Skepticism

Afternoon Inquisition, 9.26

I’m not much for political or economic discussions normally but it’s everywhere so I figured today would be a good day for a skeptical take on what’s going on in the political arena.

The government bailout proposal has caused huge controversy in the past few days. The CEO of BB&T sent a letter to the government saying, amongst other things, that it was wrong to bailout institutions that made poor decisions.

“There were a number of poorly managed institutions and poorly made financial decisions during the real estate boom,” Allison wrote. “It is important that any rules post-`rescue’ punish the poorly run institutions and not punish the well-run companies.”

So, I ask you, skeptical readers:

Is the government bailout of our failing financial institutions a good or bad idea? Please support your opinion with solid, skeptical reasoning.

I’ll probably have minimal participation on this one – it’s definitely not my area of expertise. I’m going to use this as a learning experience :)

P.S. Thanks to Krelnik for suggesting this question!

Masala Skeptic

Maria Walters (a.k.a. Masala Skeptic) has spent a lot of time in ‘furrin parts,’ including Hong Kong, Trinidad, and Pittsburgh. Although her passport is from India, she’s spent most of her adult life in the United States. She currently lives in Atlanta and has an unhealthy affection for science fiction, Neil Gaiman and all things Muppet.

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76 Comments

  1. I’m not sure that we have a choice, but I cannot support the bill as originally written, especially Section 8. That section gives Paulson absolute power with no checks, balances or oversight. I also have doubts about the figures cited. I want to a breakdown of how much money will go to whom for what reason(s), and what the taxpayers get in return.

    We must get the liquidity shortage solved, as commercial credit is the “blood” of the economy. However, we need not “give the world away” to do so.

    I think we should seriously consider what Sweden did in this kind of situation and emulate it. See this article for more information: http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html

  2. Spending money (even a lot of it) to keep the country from dipping into a depression is a good idea.

    Whether these actions will lead to a stable economy? I don’t have the foggiest: IANAE. I’m willing to hear the economists out, though. My instinct (which is useless) suggests “probably not”.

    Instituting legislation that will keep this thing from happening again the future? That’s not just a good idea, it’s an imperative.

    And now, if you’ll excuse me, I am going to get myself a bucket in preparation for the heavy vomiting that will commence when the libertarians start posting their responses to today’s AI.

    Apologies, Seth. Couldn’t help myself. ; )

  3. Bad idea. There is the moral hazard of creating the illusion of insurance for risk, which causes an inaccurate evaluation of risks and costs, which is what got us into this mess. In addition, although there is less liquidity, there is some. See Buffet buying Goldman or the Japanese firm buying Morgan Stanley or JP Morgan buying everything. There are players with capital who see an opportunity to make money. Finally, this is all being presented as a false dichotomy. The economy does not fail. It works at varying levels of efficiency. If there is money to be made in the financial markets, other players will enter that market.

    As far as regulation and legislation goes, could someone please please give me a better reason than everyone knows we need more regulation and that this was all caused by insufficient regulation? Perhaps evidence that these concepts are true.

  4. I’m going to go out on a limb here and say it’s a bad idea… not necessarily for economic reasons, though from the look of some previous posts, there are enough of those. I’m just against the whole concept of letting people off the hook for mistakes made through avarice. That sort of thing tends to make people feel like they’ll just be bailed out again if they do it again, which weakens the already shaky concept of accountability.

    No consequences = no cares.

  5. I haven’t been following this closely, so my opinion is not very well-informed. (But here I go anyway…)

    My concern with this is that it’s something that’s good in the sort-term, but very bad in the long run. It seems like this problem has gotten worse with time because past bailouts have led people in the financial industry to escape the consequences of their bad decisions. The result is a lot of high risk behaviors, because the risk is being borne by someone else (the taxpayers). The individual making the decision stands to gain a lot, with little personal risk.
    If the action is being sculpted in such a way as to avoid this, then it may not be such a bad thing. But it still sounds bad.

    This seems like watching a parent who never follows through on their threats being amazed that their kid is such a holy terror, but then giving in yet again, and letting the brat have ice cream anyway.

    I am a Hedge

  6. @ Question Authority

    How do we identify those responsible? How do we define “responsible” for such a large complex event? How do we define “ill-gotten”?

