I thought it would be nice to take a moment to thank God and our government for spending nearly $2 trillion of our tax dollars on TARP, auto industry rescue, and stimulus. Imagine if our politicians had not acted decisively. We might have seen the following:
- stock market down 50 percent
- businesses terrified and firing 500,000 workers per month
- insolvent banks
- domestic car makers near bankruptcy and begging for loans
Whew!
[One could, of course, argue that without the expansion of Big Government, the stock market would have fallen 98 percent and one guy in Saudi Arabia plus the Chinese government could have scooped up 100 percent ownership of America’s 5000 publicly traded companies, but that doesn’t seem entirely plausible as most of these companies are still profitable.]
The idea that we can borrow and spend ourselves out of a problem that was created by too much borrowing and spending is just preposterous.
Government spending works to smooth over cyclical downturns, but this is not a cyclical downturn. We are pouring money straight down the drain created by collapsing supply of credit.
Why is this so hard to understand?
Rob if that is preposterous, I dont know what you can call this. How about lending to people, then after they can’t afford it letting the government pick-up the tab, and re-stepping in for pennies on the dollar on behalf of the government to make some of it back? Take a look at this little gem:
‘Ex-Leaders of Countrywide Profit From Bad Loans’ – Stanford L. Kurland, Countrywide’s former president, and his team have been buying up delinquent home mortgages that the government took over from other failed banks, sometimes for pennies on the dollar. They get a piece of what they can collect.
http://www.nytimes.com/2009/03/04/business/04penny.html
The stock market fell because your government sold $2 trillion in bonds. Bond yields always rise until they become a better return than the stock market & people sell their stocks to buy bonds. Where did you think the $2 trillion came from?
My question is “If spending $$ to ‘stimulate’ America, if-not bailing out banks etc, where would the gov’t spend the money?”
Hmmm… I like to ride my dirt-bike around the old mining town of Randsburg, CA. This place (per Fox news) has an arsenic contamination level 416,000x (no typo) the allowable Fed standard. It would cost $170 million to clean it up.
http://www.foxnews.com/story/0,2933,470712,00.html
A bit more research indicates *All such EPA clean-up-programs are essentially on-hold due to non-availability of funds*. There are a *lot* of toxic sites in America that we (citizens) would benefit from clean-up.
One last sad note: In recent days, Obama (fulfilling a “campaign pledge”) killed the Yucca Mountain Nuclear Waste Storage Facility. Per Slate…
“Obama pulls the plug on the nuclear industry’s last best hope.”
http://www.slate.com/id/2212792/
Republicans: McCain no better. He has (loudly/often) stated (wild contradiction follows) that he would open Yucca Mountain, but *not allow nuclear waste to be transported through Arizona*.
The bottom line: We (America) elected these guys. We are stuck with them.
Surely the real problem with respect to debt is not the $2 trillion that needs to be spent to deal with a very real crisis, but the $10 trillion debt that was run up during economic good times?
It is obviously tempting for the electorate to vote for governments that give out more than they take in taxes, which is one of the fundamental problems of democracy – that we need governments to do the right thing, not the popular thing.
Additionally, I wonder whether the two-term presidential limit plays its part in this – that no president has to worry about the really long term consequences of their actions.
@ David Hamilton – you are right on that we need leaders that “govern” not just ones that “give away”.
But two terms is a -long time-. In the past 20 years we’ve had just 2 families fill the presidency. Somehow I doubt that putting in a King would improve things much…
—
Its preposterous to think that central planning and a few guys (no matter how smart) could figure out how to salvage our vast and sprawling economy – even with the $11.7 Trillion (forget that lowly $2T number!) that Bloomberg indicates they’ve put up for the task.
You’d think at some point we’d learn to stop, get the hell out of the way, and let the market work — but no, we humans are compelled to “do something”! No matter how inane or even to our detriment.
(And in the spirit of inanity, they confiscated my water bottle when I flew back from NY)