by Timothy Blankenhorn

Created on: December 16, 2008   Last Updated: January 21, 2009

Why are bailout plans a good idea, as we confront a deep and stubborn recession? That question deserves a good answer - since so many opinion makers have warned for years that government power and government spending are no-no's.

Here are ten good reasons why we need these bailouts:

1."Thanks - I needed that." Bailouts can stop - or slow - a negative economic spiral. It's like a good slap in the face like we used to see in the movies. Economies run on confidence, and nasty events can cause sudden panic. When the US government, the greatest, richest institution on earth, steps up to say, "Enough", then the panic subsides.

2. Lender of last resort. Panic selling is one level of response. One step less extreme, though, is another reaction to bad news. It's a form of nervousness that's reflected in an unwillingness to lend money - because you worry that you won't get it back. Much of the money in the bailout plans comes in the form of loans. That means that businesses and consumers can borrow the money they need to expand - or just stay in business.

3. Keep money from vanishing. In a sense, all economics is "voodoo" economics, because economies behave in weird ways. In a healthy economy, the money supply expands, not because they're printing too much money, but because it's being passed around so quickly. It's a like a generator, a dynamo, that creates more money, and more wealth, the faster it's moving. The problem is, that as it slows down, there seems to be less money circulating. This is called "deflation" and that's not good for anyone, because people have less to spend. If the government injects money into the system, via a bailout, there is more money in circulation, for normal commerce.

4. Rebuilding America. Imagine that, on the one hand, I build a new addition on my house for $100,000. Imagine on the other hand that I spend $100,00 dollars on a trip to Hawaii. What's the difference? Which spending decision is the most responsible, the most defensible? The answer is that, while the vacation is spending, in the normal sense of the word, the house addition is an investment. It has permanent value, and can be expected, in fact, to help the house appreciate in value. In the this way, when we invest in roads, bridges, and infrastructural improvements, we are really re-investing in America.

5. Improving America. When we seek to bail out Chrysler and and General motors, we will insist that the cars the two corporations will build will be more fuel efficient and less

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