Did you know you’ve shelled out $10,000 to bail out banks, auto companies and the rest of the too-big-to-fail businesses? That’s money taken away from your retirement account or your kids’ college education fund. Money that could have paid for a family vacation, a new car, new appliances, remodeling your home – hey it’s your greenbacks and your damn business how you spend it. Right?
Are you kidding, you poor, gullible thing? You have no idea what’s good for you. But don’t worry, Uncle Sam does. And Uncle Sam says if you hadn’t bailed out troubled sectors of the economy, the failure and contagion effect would have been catastrophic. There’s an element of truth in this. A collapse of the financial system would have wiped out decades of bank profits, created worldwide panic and perhaps a run on banks, and contracted business credit to a dismal level.
But is the solution any better? Is it fair to put a hole in hardworking Jack and Jill’s paychecks to bail out Wall Street and Detroit? The thing is, there is no free lunch.
New calculations by the BBC based on IMF data shows that the U.S. has spent 25 percent of its GDP on bailouts. This amounts to roughly $10,000 per person.
In a BBC story on September 10, 2009 titled “Crisis ‘Cost Us $10,000 Each,’” journalist Steve Schifferes wrote:
“Of course, most of this bail-out money was in the form of guarantees to the banking system, and as that system pulls out of the crisis, governments stand to recover most but not all of that money.”
Isn’t that great? The government will recover “most” of your money. Hurrah. Is that the criteria when you lend money? How about you tell a bank you’d return “most” of the money you borrow from it?
Schifferes goes on to write about the taxpayer funded bailouts:
“….There is no doubt that it is curbing people’s overall spending plans, and thus exacerbating the recession (the so-called “wealth effect”).”
And then there’s tomorrow to think about. Kids graduating from college with a $300,000 loan today will have to pay off the nearly $10 trillion in government deficit down the road.
But hey, when it’s Big Business versus your kids, Uncle Sam decides Big Business wins. Uncle Sam knows best, of course. Four legs are good, four legs are good….
Sujata Srinivasan is a Connecticut-based business journalist, writing and editing for publications in the U.S. and India. Key editorial positions held include: Editor of Connecticut Business Magazine, correspondent and interim chief of bureau at CNBC India-TV 18 in Chennai, senior financial editor at Innova Solutions (now Ness Technologies), freelance editor at the Connecticut Economic Resource Center, Inc. and at present, the editor of CT Indian Life, a journal for the Indian-American community in the state that chronicles life in the diaspora. Clips at 
In the bailouts of the past 12 months, the government has forked over enough money to pay off every home mortgage in America. In the past twenty years, the speculative bubble has moved from stocks to real estate to commodities to sovereign debt, and just as it popped in stocks, real estate, and commodities, eventually it has to pop in sovereign debt. I don’t know where else it can be moved at that point. I suppose governments could try to centralize all national debts, but eventually that would pop too.
And maybe then, finally, big investors and world governments can take their losses and start anew, like we should have done before the bailout madness began and all this pain became inevitable.
Interesting to note that some of the most successful of FDR’s initiatives benefited working class people directly (the creation of the Tennessee Valley Authority) or regulated businesses better (the National Industrial Recovery Act). Not surprisingly, the most successful of President Obama’s initiatives was the “Cash for Clunkers” program. Also, when he became directly involved in GM’s fortunes (and fired the head of GM), GM bounced back quicker than expected.
FDR made clear that he was declaring class warfare when he backed initiatives to benefit the poor, against the will of corporations and the rich. Is President Obama bold enough to declare the same?
Mr. Dreamer,
How do you define and measure the success of these programs? This is difficult to do because one doesn’t know how the resources used to fund them would have been utilized by the original owners.
You rest on shaky moral ground as well when you declare war on a group of citizens who have not used aggressive force on others. The real class war is between those benefiting from the use of political force and those suffering from it.
Which class are you in?
Depending on what you believe GDP is at the moment, the figure is closer to $10,656. I get that by using $13 trillion for GDP (down from last year’s $14T) and dividing by 305 million population. (1.3E13 * .25 = 3.25E12 ; 3.25E12 / 3.05E8 = 1.0656E4)
However, I have paid none of this amount. I have not at any time agreed to pay any part of the national debt. I repudiate any claim that I owe any of that money.
The politicians who voted for extending the national debt limit and for the bills authorising the borrowing, and the bureau-rats who have spent that money are the ones responsible for the national debt. No other Americans have ever signed anything making them responsible for one dime of it.
Any other position is collectivist nonsense.
Great article, and many thanks for taking the effort to publish it; I’m positive otheres benefited as wel. It really opened my eyes for some new perspectives that I hadn’t thought of before.