[Pelham]

The vast majority of economic growth during Dubya’s term was housing and housing related. In California there was a one-to-one correlation between home equity withdrawal and consumer spending. This data was available at the time and was a red flag to anyone who thought that consumer debt and real estate appreciation couldn’t go on forever.

It was also a warning that we were in a bubble. Bush allegedly has a degree in finance IIRC so this should have caught his attention.

TARP or something like it was necessary or the banks holding that paper would have been bankrupt. And while that would be an acceptable outcome in normal times this was far too widespread to let it play out. The real problem with TARP is that Bush didn’t make sure that there was protection for the taxpayers built into it, which could have easily been done. The Swedes had gone through this a decade before and the model was there to use, it wasn’t something unknown.

[Defiant]

I believed at the time that TARP would subsidize failures that should not be transferred to taxpayers. The problem, as you recognize, is the impact bank failures would have on the entire economic system. I was of the belief that a revision of some accounting rules, such as mark to market, combined with spreading write-downs over a 5 year period and a whole laundry list of other action items that were available, would save the system, allow a few of the worst offenders (Countrywide, etc.) to fail and allow the others to survive, albeit with a significantly reduced worth and shareholder loss. As it should be. It should have been a chapter 11 workout of the bad financial situation in which the shareholders get reduced equity, and instead it became a new loan for the enterprise in which nobody lost anything. That is unsustainable.

I was waiting for the whole thing to collapse after 09, and I will say this about those who are manipulating the financial system: they are good. How they kept this afloat with Obama adding 10 trillion in debt is beyond me.

[joesbucks]

I didn’t have a problem with TARP other than the shortcomings you explained. Just was pointing out the real problem in my reply to post 34.