Drew Munro: Bailout costs will span generations
I was enjoying the company recently of a certain special 11-year-old who visits us with his loving aunt to snowboard at Winter Park when I couldn’t shake a disturbing thought: His offspring are still going to be paying the interest on today’s bailout spree.
The Bush administration just approved a $17 billion package (the first installment?) for two of the Big Three automakers after weeks of orchestrated hand-wringing about whether they should take the leap. Obviously, they were going to all along. The Big
Three are “too big to fail,” in the vernacular of the day. (If they’re too big to fail, does
that make the rest of American businesses too small to matter?)
Support Local Journalism
I have a solution: If a company is that big and we have to bail it out, then as a condition of receiving help we should break the company up so it’s no longer “too big to fail.”
Of course, too big to fail was the rallying cry when Congress and the administration ponied up $700 billion in taxpayer money for the Wall Street bailout in early October.
The efficacy of that measure remains highly suspect, particularly given that Treasury Secretary Henry Paulson keeps changing whose pockets are being lined ” see auto bailout above ” and that the vast majority of it has been used for acquisitions and mergers.
Let’s just call it a day ” and a $700 billion slush fund.
Given the name of the program, we should have been forewarned: Troubled Asset Relief Program, or TARP. Well, that TARP is being used to cover something ” perhaps the well-padded posteriors of Wall Street, or maybe Washington’s dirty little secrets, or both.
Anyway, what many Americans don’t realize is that the October bailout is chump change in the context of what the U.S. government has thrown at the financial sector during the last year.
According to a Nov. 24 article by Bloomberg News, between direct bailouts, liquidity the Federal Reserve has made available, tax breaks and a few other mechanisms, a total of $7.7 trillion has been pumped into credit markets since last year. How much is that?
– It’s $24,000 for every man, woman and child in the United States.
– It’s enough to pay off half of all the mortgages in the country.
– It’s half this nation’s annual economic output.
– It’s enough to make you cry.
Granted, a substantial portion of the money ” about $4.6 trillion by Bloomberg’s accounting ” is not direct debt incurred by the U.S. government. Rather, it is money the Fed lent to lenders.
Nevertheless, it is money no longer available to anyone else ” including the true driver of American prosperity, small businesses ” and one might well wonder how a banking system that has had so much cash lavished on it over the past 12 months remains incapable of loosening credit.
The populist demagogue in me thinks of it as welfare for billionaires.
Time was I sung the praises of these Neoconservatives. Rugged individualism. Self-reliance. Pull yourself up by your bootstraps. Individuals need to assume responsibility for their own actions. Blah, blah, blah.
OK, I still believe in some of those virtues. (Though I also believe we have a societal obligation to help those who cannot help themselves.)
But I sure don’t believe in the cynical, so-called conservative politicians who bemoan the “untold costs” of single motherhood, gay marriage, “welfare queens” and “socialism” while they dole out trillions in taxpayer money to their deregulated derivative-hedge-fund-credit-default-swapping-investment-banker Wall Street buddies responsible for this mess. Judging by the results of November’s election, neither do tens of millions of other Americans.
Nor do I think my 11-year-old acquaintance would appreciate that politicians are mortgaging his future for the sake of questionable, short-term returns today.
Disagree? Then you can sit that 11-year-old on your knee and tell him why he and his offspring should be grateful that they will have the privilege of paying for mistakes made by billionaires and auto barons who will never be held accountable for their excesses.
Support Local Journalism
Readers around Grand County make the Sky-Hi News' work possible. Your financial contribution supports our efforts to deliver quality, locally relevant journalism.
Now more than ever, your support is critical to help us keep our community informed about the evolving coronavirus pandemic and the impact it is having locally. Every contribution, however large or small, will make a difference.
Each donation will be used exclusively for the development and creation of increased news coverage.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User