The costs of the 2008 bailout weren't then, they're now
The 2008 bank bailouts cost $700B but the real cost was far greater.
The anger from the bailout is still fresh more than 11 years later. Americans are angry (and about to get more angry) that so many on Wall Street walked away unscathed and with millions in bonuses. Even those who were largely responsible for the bad loans and derivatives were saved. No one went to jail.
Now we have a virus situation where no one is responsible. This isn't anyone's fault. Yet millions of workers are about to lose their jobs, people won't be able to pay mortgages, small businesses will fail and industries will collapse.
By 2008-09 standards, everyone deserves a bailout more than ever. The standard has been set.
The bailouts also sent a signal to businesses that they didn't need to prepare for a rainy day. Many businesses were buying stock over the past 3 years rather than building cash positions -- airlines in particular (who spent 96% of free cash flow on buybacks). Financial advisors are always telling people to set aside 3-months of costs and yet some of the world's largest companies haven't done the same.
The first chapter in this bailout is airlines. By almost any standards they deserve some kind of bailout. These are essential economic services and these shutdowns are way beyond their control. The thing is, once you bail them out, you have to bail everyone out. If shareholders get bailout out it sends an awful, costly message. If cruise ships get bailed out it's an order of magnitude worse.
How is an airline being forced to shutdown any different than a restaurant? Or a worker who has lost his job due to the shutdown? Everyone deserves a bailout at this point and -- importantly -- everyone expects it because of what happened in 2008-09.
The problem is that the costs are going to be staggering. We will all be paying for this for the rest of our lives. The people who aren't bailed out will be paying for the ones who are and the anger that's going to seed is terrifying.