    Of course, there was a great deal of fraud going on at several levels. Those individuals should be prosecuted. We cannot punish people post hoc for doing dumb, but legal, things. That would undermine our entire legal system.

    Seems to me that having one’s stock lose 97% of its value overnight is pretty punishing. The stock options in those golden parachutes won’t be very attractive either. And, yes, I know the collapse of these firms affects more than their stockholders.

  7. @JRice:

    Instituting legislation that will keep this thing from happening again the future? That’s not just a good idea, it’s an imperative.

    Don’t overlook the option of repealing legislation to prevent this from happening again. That would seem to be a legitimate option to consider also.

    I am a Hedge

  8. @Restefyn:

    Are you sure?

    These are people that may succeed (I hope not) in bringing down the entire world’s economy, (with all the suffering that entails) purely from their own greed and conviction that they would not be caught?

    I’m not entirely sure that the death penalty might not be appropriate.

  9. @ I am Hedge
    “Don’t overlook the option of repealing legislation to prevent this from happening again. That would seem to be a legitimate option to consider also.”

    One way to look at the genesis of this crisis is not about the amount of regulation, but the “evenness” of regulation. When regulation is very uneven (such as in privileged markets like housing), investments will be driven to be concentrated in specific areas. As a result, risk is not diversified over the entire economy and perturbations in those concentrated areas can have huge impacts.

  10. Hedge: Point taken… appreciated, even. In fact, it’s one of my pet peeves that we let laws persist as long as we do. If I had my way, nearly every law would “sunset”… and fairly quickly.

    Also, wasn’t McCain behind one of the bills that allowed the market futures that helped screw things up?

  11. What an awesome mess this is. Since the taxpayers are the ones who will pay the price for their incompetence does that mean that we all get keys to the various executive bathrooms? That would be sweet.

    And lets make sure there is no government oversight in this plan. That worked so well with the Iraq contractors after all… FSM, I hate this administration with a passion.

  12. I studied more than an average amount of economics in college adn grad school, but I’m no expert. I do remember the quote by Keynes, in response to the assertion that capitalism works in the long run – “In the long run, we are all dead.” I am not sure what the “right” thing to do is – or that we should really be doing anything.

    What I do know is that the President and the Congress, without any real debate, is about to shift the debt of the few to the debt of the many, adding about $2,300 to the federal deficit for each man, woman, and child in the U.S. – shifting the debt of the few to the debt of the many. And nobody seem particularly outraged by this.

    What I do know is that we are all supposed to be afraid of “panic” and “collapse,” with the latest story being the “largest bank failure in U.S. history” (which is more a function of inflation since the 1980s – the last time we had major S&L failures and the world didn’t come to an end), and yet I’m watching the local branh of WAMU from across the street and I don’t see anyone lined up waiting to get their deposits.

    What I do know is that 100% my clients and my friends who got themselves into mortgage trouble understood good and well what the terms of a no-down payment, interest-only, adjustable rate mortgage mean.

    What I do know is that capitalism works, if at all, only if: (1) the people who are successful in the market get to keep the profits; and (2) the people who are unsuccessful actually suffer the losses.

    Rigth now, I don’t have a lot of faith in our government, which has seem to have lost alot of faith in us. Maybe rightfully so.

  13. @JRice

    Market failure is a term that does not equate with the market ceasing to exist. Markets become inefficient. My point on these lines is that the debate is couched in terms of collapse of the economy or not. The real question is about efficiency. The financial markets have reduced efficiency and can we tolerate this period of reduced efficiency?

    As a side note, wikipedia defines “market failure” as “the condition where the allocation of goods and services by a free market is not efficient.” Not sure how to apply this as our markets are not fully free and they are never perfectly efficient, essentially due to sample size.

  14. @JRice:

    Also, wasn’t McCain behind one of the bills that allowed the market futures that helped screw things up?

    This is an example where McCain’s advantage in “experience” can work against him. He has been involved for so long, he is very likely to have had a hand in things that go terribly bad. Obama can just say “I wouldn’t have done that…”, after seeing that things have gone bad.

    For the record (someone’s keeping a record of this, right?), I don’t necessarily see “I’ve been in the government for a long time” as a good selling point for a political candidate.

