Tim “Facepalm” Worstall

Tim continues to prove that right wingers really, really love banksters and will abandon all logic and reason to defend them despite them being subsidised, cheating, arrogant wards of the state:

AIG, GM and Chrylser, that’s where the losses are.

The banksters aid, turned a profit.

I think the easiest way to show this to be silly is to compare this bailout ex ante and ex post. Before the bailout the financing cost for banks was through the roof, after the bailout it began to converge with that of the soveriegn government doing the bailing.

In Ireland, a tiny economy with a big banking sector, the government’s interest rate converged up to that of its banks, in the UK, Europe and US banks’ borrowing costs converged down towards that of the government funding them.

This happened because the government assumed all the downside risk and associated financing costs of these banks. It almost bankrupted Ireland and made tidy profits for bankers living in jurisdictions with large tax bases at those large tax bases’ expense.

As Steve Randy Waldman riffs on the same topic:

But who has lost anything from the bailouts? Wasn’t it a win-win? This all sounds very abstract. Where are the transfers?

If the government borrowed or printed a trillion dollars and gave the money to me, would there be any losers? If you don’t think there has been a wealth transfer, if you don’t think ordinary people have lost, please call your Congressperson and ask her to cut me a trillion dollar check.

Indeed, can I have a trillion dollars Tim? If I can, I promise to pay it back in a few years, and if I can’t then we’ll just call it quits.

Rightwingers, please, fall out of love with finance and think a little.

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2 thoughts on “Tim “Facepalm” Worstall

  1. Err, I quote the head of the Congressional Budget Office as saying that aid to the financial system made a profit for the US govt. Because, you know, lend freely and at a penalty rate of interest means that the penalty rate turns a margin?

    You think this shows that I really love banksters and have abandoned all reason and logic?

    Then you quote Ireland at me? Which has what to do with the US govt?

    Come along now, I’m used to a better class of insult than this.

  2. Ahem, on behalf of non-existent genuine right-wingers, I really must protest. Worstall is a liberal, just like everyone else.

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