>Tamar, if I understand correctly, most of the "loans" are to prop up very large banking/insurance firms. A small fraction of that amount is earmarked for welfare. The rest is for infrastructure projects.
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>If the market ever will recover, current government contributions in banking and insurance should be very good investments. For example, AIG has trillions of $ in assets; the US Government now owns >80% of that having paid less than $200B. Not only that, most of the $ is in fact loaned to AIG which is paying interest at above the going rate. So the government ends up with most of the assets by lending the firms $ at above the going rate, meaning the government makes $ on the loans as well. If ever there is a reason to print money, this is it!
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>While this should turn out to be a wonderful result for the taxpayer, the main Government goal is to protect household wealth, including property prices. Even people who consider that they are immune to the downturn because of their own prudence will not want to see their homes decrease in value to 50% (25%?) of last year's value. Maintaining credit for business and keeping people in jobs provides stability to underpin mortgage lending and prevent property collapses that would erase the wealth of millions of families. If asked, 5-year-olds may prefer keeping parents working and able to afford the family home (though maybe not to go to Disneyland this year). They may not be so dismayed about Government printing $ to make interest-bearing loans and collect assets that don't actually cost the taxpayer anything. They may even thank us for this one day. ;-)
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>Welfare: an issue for some, but it's fully covered by the interest payable on the far larger "loans" needed to support the market after behavior by rich people that is difficult not to call fraudulent. I see that unemployment recently rose to >8% in the US. IOW society doesn't have a role for almost 1 in 10 people. Yeah I know, they should go and be a greeter at Walmart, but presumably Walmart will need government assistance to open too many stores so there will be jobs for millions of greeters. Or maybe servers. Yep, the thriving restaurant business has space for millions more servers. As long as every working person goes to a restaurant every day, that'll be 9 tables per server per day. Presumably service charges will have to increase from 15-20% to (say) 300% so that 9 tables is enough to provide a living wage, but that'll be OK.
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>And infrastructure. There's nothing new about this. Example: the Hoover Dam involved a loan for $175M (a colossal sum in those days) being paid off over 50 years. I suppose some people must have been dismayed to see that sort of debt left for children to pay but the loan was paid off in full and on time. By the time power/water contracts began to expire in the 1980s, the public purse had received >$260M for an investment that was now worth billions of $. Had construction been delayed until the market was thriving and there was no labor excess, the cost could be expected to increase substantially and the debt still may not be paid off. Delaying creates an ever bigger debt for children and if the current generation considers it unaffordable, growth is constrained and eventually the grandchildren get saddled with a far bigger loan when they're left no choice but to undertake the work. For example, consider the cost of building a Hoover Dam today.
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>Of course I see that some people are concerned at borrowing $ for welfare, but as noted above these amounts are fully covered by the interest on the far larger sums borrowed to protect the market after greedy capitalists messed it up. If people want to throw stones, a far more likely target is the sort of person who expected and in some cases still expects millions of $ every year for his/her heroic market management that ended up risking everybody else's wealth and pursuit of happiness.

AIG pays interest to government by using new money thrown by the government to the same pit. Would you do it if you run your own business and throw your own money? That's just a small example. The basic issue that I see with your ideas is that you seemingly believe that wealth is measured by amount of money printed by government and thrown to appropriate target. It is totally wrong. The real wealth must be created in some place. That's the reason why spending money to welfare or financial ponzis won't help to get economy on right path, because these entities do not create wealth. Money-printing press does not create wealth either.