Just when you think the cost of the government bailout sparked by the credit crisis can’t get any higher, it does. Last month’s federal bailout of Citigroup added to the tally, which is now in the trillion-dollar range. After a while all of those zeroes start to lose some meaning. However, the Consumerist blog is offering a little historical perspective, noting that the bailout costs more than the sum of several government projects throughout history. By their calculations, adjusted for inflation, the 2008 bailout costs more than the Marshall Plan, the Louisiana Purchase, the Korean War, the New Deal, the Iraq invasion, the Vietnam War and the all-time budget of NASA combined. Ouch.
If this government is going to go into this much hock, they should at least address the real problem. The real problem is that the individual balance sheets of most people has far more liabilities (e.g. credit card debt, mortgage debt) than assets. And, if you want to have consumers spend and reflate the economy, then you need to help these people get in a better financial condition. I propose a $10,000 per person tax holiday. Either people pay down their debt or spend it . . . regardless, this will help the economy. Improving individual balance sheets is the only way to restore confidence and faith in the future.