Sept 23, 2008
There has been ear-splitting song, dance and noise about the bailout which the Treasury Secretary has proposed. It is not clear to me how the bailout is going to redeem the economy. It is estimated that the bailout will exceed 700 billion and may touch 1000 billion, the later figure being cutely referred to as a trillion.
For starters, most Americans are familiar with the concept of a million. It is one thousand thousand. In figures, it is the number 1 followed by by six zeros. I cannot have a physical concept of a billion, except that I can tell that it is one thousand million. That is the end of it. Ask a banker what a trillion is. Smartly he will answer it is one thousand billion, stupid! If you press him for further, he will gently clarify that it is a million times a million. You faintly pretend to understand, but well......
How many people can have a sensory understanding of a trillion except that it is a very very very big figure? How many people can visualize or have a physical idea of the speed of light? It is nice to impress a sophomore that it is 186,000 miles per second. But can you really understand it in the same way, as you understand a loaf of bread kept in your plate, or a mug of coffee sitting on your table?
Brutal fact is that a trillion can be described arithmetically, but it cannot be perceived by our eyes, ears or skin. You cannot even smell it. It is like the speed of light.If you don't agree with me try to imagine how much space one trillion 1-dollar bills will occupy without using your hematical skills. How the hell the clever Hank is going to distribute them? How is he going to count them, if at all he is going to count them? Surely, he must be a highly skilled man.
Another problem I feel uneasy about is this one. How the bailout is going to affect the the tax-payers, as a class. Surely, it will affect some tax-payers who do not have much money and whatever money they have they keep it either in cash or in a bank. But if you own a modest amount upward of $10,000, odds are that you are not keeping your money in a bank account, earning measly interest. You have perhaps invested your money in stock exchange, or a mutual fund, or maybe even in a sub-prime mortgage-based security. If you are rich or consider yourself to be so, you might have made investments in real estate or even a hedge fund. Only a naive guy will keep one million dollars in a checking account.
Now, because of the meltdown the value of all your investments has shrunk. If Hank does not bail you out by spending a trillion, the aggregate value of your invested wealth goes down, but you as a tax-payer are not affected. But if you allow him to spend a trillion the effect might well be that you don't lose on your investment as the market is bound to go up.
Choice before you is clear: (i) You save your investments from going under, and care a damn for tax you have paid or (ii) you allow your investment to go under and have the profound satisfaction of knowing that the tax you have paid was not be misused by the crafty Treasury Secretary!
If you go for the choice (i), you will support the Paulson bailout. If you go for the choice (ii), and oppose the bailout, you will allow the government to keep the taxes you have paid, or to misuse it differently.
There has been ear-splitting song, dance and noise about the bailout which the Treasury Secretary has proposed. It is not clear to me how the bailout is going to redeem the economy. It is estimated that the bailout will exceed 700 billion and may touch 1000 billion, the later figure being cutely referred to as a trillion.
For starters, most Americans are familiar with the concept of a million. It is one thousand thousand. In figures, it is the number 1 followed by by six zeros. I cannot have a physical concept of a billion, except that I can tell that it is one thousand million. That is the end of it. Ask a banker what a trillion is. Smartly he will answer it is one thousand billion, stupid! If you press him for further, he will gently clarify that it is a million times a million. You faintly pretend to understand, but well......
How many people can have a sensory understanding of a trillion except that it is a very very very big figure? How many people can visualize or have a physical idea of the speed of light? It is nice to impress a sophomore that it is 186,000 miles per second. But can you really understand it in the same way, as you understand a loaf of bread kept in your plate, or a mug of coffee sitting on your table?
Brutal fact is that a trillion can be described arithmetically, but it cannot be perceived by our eyes, ears or skin. You cannot even smell it. It is like the speed of light.If you don't agree with me try to imagine how much space one trillion 1-dollar bills will occupy without using your hematical skills. How the hell the clever Hank is going to distribute them? How is he going to count them, if at all he is going to count them? Surely, he must be a highly skilled man.
Another problem I feel uneasy about is this one. How the bailout is going to affect the the tax-payers, as a class. Surely, it will affect some tax-payers who do not have much money and whatever money they have they keep it either in cash or in a bank. But if you own a modest amount upward of $10,000, odds are that you are not keeping your money in a bank account, earning measly interest. You have perhaps invested your money in stock exchange, or a mutual fund, or maybe even in a sub-prime mortgage-based security. If you are rich or consider yourself to be so, you might have made investments in real estate or even a hedge fund. Only a naive guy will keep one million dollars in a checking account.
Now, because of the meltdown the value of all your investments has shrunk. If Hank does not bail you out by spending a trillion, the aggregate value of your invested wealth goes down, but you as a tax-payer are not affected. But if you allow him to spend a trillion the effect might well be that you don't lose on your investment as the market is bound to go up.
Choice before you is clear: (i) You save your investments from going under, and care a damn for tax you have paid or (ii) you allow your investment to go under and have the profound satisfaction of knowing that the tax you have paid was not be misused by the crafty Treasury Secretary!
If you go for the choice (i), you will support the Paulson bailout. If you go for the choice (ii), and oppose the bailout, you will allow the government to keep the taxes you have paid, or to misuse it differently.
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