Stimulus Package | Economic Stimulus | Bailouts | Bank Bailout

Economic Bailouts On An Unprecedented Scale

Starting in 2008, and extending into 2009, the U.S. Federal Government became involved in a myriad of companies and industries, handing out bailouts at an alarming rate, blurring the lines between capitalism and socialism, free enterprise and government intervention.

Below, in alphabetical order, are the major recipients of economic bailouts.

Automakers
$25 billion in low-interest loans to General Motors, Ford, and Chrysler
$22 billion in low-interest loans to General Motors, Chrysler
$30 billion to help General Motors steer through bankruptcy
Total: $77 billion

AIG – Insurance Company
$60 billion loan – September 2008
$40 billion purchase of preferred shares – September 2008
$25 billion in purchase of toxic assets – October 2008
$25 billion loan (credit limit raised to $85 billion total) – October 2008
$30 billion loan – 2009
Total: $180 billion

Bear Stearns – Investment Bank And Brokerage Firm
$29 billion in guarantees – 2008

Fannie Mae/Freddie Mac – Mortgage Companies
$300 billion – 2008
$200 billion – 2009
Total: $500 billion

In a free market economy, markets will correct themselves, even though the process might take years. Because the government has stepped in to help privately held companies – using taxpayer money – it’s impossible to predict the longterm effects. Undoubtedly, this marriage between private enterprise and public investment and oversight will have wideranging impacts.

These bailouts – and the uncertainty they wrought – certainly contributed to the Dow Jones Industrial Average falling from a high of 14,279 points in October 2007 to the 6,600 range in March 2009, a drop of about 54% in less than eighteen months.

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