Greg Ip

Articles by The Economist’s U.S. Economics Editor

Archive for the ‘TARP’ Category

America’s bail-out maths: Hard-nosed socialists

leave a comment »

America’s loathed TARP may turn a profit. That could be a problem

Jun 9th 2011 | WASHINGTON, DC | from the print edition

[Greg Ip] THE federal government is bowing out as America’s most hated fund manager. On June 3rd the Treasury reached an agreement to sell the rest of its holdings in Chrysler, a carmaker, to Italy’s Fiat. Ten days earlier it began to sell its stake in American International Group (AIG) through a public offering of the insurer’s shares. General Motors has returned to the stockmarket (the government still owns 26% of it) and Ally Financial, a former financing arm of GM and Chrysler, will soon follow. In March the Federal Reserve began selling mortgage-backed bonds it inherited from AIG.

Nobody liked the bail-outs, not even the
rescued. Tim Geithner, who oversaw them first at the New York Federal Reserve and now as treasury secretary, this week quipped to bankers: “I’m glad to not have as much equity in all of you as a group anymore.” “So are we,” one shot back. The public was the most outraged, yet on a narrow reckoning of profit and loss, taxpayers have little cause for complaint.

The entire article is linked here.


Written by gregip

June 9, 2011 at 3:47 pm

Procyclicality everywhere

leave a comment »

Jul 1st 2010, 13:02 by G.I. | WASHINGTON, DC

FISCAL austerity in a time of near recession is a bad idea when monetary policy is helpless as Brad DeLong has been pointing out for oh, several years now. Let’s broaden this debate about procyclicality beyond fiscal and monetary policy. As we saw during the crisis, both regulatory policy (forbearance) and credit policy (bail-outs and liquidity) can also be used for macroeconomic stimulus. How are they doing now: still stimulating? Unfortunately, no: they are showing symptoms of the same inchoate procyclicality as fiscal policy. Read the rest of this entry »

Written by gregip

July 1, 2010 at 8:00 am

Populists and bankers: Strange meeting

leave a comment »

Jan 28th 2010 | ORLANDO, FLORIDA
From The Economist print edition

The populist left meets the populist right to hammer the Fed

A star of the tiny screen

[Greg Ip] DEMOCRATS seldom come more partisan than Alan Grayson, who represents Florida’s eighth congressional district in the House of Representatives. He calls Republicans “foot-dragging, knuckle-dragging Neanderthals” and a “selfish party” whose advice to sick Americans is “Die quickly.” Yet when he dropped in on a convention of small-government libertarians in his home town of Orlando, Florida, last year, he was greeted like a rock star. He received two standing ovations and requests for his autograph.

The audience was not applauding Mr Grayson’s stand on health care or any other beloved Democratic cause, but his unrelenting attacks on the Federal Reserve. Though he has been in Congress only a year, his cross-examinations of Fed officials there are YouTube sensations. One, in which he demands to know who got more than $1 trillion in Fed emergency loans, has been viewed more than 3m times.

Mr Grayson’s antipathy towards the Fed is part of a resurgence of political populism on both the left and the right. Read the rest of this entry »

Written by gregip

January 27, 2010 at 10:00 pm

America’s bail-out bill: Cheap as chips?

leave a comment »


Jan 14th 2010 | WASHINGTON, DC 
From The Economist print edition

America is touting the low price of its financial bail-out. It may be too optimistic

Illustration by Peter Schrank
Illustration by Peter Schrank


[Greg Ip] COULD the worst financial crisis in history really also be one of the cheapest? America’s Troubled Asset Relief Programme (TARP), created at the height of the crisis in 2008, will end up costing taxpayers less than 1% of GDP, Treasury officials now believe. By comparison, previous systemic banking crises have on average cost 13% of GDP to resolve, according to estimates by the International Monetary Fund. “This is a pretty good return on investment,” Ben Bernanke, chairman of the Federal Reserve, told Time.

It is not just the Americans who are bullish on bail-outs. Read the rest of this entry »

Written by gregip

January 14, 2010 at 6:00 pm

Think the Bailout Is Radical? Just Wait.

leave a comment »

Greg Ip
1710 words
19 October 2008

The Washington Post

Copyright 2008, The Washington Post Co. All Rights Reserved


In the past month, the unprecedented has become routine. The Treasury Department and the Federal Reserve, headed by Republicans, have intervened in the U.S. economy to an extent that would have shocked liberals a year ago. The Treasury is now a major shareholder of U.S. banks, the Fed is a principal lender to private business, and the American taxpayer stands behind huge swaths of the financial system, from home mortgages to business bank accounts. “Socialism has now washed over free-market capitalism,” Sam Donaldson of ABC News recently sighed.

Momentous? Sure. Socialism? Hardly. Breathtaking though these past weeks have been, they’re nothing compared to what both the United States and other Western countries have experimented with in the past. But even though they have often departed from free markets in response to crisis, they eventually find their way back. Let’s not get hysterical about changing the very nature of our system over the long haul. But in the meantime, don’t rule out even more radical action. Read the rest of this entry »

Written by gregip

October 19, 2008 at 9:21 pm

A $700 billion bail-out: will it work?

leave a comment »

America’s bail-out plan

The doctors’ bill

Sep 25th 2008 | WASHINGTON, DC
From The Economist print edition

 Original link


The chairman of the Federal Reserve and the treasury secretary give Congress a gloomy prognosis for the economy, and propose a drastic remedy



AMERICAN congressmen are used to hyperbole, but they were left speechless by the dire scenario Ben Bernanke, the chairman of the Federal Reserve, painted for them on the night of September 18th. He “told us that our American economy’s arteries, our financial system, is clogged, and if we don’t act, the patient will surely suffer a heart attack, maybe next week, maybe in six months, but it will happen,” according to Charles Schumer, a Democratic senator from New York. Mr Schumer’s interpretation: failure to act would cause “a depression”. Read the rest of this entry »

Written by gregip

September 25, 2008 at 10:34 pm