Budgeting for the Next Round of Bailouts?

Gretchen Morgenson‘s Fair Game column posits an interesting question this morning that seems like a combination of pragmatism and surrender – Why don’t we figure out what the next round of bailouts for Too Big To Fail institutions will cost us, because bailouts are inevitable anyway?

The point she’s making is that nothing much has changed in Washington in terms of a lessening of systemic risk, so we may as well plan for another crisis now.

From the New York Times:

If the government won’t reduce the size of the safety net, and it has shown no appetite for doing so, it should at least tell us the price tag.

Marvin Phaup, a research scholar at George Washington University who examines federal budgeting, is one who is urging such an assessment. An expert on government guarantees, his wholly sensible view is that it is dangerous for possible bailout costs to remain unmeasured and, of course, unrecognized in the budget. “If we are extending the safety net, extending the implied guarantee to the debts of a lot of other financial institutions, and we know those guarantees are valuable and costly, then we ought to start budgeting for it,” Mr. Phaup said in an interview. “We can’t reduce the costs of these subsidies if we can’t recognize them.”

I suppose a budgeting of what the failure of some of these companies may cost the taxpayer is the economic equivalent of building a fallout shelter – one may as well prepare for the aftermath of a bomb going off than hope in vain that it won’t.

Pragmatism and surrender indeed.

Source:

Future Bailouts of America (NYT)

Tags: , , , ,

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. Bitcoin Era Review commented on Oct 01

    … [Trackback]

    […] Find More on on that Topic: thereformedbroker.com/2010/02/14/budgeting-for-the-next-round-of-bailouts/ […]

  2. tangerine canada log-in commented on Nov 29

    … [Trackback]

    […] Find More Info here to that Topic: thereformedbroker.com/2010/02/14/budgeting-for-the-next-round-of-bailouts/ […]

  3. DevOps strategy commented on Dec 01

    … [Trackback]

    […] Here you can find 75373 additional Information to that Topic: thereformedbroker.com/2010/02/14/budgeting-for-the-next-round-of-bailouts/ […]

  4. copy tag heuer cheap commented on Dec 30

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2010/02/14/budgeting-for-the-next-round-of-bailouts/ […]

  5. visit our website commented on Jan 05

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2010/02/14/budgeting-for-the-next-round-of-bailouts/ […]

  6. Digital Transformation commented on Feb 03

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2010/02/14/budgeting-for-the-next-round-of-bailouts/ […]