I wish to thank you for a great gift you probably didn't even know you were giving me.
In 2008, the Federal Government committed a total of $8.5 trillion to the most massive bailout in history. Thank you, son.
You might wonder why I am thanking you?
Well, the government doesn't have a spare $8.5 trillion laying around. In fact, the Federal Government was already running a sizable deficit. So we will have to borrow that money and add it to the national debt. There is no way that we will ever pay off the debt, so you can count on paying interest on the money spent bailing out failed businesses for the rest of your life.
At a typical interest rate of six percent, this will cost $510 billion a year, forever. Your share of this cost will be $1,700 per year every year for the rest of your life, or $4.65 every day for the rest of your life. Odds are, you will be forced to pay more than your share, in the name of "fairness".
Like I said, Thanks.
It is good to know that we learned something as a nation from this fiasco. For instance, we learned that overextended debtors with a history of irresponsibility with money should not be taking out big 30-year ARM loans with no money down and no idea of how they are going to make the payments. Which is why our government, a model of financial irresponsibility, already saddled with more debt than they can ever pay off, is borrowing $8.5 trillion more. But if the government ever gets into real financial trouble, they can always just print more money to pay their way out of the problem. If you did that they would throw you in jail. When the government does that, it drives up prices and devalues your money, your life savings, and your income.
It's also good to know that government has learned their lesson about meddling with the free market. Their policies, starting with Jimmy Carter, strengthened under Bill Clinton, and continued under George Bush encouraged mortgage companies to loan money to uncreditworthy borrowers. Government chartered organizations, Fannie and Freddie, guaranteed hundreds of billions of dollars of risky loans, packaged them up and sold them as highly rated mortgage securities. So now the solution is for the government to nationalize vast additional portions of the financial industry, buying up failed insurance companies, mortgage companies, and banks which are in such bad shape that no one else would touch them. But it's all ok because we will just pass the bill on to you. By privatizing the profit and socializing the risk, we are sure to encourage companies to make prudent decisions in the future, certain that if things go badly the government will be there to bail them out.
I have taught you how to budget your money and account for what you spend. At any time you can tell me how much money you have and account for every penny of your allowance money. You carefully set aside saving money for long-term purchases. It is good to know that the politicians who have made a career out of using our money to buy votes, favors, and influence, are sure to be at least as careful with your money as you would be. As a matter of fact, they can't say exactly what happened to the first $350 billion that they passed out.
So when Harry Reid, George Bush, and Nancy Pelosi lecture the auto makers on how the Government will demand financial responsibility and accountability as a condition of the auto industry bailout, maybe they ought to start by getting some for themselves. After all, it is not their own money that they are dishing out like candy on Halloween. It's your money and your future.