March 22nd, 2009

People in the US are angry becuase the bailed-out gang at AIG got a few million dollars in bonuses. At the same time the government has thrown away millions of millions of dollars (trillions, that is), subsidising total incompetence and corruption, without expecting any of that money back.

Now the Obama administration is declaring its intent to buy up all the remaining toxic assets to finally put a stop to the crisis. It's been estimated that this would cost the tax-payers/government another trillion dollars - but this is getting a little old, isn't it? One trillion here, another trillion there, a third trillion, a fourth... and so on. And the message is always the same - we have to bail them out because they're too big to fail, besides, we're the government, we have infinite resources, so why not share it with our buddies at the big banks?

It's no big secret that big banks were among the top of Obama's contributors, besides this is true for most 'major' US-politicians. If the Obama-administration really is serious about buying ALL the toxic assets from the banks, then the dollar really is dead, and the US-government will go bankrupt. The economy of a nation is no different from a personal economy, it's only politicians and a joke of an educational system that makes people think differently (which is true for all western countries).

If you've borrowed so much money that you can't pay the interest, do you keep borrowing more? If you've lent your neighbour a few thousand bucks and then he turns out to be a few million deep in debt from the bank, do you pay his bank-debt in order to get your borrowed money back? If you and your friend are broke, do you take out a loan to have him build you a bridge that you don't need?

You might say I'm presenting a very skewed image here, but if you consider that a personal economy is more short-term and a national economy is more long-term, it actually makes sense. You might argue that a nation can lower interest-rates; yes it can, but only in the short-term! Money wasted, is always money wasted, no matter on what scale. And borrowed money is also always borrowed money, no matter on what scale. The same goes for productivity and consumption. Therefore, if a nation is acting like an insane person, it is going to go broke, probably piss off it's neighbours and eventually end up in the asylum - or the morgue.

A final analogy: If you've made bad decisions in the past, and you stand around chanting "change!" and "hope!" on your front lawn - will your neighbours think "this is change we can beleive in!" or will they call the police?