![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-109901-100x100.png\")
Thank you for posting this. Let's also keep in mind that this the bailout bills have nothing in them preventing this from happening in another 30-years.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-116400-100x100.png\")
@MichaelBrazell: It won't happen in 30 years -- it only took ~20 years for the gubment to completely forget about the S&L crisis of the 1980s.
![\"user-pic\"](\"/css/images/default.gif\")
This puts it into perspective!
![\"user-pic\"](\"/mt-static/support/assets_c/userpics/userpic-543045-100x100.png\")
I think I'm going to be sick....
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-186777-100x100.png\")
Wait, so NASA didn't fund the moonshot?
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-90578-100x100.png\")
@m4ximusprim3: The \"moonshot\" was actually a government sponsored effort into finding the most delectable combination of jello, alcohol, and glow in the dark dye. The final formula developed was deemed too tasty to release to the general public.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-58183-100x100.png\")
@m4ximusprim3: There's the cost of the moon shot and the cost of the NASA budget for its entire existence.
@Wally East: Right. Wouldn't the former be covered by the latter? Thats like saying \"The total cost of the iraq war\" and then having a separate column for \"tomohawk missiles from '06-'08\"
@m4ximusprim3: Hey, I dunno. Going to the moon on its own was a hugely expensive project, one with which people are familiar, so I can see the benefit of pointing that out as a separate item.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-119816-100x100.png\")
@Wally East: And the Apollo program was only part of the whole \"race to the Moon.\" NASA was doing other things at the time, such as launching interplanetary probes, doing aircraft research, building radio telescopes, and doing fundamental physical research, all of which might have contributed to the race to some degree, but were not part of the full cost of the program.
@Wally East: How about this for a more tangible comparison: The entire cost of the International Space Station, though funded internationally by more than just the US's NASA, is 157 Billion, which makes it the most expensive man made object ever. In fact, I think the Bailout cost more than the entire list of \"List of world's most expensive single objects\" on Wikipedia: [en.wikipedia.org]
I'm 100% opposed to the bailout, but this chart and most other opponents of the bailout show a fairly important lack of understanding about what the bailout actually is -- it's not an expenditure like all of those things in the right-hand chart, it's an assumption of debt. The government will get some percentage of this money back. The chart on the left and the right are different kinds of \"costs\" in many respects, and are therefore apples to oranges.
All of that said, the government STILL shouldn't be assuming private debt in order to erase responsibility for mistakes that it, banks and consumers all allowed to happen.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-519133-100x100.png\")
@punkrawka: And the Marshall Plan and the Louisiana Purchase and the New Deal etc etc were just throwing away cash..?! Those weren't investments..?
Actually you could easily make the argument that the bailouts are FAR LESS an \"investment\" than most of those other items, war excluded. We get guaranteed zilch from the bailout.
@punkrawka: It's definitely easy to forget that. I think the point of the chart is a good one though. It shows how much money the government is currently pouring into the bailout. Yes, we expect some money back in the end, but the fact is that the economy is SO bad that the government has given out enough money to pay for many of the largest projects the country has ever undertaken. It's startling and eye-opening, even if the comparison is technically apples to oranges. 4,616,000,000,000 is a very large number, no matter what you're comparing it to.
As punkrawka points out, this is not money in the trash. It's actually investment. The US taxpayers actually own parts of these companies now and when they start making money again, well, so do we as taxpayers.
If we didn't back up these companies, their collapse would take the remainder of the US economy with it and it would take us decades to climb out of the hole. That's exactly what happened in Japan when their \"bailout\" came about a decade too late.
Unfortuantely, our economy would not work without AIG, Citigroup, etc...They are key players that cannot fail and as taxpayers, we're left to pick up their pieces.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-278792-100x100.png\")
@facted: No, the Louisiana purchase was an investment, and a good one. This is a \"loan\" to our deadbeat brother-in-law, which we know will never be repaid in full, but the alternative is for him to sleep on the couch for the next year.
