> Two questions:
>
> 1) So far the US hasn't frittered away any money on banks, did it? It
> lent money and was repaid with interest, or bought assets and then sold
> them at a profit.
TARP was the tip of the rentier subsidy iceberg. True cost of the bailout: $14 trillion (Nomi Prins, bless her soul, has the gory details: http://www.nomiprins.com/bailout.html). Basically, Obama's team replaced busted private loans with US T-bills, socializing private losses with public money. Despite the huge bailout, the US debt to GDP ratio is still an unsustainable 376%, and it's still running huge current account deficits, and it's still not investing in its industrial base.
> 2) Overcapacity is a real problem sometimes, isn't? Would the US or the
> world have been better off if it had followed the Chinese lead and used
> stimulus money to build new car factories or steel factories?
Two quick points: (1) yes, there's lots of new capacity, but the infrastructure spending is creating lots of new jobs and underwriting demand. (2) The BRICs have all launched huge stimulus packages and are boosting consumption. It's a slow process, but the supertanker is finally moving in the right direction.
-- DRR