I feel like I should write a blog post about the financial bailout that was announced this week. I find it difficult, however, because I barely understand enough economics to balance my checkbook at the end of the month. I sort of get the impression that it's a Big Deal and, therefore, I should care about it, but I'm not entirely clear on what's going on, how we got here, and what's been proposed to do about it.
So I'm not going to talk about that. I just wanted to try to get an idea of the scale of the $700 billion bailout. Seven hundred billion dollars is a LOT of money. It's a bit enough number that I have difficulty wrapping my brain around it.
- This bailout is the size of the cumulative cost of the Iraq war to date, plus 50%. David has a neat little widget that displays the cost of the Iraq War at any given instant, presumabely to show how fast the number is growing. This bailout is even bigger.
- The bailout is four times larger than the cumulative cost of the War in Afghanistan (Operation Enduring Freedom, source). That's the war that we went into after, you know, a little thing called 9/11.
- This is roughly fifty times larger than the airline bailout after 9/11. That's 5000%, mind you.
- Remember the savings and loan crisis of the late 80s? (I don't, really. I was in high school and wasn't really paying attention.) That was about $125 billion. This is roughly six times larger than that.
- The bailout alone will add an additional 7% to our national debt.
So the cost of this thing is staggering. And it's not limited to American banks, either. It turns out we will be bailing out lots of foreign-owned banks as well, as long as they have "significant operations" in the US. Excuse me, but when was the financial well-being of Swiss banks an American problem? Why isn't the Swiss government doing their part of the bailout?
All the decisions about who will be bailed out and for how much is left up to one, unelected guy. As Glenn Greenwald points out:
"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." Put another way, this authorizes Hank Paulson to transfer $700 billion of taxpayer money to private industry in his sole discretion, and nobody has the right or ability to review or challenge any decision he makes.
So who thinks we should privatize Social Security next?