Wednesday, November 26, 2008

Send the money to the people you fools, they can spend it better than you

The Emergency Economic Stabilization Act of 2008 also known as H.R. 1424 cost the American people $850 billion.  The population according to census estimates in the U.S. is 305,747,371. [2]  This means that the government's effort to spend $850 billion is costing $2780 for every man woman and child in the United States.  
The Emergency Economic Stabilization Act of 2008 originally was sold to Congress by telling our government that it would allow the treasury to buy troubled assets from struggling financial institutions. It would also establish a program whereby the government would offer insurance to companies for their assets rather than buying them. It would also establish "appropriate standards" for the compensation of executives at companies that sell assets to the government, create a congressional oversight panel and require the government to collect warrants from bailed out companies so they can collect part of any profits that may result from the bailout. The size of bank deposits that the FDIC can insure would also be raised, from $100,000 to $250,000. [3]

The bill has not bought troubled assets from struggling financial institutions.  Although this was the first thing that the bill addressed and we were told that the funds would do just that. 
The Treasury Secretary has invested in 53 U.S. banks in the amount of $161,471,163,000. [4] This spending was not part of what we were told.  Yesterday I posted details of the spending of $65 billion and the shares and warrants of each company that was purchased.   
Today Secretary Henry M. Paulson, Jr. discussed this week the announcement of $20 billion to back a lending facility for the consumer asset backed securities market established by the Federal Reserve Bank of New York.  The asset backed securities market provides liquidity to financial institutions that provide small business loans and consumer lending such as auto loans, student loans, and credit cards. It is beginning to look like the U.S. Federal Reserve and Treasury Department heads really are lost and that they do not know what to do. [5]

Now the U.S. Federal Reserve and Treasury Department announced November 25, 2008 that it had developed an $800 billion worth of stimulus measures to rev up three primary engines of the U.S. economy – homebuyers, consumers and small businesses.   [6][7] Are they selling us another smoke screen?

Where has the money come from to keep spending like we are?   Why has this global crisis occurred?  They say it was a housing bubble, maybe an oil bubble.  I think it is a masterful magician that holds his audience captive with his illusion.  If they really want to get the economy going the might want to consider giving they average size household a check call it a tax rebate.  The American household has on average 2.69 members. [8]  

If you take the population as a whole and then break it down there are 113,660,733 households.  Then pay each household $13975.64 which is the planned spending.  People that are facing foreclosure will be able to catch up or find a new home, others might buy a set of tires for the car because they need them, some might buy new carpet for their home and many other things.  More jobs producing the products,  people shipping them, more people working, and they all would be spending.  This makes more sense to me but I only write a blog.


steve said...

ok, that takes care of the $850 billion.

But now I read that the bailout is now actually up to $7.36 trillion.

Just imagine how that could be distributed...!

Geneva said...

Don't you first have to imagine how it could be raised?