Sunday, October 19, 2008

Bailout math

I found this graphical representation of the history of federal bailouts. I had never seen all these numbers together before. I did some easy math; from the founding of our country until this past February, the grand total of government bailouts (in today's dollars) was $347.2 billion, or $43.4 billion per bailout. In the last eight months, we've done another $1,096 billion in bailouts, for an average of $219.2 billion per bailout. And, these numbers are slightly skewed; if you factor out the whopper bailout from the savings-and-loan crashes in 1989, the pre-2008 average would only be $7.7 billion per bailout. Better, if you start counting with the Bear Stearns bailout in March, we've spent $137 billion a month on bailouts for the past eight months. This makes our spending in Iraq look cheap by comparison.

I'm fundamentally opposed to the bailouts, because they're fundamentally opposed to the whole concept of a free market. Freedom means freedom to fail, too. A relatively small number of people have made obscene amounts of money engaging in unwise financial shenanigans for the last few years, and thanks to President Bush's tax cuts, they've gotten to keep more of it than at any other time in history. So it's not unfair to expect these same people to eat their losses, since they enjoyed the fruits of their success.

And, I should mention that schadenfreude plays no part in my distaste for the bailout. Sure: speaking on behalf of the huge chunk of Americans with no money, I enjoy watching rich people take the occasional crotch shot. But I'm also painfully aware that the huge majority of the people who caused the current financial crisis aren't suffering. These people will never find themselves in a financial situation wherein their income drops as low as mine. Our government leaders who played their part in creating the crisis aren't losing their jobs, either; you'll notice they're the ones who are now in charge of fixing the problem. Those responsible managed to structure themselves such that they reaped most of the profits from their malfeasance, but the responsibility is spread among everyone who has a chunk of their 401k in the stock market. Now our government-funded bailouts are going to cost us all a trillion dollars, plus interest, and it's a fair bet that those responsible for the problem won't eat much of that debt. I'd like to see those who made the problem suffer from it, but I know it's not going to happen....

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