Government Bailouts Bailing Out American Capitalism in Essay

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Government Bailouts

Bailing out American capitalism in the present depression was far more expensive than most of the public will ever realize, especially since many of the costs were deliberately hidden. This Great Bailout was much larger than the Troubled Assets Relief Program (TARP), which went to the large banks, insurance and automobile companies. All but $50 billion of this has been paid back, but that was only one small part of the bailout. Governments concentrated on bailing out the banks and corporate elites rather than creating public works and jobs programs as Keynes would have recommended, and the costs in low wages and high unemployment for the working class and middle class was at least $5 trillion. Wall Street is profitable and the bankers are getting their bonuses, but ordinary workers and consumers at the lower and middle levels of the economy are suffering the worst conditions since the Great Depression of the 1930s. They also had to absorb most of the costs of the rampant speculation of the housing bubble and its collapse in 2008-09, which is conservatively estimated to be $10 trillion.

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These housing values will not return to the pre-bubble levels in a generation -- if ever -- but there has been no effective federal program for home mortgage relief as there was in the 1930s. So far the Federal Deposit Insurance Corporation has spent about $500 on collapse banks, which have not failed at this rate since the 1930s, and the Federal Reserve has also spent about $2 trillion to but bad mortgages and assets from the banks. In addition, the bailout of Fannie Mae and Freddie Mac, which also participated in the housing bubble, is likely to cost one trillion dollars. Following monetarist policies of keeping interest rates at zero for three years has costs retirees and small savers about $2 trillion in lost interest. Finally, about $300 billion of the almost one trillion in government stimulus spending is basically missing and unaccounted for. In short, the bailout of Wall Street and corporate America has turned out to be larger than the Gross National Project of the United States, although ordinary workers and consumers….....

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"Government Bailouts Bailing Out American Capitalism In" (2011, October 21) Retrieved May 14, 2024, from
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"Government Bailouts Bailing Out American Capitalism In", 21 October 2011, Accessed.14 May. 2024,
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