Bailouts could cost $23+ Trillion... with a "T"

[Professor S]

In fact, $23 trillion is more than the total cost of all the wars the United States has ever fought, put together. World War II, for example, cost $4.1 trillion in 2008 dollars, according to the Congressional Research Service.

Even the Moon landings and the New Deal didn’t come close to $23 trillion: the Moon shot in 1969 cost an estimated $237 billion in current dollars, and the entire Depression-era Roosevelt relief program came in at $500 billion, according to Jim Bianco of Bianco Research.

Treasury spokesman Andrew Williams downplayed the total amount could ever reach Barofsky’s number.

“The $23.7 trillion estimate generally includes programs at the hypothetical maximum size envisioned when they were established,” Williams said. “It was never likely that all these programs would be ‘maxed out’ at the same time.”

Still, the eye-popping price tag provoked an immediate reaction on Capitol Hill. “The potential financial commitment the American taxpayers could be responsible for is of a size and scope that isn’t even imaginable,” said Rep. Darrell Issa (R-Calif.), the ranking member of the House Oversight Committee. “If you spent a million dollars a day going back to the birth of Christ, that wouldn’t even come close to just one trillion dollars – $23.7 trillion is a staggering figure.”

Source: http://www.politico.com/news/stories/0709/25164.html

[BreakABone]

Hey Obama's giving a speech over there!
Its sure to be historic!

But alas, this can't be good. Old expression that money can't buy happiness, I guess it also can't fix everything.

[Combine 017]

Dont you be asking us for any loans now.

And money can buy happiness.
Notice how all the poor people are sad and rich people are happy?
The only difference is that rich people are hollow inside.

[Professor S]

Notice how all the poor people are sad and rich people are happy?
The only difference is that rich people are hollow inside.

So then they're not really happy, are they...

I've known several wealthy people in my day, and I have to say that as a whole they tend to be less happy than those of lesser means (but not poor). I think at both extremes money becomes stressful. If you're poor, you're struggling to get more of it but are ahppy with less, if you're rich you're struggling to keep it, it means more to you, and you have a lot more of it to lose.

But hell, as $23.7 Trillion... we'll all be poor eventually anyway, and that includes you Canada... we're economically tied at the hip so we'll be more than hapy to drag you down with us! :drool:

[Fox 6]

OR DO RICH PEOPLE HAVE NO ORGANS!!???!?!?!?!?!

[Combine 017]

But hell, as $23.7 Trillion... we'll all be poor eventually anyway, and that includes you Canada... we're economically tied at the hip so we'll be more than hapy to drag you down with us! :drool:

You bastards!

Then ill just make my own country, one that has a bunch of diamond deposits and volcanic activity for thermal energy, and a river for water stuff. Ill even get my own ocean!

But how the hell do you get $23.7 trillion, thats just insane.
You should just get the richest people in America to donate a couple hundred billion dollars. :p

[BreakABone]

And then give individuals control of parts of the gov't? Yeah won't work either.

[manasecret]

So what does this really mean? For all I can tell the article is a political sensational headline.

Has $23 trillion actually been spent? Apparently not, only "less than $2 trillion" (obviously not that much...).

Is there actually a chance $23 trillion will be spent? What is the actual amount that will be spent? What can be done to bring that number down? What exactly is costing so much money? Are they including any money that can be recouped, such as the TARP money being repaid or Chrysler and GM being sold back to the private sector?

All this article has is a big headline so everyone can comment below how Obama is destroying America (just like every president before him has, or so I imagine there has always been some people who the president is).

[Professor S]

So what does this really mean? For all I can tell the article is a political sensational headline.

Has $23 trillion actually been spent? Apparently not, only "less than $2 trillion" (obviously not that much...).

Is there actually a chance $23 trillion will be spent? What is the actual amount that will be spent? What can be done to bring that number down? What exactly is costing so much money? Are they including any money that can be recouped, such as the TARP money being repaid or Chrysler and GM being sold back to the private sector?

All this article has is a big headline so everyone can comment below how Obama is destroying America (just like every president before him has, or so I imagine there has always been some people who the president is).

I thought the article was pretty clear. Their bailout could cost 24.7 trillion, and it was even clarified that that money has not been spent. It's still quite frightening that this amount of money has been made AVAILABLE to be spent, an absurd amount.

[manasecret]

What I mean is the article lacks any depth. What does the maximum $24.7 trillion mean when it won't actually be spent? Specifically, what does it mean to you and me? And more importantly, how much is actually going to be spent?

If this is such an important issue, which I think it is, I think more details are needed.

