I Feel Nauseous

I feel nauseous. Not just the normal physical nausea, but a strange new fiscal nausea.

Over the past month I have heard of so many trillion dollar spending plans that I am no longer shocked when I hear about them. On the contrary, when I hear about a million or billion dollar government plan I think: “That can't possibly be right. A government plan that tries to solve all our problems without the use of twelve zeros? Impossible! Someone must have forgotten to account for a layer of bureaucracy or add in a special 'stimulus' project for their home state."

Now that I have excepted the cost of these "stimulus" and "rescue" plans (though I still have not wrapped my head around them) I just need to figure out their purpose.

The purpose of the "stimulus" bill ostensibly is to stimulate the economy. I am less than sure how this is supposed to work. I understand the basic concept of spending money to create economic activity, though I am not sure I believe it works, I am prepared to suspend disbelief. My major problem with the "stimulus" bill is that I do not think it's spending qualifies as stimulus.

According to Keynesian Economics, for "pump priming" stimulus to work it needs to be done quickly. The problem with the stimulus bill, aside from the fact that large parts of it have little to nothing to do with stimulus, it's that the "shovel ready" infrastructure projects will take at least 6 months to a year to get off the ground. At the rate the resection is going is going I don't think that we have six months.

(Side note: How do you measure the number of jobs created by this bill?)

(Side note to the side note: How do you measure the number of jobs "saved" by this bill?)

Now we come to the bail out plan (under construction). We don't know what we are going to do, but we can all agree it is going to cost a lot of money.

(Another side note: Is it a good thing to announce a trillion dollar bail-out non-plan for a banking industry that is jittery in the middle of a recession? I mean, I know they don't want to "waist a crisis", but I think people are already scared enough to accept anything they purpose. I don't think they need to spook the markets and the citizenry any more.)

So, we don't know what we are going to do, but it's going to cost an arm and a leg. I'm just a little unsure as to how borrowing money helps us out of a credit crisis.

In an attempt to get banks lending again in these uncertain times, we are going to give them a massive infusion of cash (financed by borrowing). In an uncertain market, where there is limited credit, aren't people going to find the safest investment to hide their money in? Say, government bonds?

So we are borrowing money to spend and bail out companies to get us out of a crisis started by dangerous and unsustainable levels of debt. I have heard of spending to get yourself out of a recession (we can debate how effective this is later), but I have never heard of spending your way out of debt.

My biggest question is what is going to happen when the government can't get any one to lend it any more money? Who is going to bail out the government? I am not sure who this unlucky person is going to be, but I get the sinking suspicion that I see him in the mirror every morning. That thought makes me nauseous.