I'm live-blogging the Charlotte City Council's retreat. Follow me, also, on Twitter @marynewsom. And see my previous post: "Charlotte's economy shows a lagging city."
At the Charlotte City Council retreat, council member James Mitchell asked the panel of economists' opinion of the stimulus spending.
UNCC economics professor John Connaughton said, "But for TARP we would all be selling pencils on the street corner." We were that close to collapse, he said.
He goes on to say that if the U.S. is to regain its economic standing, "It's not going to be in stealing manufacturing jobs from China." Instead, in his view, it's going to be in selling high-level services to the rest of the world, which makes an educated workforce even more important.
Monday, January 31, 2011
TARP saved our rears, economist says
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16 comments:
And, thanks to TARP, we've kicked the cost down the road so our KIDS will be selling the pencils on the corner. Thanks to the Bernanck!
Would that be Bush's TARP program?
How many tens of thousands are we taxpayers on the hook for this retreat?
If we had suffered economic collapse, instead of selling pencils on street corners, could we have seen a situation similar to Egypt, where neighborhoods are having to defend themselves against armed gangs? If so, might we want access to guns with extended ammunition clips?
Knowing what John is saying and have after hearing him speak on a few occasions, I have to agree with his assessment. Many of the big players associated with TARP have repaid thier portions. If you look into why TARP was instituted and why it had to be done according to John you would understand that it was a necessary program that has worked. Without it the collapse would have affected everyone and we would have seen unemployment close to or greater to what was seen during the depression. As an economist John is not all talk like a politician, but uses data and facts for his arguement. With TARP at least our children will have an opportunity to have a future.
Of course it was the fault of no one. Everyone was surprised and blameless. No one faces jail or complete restitution of their gains, just living on 90 million instead of 100 million. And we have learned so much we have tethered financial institutions so they must, repeat must pay their employees hundreds of millions of dollars to represent their "value" to the company.
So are any of these comapanies still refinancing themselves very night on the overnight market?
Obama continued the TARP program that Bush started and I'm glad he did. It was never a choice between good and bad but between bad and worse. It doesn't matter which party was in power, because either would've done the same thing.
Since I frequently denigrate President Bush for his many poorly thought out choices(though I do not call him childish names), I should point out that, indeed, the initial TARP program was on his watch.
That said, if you remember, the first time it was voted on it was soundly defeated when nearly every Republican voted against it. The next day the Dow took a REALLY BIG dip. A few days later they thought better of it and passed it.
The only people who think the stimulus programs were a failure are the people who think that Fox is actually news and Beck and Limbaugh really know what they are talking about. They seem to have forgotten on who's watch the crash occurred.
"With TARP at least our children will have an opportunity to have a future."
Which is good, because they'll need a nice long future to pay off all this debt!
AND, if these too-big-to-fail banks had collapsed, who would be there to get our children into cars and houses they can't afford? Not savings and loans- they actually make sure they get paid back. They're too-small-to-bailout, I guess/
To Anon 1:18:
If you are going to make an opinionated statement, at least be correct; our children are on the hook for both the Bush tax cuts and the stimulus rolled out by Obama, but TARP has mostly been repaid with interest, so please go back home and tune into Fox News and get all riled up with misinformation.
I am curious as to why John Connaughton seems to be the Observer’s’ “go-to guy” regarding the local economy, as his track record of predictions is uniformly dismal. Consider:
“Connaughton is the guy you go to when you want a study that says the latest thing government wants to do will be a smashing success. As usual, Connaughton's didn't disappoint. His 2003 study, paid for by Whitewater backers, assured the public and politicians that the park was an attraction Mecklenburg simply must have to address our "identity crisis" and separate us from other vanilla mid-sized cities.
Everyone has an Omnimax theater and an aquarium, but no one has a whitewater park, he explained.
Connaughton claimed the facility would create nearly 700 jobs, generate $37 million a year for Mecklenburg and Gaston counties and draw more than 310,000 users a year.”
- from Creative Loafing, March 17, 2009. As you probably know, rather than “generating $37 million a year”, the Whitewater Center instead defaulted on $38 million in loans. Its attendance and job creation lag woefully behind Connaughton’s absurd projections.
