JBD

I've run into these bail out cost comparisons in two places now - here and here. It looks like the source of the numbers is the same for both.

This schitck falls into the "Empire State Building - Statue of Liberty - Football Field - "We Can Put A Man On The Moon..."" category of soft-news analogies, as in "The amount of cloth required to cover Al Gore's embonpoint is equal to 3-and-a-half football fields."

So I have a question: How do these numbers compare as a % of (inflation- adjusted) GNPs? I'm going to go see if I can figure this out, but I bet some economy wonk will beat me to it.

In the mean time, go here, and enter 1900 as the initial year and 2007 as the end year.  The result is a comparison of various flavors of GDP numbers. The 2007 per capita number is over 7 times that of 1900, but the 2007 raw GDP is over 650 times bigger.

So, are these big bailout numbers relatively bigger because they are really bigger (making them scary big), or because the scale of today's economy is bigger (making them annoying big)?

My point is that it took complete mobilization, war bonds, wholesale conversion of industries, and so on, to fund & run WWII, but all this bailout stuff seems to be confined to the virtual world of government finance. It seems to me that the Brobdingnagian dollar-cost size of these bailouts is not really causing that much hardship in the everyday lives of ordinary people.

I guess I should add "yet" to that last line.

Still, so far we seem to be coping by forgoing the luxuries - the Thanksgiving trip to Maui and the every-other-year SUV upgrade - rather than suffering like they did in the Thirties. I'm talking Wall Mart instead of Nordstroms, that kind of "sacrifice."

Also, are we simply correcting paper values falsely inflated over the last decade, i.e. putting the economy on a diet, or are we lopping off gangrenous limbs to save the body?

Of course, even these minor "sacrifices" will certainly affect wide swathes of the economy. Fewer trips to Maui mean cutbacks at the airlines, airports, car rental places, hotels, lei makers, poi grinders, and pineapple loppers. What we don't know is if this slowdown is enough to drive these people into poverty, or is it just a reduction in previous annual growth, which they can handle through similar proportional cutbacks of their own.

But my question stands  - historically, are we on a diet, or are we amputating, as these comparisons suggest?

The answer seems to be - wait and see.

Posted by: JBD at 02:09 PM | No Comments | Add Comment
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