Immediate cause of the '08 crash: TARP. A picture is worth 1000 words
RayLopez99
http://raylopez99.blogspot.com/
Click on the first link for a graphic that shows discussion over TARP
was the cause-in-fact of the equities crash of October 2008. This
link is from the second link above.
A picture is worth a thousand words.
This figure is from John Taylor's paper on the crash, Critical Review:
A Journal of Politics and Society, Vol. 21, Nos. 2-3, 2009 Economic
Policy and the Financial Crisis: An Emperical Analysis of What Went
Wrong – John B. Taylor
RL
us...@domain.invalid
>
> RL
Don't even have to look to see it's bullshit
RayLopez99
> Don't even have to look to see it's bullshit
Why is it bullshit, cultard? Do you, like liberal economist Paul
Krugman says, only read people you already believe in? Hari Krishna
wants you.
I am even willing to grant that the collapse of Lehman Brothers was
the trigger (as maintained by economic historian Alan Meltzer), even
though it doesn't look that way from this graphic.
RL
us...@domain.invalid
The fact that this whole toxic mess is a result of the artificially low
interest rates of Greenspan that created the housing bubble and
trillions of toxic derivatives escapes you?
RayLopez99
No, but it escapes *you* my friend.
The thread and the blog point out, that we're discussing the "cause-in-
fact" of the crash, not the "proximate cause". Cause in fact is "what
popped the balloon?". Proximate cause is "what inflated the balloon?"
Two different questions.
RL
us...@domain.invalid
The balloon popped because the game of musical chairs was over, there
was no one left stupid enough to buy toxic mortgage packages.
This happened before tarp and accelerated when the lack of chairs
was made public, again, before tarp. You sound like another of these
" nobody saw this coming" crowd.
us...@domain.invalid
RayLopez99
> RayLopez99 wrote:
>
> > The thread and the blog point out, that we're discussing the "cause-in-
> > fact" of the crash, not the "proximate cause". Cause in fact is "what
> > popped the balloon?". Proximate cause is "what inflated the balloon?"
>
> > Two different questions.
>
> > RL
>
> The balloon popped because the game of musical chairs was over, there
> was no one left stupid enough to buy toxic mortgage packages.
> This happened before tarp and accelerated when the lack of chairs
> was made public, again, before tarp. You sound like another of these
> " nobody saw this coming" crowd.
So your thesis is the balloon popped randomly in September 2008? That
the failure of Lehman, or any government action, including TARP, had
nothing to do with the popping? It was coincidence? Noted.
RL
us...@domain.invalid
It not a thesis, it's fact. Had there been no Tarp there would have been
a complete melt down, AIG would have collapsed, taking all the big
investment companies with it.
RayLopez99
>
> It not a thesis, it's fact. Had there been no Tarp there would have been
> a complete melt down, AIG would have collapsed, taking all the big
> investment companies with it.
You seem to lack focus in your thought. Once again, we are discussing
the cause of the POP, not the cure. You are speaking now of the
'cure' to the pop ("Had there been no Tarp there would have been a
complete melt down...").
Focus my man, focus.
Once again: was the POP to the bubble (not the cause of the bubble,
not the cure to the bubble bursting) caused by government action or
inaction, or was it "random" or something else.
Not holding my breath...
RL
us...@domain.invalid
And you can't seem to grasp that tarp had nothing to due with the "POP",
Tarp was a reaction to it. The cause of "POP" was consumer income, their
debt load had peaked and all that there was no one left to sell their
toxic debt on to.
RayLopez99
> And you can't seem to grasp that tarp had nothing to due with the "POP",
> Tarp was a reaction to it. The cause of "POP" was consumer income, their
> debt load had peaked and all that there was no one left to sell their
> toxic debt on to.
So, you are saying the reason the pop occurred when it did was
random? It could have happened in August or November? I just want to
clarify your muddled thoughts.
Speak clearly man.
