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The real bailout cost? $7.4 trillion

Posted Nov 24 2008, 12:28 PM by Kim Peterson
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We were suckered into believing the bailout would only cost $700 billion. Turns out the government is set to lend at least $7.4 trillion to rescue the financial system, says Bloomberg. That's half the value of everything produced in the country last year.

How is this possible? In an impressive bit of investigative reporting, Bloomberg went out and collected data from the Fed, the Treasury and the FDIC to figure out the full extent of the government rescue effort. I suspect not even the government has done this kind of research on its spending programs.

How does the government blow through $7.4 trillion? Here are the ways:

$2.8 trilion -- Already been tapped by banks and other financial institutions

$2.4 trillion -- Set aside to buy short-term notes, or commercial paper, that companies use to pay bills

$1.4 trillion -- Used by the FDIC to guarantee loans banks make to each other

$29 billion -- To help with the Bear Stearns takeover

$123 billion -- Bailout for AIG 

$326 billion -- Bailout for Citigroup

$200 billion -- Promised to Fannie Mae and Freddie Mac

$139 billion -- Loan guarantees for General Electric's finance unit

To put this into perspective: That money is equal to spending $24,000 on every man, woman and child in the country, Bloomberg says. It would pay off more than half of the mortgages in the U.S.

Related reading:

Fed pledges top $7.4 trillion to ease frozen credit

Insurance companies angle for bailout

Treasury defends bailout bait-and-switch

$50 billion of bailout going to employee bonuses

Economists criticize bailout plans

Who isn't getting bailout money these days?

Comments

 

It truly should not shock anyone across this country that the goverment takes your hard earned money and flushes it down the toilet. Also why do people think the goverment even cares?

The American public is thoroughly disgusted with this process.  No bailout for the average Joes and Janes of America ?  Just for Wall Street crooks ?   There does not seem to be any objective criteria for determining who gets a bailout and then how much they receive.  The bailouts are just rewarding the poor performance of management.  In short, NO ACCOUNTABILITY !    - http://www.WallStreetStocks.us  

I am sick of it........using our hard earned money & giving it to the banks,  so their  CEOs can have their bonus or going on their spendy trips.  When is OUR goverment going to do something for US!!!!!!!!!!   When are the working class going to get a break in this pictures............NOT!

This number as it is, being promoted as a direct loss (see "blow through" above), might be true IF:

1. All the loans and short-term lending goes bad.All the banks would have to fail, and even then a percentage would be paid.

2. All the banks and other companies go under and thus the investments in them go bad. Again, the net assets would have to be less than all the common stock net value for the government's Preferred stock to be hit. Again, at a percentage.

3. All the mortgages go to zero value from their already depressed valuation, i.e. all houses are worth nothing to nobody, everyone prefers to live in tents.

Of course, if all this happens then it hardly matters. No paper, even deeds, would have any value since there'd be no one to enforce them. And despite what they try to tell you, you can't eat gold or live in it. So why assume all that? It's utterly pointless and irrelevant, except as propaganda. (Which was the point, wasn't it!)

We are 100% Socailist country, soon the government will be telling you what job your going to do and where your going to live. America better wake up and soon. This is coming and fast.

Read your history this happened once before, Germany 1939.

Truly amazing how history is repeating itself.  If memoriy serves me right, was not Bush Senior & Junior involved in the "S&L" bailout fiasco.  Even then there was no oversight in tracking how the this money was used.  Simply, we are bailing out the rich and their interest in these companies.

My frustration does not apply to anybody who got laid off, and who will have to apply for government aid... but can somebody tell me what the honest middle class gets in terms of a bailout? my taxes pay for congressmen perks and exec salaries, people taking advantage of welfare and free health care, union workers refusing to take pay cuts for failing businesses, financials making bad bets, people overspending on credit card debts. Me and my kids and my grandkids will have to pay for all of that. Why?

Does any one really know how bad off we are....Government or major industry leaders?? Example: recently Citi Group was wanting to buy Wachovia...now they are begging for a Government bailout....DUH!!!...those seem to be contradictory!!!  As I understand it, many are now standing in line for bailouts...American Motor firms (two of the big three), Credit Card firms (including American Express!!!), Home Builders (get the message guys...we have a surplus in homes...not all can responsibally realize the already faded  "American Dream" of owning a home!!!!), Insurance firms...and the list goes on.

Americans must adjust their lifestyes to what it takes to exist and compete in a global economy. Unfortunately, because of past unrealistic expectations and an excessive lifestyles, many sacrifices are yet to be made. Start now, the pain will only get larger later.

My  husband works for gm.....no bonus  in 10 years....and what the BIG CEO'S   make  in 1 year  would take him  30 years to make that !!!!!!!!!!!!!!!!!!!!!!!!!!   Blame it on the BIG WIGS.....n Not the  working people that get up everyday  go to work  n do there jobs !  SO HOPE things work out  for the  lil people  !  

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