bank could very well have collapsed in terms of capital ratios by the time they were to have received those loan repayments from the government.

Because, as I just pointed out while being ignored, they had secured a $9 billion credit line from the government, and with their stronger position, having that loan was enough to enable them to secure private financing, since if the losses really were worse, the government would take the loss. It was effectively a loan guarantee, and when faced with the option of using that as a loan guarantee or taking the Federal Government bailout, they chose the Federal loan guarantee (which, btw, you said was such a great deal that anyone would be nuts to refuse it.)

 

This is the exact same thing the federal reserve did with BofA and Citigroup. They guaranteed hundreds of billions of dollars of their loans in Nov. 2008, and thus they were able to raise private capital that they otherwise wouldn't have.

[StrangeSox]

Ford had a credit line that didn't get canceled. You have an automotive company getting money during the crisis. If things were as bad as being stated, they sure wouldn't have kept it under the guise that repayment would have come at some later date if they would have collapsed. If things were that bad, that wouldn't have been good enough, because the bank could very well have collapsed in terms of capital ratios by the time they were to have received those loan repayments from the government.

Were Ford and gm's situations then really analogous? Ford had a government-guaranteed credit line but want facing immediate bankruptcy and $30b in liabilities.

 

If this is true, why aren't there any contemporaneous articles arguing that private capital is available? Why did Romney himself argue for government-backed loans? Was every single piece calling for government intervention really "propaganda" as you claimed, even if it was coming from conservative economists and politicians?

[StrangeSox]

Just give up, because they don't want to understand how a market really works. They just don't. It's easier to say that the government had to step in to defend the point that the government now has to step in on everything because it's the only mechanism that works to save the world of all of the fallacies of an evil capital market. It was a payoff, everyone knows it except those who want to scream there was no money. And yes, George W. Bush did it. And it was wrong.

I'm trying to understand by reading things written by tenured economists at prominent schools but I'm bring told it is just propaganda and that a gm liquidation was impossible because the market finds a way. Help me reconcile these things!

 

"everyone" knew that private capital was available, but in public damn near everyone was calling for government intervention in some form. I'm confused.

Edited February 19, 2012 by StrangeSox

[lostfan]

There would have been a source of funding. The idea there wouldn't have is just propaganda.

Who? Where? How? Even banks couldn't borrow money from other banks in 2008 let alone extremely risky bankruptcy financing on a company with a solid reputation of failure that was built over the past decade or so. Where was the credit?

[lostfan]

Romney put himself in a position where he either has to:

a) admit that what if you use slightly different words, he was advocating doing very close to the same as what Obama ended up doing

b) admit that if you take what he was saying at face value, he was cool with letting Detroit crash and burn

 

He's trying to claim that Obama's decision is disastrous to the market/economy and trying to take credit for what happened at the same time. He said, point blank, that if Obama got his way, you could kiss the American auto industry goodbye. The complete and total opposite of that actually happened. Then again, Romney's never had any personal difficulty pretending in the past he believed the opposite of what he currently pretends to believe. He's disowned every significant legislative accomplishment he had as governor of Massachusetts.

[Cknolls]

Frankly, Bullsh*t.

 

You guys just don't want to admit that the policies you guys favor completely blew up everything, and that the government stepping in worked.

 

 

I think the GM bond holders who were butt f***ed by this would disagree with you. And the taxpayers who are getting f***ed now because BO is allowing GM to write off previous losses against future profits would probably beg to differ too.

[lostfan]

Maryland's about to pass gay marriage... that happened basically overnight, it wasn't even a hot issue or anything.

 

I know a lesbian couple who intends to get married (one of them was in the Army and came out after gays were allowed in the military). That'd be the first time I ever went to anything like that.

[southsider2k5]

Because, as I just pointed out while being ignored, they had secured a $9 billion credit line from the government, and with their stronger position, having that loan was enough to enable them to secure private financing, since if the losses really were worse, the government would take the loss. It was effectively a loan guarantee, and when faced with the option of using that as a loan guarantee or taking the Federal Government bailout, they chose the Federal loan guarantee (which, btw, you said was such a great deal that anyone would be nuts to refuse it.)

 

This is the exact same thing the federal reserve did with BofA and Citigroup. They guaranteed hundreds of billions of dollars of their loans in Nov. 2008, and thus they were able to raise private capital that they otherwise wouldn't have.

 

That still doesn't bridge that cap between failure and payback, by which time, as you just ignored, the bank could have failed.

 

Ford is proof that money was out there, like it or not.

[southsider2k5]

That still doesn't bridge that cap between failure and payback, by which time, as you just ignored, the bank could have failed.

