With FHA broke and begging for a bailout, it is interesting to note the success of the other bailouts. While some may argue that they kept the global financial system from cratering, that's only half the story. The other half is record unemployment.
Many banks who received bailouts have kept the cash on their balance sheets, afraid to invest because of economic uncertainty. Although the companies look healthy, digging deeper suggests they could help solve the unemployment debacle by targeting 25% of the bailout funds for job creation. Of course, there's the ongoing argument that companies will hire when they see demand, but that begs the question. Hiring will create demand, as the ranks of the once unemployed find themselves earning a living again and finally having cash to spend on the kids' school clothes, buy better groceries, travel more or simply spend a bit more than their barely eking out an existence fostered.
If just half of the estimated 14 Million unemployed (or 7.5 Million) began working, at an average of $100,000, it amounts to $750 Billion. Isn't that about what the bailout cost? At least we'd be getting something for the money we taxpayers are on the hook for. If each newly employed person paid just 15% in taxes, ($112.5 Billion), we just may see some positive movement in bringing down the budget deficit, although not in time for the Super Committee's November 23 deadline. But maybe in time for Christmas.
Just cutting costs won't make a corporation grow long-term. But, a disciplined plan for long-term growth will. So, which of the top money-center banks will be first to recognize they can create long-term shareholder value? And extend a helping hand to those who gave them one?
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