@facted: As nicemarmot617 pointed out, any economy that relies on a few companies to support it is destined to fail. The problem with the bailout is this: a collapse in inevitable. It WILL happen, regardless of how much money we shell out during this bailout. The longer we deflate the value of the dollar by creating non-existent money, the longer and more painful the actual collapse will be.
@facted: \"...when they start making money again, well, so do we as taxpayers.\"
I won't beat a dead horse about the fact that we won't see this money, but I will correct what may be construed as a typo... \"... IF(!!!) they start making money again...\"
As with all investments, there is a potential for loss in the form of risk.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-529488-100x100.png\")
@facted: Yeah, the \"taxpayers\" are gonna get all this money back. No.
The GOVERNMENT will get all this money back (maybe) and we won't see a cent.
@Oranges w/ Cheese: Well, technically taxpayers haven't *paid* a cent for it yet, either. It's all borrowed. If the government gets money back from this bailout it'll go to repay the bonds it issued to come up with the money in the first place. If you want a piece of that, go buy treasury bonds.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-259013-100x100.png\")
@Oranges w/ Cheese: If the government doesn't raise our taxes to pay for the bailout, why should they give the money back to taxpayers in the form of a refund or a tax break (which is what I assume you're suggesting)?
@nataku83: Because it's our money. And because I don't want them raising the taxes of my children and grandchildren to pay for their folly.
@NefariousNewt: Don't worry. The burden will fall on your grandchildren's children it will take so long to pay back.
@facted: Do you really think they'll pay the money back? My guess is in a year or two they'll quietly lobby to have the debts forgiven. And since these companies are only getting bigger and more vital to the economy, the government will have no choice but to comply.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-489342-100x100.png\")
@facted: Let's not mention the fact that any economy that depends on a few huge companies is screwed in the long run basically no matter what.
@facted: I agree. People seem to forget that if we didn't do this, the alternative would be much more devastating. I'd like to see a graph next to it showing how many jobs were saved from this. How many banks are still open because of this. Imagine the domino effect that would occur with even more people out of work, not buying anything and bringing the country even further down the hole. American GDP is measured in trillions , so this is the equivalent of you or me taking out a car loan.
@EyeHeartPie: You already got your check earlier this year. Maybe if everything goes according to facted's plan, you'll see a return on your investment in the form of lowered taxes, a reduction in the deficit / national debt (that's money that you owe, after all) or even increased government spending in areas other than national defense. As for me, I'm not holding my breath that lending these companies huge sums of money will be enough to get them to return to profitability. There were no real stipulations, and it seems as if no one learned their lesson from past mistakes.
Frankly, I am just amazed how cheap the Louisiana Purchase was. How about we find some more great deals like that one instead. The point above about the assumption of debt is valid. But I think its important to remeber what we got in return for these other investments. Territory, international stability, new technologies and prestige, compared with assuming bad debt, isn't really a good trade off. Seems like the only one that was a worse waste of money was Vietnam.
We didn't actually buy Louisiana. The French agreed to give up their claim to the land for the money.
We still had to go in and take it from the people who actually owned it.
@tbbx: Actually, we had to take it from the people who lived there... they never claimed to actually own it, aside from some Old World settlers.
![\"user-pic\"](\"/mt-static/support/assets_c/userpics/userpic-1161-100x100.png\")
@evilfremen: Seriously, like half a country for that amount of money. That's the kind of deal we need. I think there was free shipping too.
@Ben Popken: You know France would have shipped the LP in 32,000,000 separate boxes, and etchings of those boxes would be depicted in the next monthly installment of Ye Consumerist Almanac...
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-326654-100x100.png\")
@Ben Popken: White glove delivery, but it was just delivered to the frontier, they didn't carry it inside.
@InfiniTrent: Not really. France had just gotten it from the Spanish and realized that it didn't have the Navy to keep the British from waltzing in and taking it. By selling it, they got cash for something couldn't expect to keep anyway, and kept it out of enemy hands.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-328859-100x100.png\")
all the things on the right are investments expected to have a good return. The thing on the left is an investment in things known to not have a good return, on the assumption that \"magically\" we might get a good return (somehow, eventually, or something).
...and why do we need to bailout these companies?