    I am a Hedge

  15. I actually work for AIG, so I do have something of a personal stake in at least one bailout*.

    I agree with a ‘bailout’ plan in principle. But, as QuestionAuthority points out, the bill as written gives Paulsen a blank check. A blank check worth $700B. Speaking as a taxpayer that is not acceptable. Any company that uses taxpayer money to help liquidity must be backed by equity stakes, liens or other guarantees.

    The point of a bailout plan should not be to make up the losses, but to provide time for an orderly wind down of companies that are in trouble.

    * I work in one of AIG insurance subsidiaries so I have no connection with the CDO or credit default swap business. Obviously all of the above is personal opinion only.

  16. @TheSkepticalMale:

    I do remember the quote by Keynes, in response to the assertion that capitalism works in the long run – “In the long run, we are all dead.”

    I thought this quote was Keynes’ response to criticisms of the necessarily inflationary effects of his policy ideas. I think he was basically suggesting that printing more money was a good thing to do. When it was pointed out that this would just decrease the value of existing money, and lead to an increase of prices for everything in the long run, he responded with his famous quote.

    Now he’s dead, and we’re all left holding the bag for his bad ideas.

    I am a Hedge

  17. @llysenwi: I agree with you with respect to the assertions of “collapse” or “failure.” One or more market players will pick up where a failure has taken place, and I think we should be concerned about making the transition as smooth as possible.

    But that said, how do you feel about Bank of America having acquired four large institutions within the last 2 years?

  18. @TheSkepticalMale: I’m not an economist, I’m an evolutionary biologist. So, I am inclined to prefer larger amounts of diversity. That being said, Bank of America as an entity is pretty diverse and, hopefully, robust to perturbations in any one area. They do serve as an example of how a firm that has not made relatively poor decisions can take advantage of the poor decisions of other firms.

    I’m less concerned with single firms dominating a market than having capital as a whole unevenly invested. We’ve given the housing market special treatment for at least 70 years which drove imbalanced investment in that market and made the rest of the economy particularly vulnerable to fluctuations in that market (only no one complained with the fluctuations drove everything up 3 years ago).

    It seems that we agree that the question is not an “end of the world” scenario, but is about how much uncomfortable inefficiency we are willing to tolerate. Apparently the going price of national comfort is $700B.

  19. I think what concerns me most right now is our global position. We’ve been a superpower for so long, and we take that for granted. But with technology, outsourcing, and emerging markets catching up in terms of financial means and intellectual capital, our global position may be at risk. Also, in that context, a major economic problem that severely devalues our currency could lead to the purchase of major U.S. companies by foreign firms.

  20. So far, all I’ve seen is a huge stampede to do something, anything, now, now, NOW instead of taking time to come up with a solution that’s more sophisticated than “throw buckets of taxpayer cash at the problem and hope it goes away”. Are we really going to get a better solution if we rush in instead of stopping and really thinking about what we’re getting ourselves into? Finally, I really think it’s a bad idea to give money to the bunch of greedy knuckleheads that got us into this mess to begin with.

  21. Although I understand, in principle, that bailing out those who were greedy is wrong, we’re not doing it to save them. We’re doing it to save ourselves – our economy.

    I don’t envy Bernanke et al these difficult decisions. There are no easy solutions to this problem.

  22. @RevChas:

    It is interesting to note that the rhetoric is now focusing on “preventing panic.” If the system were fatally flawed, it would collapse with or without panic. But if what we are trying to fix is the perception that the system is fatally flawed, then panic must be prevented at all ($700B) costs.

  23. Real people are losing money because of the banks that are failing. My sister managed multiple WaMu branches over the past eight years and her stock based 401-K is now worth nothing, zero, zip. This was not an investment “risk” she took. The bail out of American Motors in the 1980’s seems to have worked out and the government more than got it’s money back and nations need to look out for themselves.

    I also accept that some times markets and businesses do fail but if the will of the populace wants this bail out to happen it’s within the powers of the government to do it.

  24. @Stacey said: “Although I understand, in principle, that bailing out those who were greedy is wrong, we’re not doing it to save them. We’re doing it to save ourselves – our economy.”

    Unfortunately, the time to avoid hard knocks to the economy was a year ago, if not more. I’ve seen this problem coming for at least that long with the upside-down real estate market we’ve been having. Things have progressed to a point now that we are going to have some hard economic times regardless of whether we bail out failing financial companies or not. All this looks like is that when times are good, profits are private, when times are bad, losses are socialized. IANAE, but that seems like a pretty crappy flavor of capitalism to me. Seems like all I’m getting saved from is the profits.

