Dua Sen

1 sen: Bailouts
How will bailouts help? I mean sure, you spend money today and it helps the economy, but unless the money is spent on something that will result in sustainable development and will continue to provide economic/social benefits to the society, all we're going to end up with is a bunch of white elephants that are sucking the taxpayers' resources to maintain.

2 sen: Bailouts - Medium Term Impact
Does anyone else think it's getting out of hand? Billion Dollar and Trillion Yen bailouts are being announced in so many countries that I can't keep up. Here's an Economics 101 on what could and might possibly happen:

• Inflation, because every Mohammed, Raju and Ah Boy knows that when people spend too much, prices go up and up, and bailout packages in the billions and trillions is pretty much the equivalent of a medium-sized country's GDP. Malaysia's bailout package alone is a substantial percentage of Malaysia's GDP.
• Higher taxes, because the money has to come from somewhere, and the American tradition is to spend now by issuing more debt securities. Once the securities mature and it's time to repay the bondholders, all they do is refinance with new debt securities and increase taxes to pay some of it off. It's called intertemporal financing, i.e. the future generation pays for what we're consuming now.
• Recession, because the majority of developed countries (and lets face it, global demand is dependent on them) is made up of aging populations with very serious population decline issues. In today's overpopulated world, it would be a good thing except their governments are inevitably xenophobic and restrict migration. Alors, in 20 years, they will have a much smaller workforce, meaning that national production will likewise be much smaller and absolute national spending power will be (what a surprise) much lower.

Bailouts aren't the answer. Controlled spending is. You heard it here first.