Suppose I place a bet on a tech start-up with the government lending me much of the money and guaranteeing me against losing most of my money. If the stock shoots up, then I have made money due to my impressive investing skills, right? That's what the NYT tells readers in an effort to garner support for hedge fund managers who might feel harassed by Congress if they take part in the latest Fed-Treasury proposal to increase the flow of credit in the economy. This discussion is more than a bit bizarre. The proposal offers investors much larger potential returns than they could get buying the same assets without government subsidies and it protects them against most potential losses. Naturally hedge fund managers would like to get this generous taxpayer subsidy without conditions (how does this compare with auto workers' compensation?), but why would anyone expect the government to give handouts with no conditions to some of the richest people in the country?
--Dean Baker