RL
us...@domain.invalid
I thought I'd made that clear, the jig was up in May/June of 07,
the PPT popping the market back up before close after regular 200
point drops. By August 07 anyone with eyes could see what was
happening, the consumer was tapped out.
RayLopez99
> I thought I'd made that clear, the jig was up in May/June of 07,
> the PPT popping the market back up before close after regular 200
> point drops. By August 07 anyone with eyes could see what was
> happening, the consumer was tapped out.
OK, so I'll take it as an answer that you think that anytime after May/
June of 2007, the market could have crashed like it did in late
September/ October 2008. So you are taking the position the crash in
fall 2008 was unrelated to anything the Fed did with the bailout,
contrary to esteemed economist John Taylor (of the Taylor Rule, used
by the Fed), or with the failure to save Lehman Brothers, as argued by
esteemed economic historian Alan Meltzer.
Thanks for exposing your foolishness. No further questions as your
folly speaks for itself. Case dismissed.
RL
us...@domain.invalid
I'm saying exactly what I said, Tarp had nothing to do with popping the
crash. I couldn't give one shit more what John Taylor or Alan Meltzer
say, or any of those ass clowns who claimed "nobody saw this coming",
and now claim they know when it will turn around.
Even if Lehman had been bailed out it would have made no difference. The
cat was well out of the bag by thenthe consumer was tapped out and real
estate values had outpaced what was affordable without highly risky
mortgage schemes. Hell, the ridiculous run up in real estate " Who in
hell can afford to buy these houses?" was the topic of conversations in
restaurants and hair salons as far back as late 2006.
RayLopez99
> RayLopez99 wrote:
> > On Aug 20, 7:42 pm, u...@domain.invalid wrote:
>
> >> I thought I'd made that clear, the jig was up in May/June of 07,
> >> the PPT popping the market back up before close after regular 200
> >> point drops. By August 07 anyone with eyes could see what was
> >> happening, the consumer was tapped out.
>
> > OK, so I'll take it as an answer that you think that anytime after May/
> > June of 2007, the market could have crashed like it did in late
> > September/ October 2008. So you are taking the position the crash in
> > fall 2008 was unrelated to anything the Fed did with the bailout,
> > contrary to esteemed economist John Taylor (of the Taylor Rule, used
> > by the Fed), or with the failure to save Lehman Brothers, as argued by
> > esteemed economic historian Alan Meltzer.
>
> > Thanks for exposing your foolishness. No further questions as your
> > folly speaks for itself. Case dismissed.
>
> > RL
>
> I'm saying exactly what I said, Tarp had nothing to do with popping the
> crash. I couldn't give one shit more what John Taylor or Alan Meltzer
> say, or any of those ass clowns who claimed "nobody saw this coming",
> and now claim they know when it will turn around.
Well Tarp had nothing to do with the recovery say the ass clowns. I
think they're right.
>
> Even if Lehman had been bailed out it would have made no difference. The
> cat was well out of the bag by thenthe consumer was tapped out and real
> estate values had outpaced what was affordable without highly risky
> mortgage schemes. Hell, the ridiculous run up in real estate " Who in
> hell can afford to buy these houses?" was the topic of conversations in
> restaurants and hair salons as far back as late 2006.
We beg to differ on Lehman.
In any event, thanks for your opinion, though it was like pulling
teeth.
RL
fruitella
>
> - Show quoted text -
I have to agree with u...@domain.invalid.
You are muddying up the waters by trying to redefine the cause.
RayLopez99
>
> I have to agree with u...@domain.invalid.
>
> You are muddying up the waters by trying to redefine the cause.
Well fruit, I beg to differ. What invalid and you (perhaps) think is
confusing what conservative economist John Taylor called the natural
ability of the economy to recover from disaster--and you mistook this
for TARP working.
This was not the subject of the thread, but let's make it one. To
recap, the subject of this thread was: what caused the bubble to
pop? Not to form, but to pop? Invalid thinks it was random--the
popping, not the cause--and that anytime after the summer of 2007 it
could happen. I disagree, thinking it was either Lehman or TARP's
uncertainty (note after TARP--horrible as it was--was approved, the
crisis started to end, since people did not have uncertainty--click on
the link in the OP for the graph).
