Treasury has spent or committed $590.4 billion of the TARP funds. Treasury has also relied heavily on the use of the Federal Reserve’s balance sheet which has expanded by more than $1.5 trillion....This has allowed Treasury to leverage TARP funds well beyond the funds appropriated by Congress.What? I thought we were in for $750 billion. Did Geithner go all-in while I wasn't looking?
The total value of all direct spending, loans and guarantees provided to date in conjunction with the financial stability efforts (including those of the FDIC as well as the Treasury and the Federal Reserve) now exceeds $4 trillion.
Set aside the question of whether or not we should even bail out the banks for a moment.
Should spending authorized by congressional action be allowed to act as a back door to put at risk an amount of taxpayer money that exceeds the originally authorized amount by several trillion dollars? Keep in mind that the Federal Reserve is an institution with a large degree of independence and insulation from political accountability, which is the type of accountability we use to run our country.
I previously considered whether or not this leveraging of the money explicitly authorized for a financial bailout into this gargantuan sum is even legal. I still don't know the answer.
3 comments:
It is my understanding that the Federal Reserve is a completely independent institution and is not "swayed" by political influence (if that is possible).
I read in the Graham County Courier a crazy comment on the economy, yet it has some strange logic to it that may turn out to be not so crazy in the future. I threw the paper away so I will try to paraphrase it.
There are about 40 million workers over the age of 50 who are still working.
Give each of these a million dollars to quit (with the following stipulations),resulting in forty million jobs - unemployment solved. They must buy a house or pay off the mortgage on the one they own - result, the real estate problem solved. They must each buy an American car - result,the auto business solved. They must each take out a life insurance policy - insurance problem solved. And just think, 40 million people running around on vacation spending money and stimulating the economy. There are a couple of other imperatives that he listed but you get the general drift. This drastic suggestion has an echo of Ezra Pound to it. The details may be different but the general idea
has some similarities (i.e. about forcing money to do its real work
and not lie stagnant "making interest".
Steve,
Sounds great. But, of course, even just the first part is unworkable.
What are the chances that the 40 million currently unemployed have the correct skills and knowledge to replace the 40 million that take the buyout?
Note, this is not a comment on the skills of the currently unemployed. Many of them, no doubt, are MBA's from our nation's elite universities.
What if those that took the buyouts were all workers from physically intensive professions who had decided they could take the buyout and enjoy themselves a little bit while their bodies still functioned?
We'd be left with the Harvard guys slaughtering our beef and erecting steel. Not exactly an ideal situation.
A command economy, (or just a single command from the person running the economy)will never work to match up the skills of workers with the skills that the economy requires. This, in a nutshell, is why we need a free market.
Wow. I really ran on with that one.
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