But that’s not obvious. Maybe this bail out appears better from the perspective of the stock price only, but how much of that is due to additional subsidy offered to banks? Things like the gifts on student loans. And many other gifts to bankers. This is just a gift from taxpayers. Also as Darf says this measure doesn’t consider the loss in tax revenue that would have resulted if GM had gone into bankruptcy and many job losses had followed. On net the GM bailout may have been much better. Considering only the stock price I think paints a misleading picture.

It kind of looks to me like while you aren’t going to say you support corporate welfare, bailouts for the rich, etc, still you want to spin it in a positive way. Welfare for the poor on the other hand is unambiguously bad.

You can argue back and forth about the what is the right counter factual, but the point is first, we really don’t know how much was gained or lost compared to how much would have been gained or lost had no bailouts occurred. Second, and more importantly, before the bailouts we had no way to know whether or not they would make money for the taxpayer. It is the a priori that needs to be considered, and you are just claiming “a posteriori, TARP made money, GM lost money, so we should have done the former and not the latter”. That doesn’t help guide policy at all.

I opposed the bailouts, you and Jon both approve. Jon approves based on a sort of utilitarian, greatest good principle, I oppose based on abrogation of the law being an inducement to moral hazard. Do you have any reason to say that one extra-legal bailout should happen, but another shouldn’t?

It’s better than what we are doing. I don’t think I’d call indebted college students as a group rich, but this is not my point. Whether Sumner is right or Krugman is right is not the point either. The point is when the government gives banks money at 0.75% and they turn around and loan it to students at 6.8%, well the government could just cut out the middle man instead of giving them this gift. The gift could go to the relatively poorer than banker students. The fact that banks simply feed at the public trough explains their stock price, so I think pointing to their stock price like it was a good investment whereas GM is a failure is too simplistic.

Basically, the monetarists have been saying for a while now that monetary policy is currently TIGHT…in other words, I am not saying, nor are true right wingers (in the Milton Friedman sense) saying, that current monetary policies going to produce inflation…merely that inflation can be produced IF monetary policy were loose enough.

Jon, giving better loans to college students is putting money into the hands of the rich (those that go to college) at the expense of those that don’t.

Also, keynsian predictions haven’t held up well vs. monatarists. Scott Sumner has been (cautiously) running victory laps since the last unemployment report came out.