If the Government put this money into use for the American people... WOW!
@Angryrider: Nice sentiment, but what do you suggest? And keep in mind, these companeis are made up of the American people as well.
@InfiniTrent: I suggest: the same healthcare deal the rest of the world with paved roads has, nearly free college, generous safety net, working infrastructure, working public transit, decent wages, environmental safety standards, quality public education, massive public works projects, and/or lower taxes for working people. Y'know, like we were an industrialized country or something.
Or we can \"save\" AIG temporarily... hmmmm... tough choice...
@InfiniTrent: Can we try and put it into public education? That is an investment in the future, like, for reals.
If America can put a man on the Moon, why can't we hire CEOs who aren't idiots, or regulate Wall Street so that they can't simply make stuff up and call it profit?
@NefariousNewt: Because hiring CEOs and regulating wall street aren't the same thing as shooting a rocket at the moon.
Seriously, the number of variables involved in hiring and regulation are FAR greater than the number of variables involved in a moon landing.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-83488-100x100.png\")
@InfiniTrent: Moon landing? Easy! Rocket science? Piece of cake! But bundling a bunch of risky debt into big globs, convincing insurers to call it good, and selling it like gold---now THAT'S complicated stuff, like alchemy or logarithms. It's an honor to pick up the tab.
@InfiniTrent: Having worked IT on Wall Street and knowing a little rocket science, I find that statement ludicrous.
And my statement was meant to be humorous.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-203062-100x100.png\")
For those of you who hate the IRAQ war due to its cost, please take a 2nd gander at that chart.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-257922-100x100.png\")
@Bladefist: Well, now that you pointed that out, I LOVE the Iraq war!!!
Do you really think there's anyone that is against the war specifically and solely because of how much it costs?
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-98375-100x100.png\")
@Bladefist: Notice that this was the Invasion of Iraq only. Not the hundreds of billions spent since the 'Mission Accomplished' banner was hung in 2003. It has cost hundreds of billions since then.
@Bladefist: Whuh?
It costs more than:
the Marshall Plan, the Louisiana Purchase, the Race to the Moon, the S&L Crisis, the Korean War and the New Deal. Not really a lot of value for the money in comparison, don't you think?
@Wally East: But just think of everything we've gotten out of the Iraq war compared to those other expenditures!
@nataku83: It would've been cheaper to kill a few thousand American soldiers here - would that have made Bladefist happy..?
@nataku83: You're right! I'm thinking of them now! I won't take the time and effort to write down all of those things. We all know them.
@Michael Belisle: I'm sure he was being sarcastic, but you are correct.
@Bladefist: That's stupid. I hate the Iraq war AND I hate the \"bailout\". Happy now? The two are not mutually exclusive.
Not only is the this an investment for the future, this is also saving countless jobs that would no longer exsist had we have done nothing.
Imagine the ripple effect in our economy had we decided to let all these companies to fail and just deal with it. Not only would jobs vanish but also even more people would stop buying which would continue the downward spiral. It may have taken several decades to recover where as now, we may recover in a few years.
Nobody wants to have to spend this kind of money, but it's the lesser of two evils, the alternative would have made the great depression look like a picnic.
Screw the big 3, give the money to all of us and let them fail like any other business that can't keep up would.
And punch them all in the face for good measure. They need it.
Thus ends my daily pissed-off rant.
If anyone in the government is out there listening, I want to tell you about a really solid value proposition, okay?
Invest in me. Nothing fancy, like $25,000, right? Give me $25,000 and I *promise* you that you'll see an economic impact in my local economy as soon as the next time I get paid.
You can toss money away at these companies and just hope you get a return or invest in me and *know* you'll get one.
Hell, I'll even pay $5,000 in extra taxes over the next year. You can't lose.
Where did the 4.6 trillion dollar figure for the current bailout come from, exactly?
Remember, most of these bailouts are loans, and if these companies do well, we will be paid back. Also, we have not paid out $4 trillion dollars, a lot of that money is just the US government saying we are backing some bad debt, every company would have to fail in the plan for us to lose $4 trillion.
