by Sam Kopf

Created on: December 16, 2008   Last Updated: January 13, 2009

Calling it a "bailout" levels the intellectual playing field. Balance sheets? Illiquid assets? Emergency Economic Stabilization Act? Start throwing around the real words and the differential becomes great.

The word "bailout" is the plastic side of the band aid. Underneath, the sticky stuff is even messier. You think you get it, but really, do you? So the government spent a bunch of money to help out some big companies. Sounds good. Where is that money coming from? Taxes aren't going upnow. But in the future, when taxes increase to finance the debt, what happens? Higher taxes plus stable salaries equals nonexistent disposable income. With a consumption standstill, crisis mode strikes again.

Will the government step in once more? Who's lucky this time? Lehman, no. AIG, yes. Insurance giants, automobile kings, you've had your turn. Next?

Maybe this won't happen again. Running along side of the problem could be enough. Wall Street went down, the government saved Wall Street. Crisis averted. Oops, one crisis averted. Detroit is going down. Save them too. Okay, now the crisis is averted. But wait.

The only way to solve a problem is to identify its cause. But who is to blame? Today's world sees President Bush as the cause of every problem. In reality, should the government even be connected with private businesses? Members of Congress are not economists, they're not Fed Officials, they're not even all finance majors. After a few briefings are they ready to make complicated financial decisions for an entire country?

Congressmen/women are politicians. Politics and money don't mesh. Strictly bipartisan is an idealist phrase. Republicans won't raise taxes now, because no one wants a last minute hike as their legacy? Democrats won't raise taxes soon, because its suicide to break promises in the first 100 days.

Obama may have just missed the financial institutions cries, but he's the go-to -guy for the automobile industry. Change embracing president-elect Obama is about to run face first into a wall of three that promises to help save the planet. Green as ever, the government aids the big car companies; we'll help you now if you'll help everyone later. Besides artificially equalizing American and foreign car companies, the benefits of this cash flow are completely short term. The car companies promise to use the money to create productive enterprises and develop environmentally sound vehicles. Great. But if making fuel efficient cars was profitable, the companies would have done it with their own money. Looking ahead shows the following progression. To avoid another bankruptcy scare, car companies raise prices of fuel efficient cars in order to turn a profit. The average American, whose taxes have increased in order to pay off bailout debt, can't afford the expensive vehicle. Prices will be forced to fall, requiring the product to be made cheaper. Cheap cars aren't fuel efficient. The demand for fuel will go up, the supply of fuel will remain the same, therefore the price of fuel will skyrocket, and we're back to gassing up the SUV for $4.50 a gallon.

In the long term, the "bailout" will need a bailout. Instead of erasing, why not change?

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