The Bailout: Handout or Investment?

The Bailout: Handout or Investment?

This morning I received an email from one of my oldest friends.  A friend from high school, he’s an ex-navy guy, staunch Republican, and currently living in Kuwait, helping with something that he’s been a bit guarded in sharing details about.  Almost daily, he forwards me an email or two.  I imagine I’m on a rather large distribution list, though I don’t know, as I’m blind copied along with everyone else.  Usually the emails are jokes, while more recently, I’ve been getting some that are also politically minded.

Today, he sent an alternative to the proposed bailout, in which instead of the US government giving AIG $85B to keep it afloat, the US government would give each and every adult citizen $425,000 (the email assumes there are roughly 200 million adults in the US).

The email went on to say that individual Americans could use that money far better than AIG could, for things like paying off their mortgage, credit cards, etc.  And that AIG should simply be sold off for parts–liquidated for whatever it could fetch.

I was flabbergasted at the email, as it made no sense whatsoever, and replied, “You do realize the AIG bailout is a loan, don’t you?”  It’s not a hand out.  AIG will have to pay back the $85B, along with interest.  The same way Chrysler paid back their loan, and more recently, Mexico paid back their loan.  If AIG succeeds, this will be a huge boon for Americans, as it helps protect a significant financial company AND the interest revenue will funnel back into the tax pool.

To illustrate my point I said, “We wouldn’t allow citizens that live along a proposed $100M freeway to accept a cash disbursement if they’d just drive on a dirt road.”  The freeway is more important as a long term investment.

I honestly don’t know if the AIG bailout is a good investment.  It’s quite possible it’s a horrible investment.  But giving away money to citizens should not be compared to making an investment, as if the two things are interchangeable. This type of misleading email is simply preying on frenzied emotions right now.  If you get such an email, do yourself a favor, and just click delete.  Don’t forward it, and certainly don’t get caught up in trying to defend a silly notion.


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Derek Neighbors

Handout. Expect more to line up. Detroit?

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Steve Belt

Oh yes. GM and Ford are both apparently lining up for money.

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