  25. @James Fox:

    her stock based 401-K is now worth nothing, zero, zip. This was not an investment “risk” she took

    If her 401k was 100% invested in stock from a single company, then that is a risk (and a rather foolish one) that she took. Unless, of course, I’m totally confused on how 401ks work.

    I wouldn’t have my retirement plan 100% invested in anything.

    I am a Hedge

  26. @Stacey: “… major economic problem that severely devalues our currency could lead to the purchase of major U.S. companies by foreign firms.” … And adding another $700B to the deficit would do what to our currency position?

    @James Fox:”Real people are losing money because of the banks that are failing. My sister managed multiple WaMu branches over the past eight years and her stock based 401-K is now worth nothing, zero, zip. This was not an investment “risk” she took. ” … It is my understanding of the post-Enron regulations that your sister would not have been required to keep all her eggs in one investment basket (i.e., 401k holding nothing but WAMU stock instead of diversifying). Am I misinformed about that?

    @Stacey: “Although I understand, in principle, that bailing out those who were greedy is wrong, we’re not doing it to save them. We’re doing it to save ourselves – our economy.” … But do we really NEED to write a blank check to the Secretary of the Treasurer – that is $2,300 for each of us – to save ourselves? I haven’t seen the evidence for that. Furthermore, does the Congress and administration have to do it without much deliberation?

  27. @TheSkepticalMale:

    I don’t know the answers to your (good) questions. I agree that there’s no real evidence that the current approach will save our economy. The decisions are being made based on predictions of what might happen, not what will happen.

    I can’t take a formal position on what the government should do because I don’t have the answer. I just see the complexity of the problem, and the fact that there are no easy answers.

  28. @RevChas:

    I don’t think anyone agrees that “the time to avoid hard knocks to the economy was a year ago”, but being that we can’t go back in time and fix that, we have to accept the situation as it is and move forward constructively.

    I’m not saying that the government is doing the right thing, but I am saying that lamenting something that can’t be changed will not bring us closer to a solution.

  29. There are a few things that make this crisis particularly chilling.

    One is that the Chinese government has instructed their banks not to loan any more money to US banks – that reminds me of the old Communist saw that a capitalist would sell them the rope that they would use to hang him. Make no mistake – The communist Chinese are not and have never been our friends.

    The Germans have shrugged and told us to eat their weiner. ;-)

    The Russians are flexing their muscles, because they were expecting this to happen, as were most Americans over 30 with any brains and an education in history. (Note the the Russians sent a flotilla of naval vessels to Venezuela this past week. Monroe Doctrine violation, anyone?)

    The US is militarily and financially overextended. This is how empires end – and it’s frightening. Recall that the last Depression was a significant factor in the eruption of WWII.

    We need some cool, calm analysis in Washington right now. This is not the time for either party to posture for the voters, invoke mindless ideology, or to try to save their careers – which is how I and many other observers take the events of the last 48 hours. I think that if there is a sense of solid progress on the problem, the markets will not panic. We need to repeal some bad legislation and write some stronger legislation to replace it. A good place to mine would be the Depression era legislation that was repealed in the last 25 years.

    As I pointed out earlier, there are solutions to this mess that are fair to the taxpayers and can resolve the worst of the problems. The Swedes did something quite smart when they had this happen, for example. It’s going to hurt – count on it. But I can’t see letting the people go free that caused this.

    It may take a while for the investigations to run their course, but if they follow the money and ask “Qui bono,” it will eventually become apparent who was guilty of crimes. Recall the perp walk from the Enron trials as an example.

    Long-term loans can work: Look at AMC (thanks, James Fox!), Chrysler, Lockheed, etc. So can temporary State stewardship of the affected financial companies until the damage is repaired.

