Posted on 09/23/2008 1:52:33 PM PDT by jazusamo
Estimates of how much money a government program will cost are notoriously unreliable. Estimates of the cost of the current bailout in the financial markets run into the hundreds of billions of dollars, and some say it may reach or exceed a trillion.
Many people have trouble even forming some notion of what such numbers as billion and trillion mean. One way to get some idea of the magnitude of a trillion is to ask: How long ago was a trillion seconds?
A trillion seconds ago, no one on this planet could read and write. Neither the Roman Empire nor the ancient Chinese dynasties had yet come into existence. None of the founders of the world's great religions today had yet been born.
That's what a trillion means. Put a dollar sign in front of it and that's what the current bailout may cost.
Will that money be spent wisely? It is theoretically possible. But don't bet the rent money on it or you could end up among the homeless.
Whenever there is a lot of the taxpayers' money around, politicians are going to find ways to spend it that will increase their chances of getting re-elected by giving goodies to voters.
The longer it takes Congress to pass the bailout bill, the more of those goodies are going to find their way into the legislation. Speed is important, not just to protect the financial markets but to protect the taxpayers from having more of their hard-earned money squandered by politicians.
Regardless of what Barack Obama or John McCain may say they are going to do as president, after a trillion dollars has been taken off the top there is going to be a lot less left in the federal treasury for them to do anything with.
Already Senator Christopher Dodd is talking about extending the bailout from the financial firms to homeowners facing mortgage foreclosures— as if the point of all this is to play Santa Claus.
The huge federal debts that we already have are the ghosts of Christmas past.
Financial institutions are not being bailed out as a favor to them or their stockholders. In fact, stockholders have come out worse off after some bailouts.
The real point is to avoid a major contraction of credit that could cause major downturns in output and employment, ruining millions of people, far beyond the financial institutions involved. If it was just a question of the financial institutions themselves, they could be left to sink or swim. But it is not.
We do not need a replay of the Great Depression of the 1930s, when the failure of thousands of banks meant a drastic reduction of credit— and therefore a drastic reduction of the demand needed to keep production going and millions of people employed.
But bailing out people who made ill-advised mortgages makes no more sense that bailing out people who lost their life savings in Las Vegas casinos. It makes political sense only to people like Senator Dodd, who are among the reasons for the financial mess in the first place.
People usually stop making ill-advised decisions when they are forced to face the consequences of those decisions, not when politicians come to their rescue and make the taxpayers pay for decisions that the taxpayers had nothing to do with.
The Wall Street Journal, which has for years been sounding the alarm about the riskiness of Fannie Mae and Freddie Mac, recently cited Senator Christopher Dodd along with Senator Charles Schumer and Congressman Barney Frank among those on Capitol Hill who have been "shilling" for these financial institutions, downplaying the risks and opposing attempts to restrict their free-wheeling role in the mortgage market.
As recently as July of this year, Senator Dodd declared Fannie Mae and Freddie "fundamentally strong" and said there is no need for "panicking" about them. But now that the chickens have come home to roost, Senator Dodd wants to be sure to get some goodies from the rescue legislation to pass out to people likely to vote for him.
Don't make any bets on how this situation is going to turn out— except that we can predict that politicians will blame the "greed" of other people. You can bet the rent money on that.
There is no Constitutional authority to play Santa Claus.
"We've done it for 100 years" does not invalidate that clear fact.
Things are worse than that statement suggests.
Our incompetent, criminal Congress is already loading this new welfare bill to include Student Loans, Credit Card Balances, Auto Loans, in additional, of course, to accounts of crooks with multiple homes known as Flippers"...
BOHICA...
Except, of course, for the poor schmucks stuck with the bill. They're easy to find if you own a mirror.
Criminal Congress is exactly right, they're buying votes.
Yep, those poor schmucks are us that pay the taxes.
I want to know how much money these companies who are bankrupting the country - have given to (that *&*%#) Dodd.
What's been his "share"? And how much are they giving him now?
And if that creep thinks he can assuage his conscience by "giving to the poor" - like paying for the houses they couldn't afford in the first place, we will vote his creepy self out.
According to Tax Foundation.Org:
an estimated 135,660,228 people will have filed tax returns with the IRS in 2006.
Of that number 43,362,718 returns will have zero or negative tax liability (all pay no tax - some get money paid to them).
That means the actual number of returns filed that will have a tax liability are 92,297,510.
Assume that the bailouts will cost 1 trillion dollars ($1,000,000,000,000).
That means that, on average, the government wants to give away about $10,835 for each person (or household) that actually pays taxes.
That does not take into account any interest to be paid which will double or triple the amount depending on the time it takes for the US to pay back the deficeit incurred for this boondoggle.
Also - the estimates from people hyping this program are no doubt very low.
There are other estimates floating around that the bailout could run up to $3, $4, or $5 trillion dollars.
At $5 trillion plus interest we could see an average tax liability of $100,000 to $200,000 per tax paying person or household.
I would wager his “share” has and will be in the tens of thousands, probably more.
Will the Obamas be able to get retroactive payback for the student loans that they both whine about at every opportunity?
After 7 years of Depression with all the FDR programs it took a little thing like WWII to bail out our economy. OBidenmah and the rest of the Dumbocrats will power us into a mega economic crisis. However the Raines in spain stay mainly in the Plains! so says Jimmuh Cartier and his Diamondbacks!
Seriously, one way to fix this mess to a small degree would be to change bankruptcy laws back to when it was easier to wipe out credit card debt thru bankruptcy. Debtors would most likely make an effort to save the house if they could clear the credit cards. This would be better and simpler than reforming mortgages in bankruptcy.
I hate to even think about that kind of rip off but it wouldn’t surprise me.
bttt!!
A man of clear vision and understanding.
What we need are more like him. They are a rare breed.
Where the congress is concerned ... we ought to find a way to disbar ... or impeach, or otherwise punish them. They do not self clean their own house of essentially crooked members. None are considered guilty or accountable. What a job! Shame.
I think he's telling us we're pretty much screwed. One way or another the chickens will be coming home to roost. Maybe it all needs to break down and be rebuilt upon more clearly Constitutional principles.
The cost of this bailout will be far far higher than any calculaltions because the fact of the bailout will warp the market severely further than it already is and will require ever more massive interventions until Eisenhower or Reagan Redux or until the final collapse. Weimar, here we come.
This should be a RNC and Palin McCain ad.
“No generation has a right to contract debts greater than can be paid off during the course of its own existence.” - George Washington to James Madison 1789.
“By rendering the labor of one, the property of the other, they cherish pride, luxury, and vanity on one side; on the other, vice and servility, or hatred and revolt.”
James Madison
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasure. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship. The average age of the world’s great civilizations has been two hundred years. These nations have progressed through the following sequence: from bondage to spiritual faith, from spiritual faith to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependency, from dependency back to bondage.” Alexander Tyler
“Aided by a little sophistry on the words ‘general welfare’, [they claim] a right to do not only the acts to effect that which are specifically enumerated and permitted, but whatsoever they shall think or pretend will be for the general welfare.” -— Thomas Jefferson 1825 to W. Giles.
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