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The Price of Crisis Relief

Posted on Sep 11, 2009
Bank Crisis
AP / Mary Altaffer

The richest countries have shelled out nearly $10 trillion between them, mostly to their financial sectors.

Calculations based on data from the IMF show that per capita spending to resolve the current economic crisis has hit $10,000 per person in the U.S., and an even more staggering near-$50,000 per person in the U.K.

The BBC:

The world’s largest economies have spent $10,000 for every person in a bid to fix the financial meltdown of the past year.

New calculations by the BBC, based on IMF data given to G20 finance ministers, shows these countries have spent a total of $10 trillion (£6tn).

The UK and US spent the most, with the UK spending far more, 94% of its GDP compared to 25% in the US.

That equates to £30,000 per person in the UK and $10,000 in the US.

Of course, most of this bail-out money was in the form of guarantees to the banking system, and as that system pulls out of the crisis, governments stand to recover most but not all of that money.

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By Rodger Lemonde, September 12, 2009 at 9:01 am Link to this comment

Money is strange stuff. Like a prostitute it can be
both desirable and repellent at the same time. It is
most appealing and desirable when you need it. Most
disgusting when others have it in abundance. To
extend the analogy our financial institutions have
been cheating on us. IS giving them vast sums the way
to correct this? If it averts a disaster, probably
yes. A dollar spent will be spent again repeatedly
and thus we have the value of money. It facilitates
trade ad infinitum. Note that the article says that
most of this bail out money will be recovered by
government. It was and is an investment in avoiding a
total breakdown of the international economy.

The economy of the 21st century is vast and
interdependent. In the 19th century economy was more
personal and a family could be secure on a few acres,
producing enough to meet their needs and a bit extra
to trade for what they couldn’t produce themselves.
In those times small government was enough. At this
point in time life has become to complex to run
unfettered. Change has been accelerating, the faster
it goes the harder it is to control.

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By felicity, September 11, 2009 at 9:41 am Link to this comment

In the BBC article this particularly caught my eye - “This extra government debt will have to be paid by future taxpayers, whose ability to spend money on government services like health and education will be constrained.”

True American conservatism/republicanism/capitalism, forget the crazies, has for decades been dedicated to removing the government from all social programs - its sole remaining responsibility being national defense and spreading capitalism (posing as democracy) world-wide.  The most efficient way to do this is to starve government involvement in social programs out of existence and that’s done by not being able to fund them.

Am I suggesting that this latest economic down-turn was engineered?  Not necessarily, but it certainly is convenient if starving the government is your bag.

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