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If Government to Bail Out Everyone, Who to Bail Out Government?



Posted: Wednesday, November 12, 2008

by
Mandarin as a Second Language Master

The US government has been very busy bailing out banks, an insurance company AIG, a credit card issuer American Express, to support businesses by buying commercial paper, and to try to save home owners by re-financing loans, and now it's thinking about bailing out the auto industry. It seems there is no end to this bailing out, and it will lead to a final question: who will bail out the US government?

If a person takes on too much debt, he could go bankrupt. If a company takes on too much debt, it could go bankrupt. What would happen if the US government takes on too much debt? It could default. And the current situation is that the US government has already borrowed too much while bailing out everybody else. And the worst scenario will be worthless greenbacks and a bankrupted US government.

It's hard to imagine the US government defaulting. But just a year ago, it was hard to imagine that oil prices could have a big swing from $50 to $147 and back to $59. And it was un-conceivable that China's GDP growth rate will drop into single digits. What is hard to imagine today could possibly turn out to be the truth tomorrow.

The last thing the world needs is a defaulted US. It's still the largest economy in the world and too many countries are holding US Treasury bonds. For that reason alone the whole world will not let the US government go belly up. What can they do? Buy more Treasury bills to finance more US government bail outs? But this way is not sustainable. The US government simply can not bail out everyone. If it continues to try to do so, the sad inevitable outcome will be a defaulted government.

After years of teaching Chinese to non-Chinese speakers, April Zhang established mandarin As A Second Language Master (www.mslmaster.com), and spent five years in writing two series of Chinese learning books. One, Mandarin Express, focuses on speaking and listening. The other one, Chinese Reading and Writing, focuses on reading and writing. She also produced a large amount of Mandarin learning resources and materials. As an obsessed reader, April has a passion for books and articles. Occasionally she also likes to write something which is not always about language learning.
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Top-level comments on this article: (1 total)
» left by David Pekrul
 3 years 90 days ago.
66 fans.
I don't understand the whole economic problem, but I do understand over-spending and over-borrowing. This is something that the US government does not understand or else they wouldn't be in the trouble they are today.
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