> In general, I agree with your first two sentences
> and your general attitude. But in this
> particular case of the Bear Stearns bailout that
> Dean is talking about, I don't see any socialized
> losses. The Fed doesn't live off taxes. It makes
> its own money, and it makes it precisely so it
> can spend it at times like this. Unless the Fed
> comes to need a capital injection in the future,
> I don't see where taxpayers have to spend a dime.
> It may well lose money on those securities, but
> if past practice is any guide (which it might not
> be) it will cover those losses out of its
> operating profits.
Fair enough. I think Dean was more persuasive when discussing what could ultimately come of the government assumption of underwater mortgages, paying the lender the current market value and drawing up a certificate for the remainder. I should have qualified, for the points you raised. I know the Fed is self-funding; perhaps I should have held my general argument for another thread. Still, this is hardly business as usual.
I am partial to Dean because there is no clean demarcation between stabilizing the financial system and just saving investors from themselves, and there is no shortage of blowhards (Jim Cramer is the poster boy) who treat these as identical. The distinction can't be made too often.
Dean's preferred argument, on most issues, seems to be throwing the arguments used against most Americans right back at the likes of pharma and financial elites. I often wonder if that is better for some issues than others.
Shane