the tindog coffeehouse

Last month I pointed out how The Dallas Morning News told us that Texas had simultaneously both gained and lost jobs.

Now we get the sequel.

First, we find out that Texas employers hired 41,700 new employees in October (a number almost identical to the jobs lost a month before). But then in another article (also from the DMN), we find out that Dallas-Fort Worth “lost about 60,000 jobs in October compared to a year earlier.” Both stats, conveniently, come from the Texas Workforce Commission.

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Forget $700,000,000,000. The real cost of the government’s TARP bailout rescue plan? $2,900,000,000,000. (That’s 2.9 trillion for my readers in Oklahoma, or more than 4 times the original figure.)

The special inspector general appointed to oversee the bailout package, the Troubled Asset Relief Program (TARP), said that the $700 billion does not include the additional financing and associated programs run by the Federal Reserve and Federal Deposit Insurance Corporation. Once it is all added together, the $700 billion sum balloons to $2.9 trillion in taxpayer commitments. …

“$2.9 trillion is just short of what the entire federal government spent in fiscal year 2008,” said Senate Finance Committee chairman Max Baucus (D-Mont.). “It’s like having a second United States government budget, dedicated solely to saving the financial system. And that is truly surreal.”

Surreal doesn’t even begin to describe it, if you ask me.

Previously:
$700 Billion bailout ‘letting’ the banks win?
‘Dude, where’s my $700 billion?’
Second half of bailout: How ’bout a little oversight this time?
US Bancorp CEO rips TARP, promotes faith

The New York Times has a great article which compares the Panic of 1873 to today’s financial crisis.

Most people, of course, are familiar with the Great Depression of the 1930s, but nobody except us history geeks remembers the Panic of 1873. Like today’s crisis, the stock market crash of 1873 followed a huge economic boom fueled by speculation and easy credit.

Both the U.S. and Europe were greatly expanding in the early 1870s (following the Civil War in the U.S. and German unification in Europe). According to historian Scott Reynolds Nelson (emphasis mine):

The problems had emerged around 1870, starting in Europe. In the Austro-Hungarian Empire, formed in 1867, in the states unified by Prussia into the German empire, and in France, the emperors supported a flowering of new lending institutions that issued mortgages for municipal and residential construction, especially in the capitals of Vienna, Berlin, and Paris. Mortgages were easier to obtain than before, and a building boom commenced. Land values seemed to climb and climb; borrowers ravenously assumed more and more credit, using unbuilt or half-built houses as collateral.

Sound familiar?

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Back in June, I asked the question, “How much power should the Fed have?”

“At some point,” I concluded, “enough is enough.”

The question came a few months after the Bear Stearns bailout but before the collapse of Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch, and AIG and before the passage of a $700 billion bailout plan.

On Tuesday, a day after the Federal Reserve announced it would expand its emergency lending program to $900 billion, it declared it would begin buying large amounts of commercial paper to help provide critical short-term loans to businesses.

The move did not go unnoticed by some critics who questioned its legality.

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David Saied, a former SEC commissioner for the Republic of Panama, has written a sobering article on six commonly-believed American economic myths.

Number 4 on the list seems particularly relevant this morning, with news of the bankruptcy of Lehman Brothers and sale of Merrill Lynch to Bank of America:

Consumption is indeed important in a free economy: particularly the freedom of consumers to buy their goods in unhampered markets. However, key to long-term economic growth is investment (savings), which is the opposite of consumption. Public policies that promote consumption — such as low interest rates — do so at the expense of savings. Less savings means less investments; an economy that does not save or invest will consume all of its resources and eventually end up bankrupt.

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Treasury Secretary Henry Paulson is asking Congress to give the Fed more powers to regulate the financial system, in light of the collapse (and bailout) of Bear Stearns.

Paulson said the country had come to rely on the Federal Reserve in times of crisis, citing the Fed’s actions to broker a rescue of giant hedge fund Long Term Capital Management in 1998 during the Asian currency crisis and the Bear Stearns episode this year.

“Our nation has come to expect the Federal Reserve to step in to avert events that pose unacceptable systemic risk,” Paulson said. “But, as we noted in our blueprint, the Fed has neither the clear statutory authority nor the mandate to anticipate and deal with risk across our entire financial system.”

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