The Hated Fed Guvmint Bailed Out Otherwise-Bankrupt Texas

[boutons_deux]

What A Real External Bank Bailout Looks Like

Something I’ve been looking at: Texas after the savings and loan crisis of the 1980s.

The cleanup from that crisis cost taxpayers about $125 billion (pdf), back when that was real money. As best I can tell, around 60 percent of the losses were in Texas (pdf). So that’s around $75 billion in aid — not loans, outright transfer.

Texas GDP was about $300 billion in 1987. So this was equivalent to giving — not lending, not even taking an equity stake — Spain 25 percent of its GDP to bail out its banks.

And in the US it wasn’t even treated as an interstate political issue.

Update: Not incidentally, Texas had a nasty special recession in the late 1980s, even as unemployment was falling nationally, partly driven by falling oil prices, but also driven by the collapse of the S&L bubble.

I think you can make a strong case that if Texas had been an independent country in 1986-87 it would have experienced a huge financial and fiscal crisis.

http://krugman.blogs.nytimes.com/2012/06/17/what-a-real-external-bank-bailout-looks-like/

TX and other Fed-financed redstates is just like the 1%, HATES the Feds, except when the Feds are shipping them $Bs.

[DarrinS]

lol, krugman

[boutons_deux]

Darrin always is so devastating with his counter-arguments and refuting facts.

[TeyshaBlue]

lol krugman. Answering questions nobody's asking.
lol no mention of the Windfall Profits Tax eating Texas oil production alive.
lol no mention of the Garn-St. Germain Depository Institutions Act which enabled the crash.
lol boutons the blue team fluffer.
Newsflash. Texas aint a nation. Any metaphor predicated on that nonsense fails.

TX and other Fed-financed redstates is just like the 1%, HATES the Feds, except when the Feds are shipping them $Bs.

lol simpleton.

[TeyshaBlue]

Also, there were quite a few jail sentences handed out at the end of that fiasco.

[coyotes_geek]

Texas GDP was about $300 billion in 1987. So this was equivalent to giving — not lending, not even taking an equity stake — Spain 25 percent of its GDP to bail out its banks.

Except it wasn't because the S&L losses occured over several years and Krugman is only using one year of Texas' GDP. He's not comparing apples to apples.

[TeyshaBlue]

He's not comparing apples to apples.

He had no intention of doing so. Shocking.


Not.

[johnsmith]

Darrin always is so devastating with his counter-arguments and refuting facts.

boutons, always so absent when confronted with facts.

[ElNono]

lol no mention of the Windfall Profits Tax eating Texas oil production alive.

To be fair, the collection from that tax from all states over the 10 years it lasted was only $80 billion...

Texas, Louisiana and Oklahoma, the major "energy states" back then simply suffered a real-estate price collapse because the price of oil tanked.

[TeyshaBlue]

To be fair, the collection from that tax from all states over the 10 years it lasted was only $80 billion...

Texas, Louisiana and Oklahoma, the major "energy states" back then simply suffered a real-estate price collapse because the price of oil tanked.

The tax is almost invisible compared to the consequences.
Where do you think alot of those S&L's were leveraging capital?

Real Estate.

[coyotes_geek]

The real estate / oil collapse started well before the S&L's blew up, yet Krugman's writing seems to suggest that it was the S&L scandal that was the primary cause for the Texas recession.

[TeyshaBlue]

I lived that collapse. I know people who were wiped out by it. I personally know two bankers that served time because of it. Krugman doesn't know jack shit about it. He could. He's a bright boy.
For whatever reason, he chooses not to.

[coyotes_geek]

We lived it too. My dad was in the O&G business. Tough times.

[TeyshaBlue]

Hence the LTD.:lol

[ElNono]

The tax is almost invisible compared to the consequences.
Where do you think alot of those S&L's were leveraging capital?

Real Estate.

I agree they over-leveraged on the real estate market, but the actual problem was S&L's not being regulated like banks, and acting like them.

The windfall profits tax had little to do with that situation though... Texas was hit with both the S&L fiasco and the prices of oil tanking, which produced a fairly deep recession in the state.

They needed a bailout and it was granted to them. If this was California being bailed out today, you'll never hear the end of it from the resident red team...

