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Old November 13, 2008, 04:52 PM   #1
johnwilliamson062
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Join Date: May 16, 2008
Posts: 6,810
$5 Trillion bailout

I have been reading this afternoon that the bailout is now looking as if it will run $4-5 trillion dollars before we are all through.

http://www.forbes.com/home/2008/11/1...12bailout.html

Here are some thoughts:
1. In my lifetime of 23 years GM, Ford, and Chrysler have not been competitive. Their products are lower quality and more expensive than foreign competitors, even in trucks. Even if they retool for hybrids their labor and health care obligations are such that they will not be able to profitably produce these cars. We will just have to bail them out in 3-4 years. Same goes for most of the other industries we are going to bail out.

2.China has 1.5 trillion dollars in cash reserves. That is after spending $500 billion on infrastructure as a stimulus, which by the way is the only type of bailou which will work long term. They can call the debt we owe them, bankrupt us, write off the receivables they hold on us, and they will still have a surplus. This is the Chinese government, not Chinese citizens who are in a similar position. When their markets develop to the point they do not need to sell us their goods they will have no reason to loan us money. They are very close to this point.

3. This will push our national debt from $11 trillion to $15-16 trillion dollars. Even if we are able to borrow at the same rates as we have in the past that will increase our interest payments to about 1.1 trillion dollars, or about 30% of the national budget. I doubt we will be able to borrow at the same rates we have in the past, so I am estimating somewhere more like 35-40% of our national budget will go servicing our national debt. To my knowledge, and as an economist who's favorite subject is transitioning economies(basically economies in revolution) I think I would probably know, no country has ever come back from paying more than 25% of its budget to service its debt. Revolutions begin at 50%. The time it takes to go from 25% to 50% is incredibly fast b/c the government has to borrow more and more, just like someone who uses a payroll advance service. We will probably jump form the 20% we are at currently to 35% by next June. 35% to 50% is a matter of a years after that.

4. In the Great Depression, and other previous US depressions, the government had almost no debt and was able to accrue debt with out facing the consequences it now does.

5. When I was studying transitional economics in a class(when I was absolutely hooked on the subject), I always had one question I could never answer: How did the population of a country allow the leaders to let their country go? The last few weeks I have seen all that is happening and I have received my answer and it is two part. First most people have no idea what is going on, and second those that do are paralyzed with fear.


What in the world does this have to do with firearms? You read between the lines.
What does this have to do with civil rights? Grab a history book and fasten your safety belt.
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Last edited by johnwilliamson062; November 13, 2008 at 05:26 PM.
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