Bailout blues

It has been a while since I could stand to write about the economy. I've continued reading and paying attention, but the amount of "stupidity in the system" is just painful.

The US has put the taxpayer on the hook for $7.7 trillion dollars, so far, as part of the bailout. That's half of the estimated 2008 GDP. It's probably a bit over half of the GDP for 2009.

The scary thing is that we've still got a long ways to go. Expect rising unemployment until 2010. With that will come more corporate bankrupcies as the US economy is forced to give up the asinine notion that it can be consumer driven. That only works as long as folks are willing to lend you money. We're coming to the point where nobody is that stupid.

Well, nobody, but the Federal Reserve and the US Government.

The Federal Reserve today put together a $200 billion dollar package of financing for supporting consumer finance (credit cards, student loans, auto loans, and Small Business Admin loans). The Treasury will be backstopping it from the $700 billion TARP bailout. The goal seems to be that if the central bank and the US government can get enough debt off the books of banks, things will be okay.

The problem is that much of that debt is going to default. Who would you rather have holding bag when it does, Citigroup, or your nation's central bank?

That's a trick question. You don't get a choice. haha :(

So, hunker down. At this point, the real question seems to be when the US or the Fed are going to be forced to default or effectively default by firing up the printing presses.

Happy Thanksgiving.
Be glad you don't live in Iceland, or Russia, or Europe, or China. Things will be even worse there.