Everybody is a Critic
I received the following email today regarding an alternative to bailing the United States out of debt:
There are about 40 million people over age 50 in the work force. Pay them $1 million apiece severance with these stipulations:
They leave their jobs, which means 40 million job openings. Unemployment fixed.
They buy new American cars; 40 million cars ordered. Auto industry fixed.
They either buy a house or pay off their mortgage. Housing crisis fixed.
Some people make things so complicated when they don't have to be.
This is a lot less than the billions given to banks and insurance companies.
Although I admit that the person who wrote this is on the right path to what we should be doing to bailout this economic crisis (giving money to the people, not companies that waste it), they are still way off.
First, the government has spent over $1,000,000,000,000 (trillion) on bailouts already, and people are already fussing about how bad we are going to be in debt from it in the future. If the plan above was executed, we would be using $40,000,000,000,000 (trillion) in getting things "fixed." (if you read it closely, the guy who wrote this said it would cost less than the billions already used, he must have flunked math) So why would increasing the bailout amount by almost 40 times help us?
Second, the value of the dollar would drop fast. According to reports in the Deseret News, the GNP (Gross National Product) of the United States is around $6,000,000,000,000 (trillion) per year depending on the report you look at. If we just give out money at such a large amount, an amount that takes the United States almost 7 years to get, our dollar would be worth snot. Don't forget Nazi Germany after the war where people were rushing wheelbarrows full of money to buy a loaf of bread.
Third, people will still misuse money given to them freely. There is no way the government will be able to regulate whether or not these people receiving money would spend it to recover the economy.
Fourth, giving money to 40 million people would not fix the unemployment problem, as the money is not going to companies. Some companies would let those people retire and not have to pay them further to save money, in addition to not hiring anyone to fill their position to save money again. So 40 million jobs would not be available. Same with the auto industry (I'd rather buy a foreign car than a GM car, I want something to last, not crap like Chevy or Ford) and the housing market (how are they going to regulate people from buying bigger houses and blowing the money?)
The best part of this email was the comments included from people that were forwarding it to others. One comment said, "Yeah! The government should read this e-mail and act on it. It would only cost $40,000,000 (million) to do." Well, genius, do your math and you'll see that it's not a great idea. Another comment was, "How come nobody in the government can think of this? The guy who wrote this should be president." If this guy was our President we'd be in more of a financial hole than Obama is digging us into as we speak.
Here's my question to people, and let me know if you have the answer, I'd love to see your comments if you know:
1 - With the bailout money given to banks and so forth, how much of that money was used to help those in trouble with loans? Seems to me banks are just pocketing the money and not using it toward lending and keeping the system going. If you know if there is a number out there, please let me know.
2 - Although AIG apologized for their bone headed bonuses to employees, and the government is now going to tax 90% of bonuses given out using bailout money (if it's above a certain amount I believe), how is that going to help them get their money back if they are still losing 10% of billions of dollars? It seems like another cop out to me. "Here you go, here's a huge bonus. We'll make it bigger so the 10% you get to keep is a larger amount."
3 - How is it beneficial to give money to banks instead of giving money to the people to circulate within the United States? If we circulate the money then the economy goes up.
4 - Why is money being given to banks and other financial institutions when it could have been used to create jobs with companies? Obama says he wants to build roads, well, he could have used alot of that money to create construction jobs for hundreds of thousands of people. Instead, corporate big-whigs are getting the money and hording it.
Simple as it seems it could be, the bailout isn't just a few things here and there that could be fixed. It's a matter of what the money should be going to in order to benefit the public, and not corporations. However, giving people money up to $40 trillion is not the answer either.
4 comments:
I think the bailout is flawed at its foundation. At its core is the desire to maintain the status quo and prevent massive change. No one wants their industry to die, no one wants their company to fail, no one wants their standard of living to drop.
Unfortunately, we built our economy on an imaginary sandbank. The housing boom was the result of artificially inflated prices and the financial boom was the result of overzealous borrowing. We were buying things we didn't have the money for, and it caught up to us.
Reality is that we have to pay for our mistakes. Industries have to die (at least for now), companies have to fail, standards of living have to drop. Throwing money at the problem only delays the inevitable.
If we allow nature and the law of economics to run its course and naturally correct the problems, there will initially be some suffering. The bloated carcass of outdated corporations will fall away and lighter, more agile companies that are able to adapt will rise to the top and take over as the leaders of the country. We will shed billions of dollars of waste and become more fiscally fit. And we will be better wiser from what we've learned.
However, the powers that be will not allow nature to do what nature does best. They will use their influence in government to claw at every last dollar, even if it means taking down the whole country with them.
In short, I hate every dollar spent on this bailout. We will never get that money back. If I'm wrong I will be pleasantly surprised. But I seriously doubt we will escape this thing without some serious sacrifice--either now or later.
Amen. Just like I said in a previous blog, companies in the past we shrugged at with the attitude, "You failed it's your fault." and other companies thrived on that failure. Now, we're giving money to people for no apparent reason. If GM dies than foreign car companies will thrive. If some banks blow it because of their inability to lend properly, other banks will thrive. The circle will keep going, we just have to let it go. Hail to the Wiquer Cardinal.
Giving people money is not correct.But it will help the people in some way,which I beleive strongly.Some thing we have to do to come out of recession.
h700, very good point. Giving money can't be regulated either. Like I said, it's not a simple solution. I like how you said it will help people in some way. There is no denying it will help people in some way, but again, you are correct saying it won't take us out of this recession. There is more to it. The more I think about it the more complex it is.
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