Reuters totaled up the cost of the bail-out so far, and their figure sits at 900 billion. Since GDP last quarter came in at 14 and a quarter trillion, we’re talking about the federal government and the Federal Reserve putting up an amount equal to about 6.3% of the economy. Sure, most of it is in the form of loans and financing and stuff, and its impossible to say how much of that total will be lost forever.
As I write this, the Dow is now just about where it was when GW took office, 8 years ago. And that’s nominal, not adjusted for inflation. Put another way, money in the stock market lost money over the past eight years. My wife and I took all of our money out of all the sectors that are in trouble today about a year ago, and yet our portfolio has taken one heck of a hit recently, so its not just a matter of picking what to avoid. We avoided all the big losers, and still got hammered.
So if I may play a poor man’s Bruce Webb, let me wonder about the following… Say that the president and the cheerleaders, the folks who gave us this bail-out, had succeeded in privatizing Social Security back when he took office. After eight years of pretty piddly growth and a tanking stock market, a lot of people would find their retirement fund depleted, and folks dependent on that retirement fund would be in deep trouble. I wonder – would GW and the cheerleaders, the folks who brought you a “bankruptcy reform” law written by the credit card companies, support having the government prop up millions of ordinary Americans, most of them retirees, to the tune of $900 billion over a period of a few weeks?