Since December 2007, Washington has committed $7.2 trillion to bailing out the bad investment bets of our financial system. It's even thrown in a few billion for the pathetically managed automobile industry. And with the incoming Obama administration, that figure is likely to hit a nice round number -- $8 trillion.
To put that in perspective, $8 trillion is 57% of our $14 trillion Gross Domestic Product (GDP). But here's the beauty part -- there is no way of knowing where the money went exactly and whether it is doing any good. Much of the money was supposed to go to borrowers. But the banks refuse to disclose what they're doing with it. If Wall Street pays itself $16 billion in bonuses this year -- down 50% from the 2007 high -- that money will come from us taxpayers.
Am I the only one in the U.S. who thinks it's a mistake to use taxpayer money with no strings attached? Is our system so badly skewed that the very people who caused the economic disaster are getting multimillion dollar bonuses from taxpayers who are losing their homes, jobs, and stock portfolios?
On January 21st, we ought to make a deal with all the recipients of the money, tell us where it was spent by the end of February or give us back the money. With $11.3 trillion in national debt and a $1 trillion Federal budget deficit, we can't afford to waste $7.2 trillion.
If this money is doing any good for the economy in terms of economic growth or job creation, then we'll soon discover it when we get the money back in the Treasury. What are the banks hiding? Are they doing nothing with the money? Are they paying it out in bonuses? Are they making new loans?
The worst part is the lack of political will to demand these answers.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. Portfolio published his eighth book, You Can't Order Change: Lessons From Jim McNerney's Turnaround at Boeing on December 26, 2008.
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Reader Comments (Page 1 of 1)
1-06-2009 @ 5:18PM
Phil said...
Where is the senators CORKER AND SHELBY ?? lol lol ... These scags rant about the US auto industries ! Now is the time for these REPUBLICAN anti union idiots to rant about something else that is way bigger than the big three ! lol lol ...
1-06-2009 @ 9:15AM
krinken said...
Correct me if I am wrong but $8 trillion divided by the 138 million taxpayers is about $58,000.00 per tax payer. If you gave every taxpayer $58,000.00 I believe our economic problems such as foreclosures, lost wages, and consumer confidence would be over. If you cannot stimulate the economy with $8 trillion there is something seriously wrong.
1-06-2009 @ 9:51AM
contrariansite said...
The financial authorities are clumsily addressing the current economic issues by turning screws and tightening valves. They think they can fix the machine by simply getting more credit into consumers’ hands. But this machine is not that simple. In fact, it’s not a machine at all…but a living, organic thing. It has emotions as well as a brain. It is capable of self-delusion, deceit, corruption, wishful thinking, and extravagance.
http://www.contrarianprofits.com/articles/the-breakdown-of-the-world-money-machine/10682
1-06-2009 @ 9:56AM
daang7601 said...
Only way to solve and stimulate this Hell Hole economy is to place a NUKE right on top of the Federal Reserve and Wall Street...REVOLUTION... Revolution will wipe the $14Trillion debt or any debt...
1-06-2009 @ 10:17AM
jd said...
You got this right, Peter. There is no accountability for the bailout money, much like the Madoff "Ponzi" scheme. The only problem is that the banks are doing it legally with the SUPPORT of the Treasury, the President and the Congress.
1-06-2009 @ 10:28AM
Joe said...
Thomas Jefferson wrote: "The Central Bank is an institution of the most deadly hostility existing against the principles and form of our Constitution...if the American people allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."
1-06-2009 @ 11:16AM
krinken said...
Over capitalization is part of the problem getting credit into peoples hands is the last thing we should do.
1-06-2009 @ 11:51AM
Larry said...
Billions not trillions, like 750.00 billion not counting pork?
1-06-2009 @ 11:53AM
BHarrison said...
Quote from article: "The worst part is the lack of political will to demand these answers."
THAT is the crux of all of these matters . . . CONGRESS has simply lacked the INTEGRITY to perform their fiduciary duties to draft and pass legislation to establish reasonable and prudent regulations and to implement effective oversight of the FIs and the corporations.
CONGRESS IS the CULPRIT in all of this. our Congress men are either totally INEPT or have CORRUPTLY "sold out" to the special interests groups. Tehy dazzle the public with a $700 BILLION "Bailout" package; but behind the scenes, they have tacitly "committed $7.2 trillion to bailing out the bad investment bets of our financial system."
This is as about as bad as it can get without us literally "declaring a national bankruptcy", which is, in essence, what they are doing.
CONGRESS IS the CULPRIT behind all of this . . . it would not have occurred IF Congress had done their job. These people have virtually DESTROYED the USA as we knew it to be. Why aren't MASSIVE RE-CALL ELECTIONS being demanded?
The American people are going to have to fight for changes in our Congressinoal representations. A full 90% of Congress needs to be recalled , starting with Barney Frank, Ms Pelosi, and Mr. Reid.
2-15-2009 @ 10:42AM
haji1153 said...
there are not 135 mil taxpayers.this country is run by repersntatives elected by non taxpayers.could anyone tell me any investment idea to make some some money and be the target of profit haters