Re: TARP Ends
I personally have mixed feelings about the "bailouts".
On one hand, the hemorraging was spiraling out of control. In the 80's when we hit a huge recession, the government under Reagan increased government spending to help keep the economy in check, and to try and pump money back into the economy to keep it afloat. By the same token, this is what happened in 2008 with the current round of "bailouts". Was it necessary? In all likelyhood... probably. The reason for government stepping up spending and pumping money into these industy sectors was because the government has a far larger reach in terms of financial capital, and can spread debt much farther than private companies and businesses without falling into bankruptcy. The United States is the single most secure debt holder in the world. Of course the twist is that eventually this money falls back onto the taxpayers and tax reciepts collected from individuals as well as these businesses. Furthermore, the drawback is eventual inflation. Ironically, inflation is good for paying off government debt, but bad for everyone else.
On the other hand, the funds were not targeted appropriately. The intention of the bailouts was to help spur growth. Instead, many companies used these funds to anchor themselves and improve their own corporate portfolios. While in a sense that does help the economy (stablize big business results in stabilizing the economy), it didn't have the widespread effect of spurring the availability of credit needed by smaller companies and individuals in order to further grow the economy and help create jobs. In short, the bailouts missed the mark in paving the way for more job growth. Jobs are one of the largest contributers to economic recovery.
Basically what I'm getting at is the bailouts may have in many ways helped to keep us from sinking into a larger recession or even depression, but has not helped spur recovery. If you compare the current recession to that of the 80's, there were different options available the government could use. Right off the bat, taxes for corporations and the wealthy were slashed in a huge way across the board. This reached further into the economy in stimulating growth across more than just the financial sector or the automotive sector. Now I'm oversimplifying a bit, as many tax loopholes were also cut out in the 80's, so some corporations and individuals couldn't take advantage of those loopholes like they used to. As a result, many businesses and individuals did contribute greater tax income for the government. However, instead of some groups paying huge amounts of taxes, and other groups paying very little in taxes, it was more evenly spread out to everyone. This helped spur growth spanning a greater portion of industries, which resulted in faster job growth.
We've held that same basic principle in tax collection since the 80's, so this time around, the government didn't have that option. Now the big question is what can be done to jump-start recovery, and to pump the economy with new jobs? Well, the government tried with sending stimulus money to states to use at their "discretion"... so to speak. In some cases, states did create new government programs, projects, etc that employed additional citizens. However, it wasn't enough, as the job loss rate in the private sector outpaced what the government could replace with public programs and projects. Furthermore, many states were in financial trouble with their own budgets, and used that federal money to simply maintain the status-quo with their current expenditures... thus not creating new jobs.
Of course, this is my opinion. Don't quote me as being the know-it-all authority here, but this is just something I've been observing now since all of this started. The big question is how can we stimulate job growth? What resources are available? And I'm not talking just locally, but both domestic and foreign. We participate in a global economy, so our job growth is going to depend in a large part on many of our key trade partners. However, since they are also struggling, and we can't tell other countries what to do... it's going to be a slow and painful process to stimulate job growth.
In short, this recession is much different than what we've seen in the past, both in terms of options for our government as well as private businesses, as well as the global aspect. I think the government did mostly what they could in a very short amount of time. If they took longer to craft a more structured bailout legislation process, it may have been more effective. The downside to that is the possibility of taking too long to extend help to the private sector, and we might have plunged into an even greater recession that what we experienced. I think of it as a "damned if you do, damned if you don't" situation.
2002 F-250 PSD
Gambling with 250/200's on PMR's.
478hp/851tq on Haller's dyno - 7/28/12
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