Bailout Bungling Likely To Continue

Huge government bailouts have not solved this country’s basic economic problem because the people awarding the money don’t understand what the real problem is. It isn’t a financial crisis that has spilled over into the general economy. It’s a debt-based economy-wide problem with financial industry overtones.

Making the financial industry whole does nothing to address this basic problem. It simply replaces money lost by greedy, arrogant and incredibly foolish hucksters with public funds being created by overworked printing presses. Nothing new of value results from such a process. At best it would be a zero sum game in economic terms. More likely it is destined to pull government finances into the black hole the financial industry has dug for itself.

There’s some common sense in new policies announced to date by President-Elect Obama. Giving government largesse to improve infrastructure and develop new energy sources will actually increase wealth, not just replace it. The payroll tax holiday being discussed in some quarters would do even more for Main Street’s consumers and businesses.

But the main thrust of a new Administration, alas, will probably be a continuation of Bush policies. Hank Paulson’s gang is being succeeded in top positions by Bobbie Rubin’s crowd. The same ilk. The same mindset. The same kind of financier/banker/economists who got us where we are today.

Hang on to your hats for a long, nasty ride.