Is The Bailout Healthy For Us--Now?

Could the bailout(s) be really, really bad for us? Right now, I’m not sure anybody can definitively say. We’ll all have a much better idea a year down the road when we have the advantage of hindsight. But there is room to wonder right now.
But what if? (What if’s are wonderful games to play in history—what if Nye had been reinforced with infantry at Waterloo? What if Lee had side-slipped Meade at Gettysburg and gone straight for Washington or Philadelphia? What if Patton had had more fuel in the summer of 1944, etc.) So let’s play “what if” with the American/world economy.
I tend to think of economic ups and downs as being subject to the same sorts of natural laws that impact objects in nature. Take away support and gravitational forces will bring a boulder down. Bring a comet near a planet and its orbital path will be affected—and so on.
(Nor am I, may I quickly add, any sort of useful prognosticator when it comes to individual stocks or companies. I have sometimes been accurate in my predictions about general movements in the economy, but not about any particular element in that economy.
For example, should you buy Google because its version of “cloud computing” is going to alter the world and make its shareholders stinking rich? I have no idea. Is Windows based computing likely to be supplanted over the next few years (maybe by Microsoft?)? Logic says yes. Windows (and its DOS foundation) is too inefficient to be useful far into the future. See what I mean?)
It is my belief—and has been for decades—that costs of things like housing and automobiles have gone far beyond the reasonable in the United States. People come out of college with massive debt; they buy a “starter” house for hundreds of thousands; they buy automobiles that cost the price of a nice house when I wasn’t all that much younger. I don’t believe this is sustainable.
We’ve got too much competition out there that is willing to work for a fraction of the wages Americans need to maintain their debt. This competition is increasingly well educated—and, increasingly, leaving the United States after getting degrees from MIT, Stanford or Wharton. They are going back to China or India because opportunities are better there.
What if the entire American economy NEEDS to downshift? Just to survive? Millions of members of the new world middle class already know that if you own a roof over a thousand square feet, if your belly is full, and if you have public transit or a $10,000 car to get you to work, life can be satisfactory.
One television, one computer, one phone—that sort of thing. That’s what we are competing against.
What if the present downturn in the American economy is an attempt (by natural economic forces) to get us back to a sustainable level of living in a competitive world? What if just letting it all go down until it reached a “natural” bottom might be the best thing we could do?
What if letting this happen to its full extant and immediately (bye bye GM, bye bye Bank of America, bye bye whatever else needs to fail) would get us back to where we need to be to compete. Hitting that “bottom” would be the logical moment to take the massive resources we are currently using for a bailout today and put the economy back together.
What if, by attempting to bail everybody out NOW and keep income and prices up at their current levels, we are just ensuring a much harder landing? What if all the money we can borrow will have by then been frittered away on the bailouts and we won’t be able to borrow any more to get things rolling again after the real bottom has been reached?
What if? What if? What if? Is anybody in Washington or New York thinking of this possibility?
Just let it all drop until it reaches its natural bottom—where we are competitive again. Then coming in with a huge bailout to get the wheels turning again—at a level we can sustain and compete at—could be very good for us.
The college I went to cost me $360 for the first year’s tuition. Books, fees and materials were another hundred. I could earn that in a summer. Can any summer job earn the $27,000 it costs to go to the same school now?
Maybe the bottom won’t be as bad as it sounds. Especially if we have the bailout money intact, held in reserve for the strategic moment. Imagine if your kid could earn his tuition working at the corner grocery store!