Left: Senate Bailout Hearing (Nov. 2008)
Bailout, it was announced this week, is Merriam-Webster’s 2008 Word of the Year. The dictionary people define the omnipresent word as “a rescue from financial distress.” Last year the top word, as voted by MW readers, was “woot” – as in, “woot! I won the lottery!” Which for the banks, auto and lumber firms is perhaps, now, one and the same thing. “Woot! I got a bailout!”
Woot for failing businesses – but woot for the economy? The “truthiness” of the matter (the 2006 Word of the Year) is that the old government model of priming the pump may not be as effective as it used to be. The world is now awash in government-directed stimulus – both in the form of direct industry bailouts, and a massive spending spree by government in the form of cash disbursements and tax breaks. In the U.S., it’s a $7 trillion dollar gift (so far) to overextended banks. In Taiwan the government has issued the equivalent of about CDN $3 billion in shopping vouchers, while the loopy Berlusconi government in Italy has started issuing prepaid credit cards, with about CDN $60 on them, to encourage the poor to buy food and gas.
And yet stock markets continue to plunge, more and more companies continue to fumble toward bankruptcy – and citizens everywhere are continuing to hide what’s left of dwindling savings under ratty mattresses. The fact is, in the short term, there will be suffering – but those who’ve made bad choices and bad investments should pay the price. While there is undoubtedly a role for accelerated infrastructure spending right now – as well as for more government money for technology, R&D and alternative energy – the spending focus should be on the future, not the past. Which is what bailouts are all about.
Woot, there it is.