[coyotes_geek]

Hence the LTD.:lol

:lol

Yep. Used to be Dad's company car that he "cut me a deal on".

[ElNono]

The real estate / oil collapse started well before the S&L's blew up, yet Krugman's writing seems to suggest that it was the S&L scandal that was the primary cause for the Texas recession.

did you read the article at all, or just going by boutons? :lol

[ElNono]

What stands out to me is this phrase:

"And in the US it wasn’t even treated as an interstate political issue."

How times have changed...

[coyotes_geek]

did you read the article at all, or just going by boutons? :lol

Read the article and checked out the links. That's how I found out Krugman's statement about the S&L bailout being 25% of Texas' GDP was BS.

[TeyshaBlue]

I agree they over-leveraged on the real estate market, but the actual problem was S&L's not being regulated like banks, and acting like them.

Hence my reference to the Garn-St. Germain Depository Institutions Act.


The windfall profits tax had little to do with that situation though... Texas was hit with both the S&L fiasco and the prices of oil tanking, which produced a fairly deep recession in the state.

The windfall profits tax had alot to do with destabilization of oil prices.


They needed a bailout and it was granted to them. If this was California being bailed out today, you'll never hear the end of it from the resident red team...
I've read that the majority of the bailout money went to out of state holders.

[ElNono]

Read the article and checked out the links. That's how I found out Krugman's statement about the S&L bailout being 25% of Texas' GDP was BS.

Wasn't the bailout actually handed out in the 90's, when Bush Sr was already president?

[TeyshaBlue]

Depends upon which component of the bailout you are looking at. The FSLIC portion was active in both decades.

[coyotes_geek]

Wasn't the bailout actually handed out in the 90's, when Bush Sr was already president?

Yes. And the Texas oil bust pre-dates that.

[ElNono]

Hence my reference to the Garn-St. Germain Depository Institutions Act.

Agree on this.


The windfall profits tax had alot to do with destabilization of oil prices.

Disagree on this. Going by the numbers alone, the tax collection was about 1% or less of the state total GDP during those years. Furthermore, the tax was simply not collected after 1986, since oil price went below the base price.

IIRC, what happened then was the discovery of new oil deposits at sea, which moved a lot of the production out of state and thus fired up the unemployment rate in Texas, couple with OPEC finally stopping to have a dominant position on the oil markets.


I've read that the majority of the bailout money went to out of state holders.

Wouldn't doubt it. But it was a state aid nonetheless.

[ElNono]

Depends upon which component of the bailout you are looking at. The FSLIC portion was active in both decades.


Yes. And the Texas oil bust pre-dates that.

I'll take both of your words for it. I gotta get some work done :toast

[TeyshaBlue]

I'll take both of your words for it. I gotta get some work done :toast

Why start now?:lol

[ElNono]

Why start now?:lol

Done :lol

[boutons_deux]

So did red-state, broke-ass TX suck in $Bs of Fed $$$ or not?

What about Fed $ for the hurricane Ike disaster?

Repugs HATE Fed govt, and tell everybody else to HATE GOVT-IS-THE-PROBLEM, except when the Repugs/1%/VRWC are sucking down $100Bs of Fed (taxpayer) $$$.

[TeyshaBlue]

lol simpleton.

[Capt Bringdown]

The windfall profits tax had alot to do with destabilization of oil prices.



President Carter in 1979 issued an executive order that removed price controls from petroleum products which benefited the oil industry. The boom Texas experienced in the late 1970's was due to OPEC enforcing above market prices for oil by limiting production. These two factors motivated the industry to explore for non-OPEC sources of oil. In response to the growth in non-OPEC oil production, Saudi Arabia sharply increased the production of oil in 1985 to maintain market share. This caused the 1986 collapse in crude oil prices. Domestic oil production stayed fairly constant from 1980-85.

[ChumpDumper]

Better just to stick with the stimulus money Texas used to balance the budget.

[coyotes_geek]

That would have made sense, but instead boutons wanted to parrot some krugman nonsense.

Regardless, Texas, along with all the other 49 states, is indeed in love with federal cash despite what Guv'ner Goodhair and his angry white guy minions would have you believe.