Trying to Shine Light into our National Money Hole

December 16, 2008 by  
Filed under Economics

“Throwing money down a hole” is a cliche phrase we can all relate to.  For example, boat owners are fond of describing their watercraft as a “hole in the water” into which you throw money.  (I should know.  Mrs. ToughMoneyLove and I own a couple of those holes in the water.)

With our history as big spenders and small savers, American consumers have excavated gigantic money holes for themselves.  The holes were started with a few scrapes using credit cards.  The hole was deepened using a variety of innovative sub-prime lending tools.  Then the housing bubble blew up, throwing huge chunks of financial stability into the air and leaving many consumers with their our own rather large personal money pit.

The federal government felt bad for us.  Congress in particular was worried about our financial self-esteem.  So to help out, our government commenced a series of bailouts, rescues, loans, and BARF TARP funds, all intended to substantially enlarge the national money hole.  This, I suppose, would make all of those personal money holes look less intimidating.

Obviously, the continued enlargement of the national money hole has created much debate in the media, including this one recently captured on video  (If you are reading this in a feed reader or email, you may have to click through to my site to see the video.  You should do it.)

OK, that was an amusing video and I thank the Onion for sharing it.  (Did you recognize the guy from the Sonic commercials?)  However, to me it is a form of gallows humor because there is so much hard truth associated with it.  Congress and the Treasury are indeed digging a big money hole that all taxpayers will be called on to re-fill.

This brings me to the more serious component of the discussion.  It seems that Bloomberg News had the audacity to send a formal request to the Secretary of the Treasury in which they asked two silly little questions:  (1) Where exactly have you been sending the $2 trillion in taxpayer money in the form of loans and rescue funds as recently authorized by Congress or as directed by the White House; and (2) who is supplying data on collateral for the loans?  

The Treasury apparently resented being probed in such fashion and declined to provide answers.  So Bloomberg sued under the Freedom of Information Act.  And now we wait.

To summarize, our government continues to enlarge the national money hole and now won’t let us look into it.  The rationale stated by the Treasury for its refusal is that disclosure of the recipients might create further instability in their financial condition.  And I say, so what?  With consumer, investor, and taxpayer confidence shrinking to new lows, we need transparency more than ever.  If a business is in such poor condition that it needs taxpayer money to survive, all of us deserve to know that.   If we choose not to invest in or buy products from that business based on that knowledge, that is our right.  

If our government wants to prevent us from seeing into the national money hole, then it needs to stop throwing taxpayer money into it.

What is your reaction to this development?

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5 Responses to “Trying to Shine Light into our National Money Hole”
  1. Andrea says:

    I posted something about this on my blog a while ago with much the same “are you kidding me” tone. We’re supposed to trust them, you see. If we don’t trust them, just like we should have trusted them before instead of making them disclose the actual market value of their positions. If we’d just believed in them, somehow they would have made everything all better.

  2. TStrump says:

    It’s just part of our culture of complaint … nothing is our fault anymore and it’s politically incorrect to blame or hold someone responsible.
    Honestly, I can barely read the news sometimes without wanting to scream.
    It’s worse here in Canada as we have ‘social programs’ for just about everything.

  3. Lurker Carl says:

    The same “experts” who created this economic mess we’re currently in are now in charge of fixing it. You can be sure rewards and punishments will be served by how our tax dollars are administered, not to mention $2 trillion can purchase a lot of favors. No questions asked, that was the promise made for them to fix the crisis.

    Absolute power corrupts absolutely.

  4. Robert says:

    Unfortunately, I think TARP was a poorly thought out response to one thing that the government feared… Not the collapse of Wall Street firms (after all Lehman Brothers was allowed to collapse) but the credit crunch spreading to the point that US Treasuries stopped selling.

    The US Federal government is the world’s biggest deadbeat -er- debtor. The interest alone is closing in on half a trillion dollars per year, nearly five times what is spent in Afghanistan and Iraq every year. If credit flows dried up to the point that the Treasury couldn’t borrow money, the US Government would have been in serious trouble as inflation would go through the roof when the government had to resort to unlimited printing of cash to fund it’s overspending. For a comparison, look at Germany after WWI, when inflation ran over 100% per day!

    Congress has painted itself into a corner with bloated programs that it doesn’t dare cut (due to the political fallout in the next elections) but it also cannot afford to pay for short of massive tax increases (which are only acceptable if they convince the public that “someone else” is going to pay the higher taxes).

    We owe #35,000 in federal debt for every man, woman and child currently, yet there is no real effort to reduce or freeze this debt. All because the politicians are more concerned with getting re-elected in 2 years (House) or 6 years (Senate) than they are with balancing the budget without using tricks like counting Social Security income against the deficit (Clinton’s famous 1 year “surplus” was a huge deficit if you didn’t count Social Security as regular income that year).

    Easy credit is the only thing propping up the US Federal Ponzi scheme, and they just blew an additional $700 Billion to buy themselves a few more election cycles before they have to fess up like Madoff.

  5. Andrea: Sad to say, the secrecy continues and now even Congress doesn’t care.

    TStrump: I also read recently that the Canadian government is bailing out car companies as well. Welcome to the club.

    Carl: The absolute power is about to be consolidated in the hands of the Democrats. Scary.

    Robert: I’m afraid that my three sons will be paying for our money sins for a long time after I am gone.

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