Too Big To Fail movie on HBO

I'm watching it right now. This is a great story that goes to show how close the entire world was to shutting down.

I've watched many of the broadcasts on the crisis with each giving a slightly different perspective. I think this HBO film does the best of showing how close to the brink the entire world's economy really was.

I don't see how someone could not believe what the government did was totally necessary.

My main question: Why did the US have to bailout everyone...why couldn't we have other nation's involved?

The Europe finances would have gone to crap without the US bailout, so why couldn't they help foot the bill?

quote:

---

Posted by lynxcat
Did Paulson really have a team of about 4 people that helped him make pretty much every major decision? Most shockingly, a lot of his team are in their 20s or early 30s. Does anyone know the accuracy of this?

---

100% true. The Indian guy is an aerospace engineer who switched fields after getting his MBA from Wharton - LINK

Sorkin's book gives better details but I caught it half way through and thought they did a good job.

quote:

---

Only the Rush Limbaugh type extreme right wing lunatics believe that the bailouts didn't work and had nothing to do with saving the country from a full blown depression. They are the ones that think unregulated free market and tax cuts are the solution to every economic problem. According to them the market would have corrected itself without any government intervention......yeah right, maybe in 10 years!

---

Whoa, settle down. If you mean the bailouts worked in the sense that we are not in the middle of another Great Depression, then we're dealing with partial truths. Yes, it is true that we are not in the middle of another Great Depression. But the cause and effect relationship of the bailouts to the current economic situation being better than if they had not occurred is a rather dubious claim.

No, it's not only the Rush Limbaugh types saying this. Cristina Romer, the Chairwoman of the President's Council of Economic Advisors authored a paper LINK with fellow economist and spouse David Romer before taking her current post where they demonstrated the economic impact of tax policy of GDP growth. According to their research, tax cuts raise the GDP by $3 for every dollar cut (because it leaves money where it is already - in the most productive sectors of the economy). Before you dismiss this as being irrelevant to the point, read the next paragraph.

Unfortunately, by the time they took on new roles subject to political influence as White House Advisors months later, that figure was cut down to 99 cents - while every dollar increase in government spending was said to lead to a $1.57 increase in GDP.

So Americans were asked to believe that taking future money from parts of the economy where it was likely to be most productive (the nature of nearly all taxation) - a place where the decision makers actually pay the price of being wrong - was actually less desirable than turning it over to politicians (who rarely pay the price of being wrong) to make their politically motivated spending decisions.

I'm not sure how clear I made that point, so I'll try it another way. You cannot have government spending without taking that money from somewhere, right? Where does it come from? If you answered "the most productive sectors of the economy", you may come to the head of the class. So why do we wonder why corporations keep becoming more inclined to tie their source of income and "investment" to government handouts? Why also would a business feel inclined to invest in a future economy that seems destined to rely on increased levels of taxation? The more the government borrows, the higher taxes will need to be, the more distorted the future economy will be, and the less attractive investment will be today - since we invest based on forecasts. Do these economists really think it's hard to figure out? If you follow what I'm saying, then you cannot make the case the the bailouts were a good thing, or even that they worked better than simply doing nothing. Such notions do great harm to our future.

We know what these experts predicted would happen without the bailouts. The truth is they were not claiming it would be a 10 year recovery without them. Let's take a look at what they were predicting:


They were saying we would be at 8 percent unemployment right now without the stimulus spending. They claimed we would be at 6.7% with it. To defend it, are you going to try to make the case that these experts were wrong about the recovery without the spending at the same rate they were wrong about the recovery with spending? It would be a foolish endeavor. Because we know that government spending does change incentives as I touched on above, and like I'm about to demonstrate with some much more credible sources than a random guy with a fake name on the internet.

It wasn't just the Romers taking this position. Andrew Mountford of the University of London and Harald Uhlig of the University of Chicago analyzed US data to compare the effects of deficit-financed spending, deficit-financed tax cuts and tax-financed spending. They report that “deficit-financed tax cuts work best among these three scenarios to improve G.D.P.” LINK

Harvard economists Alberto Alesina and Silvia Ardagna have also conducted a similar analysis. In their study LINK, they looked at notable changes in fiscal policy among 21 nations in the Organization for Economic Cooperation and Development. 91 episodes were identified since 1970 in which fiscal policy changes were used to stimulate the economy. Policy interventions that succeeded (those that were actually followed by robust growth) were then compared with those that failed.

The results are quite contrary to what you and the White House supporters are claiming. Successful stimulus in this historical study of economic data relies almost entirely on cuts in business and income taxes. Failed stimulus almost always occurs from increases in government spending.

Keynes is dead. It's just remarkable that his theories took so long to be thoroughly debunked and die with him. Just like L. Ron Hubbard still has his followers who continue to embrace Scientology, there will still be cults of Keynesians who refuse to embrace reality. Yes, it turns out that the spending habits which make a man poor will actually make a nation poor too. That should not have been a stunning revelation.

Even the White House seems to acknowledge that bailouts were not good for the economy. They have actually posted in crystal clear language on their blog page that there will be "No more taxpayer-funded bailouts. If a company can’t make it, it will have to liquidate. " LINK. If it was such a great success, wouldn't they be stating the opposite - that they would never hesitate to do the same thing over again? Instead, they seem to be taking the position that next time, they will do nothing. That's not exactly a ringing endorsement of bailouts or stimulus spending by politicians, is it?

Poli board time.

I watched about the first 40 minutes of this last nite

I think i was impressed more than anything at the pretty strong list of actors they rolled out and just how closely the made them resemble their IRL counterpart

quote:

---

Paulson ran the show and went to Congress and scared the ever loving shite out of them.

---

Paulson had no idea the magnitude or severity of problems until it was spelled out for him very late in the game. I's still waiting for my proportional equity share from GS for keeping them in business.

They made Bernake look like Yoda in the film. He would say something, everyone would go quiet and then they would change scene. Paul G was spot on though, and it was a pretty cool flick that captured the tension awesomely.

Watched this today on my iPhone using the HBO GO app. I thought it was very entertaining and gave the viewers a behind the scenes during the 2008 financial crisis. Here is a good video that includes interviews with the movie makers and protagonists - LINK

On another note, was GE really that affected by the credit freeze that they were in risk of shutting down their operations? This was the first time I heard anything about GE.

Can someone explain to me in layman terms or with a simple analogy how credit works for these big companies? Why do they need to borrow money continuously just to keep up their daily operations and pay their employees wages? What do they do with profits they earn and the billions of dollars of cash they have in the bank? Isn't that their money to spend?