Bail Out the Citizens!

I just did a very quick calculation and I am sure this concept will stir quite a lot of debate but it would solve the economic crisis tomorrow.

Instead of the 30 plus billion dollars we gave to GM before they slid into bankruptcy we could have given everyone in the USA 1 million dollars with the stipulation that they bought an American automobile.

Yikes that is one-tenth the cost and it would get the economy off of life support as well as save GM, Ford and Chrysler.

Is this a naïve solution? Or is the solution so simple the geniuses in Washington could be overlooking the obvious?


7 thoughts on “Bail Out the Citizens!

  1. I like your solution much better than giving them all that money so the rich executives could get their new yacht before the company went under… *sigh*I liked your comment. That was a good birthday celebration! No eye of newt, though.

  2. Better check your arithmetic.  $30 billion divided by 300 million Americans = $100 each.  Not such a bad deal to keep a big part of America’s industrial architecture intact.  (Remember, GM is also the US’ largest builder of buses, train locomotives, and ground-type military hardware.  They are also the developer of the first mass-market electric vehicle.  (The Chevy Volt, due out in 2010.)GM has not been extraordinarily well-run for years, but its retiree liabilities, UAW contracts and relationships with its (too large) dealer networks have been millstones around its neck for a long time.  The bankruptcy/recapitalization is going to free it from the worst of these._Don’t count them out yet. . .

  3. @Gentemann - Of the $700 billion committed under TARP, approximately $400 billion has taken the form of “guarantees” of Assets rather than direct contributions of capital.  These guarantees are unlikely to cost the treasury more than a small fraction of their notional amount.  The other $300 billion includes all amounts paid to AIG, Citigroup, and the other big banks to fund the Government’s purchase of preferred securities and warrants.  Again, much/most of this will probably be recouped as bank shares recover their value.The auto company bailouts are mostly of similar character.  Although the dollar costs are lower, the risks are higher.  The money isn’t going into loans to (more carefully vetted) borrowers, its going out the door to make payrolls, pay suppliers, and fund pension payments.  This allows GM and Chrysler to go on making autos that, hopefully, some consumer will eventually buy.Also, even if your figures were correct and the Government were “spending” all this money with no expectation of getting any of it back, you still need to check your arithmetic.  Funding TARP, the auto bailout and the whole stimulus package is a long way from “giving $1 million to every American.” 

  4. Obama should get you to explain this…no kidding I really enjoyed reading your explanation and it was more helpful than all the sound bites form the pundits on TV. Thank you for taking the time for such a thoughtful response.You face an uphill battle though…most folks just think the government is throwing away good money after bad.

  5. Grrrr……don’t get me started.  I hate the governments new solutions to our economic problems.  I can already see the results in our little low income county and the terrible problems that will only worsen with time.  I have never seen so many garage/yard sales in my entire 54 years of life.  People are selling anything and everything….so sad.  It just really hurts to see Americans  come to this. Yard sales to make ends meet…or just to eat….pathetic!We are slowly sinking into quicksand….gurgle,….gurgle…..gurgle…..gulp…………..________________.-

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