Commentary
Bailout Wrapped in Chocolate
Beware the Chocolate Bailout Bunny
How do you get a quarrelsome, spoiled child to swallow a large, nasty pill? Wrap it in something delicious, like chocolate, and the screaming kid will wolf it, tasting only sweetness. Down will go the medicine and everyone will be happy. That’s what the Senate did with the financial bailout package today. They wrapped it in tasty, irresistible tax cut extensions so the misbehaving brats in the House would swallow what the “wise” elders in the Senate and the doom-mongers in the White House have already willingly gulped down.
Of course, some kids in the House may be allergic to chocolate and everyone else who took the pill may become very ill before long.
The “Washington Post” reported that the $700 billion bailout package was “heavily revised” to include an extension of over $100 billion in business and personal tax breaks, and a temporary increase in FDIC insurance for bank deposits from $100,000 to $250,000. The Senate voted 74 to 25 in favor.
Here’s where the allergy to sweets comes in to play. Although the FDIC enhancement and tax break extension will help win support of rebelling Republicans, fiscally conservative House Democrats are balking at the nasty ramifications that the new additions to the bailout will have on the budget. Even so, the Post quoted“House Majority Leader Steny Hoyer” saying his fiscal conservative wing is “angry,” but will probably give their support anyway.
It seems that the unfolding financial crisis has Congress in a tizzy. As stock markets gyrate world-wide and credit markets continue acting as if the end is near, Washington has been primarily wrapped up in self-serving bickering. After all the drama, a more sensible financial bailout bill will pass – one that helps struggling homeowners and holds mindless bankers to account. But, the spiraling cost of fixing the financial markets will screw generations to come.
This is my biggest fear. The credit markets will calm down (probably), the economy won’t fall off a cliff – for now at least. The staggering initial cost of this bailout, coupled with the addition of extended tax breaks and extra incentives to lure in the hold outs means the budget deficit is now set to explode. So the emergency medicine taken now may very well turn out to be poison in a few years time.
What do you think about the financial bailout package? Do you share my concerns about the deficit? Are you relieved that these boneheads are actually about to pass a deal? Or, do you think everything should collapse so we can move at warp speed toward a barter economy? (Please leave a comment or fill out the poll on the home page.)
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Tags: bailout, budget deficit, Commentary, Congress, credit-markets, financial bailout, financial crisis, Senate, stock-market, White-House Discussion
5 comments for “Bailout Wrapped in Chocolate”
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I think this $700 billion will get things moving again, but at what cost? With the infusion of that much fiat money, the dollar will surely inflate to a much higher level where a gallon of gas will be $10.00 and even something as simple as a 20 oz bottle of water will be $5.00. People won’t buy them, and the economy will stagnate, but suppliers will not be able to reduce their prices much without going broke, so there will be a big downward spiral for years. This won’t hurt the rich very much though, because their major, hard assets will be worth a lot more, and so will their day-to-day expenses, but so what? They have plenty of pocket money; let’s face it; even if you have 23 million dollars (the point at which the rich feel that being rich begins) and the value due to inflation drops to 5 million, you are still better off than 99 percent of the rest of the poor schmucks in the U.S., and 5 million is still 5 million, which you can still live on pretty damn well. This will hurt the middle class the worst, as what is a yearly income of $100,000 going to get you? There will be no more new homes, cars, vacations, big screen TVs, etc. I fear we are going to see a HUGE gulf created between rich and poor, or should I say rich and middle-class.
So what if they have to extend the tax breaks- that’s just what the economy’s going to need anyway. The main thing is that they pass a bill before the markets crash and we end up on bread lines.
This is in response to the first comment. I agree that the dollar will suffer as a consequence of all the borrowing (printing of money, I should say). Strangely enough, the dollar rallied today, mainly due to everyone buying US T-bills. We are heading into a long stretch that will feature tight credit, low business investment and sluggish consumption. All but the top 1 or 2 percent will feel the pain.
I’m concerned with the cost of this whole thing. What the hell are these idiots doing? Arguing and posturing before the cameras and then cutting deals with lobbyists when the doors are closed. Did you hear about Harry Reid getting alternative energy subsidies added in to help Nevada? This thing gets scarier with each passing day.
I think I like your Bailout Bunny logo better than the article. You should draw more and talk less.