When will the bailouts stop? A summary of 2008 stimulus packages and bailouts (US)

[nymyth]

2008 will probably go down in history as the year of bailouts, crashes, and meltdowns. Here is a quick run down of all the laws and bills congress pushed through with lightning speed in this election year. With two months left in the year, we may see some more bailouts and stimulus packages to come.

02/13/2008 - $168 billion stimulus package is passed into law . This included tax rebate checks for individuals making less than $75000, and married couples making less than $150000. The most overlooked part of this package was that the jumbo loan limit was raised for mortgages that are purchased by Fannie Mae and Freddie Mac. This means that just eight months ago the government was still a cheerleader behind more debt and more spending.

03/26/2008 - The Federal Reserve extends a $29 billion "loan" to J.P. Morgan Chase to purchase the failed Bear Stearns through a shell company. BusinessWeek has a good article on how this deal worked. Essentially, the Fed purchased $29 billion in mortgage backed securites that could lose value.


07/26/2008 - $300 billion "housing rescue" bill was passed. This is the bill that established the Hope for Homeowners program, and also gave Treasury Secretary Paulson the ability to give Fannie Mae and Freddie Mac a limitless line of credit. The Hope for Homeowners program has now started and offers those who cannot afford their mortgages a chance to refinance into smaller mortgages insured by the Federal Housing Administration. This made Paul wonder if we should all just stop paying our mortgages .

9/7/2008 - Fannie Mae and Freddie Mac were taken over by the Federal Housing Finance Agency and the Treasury promised up to $100 billion in future support and capital investments per company . The actual total costs are yet to be determined.

9/17/2008 - AIG mostly purchased by the United States government for $85 billion dollars. The United States now owns 79.9% of the insurer through a loan deal.

10/03/2008 - $700 billion pork ladened package gets signed into law. The Treasury has been given the right to buy troubled assets and hold them. Also, $250 billion are used to purchase stocks in thousands of banks. Additionally, a variety of random provisions such as exemption of taxes on toy wooden arrows were included.

Now - The White House and Congress is now mulling over a second stimulus package of the year. This package is planned to be anywhere from $150 billion to $300 billion. Noone knows the details, yet. Additionally, there is a $25 billion auto industry bailout that is waiting to be signed into law. I guess $25 billion is really peanuts compared to what has already been passed.

Where will all of this money come from? Some say that not all of these deals will be expenditures because the equity stakes the government is taking in the largest banks and AIG will eventually give a return to the taxpayers. However, noone seems to be quite sure if that would really happen. Meanwhile, the reach of United States government has certainly grown with all of these acquisitions. When you add it all up, the quick financial maneuvers taken by the United States Government is costing more than the war in Iraq.

Another comment on the whole fiasco is that the National Debt Clock has run out of digits and each family's share is $86,023. No matter who the next president is, he must work on reducing the ever rising national debt . In fiscal year 2008 the United States spent over $450 billion in debt interest payments , and if the government does not chip away at its debt principal then more and more of this nation's production will be going towards debt service. Something has to be done, but one government bailout or stimulus after another is not the answer.

Finally, the scariest thing about these bailouts is not just the amount of money they will cost American taxpayers for generations to come, but that these bills were passed with haste and little concern for the voice of the people. In this video, Senator Diane Feinstein states that she received 91,000 phonecalls of which 85,000 were against the $700 billion bailout, but that she believes that these angry citizens do not understand the good the bailout will do. Is a democratic government really democratic if most of the elected officials do not serve the people that voted for them?

Source: http://www.wisebread.com/when-will-t...-united-states

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