“According to UNC Charlotte economist John Connaughton in an updated economic impact study on the arena, there would be a $136 million total economic impact in Mecklenburg County. This includes a direct fiscal impact of taxes on NBA player and coach salaries of $4.4 million a year, a $1.4 million annual entertainment tax revenue stream, sales tax from all events in the arena of $927,900 and $5.4 million in new property tax revenue from the development of the existing coliseum's 176 acres on Tyvola Road. The players' payroll of about $50 million would be spent locally by the players on houses, shopping, eating in restaurants, etc., and the team operations (marketing, advertising, supplies, etc.) would infuse another $25 million into the local economy.”
- from The Business Journal, Jul 29, 2002. Here, Connaughton’s figures aren’t just unrealistically high, they do not recognize that the uptown arena was merely a replacement of the Tyvola Road Coliseum (meaning that the property tax revenue is not “new”, it is merely coming from development at the Tyvola site rather than at the uptown site, which without the arena would be in private hands and thus generating property taxes). Nor does Connaughton consider that much of the money spent at arena events (a) would have been spent at similar events at the Coliseum; and/or (b) comes from a finite “bucket” of money that individuals & corporations budget for entertainment – that is, the choice to go to a Bobcats game is also a choice to not go to a movie or to another cultural/entertainment event. Furthermore, Connaughton’s assertion that “the players’ payroll of about $50 million would be spent locally” is so absurd as to compel the intelligent observer to dismiss anything else he would ever care to say.
“Connaughton expects the real, inflation adjusted Gross State Product (GSP) to increase by 2.2 percent over the 2007 level. By quarter, Connaughton predicts that GSP will increase by an annualized real growth rate of 2.9 percent in the first quarter and 3.3 percent in the second quarter. He expects GSP growth to drop off in the third quarter to 2.5 percent but anticipates a rebound in the fourth quarter, with an annualized real rate of 3.0 percent…. The state’s unemployment rate in April 2008, the latest month for which official figures are available, was 5.4 percent, slightly higher than the U.S. rate of 5.0 percent. Connaughton expects the North Carolina rate is remain stable for the duration of 2008.”
- UNCC press release, June 2, 2008. In reality, North Carolina’s GSP was absolutely flat in 2008 (thus it was negative when adjusted for inflation). And the unemployment rate has doubled rather than “remaining stable”.
A weatherman with such a track record would have been laughed out of town. Why has not Mr. Connaughton?
3:21,
People who listen to Beck and Limbaugh know how to differentiate between "who's" and "whose".
TARP saved our collective rear ends, make no mistake about that.
It was launched by the teeny tiny remaining part of the GOP that doesn't think that the Fed is spying on them through their toaster. Good move and thank you.
The money has been paid back with interest and the culpability issues are a separate matter.
Is it a royal pain to see the guilty mostly go unscathed? Sure it is. But TARP is separate from their culpability. It saved the financial system, not specific wrongdoers.
The alternative-a half-dozen or more major banks collapsing-would have been far, far worse.
Unless you like living in the bunker with your tinfoil hat and your pistol and your MREs.
To Charlotte the most significant aspect of the DNC coming is that Bank of America's insolvency will be papered over for another couple of years, as Barry O. will not want to stage his attempted recoronation on a bed of ashes. Note that BAC stock was up 4% today.
I'd like to ask Mary and all the TARP supporters to - in their own words - (a) explain the Federal Reserve's Quantitative Easing program; (b) tell us what a Primary Dealer is; and (c) explain what POMOs are and how they are affecting the stock market and worldwide commodity markets.
You see, Egyptians didn't just wake up one morning and finally realize after 30 years of Mubarak's rule that he was a dictator. Egypt, Tunisia, Algeria and the other countries facing revolution are in that situation because of rising food prices brought on by the creation - from nothing - of endless dollars by the Fed. Check commodity prices - rice and corn are up almost double-digits already this year. As Bob Marley put it, "a hungry mob is an angry mob".
I love how some people argue about how despite TARP is being with interest and it may have thwarted a depression, its still wrong on principle.True it is wrong on principle to bailout businesses for their own incompetence. However while principles feel good when your reducing your budget during a recession, they won't feed you or your children when your starving in a depression.
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