Why Bailouts and Stimulus Plans Do Not Work

There has been a lot of talk about bailout packages and stimulus plans for over a year now. It all started last spring with the liberal-led stimulus checks... it was Nancy Pelosi's pet project. She claimed it would stimulate the economy. Everybody loved them; everybody had things they wanted to buy. My God, it sounded so wonderful. However, as always, I ask people to dig deeper... read between the lines so to speak. I will try to be brief, but thoroughness is important.

First off, you are the government. The government is nothing more than a group of people we elect to collect OUR money and redisperse it collectively as a more efficient way to spend. With that being said, it means any money you receive from the government is not a gift... it is not "found" money. It was your money to begin with. Now, in order to give you your money they need a resource to restock their coffers. Well, where does every single penny of government revenue come from? Yes, taxes! So in a nutshell: you are borrowing your own money! You are no better off.

Secondly, the plan is only a short-term fix; not a long-term cure. In order for an investment to spur growth it must have a financial return. Here's an example. If we spend x billion of dollars to build new roads that only employs people until the roads are complete. The worker has a job, but for now and for now only. Also, the new road does not produce income unless it's a toll road. Instead of artificially creating jobs for the here and now, wouldn't the money be better spent investing in new technology or factories to create jobs on their own? How about investing in renewable sources of energy so we can have cheaper and more efficient ways of heating our homes and driving to work? Remember, Obama said he was against some of those things last summer as taking too long. He wants the quick fix, but a quick fix only gives you the illusion that things are better. Without that return on investment we will need a newer and bigger stimulus plan every couple of years. In a nutshell: spending bills cost us money whereas an investment strategy will make us money.

Thirdly, the recovery plan (My God I almost vomit every time I say "recovery") does not tackle the reason we need help in the first place. Just because your house is on fire it doesn't mean you throw water aimlessly. Look for the source of that fire and correct that. If the fire started in the basement, throwing water on the roof only puts out that fire TEMPORARILY! The basement is still burning and will reignite the roof. Now you are no better off and you just wasted time and energy. Again, you were under the illusion that things were better. From what I've seen, this entire financial fiasco started with subprime lending. It was an indirect stimulus back then started by the Federal Reserve by reducing interest rates to stop a small recession. It was compounded by greedy banks and Wall Street investors and ended up causing a much larger recession today. We corrected that specific problem of lending, but the principle behind it (stimulus spending) is still around. So in a nutshell: this recovery package won't spur growth; it will only help correct what the last stimulus caused. Soon this stimulus will cause an even bigger recession. Eventually, we have to stop; take our lumps; and let the market correct itself... naturally.