Comparing the Bailouts
I've been doing some thinking about the bailouts that seem to have become all the rage amongst governments around the world. Personally, I have very mixed feelings: on the one hand, I don't like big government and the idea of spending $700 billion of taxpayer money to prop up private enterprises seems anathema. On the other hand, letting systemic institutions fail is probably not a wise course of action. Given that the really fundamental issue is the lack of available credit, it is highly unlikely that private investors are going to be able to invest funds on the scale that is needed. Government intervention is probably all that's left, once we've decided that there needs to be some sort of action.
I've complained in the past of security theater, with regards to the frustrations of airport security
and the amazing erosion of our rights that was the USA PATRIOT Act. Part of me thinks that these bailouts might be "economic theater," but another part of me reminds the first part that since our economies actually work in large part due to a common belief that things do work, maybe economic theater isn't quite as bad as security theater. (Security theater, of course, makes little sense, because the vast expense and inconvenience does nothing to actually make us safer. It's possible that the bailouts will change perceptions of the economy, which may change the reality. Changing perceptions of security doesn't have any impact on how secure we really are.)
Given that, the cost of the bailout, in absolute, per capita, and as a percentage of GDP, is not as bad here as it is elsewhere. Consider the following table:
| Country | Population (Population statistics from the CIA's World Factbook.) | Bailout Value | GDP (Gross Domestic Product statistics from the CIA's World Factbook.) | Bailout as % of GDP | Bailout Cost per Person |
|---|---|---|---|---|---|
| USA | 303,824,640 | $700,000,000,000 (Widely reported in the US media, but also see The Economist.) |
$13,842,000,000,000 | 5.06% | $2,303.96 |
| UK | 60,943,912 | $862,000,000,000 (According to The Economist, the cost of the British bailout will total £500 billion or US$862 billion. Also, see this article at The Times Online.) | $2,773,000,000,000 | 31.09% | $14,144.15 |
| Germany |
82,369,552 | $540,000,000,000 (According to The Economist, the cost of the German bailout will be €400, or $540 billion.) | $3,322,000,000,000 | 16.25% | $6,555.82 |
| Iceland | 304,367 | $859,000,000 (According to Bloomberg, the cost of the Icelandic bailout of the Glitnir bank was €600 million, or $859 million—but there's probably more to come) | $20,000,000 | 4.3% | $2,822.25 |
| European Union | 491,018,683 | $2,700,000,000,000 (According to The Economist, the combined bailouts by EU governments is estimated to cost €2 trillion.) | $16,620,000,000,000 | 16.25% | $5,498.77 |
I also found this chart showing household debt as a percentage of disposable income to be pretty interesting as well. Pundits have been saying for years that American households have been overextended, but I don't remember hearing much about those outside the US. Apparently we're not the only ones who have been living the high life with other people's money.
| Country | Household Debt as Percentage of Disposable Income (Source: The Economist) |
|---|---|
| US | 140% |
| UK | 160% |
| Iceland | 213% |
So, while we're certainly feeling the pain here, the Germans and Britons almost certainly have it worse. Just something to think about...
Worldwide Weather
Holt Ancestral Lands:
Overcast, 33.8 °F
Des Moines, Iowa:
Overcast, light snow, 19.4 °F
Cambridge, Massachusetts:
Broken clouds, 33.8 °F
Champaign, Illinois:
Overcast, 32 °F
Canandaigua, New York:
Overcast, 30.2 °F
Cork, Ireland:
Broken clouds, 50 °F
Mumbai, India:
Few clouds, smoke, 80.6 °F
Stirling, Scotland:
Overcast, 39.2 °F
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