24 Apr 2009

TARP, a Criminal Enterprise

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So says Larry Kudlow (HT2EPJ). Some strong words indeed for a CNBC article:

Is the whole TARP plan a criminal enterprise? Sounds farfetched, I suppose. But after reading about Special Inspector General Neil Barofsky’s report, it may well be that TARP is just one big criminal problem.

I know, let’s play a game! I’m going to give you two quotations from economic analysts from last year, before the TARP had been approved. One of them is Kudlow, and the other is some other guy. Can you guess (a) which is Kudlow and (b) who the other guy is?

Economist #1 on TARP, from September 30, 2008:

The Paulson bailout failed in the House. If it isn’t a death blow to the plan, it should be. This is not an economic plan: it is a heist….The economics behind it are nonsense, but we are naïve if we spend much time even considering the “arguments” for it. This is a money and power grab, pure and simple….Because of all the mumbo jumbo thrown around to show why the plan is necessary, some very sharp academic economists are in a tizzy trying to treat this as an extra-credit question, rather than a crime scene.

Economist #2 on TARP, from September 27, 2008:

The single-biggest mistake in the Paulson bank-rescue-plan marketing effort has been the failure to explain clearly how taxpayers are going to recoup $700 billion used to buy toxic assets at auction in order to unfreeze the banking system. In other words, folks don’t understand how taxpayers will be paid back, and may actually make profits, which will enable the new government debt to be erased after the Treasury bank-rescue is completed.

Here’s the key point: Any loan package bought by the Treasury will be 100 percent taxpayer owned. Period.

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