But let's change the thread: did TARP and/or government Keynesian
spending work? No. Like Taylor says, economies that are free recover
quickly. This happened before the 1914 creation of the Federal
Reserve in the USA, and it's happening now. After a few years of
depression/recession, like now, the economy comes back.
By contrast, if you think TARP is working, how do you explain the fact
TARP banks (which are the unhealthy banks) have not lent money?
Surely you don't think socializing the losses of big banks that are
unhealthy somehow saved the economy? Buying their bad loans and
giving these bad loans to the taxpayers saved the economy? Never
heard of something that preposterous. The Japanese have tried that
for decades (plural) and their economy is still in the doldrums. No,
the economy came back on its own, yet I bet you and Invalid think
Obama had something to do with it. As for stimulus money, that's even
more pathetic than TARP money, as 90% of this stimulus money has not
even been spent yet. It cannot have had any stimulus effect.
Likewise "cash for clunkers" and any other non-permanent change--Bush
tried that with the rebate in early 2008 and it failed. Only a
permanent tax cut like Reagan proposed will have a real stimulus
effect.
RL
Rod Speed
> On Aug 21, 1:20 pm, fruitella <visualseep...@yahoo.com> wrote:
>
>>
>> I have to agree with u...@domain.invalid.
>>
>> You are muddying up the waters by trying to redefine the cause.
>
> Well fruit, I beg to differ. What invalid and you (perhaps) think is
> confusing what conservative economist John Taylor called the natural
> ability of the economy to recover from disaster--and you mistook this
> for TARP working.
>
> This was not the subject of the thread, but let's make it one. To
> recap, the subject of this thread was: what caused the bubble to
> pop? Not to form, but to pop? Invalid thinks it was random--the
> popping, not the cause--and that anytime after the summer of 2007 it
> could happen. I disagree, thinking it was either Lehman or TARP's
> uncertainty (note after TARP--horrible as it was--was approved, the
> crisis started to end, since people did not have uncertainty--click on
> the link in the OP for the graph).
>
> But let's change the thread: did TARP and/or government Keynesian
> spending work? No. Like Taylor says, economies that are free recover
> quickly. This happened before the 1914 creation of the Federal
> Reserve in the USA, and it's happening now. After a few years of
> depression/recession, like now, the economy comes back.
Hoover tried that, it didnt work post 29.
RayLopez99
> But let's change the thread: did TARP and/or government Keynesian
> spending work? No. Like Taylor says, economies that are free recover
> quickly. This happened before the 1914 creation of the Federal
> Reserve in the USA, and it's happening now. After a few years of
> depression/recession, like now, the economy comes back.
Hoover tried that, it didnt work post 29.
******
Hoover was an interventionist--have you not read Amity Shlaes' book
"The Forgotten Man", a revisionist account of the Great Depression?
Hoover = Roosevelt. Only Calvin Coolidge comes out clean.
But more to the point--as Dr. Milton Friedman pointed out, it was the
Federal Reserve's strict constriction of the money supply that caused
the Great Depression. Of course it didn't help, like Barry
Eichengreen points out in his book "Golden Fetters" that the world
tried to go back to the pre-WWI gold standard, which required a
deflation of prices. As Keynes helpfully has pointed out, people
resist cutting prices (I've found that to be true in this present
crisis, even with distressed real estate, people hold on to get the
price they paid unless they are truly in dire straits).
RL
us...@domain.invalid
Nah he's trying to hide the fact that this current screw up belongs to
the previous administration and then tries and lay on the new one ;~)
us...@domain.invalid
> On Aug 21, 1:20 pm, fruitella <visualseep...@yahoo.com> wrote:
>
>> I have to agree with u...@domain.invalid.
>>
>> You are muddying up the waters by trying to redefine the cause.