  30. @QuestionAuthority:

    The Chinese have never been the friends of America you say? Funny but there are LOT of people in the UK saying “The Americans are not and have never been our friends”

    The actions of the Russian military are almost entirely for internal consumption by the Russian public. In the last 25 years there country has been significantly reduced in size and world prestige (the recent conflict in Georgia should most of the military hardward to be ~30years out of date and no match for even a small western army, hence Medvedev’s drive to restructure the army from a conscript to professional one and rebuild the atlantic fleet into a modern one). The recent “rise” of Russia has been due almost entirely to high oil and gas prices (Russia supplies 90% of Europe’s natural gas) and the Russians rightly want to be taken as a great power again. Besides a strong russia is in our interests as they are a stablising factor on their former soviet possestions (i.e. they will slap down any central asian islamic republics on our behalf if they get any funny ideas).

    As for the end of the American Empire. Empires generally end with a whimper not a bang.

    Personally, I think the bale out is a terrible idea as giving the banks $700 which they can in turn lend out again is designed to re-inflate the bubble (“hey guys lets just kick this problem into the long grass until we’re safely out of office”) is only storing up trouble for later on.

    Those people who made the bad loans shouldn’t rewarded for their stupidity by being given the funds to start making reckless loans again

  31. @lagomorph:

    While Ron-Paul seems to be doing a wonderful job of pointing out everything that is wrong with the bailout package (I agree with his points, BTW), I don’t see him making any suggestions for a better solution.

    The thing is, the reason we are in this crisis is all about perceptions. The mortgages bundled in the annuities are perceived as having no value because nobody knows which ones are good and which ones are bad. Since they are perceived as having no value, the businesses that bought them cannot book them as revenue (thanks to Sarbanes-Oxley). The result is a bunch of banks and other financial institutions who, while they are still perfectly liquid, appear on the books to be losing huge sums of money. Further result: people stop investing in those institutions and their stock price plummets.

    The hope is that, by having the government buy up the mortgage annuities, they will re-invigorate the market for them and the financial institutions will be able to book revenue. The problem with this outlook: what if it doesn’t work? What if everyone just wants to dump all of their annuities and the government runs out of money to buy them up?

    Better solution: amend Sarbanes-Oxley so that it doesn’t apply in this situation. FIs can start booking the revenue on their annuities (which ARE worth something, only about 5% of the mortgages are in default), and they’ll stop going down the toilet.

    Disclaimer: I am not an economist. It is entirely possible that none of what I wrote makes any sense whatsoever. It is based on my understanding of the situation after listening to NPR and talking to a friend that works in the mortgage industry.

  32. Before I hear any more ” deregulation caused this mess”, the vast majority of it was caused by a PC push to get low income & minorities mortgages.
    NYT 1999:

    In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

    The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

    Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

  33. My own research:
    I applied for an unsecured personal loan at my bank. I’m 27, my net equity is only around 40k, but my credit rating is good 760+ last time I checked.

    I qualified for their best interest rate, and 25k.

    Someone stupendously pointed out above that there’s liquidity out there. Just not for companies & people with shitty assets.

  34. The original proposal: clearly a terrible idea. Giving one guy control over 700 billion dollars with the power to purchase any mortgage related asset, assign no bid contracts at any rate, and nationalize any financial institution without checks, balances, or oversight of any kind is not a good idea, simply because without any checks, balances, or oversight there’s no way for anyone to prevent that becoming the friends of Paulson slush fund.

    That said, nothing that derives from that original idea is likely to be a good idea.

    I don’t like the structure of the bailout, because I don’t like the idea that we are going to by extremely complicated financial instruments with no idea of what their real value is.

  35. @russellsugden:

    Funny but there are LOT of people in the UK saying “The Americans are not and have never been our friends”

    Aww, what’s a couple of wars between friends? And that was a long time ago.

    From my understanding of 20th century history (admittedly likely to have a pro-american bias) it seems that the US and the UK have been pretty good friends. There’s nothing like a common enemy to bring people together. (Stinkin’ French)

    I am a Hedge

  36. Can we stop referring to the Chinese as monolithic? QuestionAuthority’s assertion (#51) that China has ordered its banks not to lend to the US (out of maliciousness, apparently, not out of good business sense) is only plausible because China is a totalitarian state. The people of China and the government of China are completely distinct entities.

    As a capitalist and a loving father, I would definitely sell you the rope you would hang me with. If I am going to be hung, I’d rather increase my wealth that I can leave to help my family. Only a Communist would think that there is only one supplier of rope.

  37. Well,

    I’m on the “we can’t afford to let these guys sink” band wagon.

    But..

