Gotta have more bailout!

Remember the Saturday Night Live sketch with Will Farrell and Christopher Walken? Walken plays a famous record producer, and he keeps telling band member Farrell that he needs more cowbell. He can't get enough cowbell. "I've got a fever, and the only prescription is more cowbell!" It's truly hilarious, but for some reason it makes me think of the current situation, and the laughter turns to sobbing.

The answer to everything now seems to be more bailout. Based on comments I've read on this blog and other things I've heard around the office, I'd say we're well past the point of "bailout fatigue." Please, no more cowbell.

I watched the Frontline documentary this week, "Inside the Meltdown," and it reminded me of how we got onto this slippery slope. It started after the government bailed out Bear Stearns but didn't bail out Lehman Brothers. Treasury Secretary Paulson wanted to draw the line somewhere. Heavy government interventions went against everything he'd stood for up to that point. So he drew the line... and all hell broke loose.

Then, there was AIG. We had to bail them out, or more hell would break loose. Then, there was the $700 billion package. We had to pass that, or the world would end. Then, we had to bail out the carmakers or the whole economy would collapse. Then, we had to pass the stimulus package because "doing nothing" was not an option. Now, we need an aid plan for borrowers because we've given all this money to the lender side.

WHERE DOES THIS END? Will there ever come a point where we let the economy do some healing on its own?

I realize people need jobs. It's dire. Obviously, the government should play a role in the recovery. Wall Street had its chance and blew it. I get that. But I'm afraid we're forgetting how to draw lines. Paulson drew one, and it backfired. That doesn't mean every line we draw will wreak havoc. Frankly, I'd like see more results from what we've spent so far before we write any more checks.

Okay, enough from me. Here's some good reading material on this. First, a column in today's Seattle Post-Intelligencer about Doing Nothing versus Doing Something.

Harvard economist Greg Mankiw has a blog post on how we will know the stimulus package is actually working.

And finally, if you need a laugh, here's the SNL skit.

Log in to post3 Comments

As a 30 something, I would have to say that I was past bailout fatigue right before Frannie and Freddie. It's interesting that everyone, including the Frontline piece, says that not bailing out Lehman caused a huge ripple. Actually, the assets were "toxic" way before any bank went under. The assets just didn't become "toxic" because a bank or two went under. They were bad bets to begin with. I mean, 0% down and interest only... It was only a matter of time. I really enjoyed the piece on NPR this morning that said our debt is 10% of GDP with growing Social Security and Medi costs. Shouldn't that have been the story before the stimulus package was passed? At this point, I see myself paying into a system where I won't get anything back except paying more into for nothing. Viva la revolution!

Personally, I like to spend my time calculating my additional debt burden from the "bailout".

It's easy and lots of fun!

Let's see... 100 million households in America...

Approx. $750 billion for bank bailout. Approx. $750 billion for "stimulus" that I will not see a cent of...

That adds up to about $15,000 of additional debt for every household in America.

But wait, it gets better!!

Let's assume that this extra debt will need to get paid of via Federal income taxes. Well you know that over 30% of households pay zero federal income tax. So if you pay ANY tax at all your debt burden is closer to $20,000 (since you will need to pay the debt of those houses that don't pay taxes).

And it gets uglier if you pay more taxes than the average household.

But the GOOD news is that even though the Federal Government is adding all this additional debt, they feel that they are more competent at determining how to spend the stimulus funds than you are yourself. After all, the Feds know more about how to help you than you know yourself. So even though you might NOT have spent $200 million to resod the national mall, the Federal Gov't knows that that use of the stimulus funds will benefit you more than, say, $200 million of education grants.

Thank god for the government because I was starting to think I knew what was best for me!

Quoting Pythium: Viva la revolution!

That's a certain way to purge bad assets. On the debate that whether the new deal or WWII ended the last great depression. The new deal/bailout/stimulus run the longitude, one after one after another... As time goes by and the public grows more frustrated to a breaking point. Viva la revolution!

Timing is everything.

With Generous Support From...