The votes are in. The ink from the president's signature has dried. The massive bailout bill is now the law of the land. Congratulations -- you've just been sold an extremely expensive pig in a poke that you'll be paying for throughout the rest of your life.

If this ill-conceived, hastily passed, and pork-laden disaster had even a remote chance of helping the economy and credit market recover, it'd be one thing. But it doesn't, and in many cases, it will simply make things worse.

Hyperinflation or further slowdown?
The bailout itself has an estimated price tag in the neighborhood of $700 billion. To pick up that tab, the government can either print money or borrow it. If it runs the printing presses to create that cash, we run the risk of turning into the world's next Zimbabwe. If, on the other hand, the government borrows that cash, it'll learn a very painful lesson in the law of supply and demand.

While the government can certainly raise $700 billion in the debt market, the money to buy that debt has to come from somewhere. That somewhere will very likely be cash that investors could otherwise have used to finance productive, private-sector companies looking to help grow the economy. As a result, borrowing costs for companies other than the politically privileged recipients of the bailout cash will likely rise as they have to pay more interest to attract investors. That doesn't exactly spur economic growth.

Pretty much since Federal Reserve Chairman Ben Bernanke's first round of panicked rate cuts in January, cheap and plentiful federal cash has resulted in higher borrowing costs for businesses. This round won't be any different. Government investments in commercial affairs have the tendency to crowd out private capital.

You saw it happen with the extension of Bernanke's "Primary Dealer Credit Facility." With that program, the Fed essentially opened its lending window to brokers like Morgan Stanley (NYSE:MS), Merrill Lynch (NYSE:MER), and Goldman Sachs (NYSE:GS). Once they got hooked on that virtually unlimited source of cheap federal cash, there was no turning back. We all know how that saga ended. And thanks to the $700 billion worth of government ammunition now aimed at the private sector, it'll probably happen again, on an even bigger scale.

Digging a deeper hole
Add to that mess the "sweetener" provision of the bailout that increases the FDIC insurance limit to $250,000 from $100,000. On the surface, that seems like a smart way to entice people to keep more cash in what might otherwise be struggling banks. Unfortunately, however, the FDIC is already quite strapped for cash. To preserve what little capital it has, in fact, the FDIC is willing to jeopardize the very fabric of the capital market when it takes over larger banks.

Even when it doesn't actively attack the financial system, that agency has proved itself to be a terrible negotiator. The plan it brokered with Citigroup (NYSE:C) to take over Wachovia's (NYSE:WB) banking operations, for instance, left significant value on the table. Until Wells Fargo (NYSE:WFC) stepped in and offered a far better deal, it looked like Wachovia would've been the next bank hastily sold off to protect the FDIC's dwindling assets.

With the FDIC now on the hook for significantly more cash in any given bank failure, it'll likely have to raise the premiums it charges for that insurance. Of course, with so many banks already teetering on the edge, those additional mandatory charges won't exactly help them stay solvent. At this point, though, what are a few more bank failures or forced bargain-basement sales among friends?

The infinite moral hazard
Perhaps most worryingly of all, however, is what the bailout is intended to do. It's intended to hand over cash to banks that overleveraged themselves and gorged on toxic derivatives of risky mortgages back when that superficially looked like a profitable business model. Why anyone would want to reward such ill-conceived behavior with taxpayer money and thus encourage more of it in the future is beyond rational comprehension.

Seriously, for around three years, there has been plenty of evidence that the housing market that underpinned those derivatives was a bubble at risk of bursting. Any investment or commercial banker who ignored that data has no business running anyone else's money, much less receiving a windfall from taxpayers. It would have been better to let those disasters fail and fill the gaps they left behind with more intelligently managed banks like BB&T (NYSE:BBT) that largely avoided this mess.

Instead, we're now paying through the nose to subsidize failure and make life tougher for all who followed the rules. This situation won't end well, and by design, the bailout only makes things worse.

At the time of publication, Fool contributor Chuck Saletta did not own shares of any company mentioned in this article. BB&T is a Motley Fool Income Investor selection. The Fool has a disclosure policy.