>
> Well fruit, I beg to differ. What invalid and you (perhaps) think is
> confusing what conservative economist John Taylor called the natural
> ability of the economy to recover from disaster--and you mistook this
> for TARP working.
>
> This was not the subject of the thread, but let's make it one. To
> recap, the subject of this thread was: what caused the bubble to
> pop? Not to form, but to pop?
No it wasn't, it was " Immediate cause of the '08 crash: TARP. A picture
is worth 1000 words"
Invalid thinks it was random--the
> popping, not the cause--and that anytime after the summer of 2007 it
> could happen. I disagree, thinking it was either Lehman or TARP's
> uncertainty (note after TARP--horrible as it was--was approved, the
> crisis started to end, since people did not have uncertainty--click on
> the link in the OP for the graph).
>
> But let's change the thread:
Why because you've been proved wrong?
did TARP and/or government Keynesian
> spending work? No. Like Taylor says, economies that are free recover
> quickly. This happened before the 1914 creation of the Federal
> Reserve in the USA, and it's happening now. After a few years of
> depression/recession, like now, the economy comes back.
LOL, the "Free market" is what caused the whole thing, unregulated
financial products without oversight.
>
> By contrast, if you think TARP is working, how do you explain the fact
> TARP banks (which are the unhealthy banks) have not lent money?
> Surely you don't think socializing the losses of big banks that are
> unhealthy somehow saved the economy? Buying their bad loans and
> giving these bad loans to the taxpayers saved the economy? Never
> heard of something that preposterous. The Japanese have tried that
> for decades (plural) and their economy is still in the doldrums. No,
> the economy came back on its own,
LOL, What recovery? the market is being held up by the Fed and the PPT.
there is no market.
yet I bet you and Invalid think
> Obama had something to do with it. As for stimulus money, that's even
> more pathetic than TARP money, as 90% of this stimulus money has not
> even been spent yet. It cannot have had any stimulus effect.
> Likewise "cash for clunkers" and any other non-permanent change--Bush
> tried that with the rebate in early 2008 and it failed. Only a
> permanent tax cut like Reagan proposed will have a real stimulus
> effect.
Now we see the truth, another blind republican supply sider, Reagan tax
cuts are a Myth and caused big deficits. What really caused the boom
during the Reagan years, and you almost never hear it mentioned, was
simple demographics. It was the Baby Boomers, Seventy-six million coming
of age and spending.
>
> RL
Rod Speed
> Rod Speed <rod.speed....@gmail.com> wrote
>>> But let's change the thread: did TARP and/or government Keynesian
>>> spending work? No. Like Taylor says, economies that are free
>>> recover quickly. This happened before the 1914 creation of the
>>> Federal Reserve in the USA, and it's happening now. After a few
>>> years of depression/recession, like now, the economy comes back.
>> Hoover tried that, it didnt work post 29.
> Hoover was an interventionist--
Like hell he was post 29.
> have you not read Amity Shlaes' book "The Forgotten Man",
> a revisionist account of the Great Depression?
> Hoover = Roosevelt. Only Calvin Coolidge comes out clean.
Just because she claims it doesnt make it gospel.
> But more to the point--as Dr. Milton Friedman pointed
> out, it was the Federal Reserve's strict constriction of
> the money supply that caused the Great Depression.
I wasnt talking about the cause, about the reaction to it.
The economy clearly didnt recover quickly from it.
It didnt in the long depression either.
> Of course it didn't help, like Barry Eichengreen points
> out in his book "Golden Fetters" that the world tried
> to go back to the pre-WWI gold standard,
Only well after the economy clearly didnt recover quickly.
> which required a deflation of prices. As Keynes
> helpfully has pointed out, people resist cutting prices
> (I've found that to be true in this present crisis,
Like hell it is, most obviously with commodity prices.
> even with distressed real estate, people hold on to get
> the price they paid unless they are truly in dire straits).
