Pondering $700B
After much thinking and listening, I’ve decided that I’m opposed to the $700B bailout. Not that my opposition counts for much. But, here’s my theory/reasoning:
In the 1990’s, Alan Greenspan used the phrase, “Irrational Exuberance” to describe the dotcom bubble. The housing market, prior to it’s implosion, was many magnitudes larger than the dotcom bubble. It swept up the entire global economy. But, the housing market was a house of cards - a giant ponzi scheme. And as all Ponzi schemes do eventually, it collapsed in grand fashion.
Unfortunately, the US and the rest of the world became addicted to the huge amounts of leveraged money flowing through their economies. And now, we’re experiencing massive withdrawal symptoms.
I think that if we go through with the $700B bailout, we’ll just fuel the addiction and delay the withdrawal. However, there is enormous political pressure to continue fueling the addiction. All that money - or all that imaginary money which was really just highly leveraged credit - fueled vast amounts of growth. And of course, we became addicted to that growth. Even though it was unrealistic growth, totally divorced from reality.
I don’t want to continue that type of growth. It’s not real - it’s fake. I want to return to a reality based system of funding and growth.
I also have very real issues with the proposed, very vague terms, of the bailout. For example, the requirment of no agency or legal review of allocations. Treasury just allocates the money in any fashion they deem and there is no review or accountability for their actions. This administration’s track record with lone cowboy behavior does not engender confidence.
The sense of urgency - the bailout bill has to be passed - now! I’m reminded of the days after 9/11 when the Patriot Act was passed under the same sense of urgency. The Act was passed - with large sections unread or un-analyzed. And the effects of that will be with us for many many years.
If taxpayers are footing the bill for the bailout, then they should be treated as investors. They should receive a return on their investment.
I am also mightily peeved that the middle and lower income taxpayers will be footing the bill to rescue high fliers. The same high fliers that sneered at those middle and lower income Americans.
I realize that the [Democratic] Congress is caving in - they’re moving much too quickly for something of this scale. But there you have it. Analysis and careful thought are not in vogue and haven’t been for a very long time.
So - what can one do with $700B? I’ve trolled several lists and here are my favorite items:
- The government could rebuild Katrina-ravished New Orleans and Gulf Coast … three and a half times.
- Roughly 538 Yankee Stadiums could be built.
- 5.4 million students could be sent to a public university. [This one is my favorite.]
- It is nine times the amount spent on education in 2007.
- It would cost less than $700 billion for the federal government to provide universal health care for everyone in the U.S. currently without it, and carry out all the security recommendations made by the 9/11 Commission.
And finally, from from the South Bend Tribune, “If this bailout package goes through, it would push the national debt to a record $11.3 trillion. That means every man, woman, and child would owe more than $37,000. The median household income in the country last year was $50,000.”
Hello. I am 
We are so agreed on this one. The government made this mess and will only make it worse. Your analysis is dead on.
However, I do disagree with one item on your spending wish list: “The government could rebuild Katrina-ravished New Orleans and Gulf Coast … three and a half times.”
Not even in my worse nightmare would I send one more federal dollar to the New Orleans area. Never before in all the destruction I’ve covered in my life have I seen so much bad judgment, corruption and out right theft.
Better then half the property owners took the initial clean up/demolition money from FEMA and fled the area leaving New Orleans holding the bag with an incredible number of blighted properties. In some cases, entire blocks and neighborhoods were abandoned.
Now the city and outlying parishes, with even more financial assistance from you and I, are having to go in and condemn the properties and demolish them. They attach the bill to the property and then seize it for taxes after the requisite legal steps.
But there are no buyers when the property comes up for public auction. The taxpayers are still left holding the bag.
Of course the federal government, under serious prodding from Rep. William Jefferson is not going to pursue the people that took the $10 thousand to $25 thousand clean up money and ran. As hard as it is to belief Rep. Jefferson successfully argued that his constituents did not understand that money could not be spent to relocate. (He did not address the large screen TVs, new cars, etc…)
But in any case, be it a natural or financial disaster, we the US tax payers should not be underwriting every mass loss in the United States. That is why someone invented insurance, common sense and personal responsibility.