Is Less Loss a Cause for Celebration?

Is Less Loss a Cause for Celebration?

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Is Less Loss a Win?

Economics is difficult to understand at the macro level to begin with. Defining victory can be difficult, too. The Treasury Department announced that the White House is extending the 700 billion dollar bailout program until next October, in part because the government estimates they will lose only $141 billion instead of the anticipated $340 billion first forecast. On the surface that seems like it should be a very good thing. But is not losing $200 billion the same thing as having $200 billion? Not really is the answer for most of us considering the bailout was never fully funded with actual dollars to begin with. For most American taxpayers, losing less seems like very weak criteria for a victory.

Whose Dollar is it Anyway?

The bottom line no matter what economic system you use is that the bailout will still have lost $141 billion this year. So, who is going to pay for that loss? There are $141 billion dollars less to work with than there were before. The American taxpayer will foot the bill. What many in the government forget, along with most Americans, is that the federal government has very few revenue streams. When they say they will fund this or have lost that, it is the American taxpayer's money that is going bye-bye. There is the perception that the money comes from somewhere else. There is no somewhere else. Every American taxpayer is paying a portion of this loss.

Are There any Bright Spots?

There are a few promising indications that the bailout could have a positive result. The banking industry seems to be doing better than expected. The Treasury reports that bank bailouts have actually netted American taxpayers $19.1 billion. Other industries, however, like insurance and auto are not faring near as well. Between AIG, Chrysler, and GM the losses total more than $61 billion: $30 billion from each sector. The mortgage industry remains in crisis and will get a big chunk of the remaining and future bailout money. … click here to read the rest of the article titled “Is Less Loss a Cause for Celebration?“