And thats precisely what banks with defaulted propertys are in.
com...@webtv.com
Worse than that. He's in a prolonged bout of trying to rationalize and
save the Entire PHILOSOPHY he imagines he has lived by up til now. the
whole Conservative-Randian Pilosophical edifice has collaped in this last
blowup and you will see maniacs like Lopez running around ginning the
facts and trying to cover the cat turds for years to come.
the main object of a prototype psycho like Ray is not not to apply
research to find true causes, it to bend research to try and prove that
HE was never wrong ( yet that prototype almost always is).
RayLopez99
> > Nah he's trying to hide the fact that this current screw up belongs to
> > the previous administration and then tries and lay on the new one ;~)
>
> Worse than that. He's in a prolonged bout of trying to rationalize and
> save the Entire PHILOSOPHY he imagines he has lived by up til now. the
> whole Conservative-Randian Pilosophical edifice has collaped in this last
> blowup and you will see maniacs like Lopez running around ginning the
> facts and trying to cover the cat turds for years to come.
>
> the main object of a prototype psycho like Ray is not not to apply
> research to find true causes, it to bend research to try and prove that
> HE was never wrong ( yet that prototype almost always is).
Projection noted.
RL
RayLopez99
> LOL, What recovery? the market is being held up by the Fed and the PPT.
> there is no market.
Interesting that you think the government holds up markets now, yet
you seem to dismiss the fact the government had anything to do with
the market crash.
> Now we see the truth, another blind republican supply sider, Reagan tax
> cuts are a Myth and caused big deficits. What really caused the boom
> during the Reagan years, and you almost never hear it mentioned, was
> simple demographics. It was the Baby Boomers, Seventy-six million coming
> of age and spending.
>
The demographics argument has been shown to be simplistic and false.
If anything, younger people actually spend more than older people.
Any other ideas?
RL
RayLopez99
> RayLopez99 wrote
>
> > Rod Speed <rod.speed....@gmail.com> wrote
> >>> But let's change the thread: did TARP and/or government Keynesian
> >>> spending work? No. Like Taylor says, economies that are free
> >>> recover quickly. This happened before the 1914 creation of the
> >>> Federal Reserve in the USA, and it's happening now. After a few
> >>> years of depression/recession, like now, the economy comes back.
> >> Hoover tried that, it didnt work post 29.
> > Hoover was an interventionist--
>
> Like hell he was post 29.
No, he really was. We agree to disagree.
>
> > have you not read Amity Shlaes' book "The Forgotten Man",
> > a revisionist account of the Great Depression?
> > Hoover = Roosevelt. Only Calvin Coolidge comes out clean.
>
> Just because she claims it doesnt make it gospel.
She's really not that revisionist actually. The book was hardly
controversial IMO, and to my disappointment, unlike some other books,
she did not come out and say and show clearly that Roosevelt delayed
the recovery, but with all the rule changes that unsettled business
she should have.
>
> > But more to the point--as Dr. Milton Friedman pointed
> > out, it was the Federal Reserve's strict constriction of
> > the money supply that caused the Great Depression.
>
> I wasnt talking about the cause, about the reaction to it.
> The economy clearly didnt recover quickly from it.
Right. Because the Fed tightened money, that was the point. The
Crash of 1929 started as a routine contraction and turned into a Great
Depression due to the inept response by the Federal Reserve.
>
> It didnt in the long depression either.
>
> > Of course it didn't help, like Barry Eichengreen points
> > out in his book "Golden Fetters" that the world tried
> > to go back to the pre-WWI gold standard,
>
> Only well after the economy clearly didnt recover quickly.
Not well after, but a few years after 1929. And going off the gold
standard did not cure countries of the GD--the UK did so in the early
1930s and recovery did not occur until after WWII.
>
> > which required a deflation of prices. As Keynes
> > helpfully has pointed out, people resist cutting prices
> > (I've found that to be true in this present crisis,
>
> Like hell it is, most obviously with commodity prices.
They use the phrase "like hell it is" to indicate agreement in AU?
Interesting, as in the USA it's a phrase to indicate skepticism.
