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Former Bailout Inspector General Neil Barofsky: "You Should Be Scared. I'm Scared. You Can't Not Be Scared. You Can't Look At What Happened In The Run-Up To 2008 and See How It's Not Going to Repeat Itself, Given What We've Done"



June 10, 2011 – Comments (9)

GW Blog has the story here:

Former Bailout Inspector General Neil Barofsky: "You Should Be Scared. I'm Scared. You Can't Not Be Scared. You Can't Look At What Happened In The Run-Up To 2008 and See How It's Not Going to Repeat Itself, Given What We've Done"

The former Special Inspector General for TARP also noted that S&P says the next round of bailouts will cost $5 trillion just in up-front costs, and that enormous pressure is being put on Wall Street executives to take giant, company-bankrupting risks.  

9 Comments – Post Your Own

#1) On June 10, 2011 at 2:49 AM, whereaminow (< 20) wrote:


I watched the clip and I am dumbfounded.  Not because of what they said, but because they seem surprised and confused.  What did they expect to happen?

You've been here for a long time.  You were one of the first bloggers I started following.  You even made me a little coin back in the day, if you remember.

How do you not watch these guys and laugh?  You were all over this years ago.  You knew what was going to happen.  Here in 2011, they're still trying to figure it out.  It's a bit comical.

Where are they going to get $5 trillion, they ask? 
Where did they get the first $2-3 trillion? 

The best part about all this: these people helped to create and shape and promote these institutions (Dan Rather is a hardcore statist socialist), and yet they have no idea how these institutions work.  They never cared to know what the Fed does, as long as it helped their favorite special interest groups.  Now they're scared.

Well, some people, like you, understood all along.  Because of that you were maligned more than a few times on these blogs as a conspiracy theorist and a wingnut by Fed apologists and Progressives.

And yet, they still don't get it, and they never will.  They think they can fix it and that you have no answers.  They don't even know what the question is.

This gets more fun every day.

Sorry for the rant.  Thanks for the link.

David in Qatar

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#2) On June 10, 2011 at 10:01 AM, XMFSinchiruna (26.55) wrote:

+1 rec both for the OP and David's classic rant.

The problem with being right about something so terrible is that you can derive no real satisfaction other than the hope that one has contributed to the decisions by some deserving folks to prepare themselves. Abit I am sure has made a tremendous cumulative impact on countless individual decisions of the sort, and the community is better off not only because of his keen macro perspective, but also because he took on the task of voicing and transmitting the resulting concerns at every opportunity.

Which gives me a brainstorm. :) How fun would it be to organize an impromptu (perhaps first annual), community-led CAPS awards "event". We could use polls to determine the winners across multiple categories, and I could spin the resuilts into some great feature articles to help draw wider recognition to the scores of CAPS members who have made outstanding contributions to the site.

Who likes the idea? What would be a good name for the "event"? Feel free to brainstorm categories. :) 

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#3) On June 10, 2011 at 10:56 AM, whereaminow (< 20) wrote:


Glad you liked the rant!  An awards ceremony could be very funny.  Especially if we weren't too thin-skinned about it.

David in Qatar

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#4) On June 10, 2011 at 12:18 PM, russiangambit (28.81) wrote:

Of the whole Obama's adminsitration Barofsky and Bair were the only people who seem to actually care about something other than their own comfort. And they were the only ones who dared to stand in the way of Tim Geitner. 

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#5) On June 10, 2011 at 12:48 PM, awallejr (36.58) wrote:

Just more fearmongering.  I watch a short clip (not knowing what the whole interview was about) and listening to Barofsky talking about a what "if" scenario.  Yeah if the same conditions in 2008 repeated now the cost probably would amount to what he suggested.

But 2011 isn't like 2008.  The leverage rate is way lower now than then.  The banks are better capitalized than then, with threats of requiring them to be more so.  Banks lending standards are way stricter with overkill verification procedures.  The Fed basically gives them free money to reinflate their balance sheets.

So please don't make it sound like it is 2008 all over again and that the market will crash to zero.  It isn't and it won't, unless Congress allows US defaults to occur.

As an investment I wouldn't touch the major banks.  Not because I am afraid they will crash and burn, just that I don't see them providing worthwhile profits and dividend growth yet.  There is still an overhang of bad debt on their books that eventually needs to be charged off. 

While I don't view a lot of their shadow inventory as competition to new sales, mainly because they are sitting on uninhabitable homes which should be condemned, but as long as there appears to be an overhang that could continue to depress the market just by virtue of perception.

I'd stick with the BDCs, they have to lend to stay in business and that is where small and mid sized caps are starting to get the financing.  And that is where we need the growth to occur in order to create more jobs.


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#6) On June 10, 2011 at 2:42 PM, rfaramir (28.72) wrote:


In the Cassandra category of your awards, the Austrian economists win, as they are blessed with correct perception of future events but cursed so that no one will believe them.

Those few who defy and break the curse and profit by listening to the Austrians are the true winners.

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#7) On June 10, 2011 at 2:49 PM, catoismymotor (< 20) wrote:

Awards Suggestion

Since TMF has a Jester's Cap icon I think we should carry on with hat themed awards.


Classiest Fool: A Top Hat

Most Dillegent Fool: A Fedora with a Press Pass in the hat band.

Luckiest Fool: A Ten Gallon hat with an arrow piercing the most top part.

Best Mining Sector Call: A Miner's Helmet w/ light on the bill.

Best Agricultural Sector Call: A farmer's straw hat overflowing with grains.

Best Transportation Sector Call: A Greek Fishersman's Hat.

Best Building Sector Call: A Construction Helmet.




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#8) On June 10, 2011 at 4:03 PM, Starfirenv (< 20) wrote:

What?  No "Tin Foil"? 


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#9) On June 11, 2011 at 12:12 AM, Turfscape (< 20) wrote:

Starfirenv wrote:
"What?  No "Tin Foil"? "

That's the Alstry award...

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