The right way to compare is as percentage of GDP (just like deficits). Also - th $4.6 T number is potential commitments, not spent funds - not fair to compare to solid numbers from the past.
So I'm guessing that the 4 trillion for the bailout doesn't include the 5 trillion in net wealth that's been destroyed by the stock market collapse, or the indeterminate amount of money that is disappearing as empty and foreclosed real estate sits and decays?
Also, it's not NASA's fault there haven't been any fun beach excursions...do you have any idea how long they've spent looking for water on Mars?
@nataku83: Actually, even though the engineers don't get to go, NASA astronomers get to go on at least a few beach excursions. There is actual work going on before the vacation, but with all the telescopes built on Mauna Kea in Hawaii, there's plenty of reason to go there, not to mention meetings and conferences.
As an astro grad student, I've been 4 times already. Not too bad a perk.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-102449-100x100.png\")
@evilfremen: You should read morning deals a bit more carefully. That kind of stuff slips in there from time to time.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-99271-100x100.png\")
To those who think that this bailout's enormous outlay is somehow justified (or mitigated) by the fact that it is an _investment_ instead of a simple expenditure, I would make two points: 1.) The historical expenditures listed here have mostly produced massive benefits disproportionate to their expense, which I doubt a simple repayment from a beleaguered industry and a few months of job stability can hope to match. 2.) Our government doesn't have the best track record on its assumption of debt and allocation of credit, so I don't think we can reasonably hope to see a dividend on this expenditure once enough time has passed for taxpayers to forget how much they were fleeced for.
I already knew that this bailout was the proverbial waste of good money after bad, but now that I see the historical context, I'm even more disgusted.
@AtomicPlayboy: Imagine the economic boost AND boost to the housing market if the government forgave/paid off every citizen's college debts!
Of course THAT would be nasty, filthy socialism, not like the bailouts, no siree...
@quizmasterchris: Yeah, it would be nasty, filthy socialism, and I wouldn't support it, but unlike the bailouts, at least it would mainly be targeting responsible people with potential to contribute the economy instead of failed businesses with failed models who attempt to extort support on the proposition that they are too big to fail.
I don't think there's all that much value in arguing _which_ way the government should irresponsibly spend our tax money, but rather _why_ the government should be doing any of it in the first place. It shouldn't.
@AtomicPlayboy: Wait, didn't you just say that that proposal would be \"targeting responsible people with potential to contribute the economy\"? How is that \"waste\"..?
@quizmasterchris: Because the entire enterprise of using the government coffers to throw money at people who should be paying their own way is terrifically wasteful and inimical to the American ideal. If you're arguing that the government should be responsible for paying your student loans back, we are worlds apart on our view of government's role in society. We're also world apart on our views of personal responsibility, as I'm rather happy to have paid my college loans back with my own earned money, and would never conceive of demanding help from anyone.
My supposition that this form of bailout would be better than the proposed Big Three bailout and other recent bailouts was of the \"less bad\" variety, not of the \"we should do this instead\" variety, which I though I clearly articulated. In summary: Pay your bills, run your companies well, and don't ask for my help when you screw up.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-63807-100x100.png\")
@AtomicPlayboy: If by \"mostly\" you mean \"like three of them\", then your statement is accurate.
You see, I'm just not sure what massive benefits the Vietnam, Korean, and Iraq wars, walking on the moon (as awesome as it was), and bailing out the S&Ls bestowed upon us. Opponents of the bailout would probably argue against the New Deal, so we can strike that one too.
Besides, money isn't real. If you look at the current bailouts closely, the sleight of hand is revealed.
@Michael Belisle: Well, he did say \"mostly\" and if you look at the technologies that your using today, alot of them were developed and used in the moon race, and if not for those needs then, you probably wouldn't have them, or probably wouldn't have them nearly as cheap as you do now. So 5/9 is more than half, so technically is mostly.
@Michael Belisle: We simply don't agree on the \"like three of them\" part of your formulation, and your snarky insinuation that I would include the Vietnam War or the S&L crisis as massively beneficial doesn't help your argument.