>
> > even with distressed real estate, people hold on to get
> > the price they paid unless they are truly in dire straits).
>
> And thats precisely what banks with defaulted propertys are in.
Right. So we agree that Keynesianism is valid for certain parts of
the economy, like real estate and wages (nobody likes cutting their
salary). This was Keynes big insight, and even I, who am anti-Keynes,
recognize it.
RL
Rod Speed
> Rod Speed <rod.speed....@gmail.com> wrote
>> RayLopez99 wrote
>>> Rod Speed <rod.speed....@gmail.com> wrote
>>>>> But let's change the thread: did TARP and/or government Keynesian
>>>>> spending work? No. Like Taylor says, economies that are free
>>>>> recover quickly. This happened before the 1914 creation of the
>>>>> Federal Reserve in the USA, and it's happening now. After a few
>>>>> years of depression/recession, like now, the economy comes back.
>>>> Hoover tried that, it didnt work post 29.
>>> Hoover was an interventionist--
>> Like hell he was post 29.
> No, he really was.
Like hell he was. He believed that the market would sort it out. It didnt.
> We agree to disagree.
I agree to nothing of the sort.
>>> have you not read Amity Shlaes' book "The Forgotten Man",
>>> a revisionist account of the Great Depression?
>>> Hoover = Roosevelt. Only Calvin Coolidge comes out clean.
>> Just because she claims it doesnt make it gospel.
> She's really not that revisionist actually.
Irrelevant to whether she got that right.
> The book was hardly controversial IMO,
Irrelevant to whether she got that right.
> and to my disappointment, unlike some other books,
> she did not come out and say and show clearly that
> Roosevelt delayed the recovery, but with all the rule
> changes that unsettled business she should have.
Irrelevant to whether Hoover was an interventionist. He wasnt.
>>> But more to the point--as Dr. Milton Friedman pointed
>>> out, it was the Federal Reserve's strict constriction of
>>> the money supply that caused the Great Depression.
>> I wasnt talking about the cause, about the reaction to it.
>> The economy clearly didnt recover quickly from it.
> Right. Because the Fed tightened money, that was the point.
Easy to claim that was the reason.
> The Crash of 1929 started as a routine contraction and turned into a
> Great Depression due to the inept response by the Federal Reserve.
And Hoover being stupid enough to believe that the market would sort
it out prevented it from recoverying quickly. He got the bums rush at the
ballot box when the voters noticed that the market wasnt sorting it out.
>> It didnt in the long depression either.
No point in ignoring this, it wont go away.
>>> Of course it didn't help, like Barry Eichengreen points
>>> out in his book "Golden Fetters" that the world tried
>>> to go back to the pre-WWI gold standard,
>> Only well after the economy clearly didnt recover quickly.
> Not well after, but a few years after 1929.
Thats well after in the context of your alleged quick recovery.
> And going off the gold standard did not cure countries of the GD--the
> UK did so in the early 1930s and recovery did not occur until after WWII.
So much for your quick recovery.
>>> which required a deflation of prices. As Keynes
>>> helpfully has pointed out, people resist cutting prices
>>> (I've found that to be true in this present crisis,
>> Like hell it is, most obviously with commodity prices.
> They use the phrase "like hell it is" to indicate agreement in AU?
> Interesting, as in the USA it's a phrase to indicate skepticism.
Pathetic.
>>> even with distressed real estate, people hold on to get
>>> the price they paid unless they are truly in dire straits).
>> And thats precisely what banks with defaulted propertys are in.
> Right. So we agree that Keynesianism is valid for certain parts of the
> economy, like real estate and wages (nobody likes cutting their salary).
I never ever said anything like that there.
> This was Keynes big insight, and even I, who am anti-Keynes, recognize it.
Your problem.
RayLopez99
[Nonsense deleted]
I win, you lose. Stay on topic Rod Speed.
Case closed, 'nuff said.
RL
Rod Speed
RayLopez99 deperately attempted to bullshit its way out of
its predicament and fooled absolutely no on at all, as always.