[KillerGremlin]

I think being rich would be better than being poor or even middle class, and I think we had a whole thread about this. I do believe money can buy happiness, or at least it can buy you cars, houses, maids, vacations, and health. All that should lead to a longer life and would position you better in the empowered portion of society. I can see the stresses that come with that. I can also see me being a sad and buying a roller coaster. Money, fuck yeah!

24 Trillion is an insane number, but I'm not an accountant so I don't know how that number measures out when weighed against inflation and the global economy. We need Bond to post some sexy graphs. Also, as Mana said, how much of that projected hypothetical will actually get spent?

I still think this bail out was a huge mistake and America is going to slip from #1 eventually. We still have the world by the balls because of our insane military spending and our position as ambassadors of the global stage but we obviously have lots of problems at home. Shits gonna happen and sadly it looks like its gonna happen in my lifetime.

[Bond]

Unfortunately, I don't have any handy graphs for this specific article. But I will say that I think the real issue here is not exactly how big the bailout number ends up being, but rather what percent of GDP the national debt becomes, which I can post a graph on at a later date.

[TheGame]

I still think this bail out was a huge mistake and America is going to slip from #1 eventually. We still have the world by the balls because of our insane military spending and our position as ambassadors of the global stage but we obviously have lots of problems at home. Shits gonna happen and sadly it looks like its gonna happen in my lifetime.

I agree with this statement, however I don't think the Bush/Obama bail outs were the start of the problems. Granted they doubled the national debt, and the deflicit is extremely high.. Before they started doing bail outs the debt was still over 5 trillion and rising. And before they did the bail outs the economy was already going down the path of being screwed.

[Angrist]

I don't really get what bailouts are. The original post is a bit fuzzy on that...

[Dyne]

Hey, that's almost as much as the missile defense system!

[Professor S]

Just to clarify, even at Iraq war spending highs under Bush military spending accounted for about 18% of the total budget. With the massive increase in domestic spending that number will likely be far less of a percentage.

Here is a graph to put things in persepctive:

http://i.l.cnn.net/money/2009/03/20/news/economy/cbo_obama_budget_deficit/chart_cbo.03.jpg

Source: http://money.cnn.com/2009/03/20/news/economy/cbo_obama_budget_deficit/index.htm?postversion=2009032016

And I've seen estimates higher than $2 Trillion for 2009 but I don't have time to find them at the moment. And thats real dollars, not allocated dollars that are mentioned in the initial post.

As for what this means, it means the same thing it meant under Carter: Printing more money = higher inflation. IMO, we've already started to this the results in the dollar cost for oil. Gas is more expensive, but it isn't worth any more than it was before... the dollar is just worth less.

Here is an interesting article from TIME's archives (1980):

http://www.time.com/time/magazine/article/0,9171,921854-7,00.html

[KillerGremlin]

<object width="560" height="340"><param name="movie" value="http://www.youtube.com/v/at3MNu8BRwQ&hl=en&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/at3MNu8BRwQ&hl=en&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="560" height="340"></embed></object>

[Bond]

Well, our debt to national GDP ratio is becoming quite high, but it is still not as high as compared to other countries, such as Japan and some African countries. The real problem is that this is an issue of path dependence. The more money the government prints at an alarmingly quick rate, the more the people become dependent on that government to do the same. It is a very dangerous cycle.

Moreover, this creates the same cyclical relationship that our economy has been undergoing for quite sometime. While Keynesian economics tries to even out the boom and bust cycle, it simply temporarily alleviates a bust into a semi-boom, but then sets the stage for the next bust.

The core problem is that these kinds of economic issues morph into political issues, in which the "correct" economic decision is rarely made. But that's how politics works I suppose.

[Angrist]

Could anyone please explain me what is meant with bailout? Thanks.

[Professor S]

Search for "bailouts" at the top of the forum. There are at least 20 thrads dedicated to the subject since September `08.

[Angrist]

Ah, it's the plan to get the housing market back up again? Or something to do with that.

That's a lot of money.

For a while I thought it was about the money that the USA owes to (3rd world?) countries.

[Professor S]

Ah, it's the plan to get the housing market back up again? Or something to do with that.

That's a lot of money.

For a while I thought it was about the money that the USA owes to (3rd world?) countries.

1) The third world owes the US money, not the other way around. We owe China a ton of cash.

2) Everything is connected. If the housing market was isolated, this severe recession likely would not have been as bad. Instead, mortgages were essentially sold as stocks, and when the mortgages proved to be bad, the effect was systemic to the economy as markets plummeted and insurers could not afford to pay their commitments to the financial institutions as they all went belly up at the same time.

[Angrist]

Ah ok, well, that's why I put it before a question mark and in brackets. :)

I think my country owes a lot of poor countries money.