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Saturday, February 23, 2019

April 20 (Bloomberg) — The U.S. Treasury Department wants the public to believe the government’s bailouts of the financial sector might make money for taxpayers. It’s easy to see why.

If the government could show an overall profit, the implication would be that bailouts must be a good thing. Put aside the moral hazard they create, by encouraging reckless behavior. Never mind that the country’s largest too-big-to-fail banks are larger today than when the financial crisis began in 2007. The leaders who pulled off this amazing feat would deserve our praise, and everything will have worked out for the best — or so goes this line of thought.

Whatever logic there is to this reasoning falls apart, however, if the prospect of future gains is false. And sure enough, it probably is.

The Treasury Department a week ago released its latest cost estimates for the government’s numerous crisis-response programs. “Overall, the government is now expected to at least break even on its financial stability programs and may realize a positive return,” the report said. Unfortunately this conclusion rests heavily on wishful thinking and creative accounting, which becomes obvious when you dig into the report’s footnotes.

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2 responses to “Hope For Bailout Profits Rests On Fuzzy Math”

  1. clarenceswinney says:

    Two of worst bills in history.Repeal Glass-Steagall and Modernization of Commodities Market.
    Instead of local ownership and local use of wealth We have 5 banks control 50% of bank deposits in 7000 banks and 10 control 80%.
    S&L was bad one. It took 400 local investors to own one. Loans were in county.
    Great Housing boom with affordable housing. 1945-1980 it took 2.5 years of an average income to buy an average size home.. 3.4 in 2000 and 5.4 in 2005
    In 1929, top 1% owned 44.3% of wealth. 20.5% in 1979 and 34.3% in 2004
    Tax Book since 1980 a huge Christmas Tree to load goodies for Rich and corporations like GE which made 5B and paid no tax.
    Top 50% get about 90% of Total Individual Income and 70,000,000 workers get 10%
    That is why in OECD nations we rank #2 as least taxed and lowest tax paid by corporations.
    Take Control of Congress nd White House from wealthy
    Fed Fund elections–No outside money. six month length.
    Members of Congress and White House will have no need for campaign money thus ban them from taking anything with a financial value.. Bye By K Street bribers.
    clarence swinney lifeaholics of amrica

  2. James says:

    When we are spending 2 billion dollars per month in Afganistan per month with no end in sight a lot of this seems like small potatoes

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