Tag Archives: bailout

US Govt. proposes new 2009 bailout for themselves, to pay for 2008 bailout.

Seriously though, I wouldn’t be surprised. See below. Yes, the pie charts are to scale. Someone has gone ahead and converted the big scary numbers of this bailout into an easy to read pie chart. Now you have something to show your kids!

Before you get too carried away in exasperation over the blood pie of death omen shown above, you should keep one thing in mind: Like all the other projects being compared here, this is not money that has disappeared into thin air. It is essentially an investment, and investments are supposed to actually make money.

In reality, government projects don’t yield very good returns. Most people consider the Iraq war, in particular, a completely unnecessary waste of funds. But there’s always two sides to the coin. There was an asset here, and that asset was not democracy. So, if the US succeeds in its epic quest for spreading freedom and unicorns across the globe, one could actually refer to this particular investment as profitable.

Much the same way, this bailout is an investment into the banks, and it includes purchasing their assets and equity. It is entirely possible that a recovery will ensue, the banks will regain prosperity, and the government will get their money back with interest. Of course, it’s also possible to set your own house on fire by using extension cords.

One of the intentions for the bailout was to initiate a speedy recovery for the financial system, simply by injecting money into the pool (there is also the suggestion that it injects “hope” and “confidence”, when in reality the effect is more like “chronic depression”). Needless to say, that ship has sailed (into Somalian seas, after which it was immediately taken over by pirates).

This is where one would like to say, “Who knows? Obama became president. Anything is possible!”. Yes, Obama is president. Yes, it was awesome, inspired the world, and brought thousands of kittens back to life across the universe. But there is a limit to how much he can really do. If Bush simply maxed out the credit cards, Obama could cut them up, and rebuild credit. Unfortunately, Bush had no credit limit on his card, and ended up spending enough money to take all the banks out of business. Your move, Obama.

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