    How can these idiots bristle at regulation? It’s OUR money!!! Okay, I’ll give you that, you don’t want regulation, fine. I feel you.

    When you get so big (as a corporation) that we can’t (as a nation) afford to let you fail, we break you up into about six companies, or we regulate your ass. It’s one or the other.

    Right now Wall st. has all of the gains of unbridled greed and Capitalism but none of the penalties. That’s got to be fixed.

    Either the people own your huge company and regulate it (because you forced us to buy it from you), or we force you to quit playing “Pac-man” with each other and take your lumps, individually, when your short sighted greed causes you to fail.

    That doesn’t seem too unreasonable a request to me. BUT…

    I was taught that you can’t have it both ways, apparently, I was incorrectly instructed.

    This will be the first of many “bail outs”. There will be many “golden parachutes” and home owners will get little or no help.

    Call me Nostradamus,

    rod

  38. Thanks for a very interesting thread, you guys. I’ve learned a lot – alas, I think my initial instincts were sort of correct. The bailout is probably necessary but the way it’s being done is bad and nobody really knows if it’s going to solve the problem anyway.

    Sigh.

  39. The original Paulson plan was not a good idea. When this much money is being handed over it needs to have strings and regulation attached. This crisis could not have happened if it wasn’t for deregulation. It has been a long time since a merger was denied. These companies are too large to fail because deregulation allowed them to become to large. They aren’t strict monopolies but they are close enough that it doesn’t make a real difference. If AIG was 200 smaller companies and 20 of them failed they wouldn’t need a bailout.

    A bailout is unfortunatly neccessary. If this continues for very much longer we will start to see massive job losses. Companies won’t be able to make payrolls. Many good solid companies won’t be able to stay in business. We could see unemployment as high as 20%.

    Along with the money we need to institute strong regulations. A return to Glass-Stegal would be a good start. If these companies are going to accept the buyout of questionable securities then caps on executive pay and elimination of all bonuses and reclemation of large portions of the bonuses already paid out will be neccessary. Bankruptcy judges will need the authority to rewrite the terms of morgatges on primary homes in just the same way that they can on vacation homes or yachts.

    Something is going to be done. I think whatever plan is agreed on will probably be written this weekend and voted on and signed before the end of next week. I hope that it is a good bill and not something tailored to push more wealth from the poorest to the wealthiest. We have been doing that for 28 years and it has really hurt our country.

  40. Gabriel is dead on. If we recognize that the evidence suggests that a truly unregulated market will spend a fair amount of its time ramping itself to extremes of risk and income distribution-hardly a condition we would call a “free” market-then government needs to intercede to protect fair practice, enforce guarantees, and ensure a competitive environment. The government did need to step in. BUT, there needs to be a recognition that this was the result of a regulation environment that didn’t require financial institutions to exercise anything resembling good sense, and secondly, the government needs to take it out of the hides of shareholders first-demand oodles of equity, and sell it back to the public (with any luck, for something resembling profit) when the storm has cleared.

  41. @Im a Hedge:

    To be honest it mainly started when the BBC showed a documentary (“Mortgaged to the Yanks”) about how the US comprehensively shafted the UK at the end of WWII through a series of loans both side knew could never be repaid. We were giving america MILLIONS from 1946 onwards while the country was starving, bread rationing (which never happend during the war) was introduced so we could send the money to the US, the NHS began charging for glasses (the NHS to Brits is like Washington, Jefferson, Lincoln, the Constitution, the Flag all rolled into one) which really stung. We didn’t finish sending you money (which by then was billions) every year until about 2004.

    Essentially, America found a way the break the British Empire, British Industry and prevent our full recovery from the war. Had we not sent the money britian in the 50’s, 60’s, 70’s and 80’s would have been like the US during that period in terms of standard of living.

    That documentary had a big impact

  42. Well, I, for one, wouldn’t belong to a party that advertised itself as left wing, for the same reason I have very seldom belonged to any political party-trading the frame of one end of the political spectrum or the other for the good-sense evaluation of political events on a case-by-case basis is a terrible trade. Nothing about the fact that government needs to participate in markets changes the “other” fact that a monstrous fraction of those interventions are heavy-handed, byzantine, harmful, and absurd, and navigating between those two extremes requires a delicacy that political parties don’t often furnish.

