Comments on: What the current spending actually means http://www.callingjohngalt.com/2009/04/08/what-the-current-spending-actually-means/ We have been trying to reach him for quite some time. Tue, 15 Jun 2010 00:38:16 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Johnny Abacus http://www.callingjohngalt.com/2009/04/08/what-the-current-spending-actually-means/comment-page-1/#comment-286 Johnny Abacus Thu, 09 Apr 2009 18:22:39 +0000 http://www.callingjohngalt.com/?p=485#comment-286 Brian H: Which isn't to say that they aren't free, or that they don't distort the market. Which is entirely the point - without the cheap government loans all of the major financial institutions would have gone bankrupt, solvent or not (I'm not convinced that any of the largest were), due to mark to market rules. To say that the gov't will make money on this mess is fatuous. Does anyone actually believe that say... GM will pay back it's loan? This is, in fact, the precise reason the government had to step in - no one believed that any of these guys would pay their loans back, so no one on the market would give them loans (or few... there was Buffett). The cost difference between a loan at 2% interest (or whatever it is) and an infinite interest rate is quite large. Quite frankly, the only reason this wealth transfer was made as loans is to make it more politically palatable. Brian H:

Which isn’t to say that they aren’t free, or that they don’t distort the market.

Which is entirely the point – without the cheap government loans all of the major financial institutions would have gone bankrupt, solvent or not (I’m not convinced that any of the largest were), due to mark to market rules.

To say that the gov’t will make money on this mess is fatuous. Does anyone actually believe that say… GM will pay back it’s loan? This is, in fact, the precise reason the government had to step in – no one believed that any of these guys would pay their loans back, so no one on the market would give them loans (or few… there was Buffett).

The cost difference between a loan at 2% interest (or whatever it is) and an infinite interest rate is quite large. Quite frankly, the only reason this wealth transfer was made as loans is to make it more politically palatable.

]]> By: Firewallender // Cassie Wallender » If you’re not outraged, you’re not paying attention. http://www.callingjohngalt.com/2009/04/08/what-the-current-spending-actually-means/comment-page-1/#comment-283 Firewallender // Cassie Wallender » If you’re not outraged, you’re not paying attention. Wed, 08 Apr 2009 20:55:31 +0000 http://www.callingjohngalt.com/?p=485#comment-283 [...] a hat tip to the Calling John Galt blog, I have to bring this powerful visualization to your [...] [...] a hat tip to the Calling John Galt blog, I have to bring this powerful visualization to your [...]

]]> By: Brian H http://www.callingjohngalt.com/2009/04/08/what-the-current-spending-actually-means/comment-page-1/#comment-282 Brian H Wed, 08 Apr 2009 20:51:35 +0000 http://www.callingjohngalt.com/?p=485#comment-282 Except that none of the items he mentioned were "spending", they're mostly loans, the U.S. gov't is getting paid interest in excess of their borrowing costs, and is likely to come out ahead. The Bear Stearns thing was a guarantee and there has been zero cash laid out. Except that none of the items he mentioned were “spending”, they’re mostly loans, the U.S. gov’t is getting paid interest in excess of their borrowing costs, and is likely to come out ahead. The Bear Stearns thing was a guarantee and there has been zero cash laid out.

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