I would only consider the Vietnam War and the S&L crisis to be negative, with the Korean War being a neutral advancement of the Cold War conflict. As for the benefits of the Iraq War, we'll see, but I continue to believe that the war, while poorly executed at times, will make for a brighter future in the Middle East, as it already has begun to. Moonshot/NASA -> countless technological advancements non necessarily related to lunar or space exploration. I'm OK with the New Deal in that it produced immediate results in a situation far more dire than the current one, just not OK with the fact that its organizations were not sunsetted, which does not diminish its original utility, just its structure. My disdain for the bailout is perfectly consistent with the view, as the present economic situation is completely different from that which existed in the 1930s, no matter how much the alarmist media would like us to believe otherwise.
@Michael Belisle: Actually, I'm not sure opponents of the bailout and opponents of the New Deal are the same people. Conservatives who oppose spending money on social welfare programs are often quite happy to spend money on corporate welfare.
@AtomicPlayboy: The economy is certainly in dissaray, and something needs to be done. But as Atomic points out, we need to find a solution where the cost is dwarfed by the payoff. Does anyone really believe this will be the case with this corporate bailout?
The difference between NASA, the Race to the Moon, and the New Deal -- and the current spending frenzy -- is that the former projects put up money which DIRECTLY affected the populace by spurring inovation and hiring people for important jobs. I have seen no evidence that says the financial institutions won't just use this cash to sure up sagging profit margins & repeat the same mess again in a decade...
it's amazing to me how people just accept a number thrown out ($4.6 T) without questioning it.
@nudger: Well lets see, you've got Citi, AIG, TARP, Fannie / Freddie, most likely the upcoming auto bailout (god forbid)..
So, maybe my math sucks, but assuming there are about 140 million taxpayers in the country, 4.6 trillion works out to about $33,000.00 per taxpayer, or about 15,000.00 for every man woman and child in the country. It's just a staggering number.
Get off your high horse socialist Popken. $4.6T has NOT been spent.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-16563-100x100.png\")
@jeffsu: I'm trying to parse out the number of internal contradictions you've infused in that simple statement, and am quietly yet substantially impressed.
You're defending the bailout. OK fine.
But then you're calling Ben a Socialist because... He's pointing out that nationalizing vast swaths of the US economy is expensive?!
Wha... What?!!
If your cognitive dissonance could be harnessed in a 6-cylinder form, America's gas dependence would be solved overnight.
Please note the very high cost and the lack of inclusion of the Freddie and Fannie portfolios. The total is pushed higher with an auto maker bailout. True, at the moment, $4.6T seems a bit high, but considering the government is prepared to spend in excess of $8.5T, I think Ben's point still stands.
Please research a bit before you start in with the name calling, yes?
![\"user-pic\"](\"/mt-static/support/assets_c/userpics/userpic-540837-100x100.png\")
My question is: can anyone actually UNDERSTAND 4.616 trillion dollars? I cant. I get my paycheck every two weeks and think it's time to go to town! And I make hardly anything. I actually can't comprehend $4.616T, and I think neither can most people...kaming it easier to pass in Congress.
Cant we just give $1T to NASA and say \"Here, take up the Venus fly-by you planned in 1974 and take us to Mars on a reactor-driven ship.\" Anyone?
Taxpayer funded bailouts are for LOSERS only. Do you want to be considered at LOSER?
It's actually bloomberg's high horse. They have a breakdown of what the taxpayer is on the hook for here:
It shows the total commitment, as well as what's been spent.
Is this adjusted for inflation?
@IrvCrapper: From the first paragraph (on this very page):
\"Yes, these numbers are inflation adjusted.\"
So, I think the answer is, \"Yes, these numbers are inflation adjusted.\"
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-604986-100x100.png\")
S&L Crisis is about 160...not 256.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-66943-100x100.png\")
One thing that is being overlooked is that 'in theory' the government is supposed to be getting some of this money back - unlike alot of the plans listed that were just handouts.
