UPDATED (2/5/09): First, the government decided that “bailout” wasn’t all that PR-savvy, so instead, $700 billion became part of the Troubled Assets Relief Program (TARP). TARP then went to Wall Street, where it funded employee bonuses and baseball stadiums. Instead of creating liquidity in the markets, the Wall Street banks hoarded their TARP money, perhaps to save up for corporate jets, Vegas getaways, or 19th-century credenzas. Now, with a new year, a new president, and a new bailout package, we’re hoping for a different result. With BusinessWeek already deeming the original bailout a “bust“, I’m looking back on what I wrote when the TRAP (sic) was first proposed. After all, with $825 billion or more at stake, a call for prudence may find a receptive audience today.
ORIGINALLY POSTED (9/25/08): By now, most of us know that our economy is struggling. Credit is scarce, banks are teetering, and President Bush finally came out of his batcave on Wednesday to make a sobering speech. Giving a concise summary of how our economy began its precipitous freefall, the President conceded that this doomsday had been building “over a long period of time”… meaning, before his eight years in office.
However, as much as I found myself agreeing with some of the President’s assessments, I could not help but feel disturbed by the hastily-constructed $700 billion rescue plan, and the President’s intentions of pushing it through as soon as possible. Haven’t we heard the same act-now-or-forever-lose-your-peace spiel before (cough, cough: Iraq)? Except this time, instead of peace, we’re losing our houses, our money, and our material possessions. I could not help but be amazed at the President’s staunch conviction: warning of imminent recession and homelessness, he appealed to the same sense of urgency with which he implored Congress to start the war five years ago. “Without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold. More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet….Millions of Americans could lose their jobs….And, ultimately, our country could experience a long and painful recession.”
But, isn’t this the administration that gave us the Patriot Act, a trillion dollar oil quest, and an economic stimulus check that was supposed to prevent things like this from happening? Needless to say, the President has not had a favorable track record in times of crisis (or, for that matter, in times of peace). And the impact of this decision has consequences not only for our country now, but globally for years to come. So instead of a call for action, this should be a call for prudence. Instead of asking for our money, the President should be asking for our patience. Economists demand it. Congress needs it. Everyone knows that we can’t prolong the decision on this bailout, but we can’t just pound it out in less time than it takes to buy a ficus from Amazon.com.
In the end, the Bush administration’s proposed $700 billion plan may be the best way to get us out of this turdburger. But if that’s the case, I hope that our lawmakers will have come to their conclusion after setting emotions aside and considering all other options. After all, $700 billion is a lot of money: that’s 778 Big Macs per person, 4 brand new Mac laptops per household, or 833 million Maxim yearly subscriptions for life. And so if this bailout goes through, and Americans are forced to give up either food, computers, or our trashy magazines, whoever wins the upcoming election will have to deal with some pretty angry (and hungry) constituents.