[nathanbedford]

As ideologically impure as this betrays me to be, to this day I remain ambivalent about the wisdom of TARP. Some time ago I posted a compendium of 2 replies we set out my ambivalence:

I think most FReepers are well aware that I am no uncritical fan of George Bush. I posted lengthy and vituperative reply and even vanities complaining of his leadership and his spending. But I think the man is getting a bad rap on this thread on this issue.

Here are two posts, the first in which was published on September 30, 2008 in an attempt to balance ideology and practicality. To this day I do not know if the bailout done under Bush was well-founded or not. I suspect no one was published on this thread knows either.

The second post was published with the perspective of time.

I have not yet posted on the wisdom of the bail out because, frankly, I do not know what to say. I do not know what to say because of the things I do not know. First, I do not know if the bailout plan will work. Second, I do not know if the entire world system will crash without such a plan. Third, I do not know what the odds are of either a successful bailout or a world crash so I cannot weigh the severity of potential harm against the likelihood of the harm occurring.

I know what my ideology is, I am opposed to government meddling in the economy on the way up and on the way down either by picking winners or by rescuing losers. On the other hand, I recognize the extreme danger to the very survival of my ideology should the country descend into a depression. I am well read enough to know about the Great Depression and what it did to other democracies around the world and how close our own American democracy came to descending into communism. So, I do not know in which direction lurks a greater danger to the ideal of conservatism.

I do know that the Constitution as written prohibits virtually every facet of the proposed bailout plan. I know that no federal court that I can think of will conceivably declare any part of the plan to be repugnant to the constitution. Therefore, I know I cannot rely on the courts to protect the Constitution. However, I also know that the political will will triumph regardless of the Constitution and it is bootless to fall on one's ideological sword to no purpose.

I do not know what it is like to live through a depression although my father has described what it was like in the rural South when people literally had no money and had to contrive a barter economy. On the other hand, I do not know what it is like to live through a raging inflation such as was sustained here in Germany during the Weimar and even today in Zimbabwe. I do not know if doing nothing will generate a depression. I do not know if these bailouts will generate hyperinflation.

I do know that if abandoning my ideology long enough to countenance the bailout would save the country from a depression, I would do it in a heartbeat.

I am not sure that those people on these threads who on claim to know the answers to all these questions really know what they're talking about. I do not know if they are so sure about their facts only knew because they are so certain in their ideology. I do not know all if those people who are so certain in their bailout do so because otherwise their ox gets gored. So I do not know how to come down on one side or the other based on the motives of the partisans on either side of the bailout question. I simply do not know what their motives really are.

I do know that economics is called the dismal science and now I know why.

Given the state of my ignorance, I am going to embark on a new course, I am going to practice humility.

Here's the second post:

I have often put myself in Bush's moccasins when he is told by his Secretary of the Treasury and the Chairman of the Federal Reserve that if he does not act within hours the entire financial system of the Western world will crash, that nation will be devastated, millions will be thrown out of work, that the implications extend even to starvation and rioting in the streets.

If one acts precipitously one sets a bad precedent and wastes a couple of hundred billion dollars. On the other hand, if one fails to act when required, the consequences are horrible. You cannot investigate the situation and determine who is right in a few hours available, you can only look into the eyes of the man who implore you to act and hope what your read is more accurate than when you looked into Vladimir Putin's eyes.

Given that scenario, I think I would have made the same choice Bush made.

[GregoryFul]

A fundamental concept is that the economy is a chaotic system, a complex system with self-referential feedback. Mathematicians know that one cannot predict the effect any driver will have on such a system. In economies, I think, the proof is the confusion evident in that schooled economists are diametrically opposed on conviction as to what may happen as a result of some specified top down action. I say that the trajectory of economic systems cannot be predicted or controlled given our current understanding of chaotic systems. The same driver can have a much different effect each time it is used, even when the initial conditions seem the same. Very confusing.

For now, we can only ride out the usual storms, the systemic excursions, and trust that the feedback within the system will yield a positive outcome for its participants, letting a bottoms up approach stabilize and restore apparently errant gross moves, a necessary condition of any system that endures long term.