What does the government do when a $700-Billion bail-out isn’t working? It tries an $800-Billion bail-out, of course.
This morning, the U.S. Department of the Treasury and the Federal Reserve announced plans to squander another $800-Billion of taxpayers’ money “to make it easier for households to borrow money for cars, tuition bills and new homes”, the Washington Post reports. Did they forget flat-screen TVs?
The latest spending spree “is largely separate from the $700 billion Troubled Asset Relief Program, administered by the Treasury Department” although it “is partially backed by $20 billion from the TARP”, says the Post.
According to Mr. Paulson, the purpose of the new deck-chair arrangement is to coax lending back to “normal” levels.
This is nuts. Profligacy has become normal, and that’s the problem. The problems triggered by fostering the notion that people are entitled to things they can’t afford will not be solved by plundering the taxpayers in order to provide more credit so that people can continue buying things they cannot afford.