 

Ford is proof that money was out there, like it or not.

 

It is also worth pointing out again that the comparison between banks and auto is a complete fail, as was explained in detail, and ignored as usual.

[Balta1701]

It is also worth pointing out again that the comparison between banks and auto is a complete fail, as was explained in detail, and ignored as usual.

They were both relying on their ability to raise funds privately to roll over debt. In neither case could they do so, including Ford, without huge government actions. If there is a difference, it's that the automakers had smaller debts and more time to work with as a consequence, which is why the banks received such enormous guarantees.

[lostfan]

At the time, almost everyone was saying GM was hopeless and should fail because it was a waste of taxpayer money, and the company would fail anyway because of its incompetence, when in fact they were still a solvent company that sold products people were still willing to buy (as was shown later). Actually, there are a few people who still think this... a guy at work thought buying GM stock at its IPO was pissing away money. Still clinging to his beliefs, sticking to his guns, he wouldn't believe anything positive about GM.

 

So anyway given this prevailing attitude towards, GM, why the f*** would anyone want to take on that kind of catastrophic risk at a time when credit was bone dry? Banks were being super-stingy with mortgages (having to do a complete 180 from a couple of years prior) and closing people's credit card accounts.

 

Ford is not really a good comparison either. That's comparing an existing line of credit for a company viewed as solvent, responsible, and in relatively good financial shape, to a new line of credit for a bankruptcy. How are those the same?

Edited February 19, 2012 by lostfan

[StrangeSox]

It is also worth pointing out again that the comparison between banks and auto is a complete fail, as was explained in detail, and ignored as usual.

Why did barely anyone, including conservatives, agree with this position at the time? Why do many people, including conservatives, still think that this idea of yours is a "fantasy?"

[Balta1701]

Why did barely anyone, including conservatives, agree with this position at the time? Why do many people, including conservatives, still think that this idea of yours is a "fantasy?"

I'd say a lot of people agreed with that position at the time. A number of them have recanted, even apologized for it.

 

There could have been slight tweaks to how the final deal went down that might have been more fair in one way or the other, but the principle of doing the bailout and having it work is the right one.

[StrangeSox]

I'd say a lot of people agreed with that position at the time. A number of them have recanted, even apologized for it.

 

There could have been slight tweaks to how the final deal went down that might have been more fair in one way or the other, but the principle of doing the bailout and having it work is the right one.

From what I recall and have recently re-read, there were several positions. That they didn't deserve the money and would fail anyway. That a government run bailout was best. That a private bailout utilizing government-backed loans was best. What I haven't really seen are contemporaneous claims that gm would be perfectly fine with zero government intervention and that of course tens of billions in private equity are available, which is ss's and kap's claim.

 

Quick clarification: "this idea" referred to the above, not the differences between a bank and gm.

Edited February 19, 2012 by StrangeSox

[Balta1701]

What I haven't really seen are contemporaneous claims that gm would be perfectly fine with zero government intervention and that of course tens of billions in private equity are available, which is ss's and kap's claim.

That pretty much sounds like exactly the claim the Economist apologized for.

[StrangeSox]

That pretty much sounds like exactly the claim the Economist apologized for.

If you read the next sentence of the original article, they say "many observers think this was unlikely."

[southsider2k5]

At the time, almost everyone was saying GM was hopeless and should fail because it was a waste of taxpayer money, and the company would fail anyway because of its incompetence, when in fact they were still a solvent company that sold products people were still willing to buy (as was shown later). Actually, there are a few people who still think this... a guy at work thought buying GM stock at its IPO was pissing away money. Still clinging to his beliefs, sticking to his guns, he wouldn't believe anything positive about GM.

 

So anyway given this prevailing attitude towards, GM, why the f*** would anyone want to take on that kind of catastrophic risk at a time when credit was bone dry? Banks were being super-stingy with mortgages (having to do a complete 180 from a couple of years prior) and closing people's credit card accounts.

 

Ford is not really a good comparison either. That's comparing an existing line of credit for a company viewed as solvent, responsible, and in relatively good financial shape, to a new line of credit for a bankruptcy. How are those the same?

 

A line of credit can be cancelled at anytime. Its affect on capital is the same when a company uses an existing line or a new line to borrow more money.

[kapkomet]

A line of credit can be cancelled at anytime. Its affect on capital is the same when a company uses an existing line or a new line to borrow more money.

 

 

*yawn*

 

It's getting boring. Obviously, no one had any money except the government. Don't you realize that every company that had any paper credit was bankrupt at the time? Bonds, lines of credit, stocks, mortgages, notes, they were all zero when GM got bailed out, and it was the only way.