A trillion here…a trillion there…pretty soon you’re talking real money.
U.S. stocks are down about 10% so far this year…that’s about $1.5 trillion lost. U.S. housing stock is said to be down about $2 trillion. And losses from subprime, credit cards, home equity lines, rogue traders…and hanky panky…probably add up to another trillion or so.
And let’s not forget the cost of the War Against Nobody in Particular – the war on terror…which costs a couple hundred billion.
And now, along comes…what’s this…a bi-partisan giveaway of tax rebates! Yes, it’s in today’s news. The Dems and the Reps have agreed to give taxpayers back some of their money. And Treasury secretary Paulson appeared in Congress telling them to get a move on. If they don’t get those checks out soon, it will be too late.
The pols are going to spend as much or more than ever. They were already running a $200 billion deficit…so they couldn’t possibly give money back. And many of these “rebates” are said to be going to people who never paid anything in the first place. Still, they’re going to send out 117 million checks at a cost of some $150 billion. This is Zimbabwe economics…if you don’t have money, just print it.
“Economic stimulus” they call it. But if they’re hoping to counteract the effect of trillions of dollars of lost wealth…they’re going to have to come up with more than $150 billion.
No, no…say the politicians. This stimulus is ‘targeted.’ It will go to people who are most likely to spend it. Yes, they will spend it at Wal-Mart…and at the gasoline pumps. The $150 billion will thus end up where the trillions that went before it ended up – in the pockets of Asians and Arabs. And yes, it will probably stimulate their economies.
And it might stimulate dollar holders all over the world to look for something else to put in their vaults.
The Daily Reckoning Australia