@quagmire0: You could make a very good argument that the only program of the ones listed where money was just flushed down a drain was the S&L bailout. All of the rest of them had some benefit expected from the expenditure at the start, even the Iraq war.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-236523-100x100.png\")
@Wally East: The govt MADE money back on the S&L bailout. I could swear I read recently it was in the neighborhood of $300 million to the good. (that's on top of getting the original bailout $ back)
@Wally East: The S&L bailout made money in the long run, actually. So that money wasn't just flushed down a drain either.
Yup. Get those pesky gov't bureaucrats out of the way and let the Magic of the Marketplace, unfettered or regulated, work its magic.
Ta-Dah?
Love the pretty pictures but there seems to be something wrong with those figures...?
AIG was $85 billion, banking bailout is $700 billion, automakers bailout (loan/gift) probably gonna be $25 billion...
That is only $810 billion. How in the hell are they getting $4.6 TRILLION? (knock knock) Hello?
@ZukeZuke: There are a number of other actions the gov't has taken - underwriting the short-term capital markets, the commercial paper market, etc., that you're overlooking. :)
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-425602-100x100.png\")
I just threw up in my mouth.
Thanks, Government. I didn't know I could hate anything this much.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-428704-100x100.png\")
Over $20,000 could have been given to each taxpayer.
1. Does this mean the government is admitting stimulus checks don't work?
2. Why is a better way to pay off our debt to give the companies we owe money to $20,000 per person to keep us in debt instead of giving us the $20,000 to get us out of debt?
Wait, can we put the Lousiana Purchase back on the shelf?
@Oranges w/ Cheese: Well, you're also not having to write a check directly out of your checking account to fund the bailout, either.
@InfiniTrent: I'm sorry that the money that *doesn't* go into my account in the form of TAXES must not count then, huh?
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-2180-100x100.png\")
These are also loans for the most part. Not just payouts.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-25155-100x100.png\")
Wow @ the Louisiana purchase cost.
I'm glad the US is still in the business of taking things from brown people.
@imjustabill: I'm talking about the American Indians. And yes, the Europeans are also in the business of taking thing away from brown people. The French didn't own that land anymore than we did. We just planted our flag and took it.
I don't get the Graphic. So I'm comparing a 100% of something to a 100% of something else that's not even the same amount??? Someone skipped the pick the right graph for the right job chapter in their Excel 101 book.
As much as I hate the whole idea of the bailout, remember that the only way that this will actually physically cost the country 4.6 trillion dollars is if each and every company that takes bailout money goes completely out of business.
The first bailout is what it is. However, I'm opposed to multiple bailouts that are now coming out. Why does everybody thing \"ahh, a trillion here...a trillion there...no big whoop.\"
Stop the fucking madness.
This graph would actually mean something if each slice of the pie was %GDP of those projects at the time they were enacted/payed for.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-465456-100x100.png\")
Thank you for adjusting the numbers for inflation, but another interesting metric would be to look at the bailout package in terms of % of GDP. If the economy has grown faster than inflation, then the relative differences in the various programs could be quite interesting.
(And no, I'm neither defending nor deriding the current bailout plan -- I'm just interested in the metrics.)
This does not account for the US economy being considerably larger now than for the prior programs. The new deal would have been at least a comparable share of GDP (and if you think of the SS / Medicare situation we're in now, ignoring the benefits of the programs, it's far more expensive than the bailout.
Only the $700 billion TARP part of the 'bailout' came from fiscal (government budget, increased borrowing) sources. This amount can definitely be multiplied by some (Also, the borrowing used to finance this $700 bln fiscal expansion is coming at an extremely low rate, thanks in no small part to the financial crisis itself. As international investors 'flock to quality' the USD has appreciated considerably and US Government Bond rates are at historic lows (.01% on the 1-month today, I believe).
Borrow (primarily from foreigners) at extremely low rates to finance fiscal intervention? Then pay them back with even stronger dollars?
If only Americans were so lucky every day.
The remainder of the 'bailout' (I keep putting it in quotes because there have been dozens of separate interventions) is coming from the Fed. The Fed injects liquidity with either \"shelf money\" (that isn't already in the money supply) or newly-printed money, by buying government bonds.
It can get away with this because of massive deleveraging in the financial sector.
