If you give me a loan, then as it expires I take out a new loan to pay you back, would you say that you've made money from the arrangement? I would say that you haven't, as if I default the second loan you still take a net loss across all our transactions. However in the case of TARP, many TARP loans were rolled over into non-TARP loans, without the principal being returned at all.

We could also discuss whether it is a good idea to subsidize the losses of some parts of the financial and automotive industries but not others, whether this is really conducive to a healthy economy based on competition, and whether the incentive structure created by handing bags of stolen money to anyone who can credibly threaten to damage the economy is a good one, but this probably isn't the place to do it.

That is quite curious because we never had any deficit reduction debate before 2007 or any talk about government having too much debt yet now we all the sudden do.

I think if there was a graph of government debt it would show a big spike around 2008.