Estimates of how much money a government program will cost are
notoriously unreliable. Estimates of the cost of the current bailout
in the financial markets run into the hundreds of billions of dollars,
and some say it may reach or exceed a trillion.

Many people have trouble even forming some notion of what such numbers
as billion and trillion mean. One way to get some idea of the
magnitude of a trillion is to ask: How long ago was a trillion
seconds?

A trillion seconds ago, no one on this planet could read and write.
Neither the Roman Empire nor the ancient Chinese dynasties had yet
come into existence. None of the founders of the world's great
religions today had yet been born.

That's what a trillion means. Put a dollar sign in front of it and
that's what the current bailout may cost.

Will that money be spent wisely? It is theoretically possible. But
don't bet the rent money on it or you could end up among the
homeless.

Whenever there is a lot of the taxpayers' money around, politicians
are going to find ways to spend it that will increase their chances of
getting re-elected by giving goodies to voters.

The longer it takes Congress to pass the bailout bill, the more of
those goodies are going to find their way into the legislation. Speed
is important, not just to protect the financial markets but to protect
the taxpayers from having more of their hard-earned money squandered
by politicians.

Regardless of what Barack Obama or John McCain may say they are going
to do as president, after a trillion dollars has been taken off the
top there is going to be a lot less left in the federal treasury for
them to do anything with.

Already Senator Christopher Dodd is talking about extending the
bailout from the financial firms to homeowners facing mortgage
foreclosures-- as if the point of all this is to play Santa Claus.

The huge federal debts that we already have are the ghosts of
Christmas past.

Financial institutions are not being bailed out as a favor to them or
their stockholders. In fact, stockholders have come out worse off
after some bailouts.

The real point is to avoid a major contraction of credit that could
cause major downturns in output and employment, ruining millions of
people, far beyond the financial institutions involved. If it was just
a question of the financial institutions themselves, they could be
left to sink or swim. But it is not.

We do not need a replay of the Great Depression of the 1930s, when the
failure of thousands of banks meant a drastic reduction of credit--
and therefore a drastic reduction of the demand needed to keep
production going and millions of people employed.

But bailing out people who made ill-advised mortgages makes no more
sense that bailing out people who lost their life savings in Las Vegas
casinos. It makes political sense only to people like Senator Dodd,
who are among the reasons for the financial mess in the first place.

People usually stop making ill-advised decisions when they are forced
to face the consequences of those decisions, not when politicians come
to their rescue and make the taxpayers pay for decisions that the
taxpayers had nothing to do with.

The Wall Street Journal, which has for years been sounding the alarm
about the riskiness of Fannie Mae and Freddie Mac, recently cited
Senator Christopher Dodd along with Senator Charles Schumer and
Congressman Barney Frank among those on Capitol Hill who have been
"shilling" for these financial institutions, downplaying the risks and
opposing attempts to restrict their free-wheeling role in the mortgage
market.

As recently as July of this year, Senator Dodd declared Fannie Mae and
Freddie "fundamentally strong" and said there is no need for
"panicking" about them. But now that the chickens have come home to
roost, Senator Dodd wants to be sure to get some goodies from the
rescue legislation to pass out to people likely to vote for him.

Don't make any bets on how this situation is going to turn out--
except that we can predict that politicians will blame the "greed" of
other people. You can bet the rent money on that.

http://townhall.com/columnists/Thoma...lution_part_ii