  43. @russellsugden:

    Russel,

    Your comment makes me glad I put in my caveat, “admittedly likely to have a pro-american bias” regarding my knowledge of anglo-american relations. I wasn’t aware of the stuff you describe.

    I remember that FDR was using the Lend-Lease program as a way to make more likely the US public would support entering the war. “Can’t get that stuff repaid if there’s no more Britain…” Then, in the US, the history lesson goes from the end of the war straight to the Marshall Plan. “Look how nice we were to all those poor Europeans”. I don’t remember the issue of repayment of Lend-Lease ever coming up.

    It looks like I need a refresher course.

    I am a Hedge

  44. @russellsugden:

    How come I’m reading so much left wing stuff on here but yet there is no genuine left wing political party in the States?

    In the US, the two big parties have settled into a comfy relationship. I don’t think there’s a conspiracy here, it’s just developed this way. The parties mostly agree on things. They make a big show out of a few hot-button issues where they differ. This gets the voters all worked up, thinking that there’s a lot more difference than there really is. The differences are very small compared with the similarities, but since it’s widely accepted that you have to choose either ‘R’ or ‘D’, people pick a side. Then the “sports fan” attitude takes over, and people start cheering for their team and booing the other side. They somehow convince themselves that their team really is way better.

    The parties seem to have figured out that they do best by not taking too manny strong stands on issues. So if you’re a voter in the US and you want an ideological option, you end up “wasting your vote” on a third party candidate (if the big 2 haven’t managed to Protect Our Democracy ™ by keeping such candidates off the ballot.)

    (I don’t know if the Green Party meets your idea of a genuine left wing political party, but they seem to have some people convinced.)

    I am a Hedge

  45. @russellsugden: Essentially, America found a way the break the British Empire

    Russell, the British Empire had been broken before the second world war. And, oh man I hate even saying this, it looks like America may be on the downward spiral of our own. We eleceted an evil man like Bush twice, because we wanted a president that we could drink with. We elected Reagan twice because we were tired of feeling bad that we had elected Nixon twice. Then we elected Bush once. We felt like we were touched by god to lead the world and we are shocked and angry when anyone thinks that we shouldn’t tell them how to live.

    Oh hell, I’ve lost the line of this thread.

    Through a tangled skein I view you. Now my silver scissors cut the yarn.

  46. @Im a Hedge:

    I didn’t know about it (neither did most people) until the BBC documentary “Mortgaged to the Yanks” was on TV. The best bit of which was when LBJ asked Harold Wilson (Prime Minister of the time) to send British Troops into Vietnam, the reply “How’s about cancelling the debt first?” No one knows exactly what LBJ said but Wilson later said on TV that “We won’t be sending so much as a marching band into Vietnam”

    As for the two main parties in America, didnt the Republicans and Democrats start out as one single political party, the Democratic Republic Party? (Along side the Whigs and Federalists?), so its hardly suprising they barely differ. Typical Democrat politicians (or at least the one’s who are brave enough to appear on the BBC) would be in the Right of politics and Republicans on just this side of foaming-at-the-mounth unelectable.

    Right-wing and Left-wing politicians argue about how best to spend £250bn a year on the NHS (its a given that medical treatment is free)

  47. @Gabrielbrawley:

    The best proof the American era is over is the TV show “John Adams” which was aired last night over here. (Which by the way I loved)

    As soon as, as a society, you begin looking backwards, you’re finished. America is starting down the road of “If only we could go back to X” that Britain started down ~50 years ago. Hence the fact the >50% of our TV is costume drama (usually set 1790 to 1910, the zenith of the britain as a power) and most of the population seem to wish they lived in a Jane Austin novel

  48. @russellsugden:

    As for the two main parties in America, didnt the Republicans and Democrats start out as one single political party, the Democratic Republic Party? (Along side the Whigs and Federalists?), so its hardly suprising they barely differ.

    I’m doing this without consulting any reference books, so I could get things all wrong.

    There was a Democrat-Republican party, which I think has continuity with the present-day Democratic party. At some point they dropped the “Republican”, but I don’t remember the details of why. The current Republican party traces it’s history to the US Civil War era, and isn’t related to the earlier Democrat-Republican party.

    You can probably get a much more accurate version of this with a few minutes at wikipedia (or your reference of choice).

    I am a Hedge

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