Moon Kil Woong

Mind Your Value Judgments of the U.S. Economy

I agree with you that the financial cost of government stimulus/expenditure is not the major issue here. However, the operating word is bailout. Government mis-allocation of resources is always a bad thing. You could say government stimulus for the Iraq war, it is pouring money into the world. however, we would see it is pouring money that largely goes to other countries economies thus the benefit is squandered and the US citizen barely reaps any stimulus.

Likewise, the government supporting zombie financial institutions merely keeps a weakening wage structure for AIG and other employees that know the end of the road is near. Thus, their incentive to spend their salary diminishes along with their jobs and salaries. Thus you have slow hemorrhaging rather than stimulus. In fact, it is a bailout. To call it a economic stimulus is ill founded.

An economic stimulus would be pumping money and resources to build up a new viable part of our economy that has a lot of future hope. Or aiding good banks to grow and consume all the bad banks. Instead, the US government is choosing just to keep the bad banks around lugging trillions of toxic poisonous derivatives that is coursing through our economy.

The US citizen deserves much better than this. Our patriotism and loyalty and belief in America is not the issue. The issue is merely, the loyalty of our government to follow capitalism and the incentive structure it creates. Let the bad companies and segments of the economy die out and let the strong segments grow and flourish. Currently, I would say the government is strangling the entire US economy in order to save the rotting branches.

If you are going to spend money invest in better wireless service, power supplies, roads, bridges, research labs, internet connectivity, and education. Don't invest in helping banks pay off derivative bets, multi-million defunct banking executive pay, insurance companies gambles with the devil (Goldman Sacs and Paulson derivatives bets), housing speculators, and giant debt holders.

"One of these things has a future, the other does not."