Bailing Out the World

by Kakofonous

What's in a bailout? $700 billion? Taxpayer security? A stable economy? Happy fat cats at the top? Paulson and Bernanke tell us that the plan, as it is now, will do all of those things. (Of course, by the time this post is finished, the wording will have changed.) Many at the bottom, as well as many Democrats and Republicans, disagree. One of those in dissent is Speaker Nancy Pelosi, who, in her speech of two days ago, decried with fervor the policies of the last few years and cast doubt upon the viability of the plan. Whether or not it is valid is the central question now; most are in agreement that it is certainly a necessary measure to take, but none are enthusiastic about the prospect. There are several aspects that detract from the plan; most prominent among them are the immense cost levied on the taxpayer, the near lack of government oversight, and a general feeling that this will only be the first of several more bailouts. With major banks collapsing on an almost daily basis, America and the world are wondering whether finance will ever return to the state it was before the bailout, not fundamentally changed through gigantic government intervention throughout major industrialized countries.

There seems to be a consensus that this change into a new kind of capitalism is, at least for the moment, the only option we have now. Globalization has given us a world where one country's economy, especially one as large as that of the United States, cannot collapse while another prospers. If one country's stock market falls, chances are good that many others will come down with it. If one country has a natural disaster which affects its resource reserves, commodity prices throughout the globe will rise. This interconnectedness is something that most people have very little idea what to do with. It is a fundamentally flawed idea to suggest that we simply stand back and watch the world fall into a recession; increasing the world's GDP is an extremely difficult task.

So, what does this have to do with a gigantic government bailout? Quite a lot. We would endanger ourselves to a much greater extent than we might realize if the bailout is not implemented. If our economy fails, foreign investment in our economy will fail, thus having an impact on countries with whom we deal only a little. Stock markets in other countries will plummet and their economies will also be thrust into recession, impacting their ability to deliver the massive imports that we receive. If our economy fails, we will be in dire economic straits for much longer than we realize.