Where Is My Bailout?

Capitalism at work. The demise of the free market as we know it…

I haven’t really studied economics in any detail but my life experience tells me one thing about money. If accounts payable is more than accounts receivable you have a problem. A big problem.

I don’t understand how the average person fails to understand this basic principal. They deal with it every day and they know what it means. For some reason when you throw the word “billion” in front of anything all logic goes out the window.

Take a look at a typical transaction. I have a glass of milk and it costs me $1 to produce. If I sell it for $1 then I’m at break-even. If I sell it for less than $1 I have to find the difference some place to make up for the cost of producing it. If I sell it for more than $1 I make a profit. How hard is that to understand?

In the news this week we found out (surprise!) that California is about to go bankrupt unless we sort the budget out. The numbers are staggering. We’re talking more money than someone can comprehend. Billions of dollars. The proposed solution? Raise taxes and reduce spending. As much as I hate the notion of paying more – what other option is there?

So let’s ratchet up the milk numbers. For 2008-2009 California’s revenue is expected to be $128 Billion. The expected expenditure? $144 Billion. That is a shortfall of $16 Billion, or with the zeros thrown in $16,000,000,000. That equates to approximately $533 for every man, woman and child in the state (some 30 million people).

The argument being made by many is “you can’t tax us more that’s just wrong”. But in the same breath other are saying “you can’t cut spending because that’s just wrong”.

In my little world if I did this, I wouldn’t have any choice. I would either have to find another job to pay the bills or cut back on spending money. Yet the same rules go out the window when big money is involved. WHY?

Now I can guarantee you that if I overspent by that 20% in a year nobody would come to me and say “Andy, no problem mate. Here’s the extra you overspent by as a bail out package”.

But that’s exactly what the state is doing – it (and a bunch of other states) is going to the Federal government and asking for a bailout package. Along with the car industry, the mortgage companies, the financial institutions and everyone else who thinks they are entitled to a free handout for the poor management of their finances.

The irony behind this, and this is the bit I just don’t understand, is that the average person doesn’t seem to realize that the way the Federal government pays for this is via taxes that we all pay. So we’re paying ANYWAY. So why not just deal with the problem in the first place. Balance the budget by not spending more than we earn.

How difficult is this?

You simply can’t have all the programs and services but not expect to pay for it. It just doesn’t work that way.

The financial sector already has it’s $700 billion bailout (that’s nearly 7 times the annual revenue of California – the 7th largest economy in the world!). A recent announcement puts another $800 Billion on the table from the government.

These two bailout’s alone amount to an extra $4918 that every man, woman and child in the USA needs to come up with. Anyone do that math before they ponied up the greenbacks (I do realize that there are some other methods for recovering the money – but still I’m making a point about how the billions add up).

So I figured I could do with an extra $500K. Not much but that would help out. It would, after all cost less that 200’s of a dollar (less than $0.002). Surely the American Public can afford that to help me out.

After all, where’s my bailout?