Money: it’s all everyone is talking about, and we aren’t alluding to pennies for our thoughts. Nope, it’s all about the billions now. 34 billion, 150 billion, 700 billion, and the numbers go on and on.
We’ve got one question: where, or where, are all these billions coming from? Surely not from taxpayers, many of whom will most likely be laid off in the coming year. Nor businesses, who are struggling just to keep their doors open. The federal government is already over invested in military campaigns and according to Wikipedia, as of November of this year, US public debt is $10.6 trillion.
Like IJN.com users, who voted overwhelmingly on our poll* against bailouts, Rocky Mountain Jew is extremely skeptical of inefficient, unprofitable companies being given lifelines.
These bailouts are frightening on myriad levels. First, principle: in a capitalist-based economy businesses that can’t make it file for bankruptcy. In a post Cold War world, we already know the success rate of command – or centralized – economies. Why are we moving toward a model which we know leads to certain economic failure?
Second, the potential inefficiency of the bailout itself. Are these simply handouts? How strictly will the federal government monitor how the monies are distributed? Will the top execs continue to receive their fat bonuses?
Third, where do they stop? Like 15% of IJN.com users, Rocky Mountain Jew first believed that bank bailouts were necessary. In the past two weeks, with the Detroit three appealing for billions, we’re recanting. Any large company can make the case that its closure will have a significant impact on the economy. So where does the buck – no pun intended – stop?
And fourth, as above, money. Where is this seemingly never-ending horde of cash? Let’s be blunt: it doesn’t exist. So will the treasury simply begin printing money, a situation that could quickly lead to hyperinflation?
Currently, it looks as though the government is employing a method similar to the Canadian model of health care, which is publicly funded but privately produced. This is, perhaps, the best interim measure, but a tough reassessment of American economic policy as well as reflection on our consumerist oriented society is what’s really required. Putting a band aid on a gunshot wound doesn’t permanently stop the bleeding, and neither will dealing will this financial crisis on a company by company basis.
“Something is rotten in the state of Denmark,” says Marcellus in Act I of Hamlet. Substitute US or global economy for Denmark, and Shakespeare’s words are more topical than ever. The rot must be addressed at the core, if any long term solution is to be found.
*Poll results: 70% against bailouts; split evenly, 15% for bailouts, and 15% for bank bailouts only.
But what about the loss of jobs? In the long run, doesn’t that potential affect on the economy outweigh the cost of a bailout?
The problem is that nobody knows what the bailouts will accomplish. Also, nobody knows what the money is actually going to do. Will the treasury department own a piece of everyone’s mortgage? Will the Fed own part of GM, Ford, and Chrysler? Will the bailouts be loans? Gifts?
Absolutely!! Who is actually managing this money? Will the government take a stake? If they don’t take a stake does it mean they’re being irresponsible and just handing out bucks to CEOs?