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Random Financial Commentary
EconLog: Library of Economics and Liberty — ... The US government, by contrast, is sitting on a paper profit of almost $11bn on its 34 per cent shareholding in Citigroup... The government said it had earned an annualised return of 23 per cent from its $10bn investment in Goldman Sachs under Tarp. In June, Goldman returned the $10bn and later paid another $1.1bn to buy back warrants attached to Tarp aid. Morgan Stanley, American Express and other banks have done the same, leaving taxpayers with substantial profits. Pointer from Tyler Cowen , who says we should admit that the bailouts were a good idea. Certainly, profits ...

Looking Back at the Bailouts
winterspeak.com — Megan and Tyler ask whether the financial bailouts were a good idea, and what should have been done differently. Here's my take: 1) Recapitalize banks by recapitalizing consumers A "good loan" is a loan that will be paid back, and a "bad loan" is a loan that will not. It's a simple difference. The solvency part of the financial crises was caused by banks having too many "bad loans" on their books, and the Government's solution to this was to give the banks taxpayer money. The "bad loans" were bad because people did not have the money to pay ...

Tyler Cowen on Pretense
EconLog: Library of Economics and Liberty — On his blog today, Tyler Cowen, who does not usually use harsh language, does use it when referring to libertarians. He writes: By the way, some libertarians like to pretend that Milton Friedman blames the Fed for "contracting" the money supply by one-third in that period but in reality Friedman blames the Fed for having let the money supply fall by one-third and not having run a bank bailout. He's correct that Friedman wanted the Fed to increase the money supply. I don't think I'm pretending when I say that I don't think Friedman advocated bailing out banks during the ...

Can I bring myself to utter THOSE words?
The Austrian Economists — ... Tyler Cowen argues that in hindsight, we should consider the bailout to have been successful in averting a financial meltdown of the US economy.  He specifically asks me whether I can bring myself to admitting this. ...

Tyler Cowen, Milton Friedman, and Bailouts
EconLog: Library of Economics and Liberty — ... and here ) on whether Milton Friedman would have supported the bailout of banks, I let myself be distracted by Tyler's use of the word "pretend." I accused Tyler of being particularly harsh on libertarians and Tyler has replied that he is often harsh on non-libertarians. In ...

Vanilla afterthoughts
interfluidity — ... " tradition of not-exactly-regulation which, however objectionable, is less objectionable than the unqualified paternalism that may result from continued dysfunction and crisis. (Tyler might note a familiar form to this argument.) The crucial question is how and whether governments could deploy vanilla products well. Both ...