(explaining de-leveraging) When banks take your money and then loan it to someone else, they are effectively producing money. Now, instead of just being the one dollar that you have, now there is the one you have in the bank, and the one that the borrower has in his pocket (or more likely in another bank, adding to the effect). When banks stop lending or otherwise using leverage, the opposite happens, and the money supply shrinks.
As long as the effective money supply is shrinking, the Fed can inject as much new money into the system as it wants without having to worry about inflation. The last beige book (released today) actually mentioned deflation as a serious worry. The Fed is going to keep the printing presses going.
Only the \"S&L Bailout\" and \"New Deal\" were comparable in this sense, and the New Deal was before Keynsian economics showed us how the money supply interacted with goods markets. And the S&L crisis was cut short for moral hazard reasons. If it was thought to drag down the economy as a whole, you better believe they would have kept printing.
So anyway, the extra $700 billion on the Federal Debt only becomes a problem when international investors stop seeing the US as the safety beacon that it is. As long as the rates on that debt stay low, the budget and trade deficits will likely persist.
If something happens to worry the world, however... tighten your belts, America.
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wait, how did we calculate 4 trillion?
i thought we authorized 700bn, plus AIG's few billion, plus buying up all the crappy loans... is that really 4 trillion?
@facted:
It's an investment alright, but is it a good one? It might be, if these companies learn from their mistakes and start acting responsibly. But of course, they know the extent to which our economy depends on them, so I'm afraid they will keep doing the same damn things, secure in the knowledge that the government will bail them out next time.
I'm not necessarily certain that we shouldn't be doing this. I'm not even certain we have a choice. I'm just afraid it's setting a dangerous precedent for irresponsible businesses.
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Have none of you heard the numbers on how much money EACH AMERICAN (or family) could have if this money was divided up? You wouldn't need half of these banks if we had the money ourself. We could ALL pay off our mortgages, pay for college, retire, etc. No need for banks, loans, etc. Nobody really talks about that though.
Pie charts are for percents. The one on the right shows that 20% of the money spent on large government projects was spent on NASA, etc. The one on the left is entirely useless. It says that 100% of the money invested in the bailout was invested in the bailout. There is no way to compare the two graphs; a bar chart would be needed for that.
Hmm... coming from MA, if we added the BIG DIG project, we would surely be spending more than the bailout!
It's a little disingenuous to throw the Louisiana Purchase in there since it is one of the greatest deals in history.
I mean, let's adjust the whole deal instead of the final numbers. Jefferson wanted to spend $10 million just for New Orleans. Adjusting for inflation, that's $137 billion for one city. So, the offer really was, \"hey, throw in another $80 billion and we'll give you another 800,000 square miles and you can double the size of your country\".
So, I guess it's technically true that it cost less than some of those other things. Of course, it's also technically true that if I found some down on his luck stock broker and he offered to trade me his new Bugatti Veyron for a for a bottle of Colt 45, then I could say a BV costs less than what I plaid for my first car.
When it comes to subsidizing risks and costs of big business in this country, there are no limits.
When it comes time to help the working stiff (or used-to-be-working stiff, well, then we bust out the tough love and tell them \"you gotta lift yourself up by your bootstraps\".
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@facted: Wait...so the Louisiana Purchase WASN'T an investment? NASA was money in the trash?
This is what we call a classic \"Apples-To-Oranges Fail\"...
It amazes me that so many people think the economy will plummet into the abyss if some large financial firms reap what they sow. They are financial firms. If they go under, their clients get taken by the remaining firms. To cover the added workload, said firms then have to hire more people. Now where might they find a large pool of skilled workers to help them out? Just don't hire the idiots from VP on up from the failed firms. They've already proven their incompetence.
A more accurate representation would be to portray the non-inflation adjusted figures as a percentage of GDP, and then to superimpose a graph showing aggregate government spending as a percentage of GDP.
Simply using inflation-adjusted figures is misleading.
Although one could argue not more misleading than comparing government expenditures to government assumption of debt (although in reality it is more complicated than this simply binary, in each pie chart).
-Math/Economics major
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Well, that does put it in perspective.